UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997
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
No. 1-9820
BIRMINGHAM STEEL CORPORATION
DELAWARE 13-3213634
- -------------------------- -------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1000 Urban Center Parkway, Suite 300
Birmingham, Alabama 35242
(205) 970-1200
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 and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days Yes ( x ) No ( ).
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 29,677,655 Shares of Common Stock, Par Value $.01 Outstanding
at March 13, 1997.
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BIRMINGHAM STEEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares)
March 31, June 30,
1997 1996
(Unaudited) (Audited)
----------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,823 $ 6,663
Accounts receivable, net of allowance for
doubtful accounts of $1,508 at March 31, 1997;
$1,554 at June 30, 1996 132,006 111,565
Inventories 214,504 196,752
Other 16,554 13,013
----------- ---------
Total current assets 364,887 327,993
Property, plant and equipment
(including property and equipment,
net, held for disposition of $19,513
and $18,210 at March 31, 1997 and June
30, 1996, respectively):
Land and buildings 173,003 123,465
Machinery and equipment 530,417 376,744
Construction in progress 182,126 178,011
----------- ---------
885,546 678,220
Less accumulated depreciation (162,737) (134,196)
----------- ---------
Net property, plant and equipment 722,809 544,024
Excess of cost over net assets acquired 51,537 46,077
Other assets 38,568 9,893
----------- ---------
Total assets $ 1,177,801 $ 927,987
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 74,533 $ 83,226
Accrued interest payable 6,327 5,935
Accrued operating expenses 7,342 5,936
Accrued payroll expenses 6,103 6,888
Income taxes payable - 369
Other current liabilities 20,570 14,044
----------- ---------
Total current liabilities 114,875 116,398
Deferred income taxes 49,512 50,292
Deferred compensation 5,758 5,606
Long-term debt 518,469 307,500
Minority interest in subsidiary 16,305 -
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, par value $.01; authorized
5,000,000 shares - -
Common stock, par value $.01; authorized:
75,000,000 shares; issued and outstanding:
29,727,815 at March 31, 1997 and
29,679,761 at June 30, 1996 297 297
Additional paid-in capital 331,030 331,430
Treasury stock, 56,715 and 1,070,727 shares at
March 31, 1997 and June 30, 1996, respectively,
at cost (1,019) (21,148)
Unearned compensation (1,353) (2,165)
Retained earnings 143,927 139,777
----------- ---------
Total stockholders' equity
472,882 448,191
----------- ---------
Total liabilities and stockholders' equity $ 1,177,801 $ 927,987
=========== =========
See accompanying notes.
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BIRMINGHAM STEEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data; unaudited)
Three months ended Nine months ended
March 31, March 31,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
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Net sales $ 257,858 $ 197,057 $ 701,420 $ 601,707
Cost of sales:
Other than depreciation and
amortization 223,675 182,109 601,295 527,844
Depreciation and amortization 12,155 8,766 33,743 25,068
--------- --------- --------- ---------
Gross profit 22,028 6,182 66,382 48,795
Provision for loss on mill
modernization program,
pre-operating/startup costs
and unusual items 6,557 16,309 9,091 21,425
Selling, general and administrative 10,490 9,634 26,852 29,300
Interest 5,677 3,673 14,310 9,037
--------- ---------- --------- ---------
(696) (23,434) 16,129 (10,967)
Other income (expense), net 664 291 4,511 2,925
Minority interest in loss of
subsidiary 1,039 - 1,160 -
--------- ---------- --------- ---------
Income before income taxes 1,007 (23,143) 21,800 (8,042)
Provision for income taxes 413 (8,746) 8,938 (2,479)
--------- ---------- --------- ---------
Net income $ 594 $ (14,397) $ 12,862 $ (5,563)
========= ========== ========= =========
Weighted average shares outstanding 29,423 28,598 28,896 28,552
========= ========= ========= =========
Earnings per share $ 0.02 $ (0.50) $ 0.45 $ (0.19)
========= ========== ========= =========
Dividends declared per share $ 0.10 $ 0.10 $ 0.30 $ 0.30
========= ========== ========= =========
See accompanying notes.
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BIRMINGHAM STEEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine months ended
March 31,
---------------------
1997 1996
(unaudited) (unaudited)
--------- ---------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 12,862 $ (5,563)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization 33,743 25,068
Provision for doubtful accounts receivable 15 403
Deferred income taxes (780) (3,672)
Provision for loss on mill modernization
program, pre-operating/startup costs
and unusual items - 21,425
Gain on sale of 50% equity in scrap
subsidiary (1,746) -
Minority interest in subsidiary (1,160) -
Other 824 2,820
Changes in operating assets and liabilities,
net of effects from business acquisition:
Accounts receivable (20,456) 8,711
Inventories 9,865 (33,877)
Prepaid expenses (371) (1,571)
Other current assets (4,606) (4,077)
Accounts payable (24,392) 2,829
Income taxes payable (369) (379)
Other accrued liabilities (17,666) 8,191
Deferred compensation 152 408
--------- ---------
Net cash provided by (used in) operating
activities (14,085) 20,716
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (144,581) (129,522)
Payments for business acquisitions (43,309) (10,532)
Proceeds from disposal of property,
plant and equipment 108 191
Proceeds from sale of 50% equity in scrap
subsidiary 5,372 -
Investment in scrap subsidiary (9,250) (5,089)
Additions to other non-current assets (21,530) (16,552)
Reductions in other non-current assets 662 9,517
--------- ---------
Net cash used in investing activities (212,528) (151,987)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net short-term borrowings and repayments - (8,020)
Proceeds from issuance of long-term debt 210,969 165,000
Proceeds from issuance of common stock 310 64
Proceeds from issuance (purchase) of
Treasury Stock 19,188 (540)
Cash dividends paid (8,694) (8,564)
--------- ---------
Net cash provided by financing activities 221,773 147,940
--------- ---------
Net increase (decrease) in cash and cash
equivalents (4,840) 16,669
Cash and cash equivalents at:
Beginning of period 6,663 4,311
--------- ---------
End of period $ 1,823 $ 20,980
========= =========
Supplemental cash flow disclosures:
Cash paid during the period for:
Interest (net of amounts capitalized) $ 9,868 $ 3,820
Income taxes $ 8,209 $ 5,545
See accompanying notes.
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BIRMINGHAM STEEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997 and 1996
1. Description of the Business and Significant Accounting Policies
Description of the Business
Birmingham Steel Corporation (the Company) operates steel mini-mills in
the United States producing steel reinforcing bar, merchant products
and high quality bar, rod and wire. The Company operates in one
industry segment and sells to third parties primarily in the
construction, manufacturing and automotive industries throughout the
United States and Canada.
Principles of consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. In the opinion of management, all
adjustments considered necessary for a fair presentation have been
included. All significant intercompany accounts and transactions have
been eliminated.
Inventories
Inventories are stated at the lower of cost or market value. The cost
of inventories is determined using the first-in, first-out method.
Earnings per share
Earnings per share are computed using the weighted average number of
outstanding common shares and dilutive equivalents (if any).
Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share", which is required to be
adopted on December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings per
share and to restate all prior periods. Under the new requirements for
calculating primary earnings per share, the dilutive effect of stock
options will be excluded. The impact of Statement No. 128 on the
calculation of primary earnings per share and fully diluted earnings
per share is not expected to be material.
In March 1995, the Financial Accounting Standards Board issued
Statement No. 121 that requires impairment losses to be recorded on
long-lived assets used in operations, including goodwill, when
impairment indicators are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets'
carrying amount. Statement No. 121 also addresses the accounting for
long-lived assets that are expected to be disposed of in future
periods. The Company adopted Statement No. 121 in the first quarter
of fiscal 1997 with no material effect on earnings or asset values.
The Company issues stock based awards in several forms which are
accounted for in accordance with Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees". In October 1995,
the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", which provides an alternative to Opinion No. 25 in
accounting for stock-based compensation issued to employees. The
Statement allows for a fair value based method of accounting for
employee stock options and similar equity instruments. For companies
that continue to account for stock-based compensation arrangements
under Opinion No. 25, Statement No. 123 requires disclosure of the pro
forma effect on net income and earnings per share of its fair value
based accounting for those arrangements. The Company has elected to
continue accounting for stock-based compensation arrangements in
accordance with Opinion No. 25. However, the Company will adopt the
disclosure requirements of Statement No. 123 in its annual report for
fiscal 1997.
2. Business Acquisitions and Joint Ventures
On November 15, 1996, the Company entered into a Contribution Agreement
with Atlantic Steel Industries, Inc. (Atlantic) and IVACO, Inc., the
parent of Atlantic, pursuant to which the Company and Atlantic formed
Birmingham Southeast, LLC (Birmingham Southeast), a limited liability
company owned 85 percent by Birmingham East Coast Holdings, a wholly
owned subsidiary of the Company, and 15 percent by a subsidiary of
IVACO, Inc. On December 2, 1996, pursuant to the Contribution Agreement
the Company contributed the assets of its Jackson, MS facility to
Birmingham Southeast which had no impact on the accompanying
consolidated financial statements. Birmingham Southeast then purchased
the operating assets of Atlantic located in Cartersville, GA for
$43,309,000 in cash and assumed liabilities approximating $44,257,000.
The purchase price has been allocated to the assets and liabilities of
the Company as follows (in thousands):
Current assets $ 31,667
Property, plant & equipment 63,400
Other non-current assets,
primarily goodwill 9,964
--------
Total assets acquired $105,031
Fair value of liabilities
assumed (44,257)
Minority interest (17,465)
---------
Total purchase price $ 43,309
=========
The non-cash financing and investing activities related to the purchase
of the Cartersville, Georgia assets have been excluded from the
statement of cash flows.
On September 18, 1996, the Company entered into an agreement with Raw
Materials Development Co., Ltd., an affiliate of Mitsui & Co., Ltd.
forming Pacific Coast Recycling, LLC (Pacific Coast), a 50/50 joint
venture established to operate in southern California as a collector,
processor and seller of scrap. The Company made equity investments in
Pacific Coast of approximately $7,500,000 on December 27, 1996 and
$1,750,000 on January 23, 1997. On December 27, 1996, Pacific Coast
purchased certain assets from the estate of Hiuka America Corporation
and its affiliates with annual scrap processing capacity of
approximately 1 million tons. Pacific Coast plans to utilize the
facility at the Port of Long Beach to export scrap.
On August 30, 1996, the Company entered into an Equity Contribution
Agreement with American Iron Reduction, L.L.C. (AIR), a 50 percent
owned subsidiary of the Company, for the purpose of constructing a
direct reduced iron (DRI) facility in Louisiana. Under the Equity
Contribution Agreement, the Company is required to make an equity
contribution to AIR of not less than $20,000,000 and not more than
$27,500,000 upon completion of the DRI facility, which is expected to
be completed by the end of calendar year 1997. The Company also entered
into a DRI Purchase Agreement with AIR on August 30, 1996, whereby the
Company will purchase a minimum of 600,000 metric tons of DRI annually.
The DRI purchased will be utilized primarily at the Memphis melt shop
as a substitute for premium, low-residual scrap.
On August 8, 1995, the Company purchased certain assets of Western
Steel Limited, a subsidiary of IPSCO Inc., located in Calgary, Alberta,
Canada for a purchase price of approximately $11,206,000. On December
13, 1995, Birmingham Recycling Investment Company (BRIC), a wholly
owned subsidiary of the Company, completed a related transaction when
it purchased the stock of Richmond Steel Recycling Limited (RSR), a
scrap processing facility and subsidiary of Western Steel Limited,
located in Richmond, British Columbia, Canada. On December 20, 1996,
BRIC sold 50 percent of the stock of RSR to SIMSMETAL Canada, Ltd. and
recognized a pre-tax gain, included in other income, of approximately
$1,746,000.
3. Inventories
Inventories were valued as summarized in the following table (in
thousands):
March 31, June 30,
1997 1996
-------- --------
At lower of cost (first-in,
first-out) or market:
Raw materials and mill supplies $ 45,119 $ 37,871
Work-in-progress 75,327 95,423
Finished goods 94,058 63,458
-------- --------
$214,504 $196,752
======== ========
4. Borrowing Arrangements
On March 20, 1997, the Company entered into a five year, unsecured
revolving credit agreement whereby the Company may borrow up to
$300,000,000 with interest at market rates mutually agreed upon by the
Company and the lenders. Proceeds of $181,874,000 from the new credit
agreement were used to repay borrowings under the Company's previous
revolving credit arrangements. Approximately $115,031,000 was available
under this facility at March 31, 1997.
Under a line of credit arrangement for short-term borrowings, the
Company may borrow up to $15,000,000 with interest at market rates
mutually agreed upon by the Company and the lender. The full line of
credit was available under this facility at March 31, 1997.
On October 8, 1996, the Company issued a $26,000,000, 30 year variable
rate industrial revenue bond under the authority of the City of Memphis
and County of Shelby, Tennessee. The Company will use the proceeds of
the tax-free bond to finance certain portions of its new melt shop in
Memphis, Tennessee.
On September 29, 1995, the Company completed a $150,000,000 private
placement of senior notes. The notes are unsecured and primarily
consist of maturities ranging from seven to ten years and a weighted
average interest rate of 7.05 percent. The proceeds of the debt issue,
which were drawn down on December 15, 1995, were utilized primarily to
fund the Company's multi-year capital expenditure program.
On September 1, 1995, American Steel & Wire Corporation (ASW), a
wholly-owned subsidiary of the Company, issued $15,000,000 in Solid
Waste Disposal Revenue Bonds under the authority of the Ohio Water
Development Authority. The bonds have a term of thirty years at a
variable market interest rate. The proceeds of the bonds have been used
to construct a waste water treatment facility at the Company's new bar
mill located in Cleveland, Ohio.
5. Contingencies
Environmental
The Company is subject to federal, state and local environmental laws
and regulations concerning, among other matters, waste water effluents,
air emissions and furnace dust management and disposal.
The Company has been advised by the Virginia Department of Waste
Management of certain conditions involving the disposal of hazardous
materials at the Company's Norfolk, Virginia property which existed
prior to the Company's acquisition of the facility. The site has been
accepted into Virginia's Voluntary Remediation Program. This program
confers statutory immunity from certain environmental claims upon
certification by the Virginia Department of Environmental Quality of the
site remediation. The Company was also notified by the Department of
Toxic Substances Control (DTSC) of the Environmental Protection Agency
of the State of California of certain environmental conditions regarding
its property in Emeryville, California. The Company has performed
environmental assessments of these sites and developed work plans for
remediation of the properties for approval by the applicable regulatory
agencies. The remediation plan for the Emeryville site was approved by
DTSC, and the Company recently received letters from DTSC confirming
that the site has been remediated in accordance with the approved
remedial implementation plan.
As part of its ongoing environmental compliance and monitoring programs,
the Company is voluntarily developing work plans for environmental
conditions involving certain of its operating facilities and properties
which are held for sale. Based upon the Company's study of the known
conditions and its prior experience in investigating and correcting
environmental conditions, the Company estimates that the potential costs
of these site restoration and remediation efforts may range from
$3,050,000 to $5,250,000. Approximately $2,000,000 of these costs is
recorded in accrued liabilities at March 31, 1997. The remaining costs
principally consist of site restoration and environmental exit costs to
ready the idle facilities for sale, and have been considered in
determining whether the carrying amounts of the properties exceed their
net realizable values. These expenditures are expected to be made in the
next two years if the necessary regulatory agency approvals of the
Company's work plans are obtained. Though the Company believes it has
adequately provided for the cost of all known environmental conditions,
the applicable regulatory agencies could insist upon different and more
costly remediative measures than those the Company believes are adequate
or required by existing law. Additionally, if other environmental
conditions requiring remediation are discovered, site restoration costs
could exceed the Company's estimates. Except as stated above, the
Company believes that it is currently in compliance with all known
material and applicable environmental regulations.
Legal Proceedings
The Company is involved in litigation relating to claims arising out of
its operations in the normal course of business. Such claims are
generally covered by various forms of insurance. In the opinion of
management, any uninsured or unindemnified liability resulting from
existing litigation or claims would not have a material effect on the
Company's business, financial position, liquidity or results of
operations.
6. Disposition of Idle Facilities
In Fiscal 1995, the Company entered into an agreement to sell the real
property at its idle facility in Ballard, Washington. In December, 1995,
the Company incurred a write-off of $2,055,000, which is included in the
provision for loss on mill modernization program, primarily related to
the equipment at the Ballard facility after termination of the sales
contract on the equipment. In August, 1995, the Company completed the
exchange of the idle Kent, Washington facility and other property at the
Seattle, Washington steel-making facility with the Port of Seattle for
property owned by the Port which is being used in the Company's Seattle
operations. No gain or loss was recognized as a result of the
transaction.
7. Provision for Loss on Mill Modernization Program, Pre-Operating/Startup
Costs and Other Unusual Items
The provision for loss on mill modernization program,
pre-operating/startup costs and other unusual items in the accompanying
financial statements consists of the following (in thousands):
Nine months ended Nine months ended
March 31, 1997 March 31, 1996
----------------- -----------------
Equipment write-downs $ - $ 6,580
Pre-operating/startup costs 9,091 5,641
Restructuring of EDS contract - 4,522
Legal/property cleanup reserves - 2,350
Severance/reorganization costs - 1,395
Other - 937
-------- --------
Total $ 9,091 $21,425
======== ========
Pre-operating/startup costs consist of non-capitalized costs incurred
prior to a facility reaching commercial production levels.
8. Public Offering of Shares
On January 23, 1997, the Company issued 1,000,000 additional shares of
common stock from treasury in a public offering. The proceeds from the
offering were used to offset certain payments made by the Company in
connection with its acquisition of the assets of Atlantic as described
in Note 2.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The statements contained in this report that are not purely historical or which
might be considered an opinion or projection concerning the Company or its
business, whether express or implied, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements include statements regarding the Company's expectations, hopes,
anticipations, intentions, plans and strategies regarding the future.
Forward-looking statements include, but are not limited to: expectations about
environmental remediation costs, assessments of expected impact of litigation
and adequacy of insurance coverage for litigation, expectations regarding the
costs of new projects, expectations regarding future earnings, and expectations
regarding the date when facilities under construction will be operational and
the future performance and capabilities of those facilities. Moreover, when
making forward-looking statements, management must make certain assumptions that
are based on management's collective opinion concerning future events, and blend
these assumptions with information available to management when such assumptions
are made. Whether these assumptions are valid will depend not only on
management's skills, but also on a variety of volatile and highly unpredictable
risk factors. Some, but not all, of these risk factors are described below under
the heading "Risk Factors That May Affect Future Operating Results".
For the third quarter of fiscal 1997, the Company reported earnings of $594,000,
compared with a loss of $14,397,000 in the third period of fiscal 1996. Earnings
per share for the quarter were $.02, compared to a loss of $.50 reported for the
third quarter of last year. Third quarter steel shipments were 747,000 tons,
compared with 589,000 tons shipped in the same period a year ago. Net sales for
the third quarter were $257,858,000, an increase of 31 percent from $197,057,000
for the same period last year.
For the nine months ended March 31, 1997, the Company reported earnings of
$12,862,000, compared with a loss of $5,563,000 for the same period last year.
Earnings per share for the period were $.45, compared to a loss of $.19 per
share reported last year. Steel shipments for the nine month period were
2,025,000 tons, an 18 percent increase from 1,720,000 tons for the same period
of 1996. Net sales were $701,420,000 for the nine month period compared with
$601,707,000 in the same period a year ago.
Net Sales
The Company achieved record steel shipments of 747,000 tons in the third
quarter, up 27 percent from 589,000 tons reported in the third quarter of fiscal
1996. A favorable shift in product mix reflecting a 9 percent increase in rebar,
a 73 percent increase in merchant and 15 percent increase in special bar quality
(SBQ) shipments resulted in the third quarter. Shipment of semi-finished steel
billets account for 8 percent of total shipments for the three months ended
March 31, 1997 compared with 6 percent of total shipments for the same period a
year ago.
Third quarter average selling prices for rebar and merchant products were $312
per ton, compared with $298 per ton for the third quarter of last year and $313
per ton in the immediately preceding quarter. Average semi-finished billet
selling prices were $241 per ton for the third quarter, compared with $206 per
ton in the prior year period. Selling prices of SBQ products averaged $475 per
ton in the third quarter, up $8 per ton compared with $467 per ton in the third
quarter of the prior year and up $6 per ton compared with $469 per ton in the
second quarter of the current year.
The increase in net sales over the prior year period is primarily attributable
to the inclusion of sales from the Cartersville, Georgia facility which was
acquired in December, 1996 and increased shipment volumes from the Company's
other facilities combined with an increase in average selling prices from the
prior year period.
Cost of Sales
As a percentage of net sales, cost of sales (other than depreciation and
amortization) fell to 86.7% compared with 92.4% in the third quarter last year.
The decline resulted from increased average selling prices and shipment volumes,
partially offset by increased billet costs at the Company's SBQ facility in
Cleveland, Ohio and slightly increased conversion costs.
For the nine months ended March 31, 1997, cost of sales as a percentage of net
sales was 85.7% compared with 87.7% in the same period last year.
Rebar/merchant conversion costs rose to $130 per ton for the third quarter
compared with $125 per ton for the second quarter and $126 per ton for the third
quarter of the prior year. Conversion costs at the Company's SBQ facility
increased to $71 per ton for the three months ended March 31, 1997, compared
with $67 per ton in the immediately preceding quarter and $60 per ton for the
third quarter last year.
The Company's third quarter scrap raw material cost of $134 per ton was down
from $135 per ton in the prior year period. Raw material billet cost at the
Company's SBQ facility was $367 per ton in the third quarter, up $24 per ton
from $343 in the third quarter last year and up $5 per ton compared with the
second quarter of the current year. To offset the cost of purchased billets at
its SBQ facility, the Company is currently constructing a high quality steel
melting facility in Memphis, Tennessee to supply approximately 1 million tons
annually of the SBQ billet requirements. The facility is scheduled for start-up
in the fourth quarter of calendar 1997 at an expected capital cost of
approximately $200 million.
Depreciation and amortization was $12,155,000 in the third quarter compared with
$8,766,000 in the prior year period. For the nine month period, depreciation and
amortization totaled $33,743,000, up from $25,068,000 reported for the same
period last year. The increase is primarily attributable to the recognition of
depreciation expense for the Cleveland, Ohio bar mill placed into service in
July, 1996 and the assets acquired in Cartersville, Georgia in December, 1996.
Provision for Loss on Mill Modernization Program, Pre-Operating/Startup Costs
and Unusual Items
Provision for loss on mill modernization program, pre-operating/startup costs
and unusual items amounted to $6,557,000 for the third quarter compared with
$16,309,000 in the third quarter of last year. For the nine months ended March
31, 1997, the provision for loss on mill modernization program,
pre-operating/startup costs and unusual items amounted to $9,091,000 compared
with $21,425,000 for the same period a year ago. The current quarter charges
relate primarily to pre-operating costs at the recently acquired Cartersville,
Georgia facility and the Memphis, Tennessee melt shop currently under
construction. The charges for the nine month period of the current fiscal year
also include the startup expenses incurred at the new bar mill in Cleveland,
Ohio which began operations in July. The prior period charges resulted from a
write-off of equipment at the Company's idled Ballard, Washington facility;
startup/pre-operating costs for the bar mill in Cleveland, Ohio, the high
quality melting facility in Memphis, Tennessee and the new melt shop in Seattle,
Washington; the restructuring of the information technology contract with
Electronic Data Systems; charges related to reorganization at both the corporate
and plant levels and reserves for legal and property cleanup issues at the
Company's idled Emeryville, California, Norfolk, Virginia and Prichard, Alabama
facilities.
Selling, General and Administrative Expenses ("SG&A")
SG&A amounted to $10,490,000 in the third quarter compared with $9,634,000 in
the third quarter last year. As a percent of sales, SG&A declined to 4.1 percent
in the third quarter, compared with 4.9 percent in the prior year period.
For the nine months ended March 31, 1997, SG&A declined to $26,852,000 compared
with $29,300,000 in the same period last year. As a percent of sales, year to
date SG&A were 3.8 percent, compared with 4.9 percent last year. The favorable
decline in SG&A is primarily attributable to cost savings resulting from the
renegotiation of the Company's contract with Electronic Data Systems (EDS) in
the fourth quarter of fiscal 1996.
Interest Expense
Interest expense increased to $5,677,000 in the third quarter of the current
year compared with $3,673,000 reported last year, primarily due to increased
borrowings on the Company's short-term lines of credit. In the third quarter,
the Company capitalized approximately $2,113,000 in interest related to
construction projects, compared with approximately $1,661,000 in the same period
last year.
For the nine months ended March 31, 1997, interest expense increased to
$14,310,000, compared with $9,037,000 in the prior year due to increased
borrowings on the short-term lines of credit and the recognition of interest on
the $150,000,000 private placement drawn in December, 1995, the issuance of
$26,000,000 in industrial revenue bonds completed in October, 1996 and the
issuance of $15,000,000 in Solid Waste Disposal Revenue Bonds completed in
September, 1995. The increase was partially offset by the increased level of
capitalized interest on construction projects in the amount of approximately
$5,648,000 for the nine month period, compared with approximately $3,794,000 in
the same period last year.
Income Taxes
Effective income tax rates for the nine months ended March 31, 1997 and 1996
were 41.0% and 30.8% respectively. The lower rate in the prior year resulted
from decreased earnings of the Company in fiscal 1996.
Liquidity and Capital Resources
Operating Activities:
For the first nine months of fiscal 1997, net cash used in operating activities
was $14.1 million, compared with net cash provided by operating activities of
$20.7 million reported in the third quarter of last year. The decline in
operating cash flow was essentially due to changes in operating assets and
liabilities, primarily accounts receivable, accounts payable, inventories and
other accrued liabilities.
Investing Activities:
Net cash used in investing activities was $212.5 million, compared with $152.0
million last year. Capital spending increased over the prior year period due
primarily to the construction of the new melt shop in Memphis.
On November 15, 1996, the Company entered into a Contribution Agreement with
Atlantic Steel Industries, Inc. (Atlantic) and IVACO, Inc., the parent of
Atlantic, pursuant to which the Company and Atlantic formed Birmingham
Southeast, LLC (Birmingham Southeast), a limited liability company owned 85
percent by Birmingham East Coast Holdings, a wholly owned subsidiary of the
Company, and 15 percent by a subsidiary of IVACO, Inc. On December 2, 1996,
pursuant to the Contribution Agreement, the Company contributed the assets of
its Jackson, Mississippi facility to Birmingham Southeast and Birmingham
Southeast purchased the assets of Atlantic located in Cartersville, Georgia for
$43.3 million in cash and assumed approximately $44.3 million in liabilities
(See Note 2 to Consolidated Financial Statements).
In the current year, the Company made a $9.3 million investment in Pacific Coast
Recycling, LLC (Pacific Coast), a joint venture established to operate in
southern California as a collector, processor and seller of scrap owned 50
percent by the Company and 50 percent by Raw Materials Development Co., Ltd., an
affiliate of Mitsui & Co., Ltd. On December 27, 1996, Pacific Coast completed
the purchase of certain assets from the estate of Hiuka America Corporation and
its affiliates with annual scrap processing capacity of approximately 1 million
tons. Pacific Coast plans to utilize the facility at the Port of Long Beach to
export scrap (See Note 2 to Consolidated Financial Statements).
On December 20, 1996, Birmingham Recycling Investment Co., a wholly owned
subsidiary of the Company, sold 50 percent of the stock of Richmond Steel
Recycling Limited to SIMSMETAL Canada, Ltd. and recognized a pre-tax gain of
approximately $1.7 million.
Financing Activities:
Net cash provided by financing activities was $221.8 million in the first nine
months of the current year, compared with $147.9 million for the same period
last year. During the period the Company completed a $26 million, 30 year
tax-free bond financing at Memphis, the proceeds of which will be used to
finance certain portions of the Memphis melt shop currently under construction.
In the current quarter, the Company entered into a five year, $300 million
unsecured revolving credit agreement which will be utilized to fund the
Company's working capital needs, capital expenditures and for other general
corporate purposes. Borrowings under the revolving credit facility will bear
interest at market rates mutually agreed upon by the Company and the lenders. In
the third quarter, $182 million was drawn from the revolving credit facility to
repay borrowings under the Company's previous revolving credit arrangements.
During the prior year period, the Company completed a $15 million, 30 year
tax-free bond financing at its Cleveland, Ohio facility and issued $150 million
senior debt notes, using a portion of the proceeds to pay down the short-term
lines of credit.
On January 23, 1997, the Company issued 1,000,000 additional shares of common
stock from treasury in a public offering registered with the Securities and
Exchange Commission. The proceeds of $19,188,000 from the offering were used to
offset certain payments made by the Company in connection with its acquisition
of the assets of Atlantic Steel Industries, Inc. located in Cartersville,
Georgia (See Note 2 to Consolidated Financial Statements).
Working Capital:
Working capital at the end of the third quarter increased to $250.0 million,
compared with $211.6 million at the end of fiscal 1996. The rise in working
capital was essentially due to increases in accounts receivable and inventories
during the first nine months of fiscal 1997.
Other Comments
On April 15, 1997, the Company declared a regular quarterly cash dividend of
$.10 (ten cents) per share payable May 6, 1997 to shareholders of record on
April 25, 1997.
Risk Factors That May Affect Future Operating Results
All forward-looking statements included in this document are based upon
information available to the Company on the date hereof, and the Company assumes
no obligation to update any such forward-looking statements. It is important to
note that the Company's actual results could differ materially from those
described or implied in such forward-looking statements. Among the factors that
could cause actual results to differ materially are the factors detailed below.
In addition, you should consider the risk factors described from time to time in
the Company's reports on Forms 10-Q, 8-K, 10-K and Annual Report to
Shareholders.
The Company is in the steel industry, an industry that is vulnerable to
unpredictable economic cycles. A downturn in the economy or in the Company's
markets could have an adverse effect on the Company's performance.
The Company has attempted to spread its sales across the reinforcing bar,
merchant product and special bar quality markets to reduce the Company's
vulnerability to an economic downturn in any one product market. The Company's
performance, however, can still be materially affected by changes in demand for
any one of its product lines and by changes in the economic condition of the
construction industry, manufacturing industry or automobile industry.
The cost of scrap is the largest element in the cost of the Company's finished
rebar and merchant products. The Company purchases most of its scrap on a
short-term basis. Changes in the price of scrap, therefore, can significantly
affect the Company's profitability. Changes in other raw material prices can
also influence the Company's profitability.
Prices for some of the Company's products are positively affected by the
influence of trade sanctions imposed on the Company's foreign competitors.
Changes in these sanctions or their enforcement could adversely affect the
Company's results.
Energy costs are also a significant cost affecting the Company's results.
Current reforms in the electric utility industry at the state and federal level
are expected to lower energy costs in the long run. However, numerous utilities
and political groups are fighting these reforms and states are approaching the
reforms in different fashions. The possibility exists, therefore, that the
Company could be exposed to energy costs which are less favorable than those
available to its competitors. Such a situation could materially affect the
Company's performance.
Until completion of the Memphis Melt Shop, currently under construction, the
Company's Special Bar Quality ("SBQ") division will purchase substantially all
of its steel billets from third parties. The cost of these steel billets is the
largest element in the cost of the SBQ division's finished products. Thus, the
performance of this division, and in turn, the performance of the Company, can
be materially affected by changes in the price of the steel billets it buys from
third parties.
The Company currently is constructing a new Memphis Melt Shop to supply billets
to the Company's SBQ division and is participating in a joint venture to
construct a DRI facility in Louisiana. Delays or cost overruns in either of
these projects could materially affect the Company's future results. While both
projects are currently on schedule, these projects, like other construction
projects, can be affected or delayed by factors such as unusual weather, late
equipment deliveries, unforeseen conditions and untimely performance by
contractors. A late start-up of one or both of these projects could adversely
effect the Company's results.
The Company believes its labor relations are generally good. Almost the entire
work force is non-union and the Company has never suffered a strike or other
labor related work stoppage. If this situation changes, however, the Company's
performance could suffer material adverse effects.
The Company operates in an industry subject to numerous environmental
regulations. Changes in environmental regulations or in the interpretation or
manner of enforcement of environmental regulations could materially affect the
Company's performance. Further, the Company is planning and performing certain
environmental remediations. Unforeseen costs or undiscovered conditions
requiring unplanned expenditures in connection with such remediations could
materially affect the Company's results.
The Company's economic performance, like most manufacturing companies, is
vulnerable to a catastrophe that disables one or more of its manufacturing
facilities and to major equipment failure. Depending upon the nature of the
catastrophe or equipment failure, available insurance may or may not cover a
loss resulting from such a catastrophe or equipment failure and the loss
resulting from such a catastrophe or equipment failure could materially affect
the Company's earnings.
The Company anticipates that it will continue to borrow funds in the future.
Increases in interest rates or changes in the Company's ability to borrow funds
could materially affect the Company's performance.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in litigation relating to claims arising out of its
operations in the normal course of business. Some of these claims against the
Company are covered by insurance, although the insurance policies do include
deductible amounts. It is the opinion of management that any uninsured or
unindemnified liability resulting from existing litigation would not have a
material adverse effect on the Company's business or financial position. There
can be no assurance that insurance, including product liability insurance, will
be available in the future at reasonable rates.
By letter dated October 20, 1992, the Department of Toxic Substances Control of
the Environmental Protection Agency of the State of California ("DTSC")
submitted to Barbary Coast Steel Corporation ("BCSC"), a wholly owned subsidiary
of the Company, for its review and comment a proposed Consent Order relating to
BCSC's closed steel facility at Emeryville, California. BCSC and DTSC executed
the terms of a Consent Order on March 22, 1993. Pursuant to that Consent Order,
BCSC has completed an environmental assessment of the site and, on June 10,
1996, received DTSC approval of its proposal for the remediation of the
property. Remediation of the site in accordance with the approved plan is now
complete. The Company believes that the fair value of the property is in excess
of $13.0 million, based upon offers received by the Company for the purchase of
the property, which is in excess of the Company's carrying cost of the property
plus incurred and anticipated future costs of remediation.
On December 20, 1996, the U. S. District Court for the Northern District of
California approved the terms of the Settlement and Release Agreement (the
"Settlement Agreement") between BCSC and various other parties to the action
styled IMACC Corporation v. Warburton, et al., in which BCSC was both a
defendant and counter-claimant. The claims in this case were brought under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
with respect to property which is adjacent to BCSC's closed steel facility in
Emeryville, California on which an industrial drum and barrel reconditioning
facility operated from the 1940's until 1991. The Settlement Agreement provides,
among other things, that IMACC will pay to BCSC $250,000 in respect of BCSC's
counter-claims and that BCSC will then contribute $380,000 to an escrow account
to be established for the payment and reimbursement of costs incurred to
remediate the contaminated property immediately adjacent to the BCSC property.
As a result, the parties to the Settlement Agreement have dismissed their
respective claims and counter-claims against each other. BCSC has also entered
into a settlement and release agreement involving mutual releases and dismissal
of claims with other parties to the litigation. All other claims and prospective
claims in the litigation against BCSC are barred by the Court's order approving
the settlement with IMACC.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are required to be filed with this report:
10.1 $300 million Credit Agreement, dated as of March 17, 1997 by
and among Birmingham Steel Corporation, as Borrower, the
financial institutions party hereto and their assignees under
section 12.5.(d), as Lenders, PNC Bank, National Association
and The Bank of Nova Scotia, as Co-agents and Nationsbank,
N.A. (South), as Agent and as Arranger
The Company filed a current report on Form 8-K on December 12, 1996 to report
the completion of its acquisition of certain assets of Atlantic Steel
Industries, Inc. An amendment to Form 8-K was filed on January 15, 1997.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Birmingham Steel Corporation
May 14, 1997 \s\ John M. Casey
-------------------------------------
John M. Casey
Vice President,
Chief Financial Officer
May 14, 1997 \s\ Robert E. Powell
-------------------------------------
Robert E. Powell
Vice President & Controller
<PAGE>
Exhibit 10.1
$300,000,000
CREDIT AGREEMENT
Dated as of March 17, 1997
by and among
BIRMINGHAM STEEL CORPORATION,
as Borrower
THE FINANCIAL INSTITUTIONS PARTY HERETO
AND THEIR ASSIGNEES UNDER SECTION 12.5.(d),
as Lenders,
PNC BANK, NATIONAL ASSOCIATION, and
THE BANK OF NOVA SCOTIA,
as Co-Agents
and
NATIONSBANK, N.A. (SOUTH),
as Agent and as Arranger
<PAGE>
TABLE OF CONTENTS*
Article I. Definitions ......................................................1
Section 1.1. Definitions. .........................................1
Section 1.2. General. .............................................17
Article II. Credit Facility .................................................17
Section 2.1. Revolving Loans. .....................................17
Section 2.2. Bid Rate Loans. ......................................18
Section 2.3. Letters of Credit. ...................................21
Section 2.4. Swingline Loans. .....................................25
Section 2.5. Rates and Payment of Interest on Loans. ..............27
Section 2.6. Number of Interest Periods. ..........................28
Section 2.7. Repayment of Loans. ..................................28
Section 2.8. Prepayments. .........................................28
Section 2.9. Continuation. ........................................28
Section 2.10. Conversion. .........................................29
Section 2.11. Notes. ..............................................29
Section 2.12. Voluntary Reductions of the Commitment. .............30
Section 2.13. Expiration or Maturity Date of Letters of Credit Past
Termination Date.....................................30
Section 2.14. Amount Limitations. .................................30
Article III. Payments, Fees and Other General Provisions ....................31
Section 3.1. Payments. ............................................31
Section 3.2. Pro Rata Treatment. ..................................31
Section 3.3. Sharing of Payments, Etc. ............................32
Section 3.4. Several Obligations. .................................32
Section 3.5. Minimum Amounts. .....................................32
Section 3.6. Fees. ................................................33
Section 3.7. Computations. ........................................34
Section 3.8. Usury. ...............................................34
Section 3.9. Agreement Regarding Interest and Charges..............34
Section 3.10. Statements of Account. ..............................34
Section 3.11. Defaulting Lenders. .................................35
Section 3.12. Taxes. ..............................................36
Article IV. Yield Protection, Etc. ..........................................37
Section 4.1. Additional Costs; Capital Adequacy. ..................37
Section 4.2. Suspension of LIBOR Loans. ...........................38
Section 4.3. Illegality. ..........................................39
Section 4.4. Compensation. ........................................39
Section 4.5. Treatment of Affected Loans. .........................40
Section 4.6. Change of Lending Office. ............................40
Section 4.7. Assumptions Concerning Funding of LIBOR Loans. .......41
Article V. Conditions Precedent .............................................41
Section 5.1. Initial Conditions Precedent. ........................41
Section 5.2. Conditions Precedent to All Loans and Letters of
Credit................................................43
Article VI. Representations and Warranties ..................................43
Section 6.1. Representations and Warranties. ......................43
Section 6.2. Survival of Representations and Warranties, Etc. .....49
Article VII. Affirmative Covenants ..........................................49
Section 7.1. Preservation of Existence and Similar Matters. .......49
Section 7.2. Compliance with Applicable Law and Material Contracts.50
Section 7.3. Maintenance of Property. .............................50
Section 7.4. Insurance. ...........................................50
Section 7.5. Payment of Taxes and Claims. .........................50
Section 7.6. Visits and Inspections. ..............................51
Section 7.7. Use of Proceeds; Letters of Credit. ..................51
Section 7.8. Environmental Matters. ...............................51
Section 7.9. Books and Records. ...................................52
Section 7.10. Further Assurances. .................................52
Article VIII. Information ...................................................52
Section 8.1. Quarterly Financial Statements. ......................52
Section 8.2. Year-End Statements. .................................52
Section 8.3. Compliance Certificate; Accountant's Letter. .........53
Section 8.4. Copies of Other Reports. .............................53
Section 8.5. Notice of Litigation and Other Matters. ..............54
Section 8.6. ERISA. ...............................................54
Section 8.7. Other Information. ...................................55
Article IX. Negative Covenants ..............................................55
Section 9.1. Financial Covenants. .................................55
Section 9.2. Liens, Debt and Other Restrictions. ..................56
Section 9.3. Transactions with Affiliates. ........................61
Section 9.4. Line of Business. ....................................62
Article X. Default ..........................................................62
Section 10.1. Events of Default. ..................................62
Section 10.2. Remedies Upon Event of Default. .....................65
Section 10.3. Allocation of Proceeds. .............................66
Section 10.4. Performance by Agent. ...............................67
Section 10.5. Rights Cumulative. ..................................67
Section 10.6. Recision of Acceleration by Requisite Lenders. ......67
Article XI. The Agent .......................................................68
Section 11.1. Authorization and Action. ...........................68
Section 11.2. Agent's Reliance, Etc. ..............................68
Section 11.3. Notice of Defaults. .................................69
Section 11.4. NationsBank as Lender. ..............................69
Section 11.5. Lender Credit Decision, Etc. ........................69
Section 11.6. Indemnification of Agent. ...........................70
Section 11.7. Successor Agent. ....................................71
Section 11.8. Co-Agents. ..........................................71
Article XII. Miscellaneous ..................................................71
Section 12.1. Notices. ............................................71
Section 12.2. Expenses. ...........................................72
Section 12.3. Setoff. .............................................73
Section 12.4. Litigation; Jurisdiction; Other Matters; Waivers. ...73
Section 12.5. Successors and Assigns. .............................75
Section 12.6. Amendments. .........................................77
Section 12.7. Removal of Lenders. .................................78
Section 12.8. Designation of Subsidiaries. ........................78
Section 12.9. Nonliability of Agent and Lenders. ..................80
Section 12.10. Confidentiality. ...................................80
Section 12.11. Indemnification. ...................................80
Section 12.12. Termination; Survival. .............................82
Section 12.13. Severability of Provisions. ........................82
Section 12.14. GOVERNING LAW. .....................................83
Section 12.15. Counterparts. ......................................83
Section 12.16. No Fiduciary Relationship. .........................83
Section 12.17. Limitation of Liability. ...........................83
Section 12.18. Entire Agreement. ..................................83
Section 12.19. Construction. ......................................83
* This Table of Contents is not part of the Credit Agreement and is
provided as a convenience only.
SCHEDULE 6.1.(b) Ownership Structure
SCHEDULE 6.1.(d) Agreements Limiting Debt
SCHEDULE 6.1.(f) Title to Properties; Leases
SCHEDULE 6.1.(g) Debt
SCHEDULE 6.1.(i) Litigation
SCHEDULE 6.1.(m) Environmental Laws
SCHEDULE 7.7. Debt to Be Paid at Closing
EXHIBIT A Form of Assignment and Acceptance Agreement
EXHIBIT B Form of Notice of Borrowing
EXHIBIT C Form of Notice of Continuation
EXHIBIT D Form of Notice of Conversion
EXHIBIT E Form of Notice of Swingline Borrowing
EXHIBIT F Form of Swingline Note
EXHIBIT G-1 Form of Agented Bid Rate Quote Request
EXHIBIT G-2 Form of Bid Rate Quote Request Administered
by Borrower
EXHIBIT H Form of Bid Rate Quote
EXHIBIT I Form of Bid Rate Quote Acceptance
EXHIBIT J Form of Revolving Note
EXHIBIT K Form of Bid Rate Note
EXHIBIT L-1 Form of Opinion of Outside Counsel
EXHIBIT L-2 Form of Opinion of In-house Counsel
EXHIBIT M Form of Compliance Certificate
THIS CREDIT AGREEMENT dated as of
March 17, 1997 by and among BIRMINGHAM STEEL CORPORATION, a corporation
organized under the laws of the State of Delaware (the "Borrower"), each of the
financial institutions initially a signatory hereto together with their
assignees pursuant to Section 12.5.(d), each of PNC BANK, NATIONAL ASSOCIATION
and THE BANK OF NOVA SCOTIA, as Co-Agents, and NATIONSBANK, N.A. (SOUTH), as
Agent and as Arranger.
WHEREAS, the Agent and the Lenders desire to make available to the
Borrower a $300,000,000 revolving credit facility which includes a $15,000,000
letter of credit facility and a $30,000,000 swingline facility on the terms and
conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree as follows:
ARTICLE 1 DEFINITIONS
Section 1.1 Definitions.
In addition to terms defined elsewhere herein, the following terms
shall have the following meanings for the purposes of this Agreement:
"Acceptable Consideration" means, with respect to any Transfer of any
Property of the Borrower or a Restricted Subsidiary, cash consideration,
promissory notes or such other consideration (or any combination of the
foregoing) received by such Person in connection with such Transfer as is, in
each case, determined by the Board of Directors of the Borrower or such
Restricted Subsidiary, as the case may be, in its good faith opinion, to be in
the best interests of the Borrower or such Restricted Subsidiary.
"Additional Costs" has the meaning given that term in Section 4.1.
"Adjusted Eurodollar Rate" means, with respect to each Interest Period
for any LIBOR Loan, the rate obtained by dividing (a) LIBOR for such Interest
Period by (b) a percentage equal to 1 minus the stated maximum rate (stated as a
decimal) of all reserves, if any, required to be maintained against
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System (or against any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by an office of any Lender outside of the United
States of America to residents of the United States of America).
"Affiliate" means, at any time, a Person (other than a Restricted
Subsidiary) (a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the Borrower,
(b) that beneficially owns or holds 5% or more of any class of the Voting Stock
of the Borrower, or (c) 5% or more of the Voting Stock (or in the case of a
Person that is not a corporation, 5% or more of the equity interest) of which is
beneficially owned by the Borrower or a Subsidiary. For purposes of this
definition, "control" (including with correlative meanings, the terms
"controlled by" and "under common control with") means the possession directly
or indirectly of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agent" means NationsBank, N.A. (South), in its capacity as agent for
the Lenders under the terms of this Agreement, and any successor agent.
"Agented Bid Rate Quote Request" has the meaning given that term in
Section 2.2.(b).
"Agreement" means this Credit Agreement.
"Agreement Date" means the date as of which this Agreement is dated.
"Applicable Facility Fee" means, except as set forth below in this
definition, (a) from the Effective Date through the date four days following the
date of receipt by the Agent of a Compliance Certificate in respect of the
fiscal period of the Borrower and its Subsidiaries ending on March 31, 1997, the
percent per annum provided for in level 3 of the following table and (b)
thereafter for each period beginning on the date five days following the date of
receipt by the Agent of a Compliance Certificate in respect of any quarterly
fiscal period of the Borrower and its Subsidiaries ending after March 31, 1997
and ending on the date four days following the date of receipt by the Agent of a
Compliance Certificate in respect of a subsequent fiscal period, that percent
per annum set forth below opposite the Debt to Capitalization Ratio applicable
to the fiscal period of the Borrower and its Subsidiaries then ended as
reflected in the applicable Compliance Certificate:
- ------------------------------------------------------------------------------
Level Debt to Capitalization Ratio Applicable Facility Fee
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
1 Less than or equal to 0.60 to 1.00
but greater than 0.55 to 1.00 0.200%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
2 Less than or equal to 0.55 to 1.00
but greater than 0.50 to 1.00 0.175%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
3 Less than or equal to 0.50 to 1.00
but greater than 0.40 to 1.00 0.150%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
4 Less than or equal to 0.40 to 1.00
but greater than 0.30 to 1.00 0.125%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
5 Less than or equal to 0.30 to 1.00 0.100%
- ------------------------------------------------------------------------------
Notwithstanding the above, if the Borrower shall fail to deliver any such
Compliance Certificate within the time period required by Section 8.3., then the
Applicable Facility Fee shall be the percent per annum provided for in level 1
above until the appropriate Compliance Certificate is so delivered.
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and all
orders and decrees of all courts, tribunals and arbitrators.
"Applicable Margin" means, except as set forth below in this
definition, (a) from the Effective Date through the date four days following the
date of receipt by the Agent of a Compliance Certificate in respect of the
fiscal period of the Borrower and its Subsidiaries ending on March 31, 1997, the
percent per annum provided for in level 3 of the following table and (b)
thereafter for each period beginning on the date five days following the date of
receipt by the Agent of a Compliance Certificate in respect of any quarterly
fiscal period of the Borrower and its Subsidiaries ending after March 31, 1997
and ending on the date four days following the date of receipt by the Agent of a
Compliance Certificate in respect of a subsequent fiscal period, that percent
per annum set forth below opposite the Debt to Capitalization Ratio applicable
to the fiscal period of the Borrower and its Subsidiaries then ended as
reflected in the applicable Compliance Certificate:
- ------------------------------------------------------------------------------
Level Debt to Capitalization Ratio Applicable Margin
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
1 Less than or equal to 0.60 to 1.00
but greater than 0.55 to 1.00 0.500%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
2 Less than or equal to 0.55 to 1.00
but greater than 0.50 to 1.00 0.400%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
3 Less than or equal to 0.50 to 1.00
but greater than 0.40 to 1.00 0.350%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
4 Less than or equal to 0.40 to 1.00
but greater than 0.30 to 1.00 0.275%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
5 Less than or equal to 0.30 to 1.00 0.200%
- ------------------------------------------------------------------------------
Notwithstanding the above, if the Borrower shall fail to deliver any such
Compliance Certificate within the time period required by Section 8.3., then the
Applicable Margin shall be the percent per annum provided for in level 1 above
until the appropriate Compliance Certificate is so delivered.
"Assignee" has the meaning given that term in Section 12.5.(d).
"Assignment and Acceptance Agreement" means an Assignment and
Acceptance Agreement among a Lender, an Assignee and the Agent, substantially in
the form of Exhibit A.
"Base Rate" means the per annum rate of interest equal to the greater
of (a) the Prime Rate or (b) the Federal Funds Rate plus one-half of one percent
(0.5%). Any change in the Base Rate resulting from a change in the Prime Rate or
the Federal Funds Rate shall become effective as of 12:01 a.m. E.S.T. of the
Business Day on which each such change occurs. The Base Rate is a reference rate
used by the Agent in determining interest rates on certain loans and is not
intended to be the lowest rate of interest charged on any extension of credit to
any debtor.
"Base Rate Loan" means a Loan bearing interest at a rate based on the
Base Rate.
"Bid Rate" has the meaning given that term in Section 2.2.(c)(ii)(C).
"Bid Rate Borrowing" has the meaning given that term in Section 2.2.(b)
"Bid Rate Loan" means a loan made under Section 2.2.(b).
"Bid Rate Notes" has the meaning given that term in Section 2.11.(b).
"Bid Rate Quote" means an offer in accordance with Section 2.2.(c) by a
Lender to make a Bid Rate Loan with one single specified interest rate.
"Bid Rate Quote Request" has the meaning given that term in Section
2.2.(b).
"Board of Directors" means, at any time, the board of directors of the
Borrower or the board of directors (other group of individuals responsible for
performing similar functions, in the case of a Person not a corporation) of a
Restricted Subsidiary, as applicable, or any committee thereof that, in the
instance, shall have the lawful power to exercise the power and authority of
such board of directors or other group.
"Borrower" has the meaning set forth in the introductory paragraph
hereof and shall include the Borrower's successors and assigns.
"Business Day" means (a) any day other than a Saturday, Sunday or other
day on which banks in Atlanta, Georgia or Charlotte, North Carolina are
authorized or required to close and (b) with reference to a LIBOR Loan, any such
day that is also a day on which dealings in Dollar deposits are carried out in
the London interbank market.
"Capital Expenditures" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets which
are not, in accordance with GAAP, treated as expense items for such Person in
the year made or incurred or as a prepaid expense applicable to a future year or
years, and shall include all Capitalized Lease obligations.
"Capitalized Lease" means, at any time, a lease with respect to which,
under GAAP, the lessee is or will be required to recognize the acquisition of an
asset and the incurrence of a liability at such time.
"Commitment" means, as to each Lender, such Lender's obligation to make
Revolving Loans pursuant to Section 2.1. and to issue (in the case of the Agent)
or participate in (in the case of the other Lenders) Letters of Credit pursuant
to Section 2.3.(a) and 2.3.(i) respectively, in an amount up to, but not
exceeding, (but in the case of the Agent excluding the aggregate amount of
participations in the Letters of Credit held by other Lenders) the amount set
forth for such Lender on its signature page hereto as such Lender's "Initial
Commitment Amount" or as set forth in the applicable Assignment and Acceptance
Agreement, as the same may be reduced from time to time pursuant to Section
2.12. or as appropriate to reflect any assignments to or by such Lender effected
in accordance with Section 12.5.
"Commitment Percentage" means, as to each Lender, the ratio, expressed
as a percentage, of (a) the amount of such Lender's Commitment to (b) the sum of
(i) the aggregate amount of the Commitments of all Lenders hereunder; provided,
however, that if at the time of determination the Commitments have terminated or
been reduced to zero, the "Commitment Percentage" of each Lender shall be the
Commitment Percentage of such Lender in effect immediately prior to such
termination or reduction.
"Compliance Certificate" has the meaning given such term in Section 8.3
"Consolidated Assets" means the total consolidated assets of the
Borrower and its Restricted Subsidiaries.
"Consolidated EBIT" means, for any period, the sum of (a) Consolidated
Net Income for such period, plus (b) the aggregate amount of (i) taxes imposed
on, or measured by, income or excess profits, and (ii) Consolidated Interest
Expense (to the extent, and only to the extent, that any such amount in clauses
(i) or (ii) was deducted in the computation of Consolidated Net Income for such
period), in each case accrued for such period by the Borrower and the Restricted
Subsidiaries, determined on a consolidated basis for such Persons.
"Consolidated Interest Expense" means, for any period, all interest
charges for such period accrued on or with respect to all Debt of the Borrower
and its Restricted Subsidiaries (including without limitation, amortization of
debt discount and expense and imputed interest on Capitalized Lease
obligations).
"Consolidated Net Income" means, with respect to the Borrower and its
Restricted Subsidiaries for any period of computation thereof, the net income
(or loss) of the Borrower and its Restricted Subsidiaries on a consolidated
basis for such period; provided, however, that the following shall be excluded
when determining Consolidated Net Income: (a) any item of gain or loss resulting
from sale, conversion or other disposition of assets other than in the ordinary
course of business; (b) net gains or losses on the acquisition, retirement, sale
or other disposition of capital stock and other securities of the Borrower and
its Restricted Subsidiaries; (c) the income (or loss) for such fiscal period of
any Person prior to the date such Person becomes a Restricted Subsidiary of the
Borrower or is merged into or consolidated with the Borrower or any of its
Restricted Subsidiaries, or such Person's assets are acquired by the Borrower or
any of its Restricted Subsidiaries; (d) any write-up of any asset; (e) any other
net gains or losses of an extraordinary nature as determined in accordance with
GAAP; (f) any earnings attributable to the amortization of negative goodwill;
and (g) that portion of net earnings of any Restricted Subsidiary that is
unavailable for payment as dividends to the Borrower or another Restricted
Subsidiary as a result of a legal or contractual prohibition, unless such
portion of such net earnings is legally available for either: (x) reimbursement
to the Borrower or another Restricted Subsidiary for advances, loans or
allocated expenses, or (y) advances or loans to the Borrower or another
Restricted Subsidiary.
"Consolidated Net Worth" means the Borrower's stockholder's equity
which would appear as such on a consolidated balance sheet of the Borrower and
its Restricted Subsidiaries prepared in accordance with GAAP.
"Consolidated Tangible Net Worth" means (a) Consolidated Net Worth less
(b) all intangible items reflected therein, including all goodwill, all
intangible plant expansion costs, all unamortized debt discount and expense,
unamortized research and development expense, unamortized deferred charges,
patents, trademarks, service marks, trade names, copyrights, unamortized excess
cost of investment in Subsidiaries over equity at dates of acquisition, and all
similar items which should properly be treated as intangibles in accordance with
GAAP.
"Continue", "Continuation" and "Continued" each refers to the
continuation of a LIBOR Loan from one Interest Period to another Interest Period
pursuant to Section 2.9.
"Convert", "Conversion" and "Converted" each refers to the conversion
of a Base Rate Loan into a LIBOR Loan or the conversion of a LIBOR Loan into a
Base Rate Loan, in either case pursuant to Section 2.10.
"Credit Event" means any of the following: (a) the making (or deemed
making) of any Loan, (b) the Conversion of a Loan and (c) the issuance of a
Letter of Credit.
"Debt" means, with respect to a Person and at the time of determination
thereof, all of the following (without duplication): (a) obligations of such
Person in respect of money borrowed; (b) obligations of such Person (other than
trade debt incurred in the ordinary course of business), (i) represented by
notes payable, or drafts accepted, in each case representing extensions of
credit, (ii) evidenced by bonds, debentures, notes or similar instruments, or
(iii) constituting purchase money indebtedness, conditional sales contracts,
title retention debt instruments or other similar instruments, upon which
interest charges are customarily paid or that are issued or assumed as full or
partial payment for property; (c) obligations of such Person in respect of
mandatorily redeemable Securities issued by such Person; (d) Capitalized Lease
obligations of such Person; (e) all reimbursement obligations of such Person
under any letters of credit or acceptances (whether or not the same have been
presented for payment); and (f) all Debt of other Persons which (i) such Person
has Guaranteed or (ii) are secured by a Lien on any property of such Person
(whether or not such Person has assumed liability with respect to such Debt).
"Debt to Capitalization Ratio" means, as of the date of determination
thereof, the ratio of (a) all Debt of the Borrower and its Restricted
Subsidiaries as determined on a consolidated basis to (b) the sum of (i) all
Debt of the Borrower and its Restricted Subsidiaries as determined on a
consolidated basis plus (ii) the Borrower's Consolidated Net Worth.
"Default" means any of the events specified in Section 10.1., whether
or not there has been satisfied any requirement for the giving of notice, the
lapse of time, or both.
"Defaulting Lender" has the meaning set forth in Section 3.11.
"Dollars" or "$" means the lawful currency of the United States of
America.
"Effective Date" means the later of: (a) the Agreement Date; and (b)
the date on which all of the conditions precedent set forth in Section 5.1.
shall have been fulfilled or waived in writing by the Requisite Lenders.
"E.S.T." means Charlotte, North Carolina time.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Borrower, any of its Subsidiaries or any of its other ERISA Affiliates or is
assumed by the Borrower, any of its Subsidiaries or any of its other ERISA
Affiliates in connection with any acquisition or other business combination or
(b) has at any time been maintained for the employees of the Borrower, any of
its Subsidiaries or any other current or former ERISA Affiliate.
"Environmental Laws" means any Applicable Law relating to environmental
protection or the manufacture, storage, disposal or clean-up of Hazardous
Materials including, without limitation, the following: Clean Air Act, 42 U.S.C.
S 7401 et seq; Federal Water Pollution Control Act, 33 U.S.C. S 1251 et seq.;
Solid Waste Disposal Act, 42 U.S.C. ss. 6901 et seq.; Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq.; National Environmental Policy Act, 42 U.S.C. ss. 4321 et seq.; regulations
of the Environmental Protection Agency and any applicable rule of common law and
any judicial interpretation thereof relating primarily to the environment or
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
in effect from time to time.
"ERISA Affiliate" means any entity required at any relevant time to be
aggregated with the Borrower or any Subsidiary under Sections 414(b) or (c) of
the Internal Revenue Code. In addition, for purposes of any provision of this
Agreement that relates to Section 412(n) of the Internal Revenue Code, the term
ERISA Affiliate shall mean any entity aggregated with the Borrower or any
Subsidiary under Sections 414(b), (c), (m) or (o) of the Internal Revenue Code.
"Event of Default" means any of the events specified in Section 10.1.,
provided that any requirement for notice or lapse of time or any other condition
has been satisfied.
"Excluded Transfers" has the meaning given such term in Section 9.2.
(g)(ii)(3)(A).
"Fair Market Value" means, at any time, with respect to any Property,
the sale value of such Property that would be realized in an arm's-length sale
at such time between an informed and willing buyer, and an informed and willing
seller, under no compulsion to buy or sell, respectively.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward to the nearest 1/100th of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day,
provided that (a) if such day is not a Business Day, the Federal Funds Effective
Rate for such day shall be such rate on such transactions on the next preceding
Business Day, and (b) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Effective Rate for such day shall be the average
rate quoted to the Agent by federal funds dealers selected by the Agent on such
day on such transaction as determined by the Agent.
"Fees" means the fees and commissions provided for or referred to in
Section 3.6. and any other fees payable by the Borrower hereunder or under any
other Loan Document.
"Four-Quarter Period" means a period of four full consecutive fiscal
quarters of the Borrower and its Subsidiaries, taken together as one accounting
period, and unless set forth herein to the contrary, shall mean the four full
consecutive fiscal quarters of the Borrower and its Subsidiaries ending on (or
most recently ending before) the date of any computation of any given financial
ratio or covenant contained herein.
"GAAP" means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board and in such
statements, opinions and pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United States.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity (including, without limitation, the
Federal Deposit Insurance Corporation, the Comptroller of the Currency or the
Federal Reserve Board, any central bank or any comparable authority) or any
arbitrator with authority to bind a party at law.
"Guaranty" means, with respect to any Person (for the purposes of this
definition, the "Guarantor") any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection)
of such Person guaranteeing any Debt of any other Person (the "Primary Obligor")
in any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by the
Guarantor: (a) to purchase such Debt or any Property or assets constituting
security therefor; (b) to advance or supply funds (i) for the purpose of payment
of such Debt, or (ii) to maintain working capital or other balance sheet
condition or any income statement condition of the Primary Obligor or otherwise
to advance or make available funds for the purchase or payment of such Debt; (c)
to lease Property or to purchase Securities or other Property or services
primarily for the purpose of assuring the owner of such Debt of the ability of
the Primary Obligor to make payment of the Debt; or (d) otherwise to assure the
owner of the Debt of the Primary Obligor against loss in respect thereof. For
purposes of computing the amount of any Guaranty, in connection with any
computation of Debt, it shall be assumed that the Debt that is the subject of
such Guaranty is, to the extent guaranteed under such Guaranty, a direct
obligation of the issuer of such Guaranty.
"Hazardous Materials" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Environmental Laws as "hazardous substances", "hazardous materials",
"hazardous wastes", "toxic substances" or any other formulation intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity or
"TLCP" toxicity, "EP toxicity"; (b) oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources; (c)
any flammable substances or explosives or any radioactive materials; and (d)
asbestos in any form or (e) electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million.
"Intellectual Property" has the meaning given that term in Section
6.1.(q).
"Interest Period" means:
(a) with respect to any LIBOR Loan, each period commencing on the date
such LIBOR Loan is made or the last day of the next preceding Interest Period
for such Loan and ending on the numerically corresponding day in the first,
second, third or sixth calendar month thereafter, as the Borrower may select in
a Notice of Borrowing, Notice of Continuation or Notice of Conversion, as the
case may be, except that each Interest Period that commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month;
and
(b) with respect to any Bid Rate Loan, the period commencing on the
date such Bid Rate Loan is made and ending on any Business Day not less than 7
and not more than 90 days thereafter, as the Borrower may select as provided in
Section 2.2.(b).
Notwithstanding the foregoing: (i) if any Interest Period would otherwise end
after the Termination Date, such Interest Period shall end on the Termination
Date; (ii) each Interest Period that would otherwise end on a day which is not a
Business Day shall end on the next succeeding Business Day (or, in the case of
an Interest Period for a LIBOR Loan, if such next succeeding Business Day falls
in the next succeeding calendar month, on the next preceding Business Day); and
(iii) notwithstanding the immediately preceding clause (i), no Interest Period
for any LIBOR Loan shall have a duration of less than one month and, if the
Interest Period for any LIBOR Loan would otherwise be a shorter period, such
Loan shall not be available hereunder for such period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Investment" means any investment, made in cash or by delivery of
Property, by the Borrower or any Restricted Subsidiary (x) in any Person,
whether by acquisition of stock, indebtedness or other obligation or Security,
or by loan, Guaranty, advance or capital contribution, or otherwise, or (y) in
any Property.
"L/C Commitment Amount" equals $15,000,000 (Fifteen Million Dollars).
"Lender" means each financial institution from time to time party
hereto as a "Lender", together with its respective successors and assigns.
"Lending Office" means, for each Lender and for each Type of Loan, the
office of such Lender specified as such on its signature page hereto or in the
applicable Assignment and Acceptance Agreement, or such other office of such
Lender as such Lender may notify the Agent in writing from time to time.
"Letter of Credit" has the meaning set forth in Section 2.3.(a).
"Letter of Credit Documents" means, with respect to any Letter of
Credit, collectively, any application therefor, any certificate or other
document presented in connection with a drawing under such Letter of Credit and
any other agreement, instrument or other document governing or providing for (a)
the rights and obligations of the parties concerned or at risk with respect to
such Letter of Credit or (b) any collateral security for any of such
obligations.
"Letter of Credit Liabilities" shall mean, without duplication, at any
time and in respect of any Letter of Credit, the sum of (a) the Stated Amount of
such Letter of Credit plus (b) the aggregate unpaid principal amount of all
Reimbursement Obligations of the Borrower at such time due and payable in
respect of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Lender (other than the Agent in its capacity as such) shall be
deemed to hold a Letter of Credit Liability in an amount equal to its
participation interest in the related Letter of Credit under Section 2.3.(i),
and the Agent shall be deemed to hold a Letter of Credit Liability in an amount
equal to its retained interest in the related Letter of Credit after giving
effect to the acquisition by the Lenders other than the Agent of their
participation interests under such Section.
"LIBOR" means, for any LIBOR Loan for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period. If for any
reason such rate is not available, the term "LIBOR Rate" shall mean, for any
LIBOR Loan for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"LIBOR Loans" means Loans bearing interest at a rate based on LIBOR.
"Lien" means any interest in Property constituting any pledge,
assignment, hypothecation, mortgage, security interest, deposit arrangement,
conditional sale or title retaining contract, sale and leaseback transaction,
effective financing statement filing, lessor's or lessee's interest under any
lease, subordination of any claim or right, or any other arrangement, express or
implied, under which such Property is transferred, sequestered or otherwise
identified for the purpose of subjecting the same to the payment of Debt or
performance of any other obligation in priority to the payment of general,
unsecured creditors. The term "Lien" includes, with respect to stock,
stockholder agreements, voting trust agreements, buyback agreements and all
similar arrangements, but excludes, with respect to any ownership interest in a
limited liability company or partnership, limited liability company agreements,
operating agreements, partnership agreements, voting trust agreements, buy-back
agreements and all similar arrangements. For the purposes hereof, the Borrower
and each Subsidiary is deemed to be the owner of any Property that it shall have
acquired or holds subject to a conditional sale agreement, Capitalized Lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person for security purposes, and such retention or
vesting is deemed a Lien.
"Loan" means a Revolving Loan, a Bid Rate Loan or a Swingline Loan.
"Loan Document" means this Agreement, each Note, each document,
instrument or agreement executed and delivered by the Borrower to or in favor of
the Agent in connection with or relating to any Letter of Credit and each other
document or instrument now or hereafter executed and delivered by the Borrower
to or in favor of the Agent or any Lender in connection with, pursuant to or
relating to this Agreement.
"Material Adverse Effect" means a materially adverse effect on (a) the
business, assets, liabilities, financial condition or results of operations of
the Borrower and its Restricted Subsidiaries taken as a whole, (b) the ability
of the Borrower to perform its obligations under any Loan Document to which it
is a party, (c) the validity or enforceability of any of the Loan Documents, or
(d) the timely payment of the principal of or interest on the Loans or other
amounts payable in connection therewith.
"Material Contract" means any contract or other arrangement (other than
Loan Documents), whether written or oral, to which the Borrower or any
Subsidiary is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto could reasonably be expected to have a
Material Adverse Effect.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower, any of its Subsidiaries or any other
ERISA Affiliate is making, or is accruing an obligation to make, contributions
or has made, or been obligated to make, contributions.
"NCMI" means NationsBanc Capital Markets, Inc., and its respective
successors and assigns.
"NationsBank" means NationsBank, N.A. (South), and its respective
successors and assigns.
"Note" means a Revolving Note, a Bid Rate Note or the Swingline Note.
"Notice of Borrowing" means a notice in the form of Exhibit B to be
delivered to the Agent pursuant to Section 2.1.(b) evidencing the Borrower's
request for a borrowing of Revolving Loans.
"Notice of Continuation" means a notice in the form of Exhibit C to be
delivered to the Agent pursuant to Section 2.9. evidencing the Borrower's
request for the Continuation of a LIBOR Loan.
"Notice of Conversion" means a notice in the form of Exhibit D to be
delivered to the Agent pursuant to Section 2.10. evidencing the Borrower's
request for the Conversion of a Loan from one Type to another Type.
"Notice of Swingline Borrowing" means a notice in the form of Exhibit E
to be delivered to the Swingline Lender pursuant to Section 2.4.(b) evidencing
the Borrower's request for a Swingline Loan.
"Obligations" means, individually and collectively: (a) the aggregate
principal balance of, and all accrued and unpaid interest on, all Loans; (b) all
Reimbursement Obligations and all other Letter of Credit Liabilities; and (c)
all other indebtedness, liabilities, obligations, covenants and duties of the
Borrower owing to the Agent, any Lender or NCMI of every kind, nature and
description, under or in respect of this Agreement or any of the other Loan
Documents, including, without limitation, all Fees and indemnification
obligations, whether direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any promissory note.
"Operating Income Contribution Percentage" means, in respect of any
Property of the Borrower or any Restricted Subsidiary that is the subject of a
Transfer or proposed Transfer, the percentage of Consolidated Net Income
contributed by such Property during the period of 12 consecutive fiscal months
of the Borrower most recently ended prior to the Transfer or proposed Transfer
of such Property; provided that such percentage so contributed may be determined
in good faith by the Borrower, and if the consideration received in connection
with such Transfer exceeds $10,000,000, such determination shall have been
supported by a certificate of the Chairman, the Vice Chairman, the President or
a Vice President of the Borrower detailing such determination and that such
certificate is delivered to the Agent and each of the Lenders within 30 days of
such Transfer.
"Participant" has the meaning given that term in Section 12.5.(c).
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.
"Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is
subject to the provisions of Title IV of ERISA or Section 412 of the Code and
which (a) is maintained for employees of the Borrower, any of its Subsidiaries
or any of its other ERISA Affiliates or is assumed by the Borrower, any of its
Subsidiaries or any of its other ERISA Affiliates in connection with any
acquisition or other business combination or (b) has at any time been maintained
for the employees of the Borrower, any of its Subsidiaries or any other current
or former ERISA Affiliate.
"Permitted Investments" means any of the following Investments: (a)
direct obligations of the United States of America or obligations guaranteed by
the United States of America maturing no later than 365 days from the date of
acquisition; (b) repurchase agreements or eurodollar deposits with or
certificates of deposit maturing no later than 365 days from the date of
acquisition and issued by banks having a combined capital and surplus of over
$250,000,000 and rated at least A- by Standard & Poor's Rating Group, a division
of McGraw-Hill, Inc. ("S&P") and at least A3 by Moody's Investor Service, Inc.
("Moody's"); (c) Investments in Restricted Subsidiaries or Persons that
contemporaneously with such Investment become Restricted Subsidiaries; (d)
Investment in commercial paper issued by corporations incorporated in the United
States of America or any state thereof and maturing in 270 days or less and
rated at least A-1 by S&P or P-1 by Moody's; (e) Investments in Property used in
the ordinary course of business of the Borrower and the Restricted Subsidiaries;
and (f) other Investments so long as after giving effect to such other
Investments the aggregate book value of all such other Investments of the
Borrower and the Restricted Subsidiaries at such time does not exceed 20% of
Consolidated Assets at such time.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Post-Default Rate" means, in respect of any principal of any Loan, any
Reimbursement Obligation or any other Obligation that is not paid when due
(whether at stated maturity, by acceleration, by optional or mandatory
prepayment or otherwise), a rate per annum during the period from and including
the due date to but excluding the date on which such amount is paid in full
equal to two percent (2.0%) plus the Base Rate as in effect from time to time;
provided that, if the amount so in default is the principal of a LIBOR Loan or a
Bid Rate Loan and the due date thereof is a day other than the last day of the
Interest Period therefor, the "Post-Default Rate" for such principal shall be,
for the period from and including such due date to but excluding the last day of
the Interest Period, two percent (2.0%) plus the interest rate for such Loan as
provided in Section 2.5.(a), and thereafter, the rate provided for above in this
definition.
"Prime Rate" means the rate of interest per annum announced publicly by
the Agent as its prime rate from time to time. The Prime Rate is not necessarily
the best or the lowest rate of interest offered by the Agent or any Lender.
"Principal Office" means the office of the Agent located at 600
Peachtree Street, N.E., 21st Floor, Atlanta, Georgia 30308, Attention: Corporate
Banking, Corporate Loan Support, or such other office of the Agent as the Agent
may designate from time to time.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
"Purchase Money Lien" means (a) any Lien held by any Person (whether or
not the seller of such Property) on tangible Property (or a group of related
items of Property the substantial portion of which are tangible) acquired or
constructed by the Borrower or any Subsidiary, which Lien secures all or a
portion of the related purchase price or construction costs of such Property,
provided that such Purchase Money Lien (i) encumbers only Property acquired or
constructed after the Agreement Date and acquired with the proceeds of the Debt
secured thereby, and (ii) such Lien is not thereafter extended to any other
Property and (b) any Lien existing on Property of any Person at the time it
becomes a Restricted Subsidiary, provided that (i) no such Lien shall extend to
or cover any Property other than the Property subject to such Lien at the time
of any such transaction, and (ii) such Lien was not created in contemplation of
any such transaction.
"Quarterly Date" means the last Business Day of March, June, September
and December in each year, the first of which shall be March 31, 1997.
"Register" has the meaning given that term in Section 12.5.(e).
"Regulatory Change" means, with respect to any Lender, any change
effective after the Agreement Date in Applicable Law (including without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) or the adoption or making after such date of any interpretation,
directive or request applying to a class of banks, including such Lender, of or
under any Applicable Law (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful) by any Governmental Authority
or monetary authority charged with the interpretation or administration thereof
or compliance by any Lender with any request or directive regarding capital
adequacy.
"Reimbursement Obligation" means the absolute, unconditional and
irrevocable obligation of the Borrower to reimburse the Agent for any drawing
honored by the Agent under a Letter of Credit.
"Reportable Event" has the meaning set forth in Section 4043(b) of
ERISA, but shall not include a Reportable Event as to which the provision for 30
days' notice to the PBGC is waived under applicable regulations.
"Requisite Lenders" means, as of any date, Lenders having more than 50%
of the aggregate amount of the Commitments, or, if the Commitments have been
terminated or reduced to zero, Lenders holding more than 50% of the principal
amount of the Loans and Letter of Credit Liabilities.
"Restricted Subsidiary" means, at any time, a Subsidiary, (a) organized
under the laws of the United States, Puerto Rico or Canada or a jurisdiction
thereof at such time, (b) that conducts substantially all of its business and
has substantially all of its Property within the United States, Puerto Rico and
Canada at such time, and (c) at least 80% (by number of votes) of each class of
Voting Stock of which and 100% of all preferred stock and other equity
Securities of which are legally and beneficially owned by the Borrower and its
Wholly-Owned Restricted Subsidiaries at such time.
"Restricted Subsidiary Stock" has the meaning given such term in
Section 9.2.(f).
"Revolving Loan" means a loan made by the Lender to the Borrower
pursuant to Section 2.1.(a).
"Revolving Note" has the meaning given that term in Section 2.11.(a).
"Securities Act" means the Securities Act of 1933, as amended from time
to time, together with all rules and regulations issued thereunder.
"Security" means a "security" as defined by Section 2(1) of the
Securities Act.
"Solvent" means, when used with respect to any Person, that (a) the
fair value and the fair salable value of its assets (excluding any Debt due from
any Affiliate of such Person) are each in excess of the fair valuation of its
total liabilities (including all contingent liabilities); and (b) such Person is
able to pay its debts or other obligations in the ordinary course as they mature
and (c) that the Person has capital not unreasonably small to carry on its
business and all business in which it proposes to be engaged.
"Stated Amount" means the amount available to be drawn by a beneficiary
under a Letter of Credit from time to time, as such amount may be increased or
reduced from time to time in accordance with the terms of such Letter of Credit.
"Subsidiary" means, at any time, a corporation, partnership, limited
liability company or other business entity of which the Borrower owns, directly
or indirectly, more than 50% (by number of votes) of each class of Voting Stock
at such time.
"Swingline Commitment" means the Swingline Lender's obligation to make
Swingline Loans pursuant to Section 2.4. in an amount up to, but not exceeding,
$30,000,000.
"Swingline Lender" means NationsBank, N.A. (South), together with its
respective successors and assigns.
"Swingline Loan" means a loan made by the Swingline Lender to the
Borrower pursuant to Section 2.4.(a).
"Swingline Note" means the promissory note of the Borrower payable to
the order of the Swingline Lender in a principal amount equal to the amount of
the Swingline Commitment as originally in effect and otherwise duly completed,
substantially in the form of Exhibit F.
"Taxes" has the meaning given that term in Section 3.12.
"Termination Date" means March 17, 2002.
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the notice
requirement has been waived by applicable regulation); or (b) the withdrawal of
the Borrower or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA
or was deemed such under Section 4068(f) of ERISA; or (c) the termination of a
Pension Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA; or (d) the institution of proceedings to terminate a Pension Plan by the
PBGC; or (e) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan; or (f) the partial or complete withdrawal of
the Borrower or any ERISA Affiliate from a Multiemployer Plan; or (g) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
ERISA; or (h) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or (i) any event or condition which results in the termination of
a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
"Transfer" or "To Transfer" have the meaning given such terms in
Section 9.2.(g)(ii).
"Type" with respect to any Loan, refers to whether such Loan is a LIBOR
Loan or Base Rate Loan.
"Unrestricted Subsidiary" means, at any time, any Subsidiary that has
been designated by the Borrower as an Unrestricted Subsidiary, provided that at
the time of such designation (a) the Subsidiary so designated neither owns,
directly or indirectly, any Debt of the Borrower or any Restricted Subsidiary or
any capital stock or other Securities of any Restricted Subsidiary, (b) no Debt
of such Subsidiary is Guaranteed by the Borrower or a Restricted Subsidiary, and
(c) no Default or Event of Default would occur as a result of such designation.
"Voting Stock" shall mean capital stock (or equivalent ownership
interest) of any class or classes of a corporation, partnership, limited
liability company or other business entity, the holders of which are ordinarily,
in the absence of contingencies, entitled to elect corporate directors, managers
or trustees (or Persons performing similar functions).
"Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted
Subsidiary 100% of all of the equity Securities (except directors' qualifying
shares) of which are owned by any one or more of the Borrower and the Borrower's
other wholly-owned Subsidiaries at such time.
Section 1 General.
Unless otherwise indicated, all accounting terms, ratios and
measurements shall be interpreted or determined in accordance with GAAP.
References in this Agreement to "Sections", "Articles", "Exhibits" and
"Schedules" are to sections, articles, exhibits and schedules herein and hereto
unless otherwise indicated. References in this Agreement to any document,
instrument or agreement (a) shall include all exhibits, schedules and other
attachments thereto, (b) shall include all documents, instruments or agreements
issued or executed in replacement thereof, to the extent permitted hereby and
(c) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, supplemented, restated or otherwise modified
from time to time to the extent permitted hereby and in effect at any given
time. Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. Unless explicitly set forth to the
contrary, a reference to "Subsidiary" means a Subsidiary of the Borrower or a
Subsidiary of such Subsidiary and a reference to an "Affiliate" means a
reference to an Affiliate of the Borrower. Titles and captions of Articles,
Sections, subsections and clauses in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement.
ARTICLE 2 CREDIT FACILITY
Section 2.1 Revolving Loans.
(a) Generally. Subject to the terms and conditions hereof, during the
period from the Effective Date to but excluding the Termination Date, each
Lender severally and not jointly agrees to make Revolving Loans to the Borrower
in an aggregate principal amount at any one time outstanding up to, but not
exceeding, the amount of such Lender's Commitment; provided, however, that in no
event shall the aggregate principal amount of all outstanding Revolving Loans,
together with the aggregate principal amount of all outstanding Swingline Loans,
the aggregate amount of all Letter of Credit Liabilities and the aggregate
principal amount of all outstanding Bid Rate Loans, exceed the aggregate amount
of the Commitments as in effect from time to time. Subject to the terms and
conditions of this Agreement, during the period from the Effective Date to but
excluding the Termination Date, the Borrower may borrow, repay and reborrow
Revolving Loans hereunder.
(b) Requesting Revolving Loans. The Borrower shall give the Agent
notice pursuant to a Notice of Borrowing or telephonic notice of each borrowing
of Revolving Loans. Each Notice of Borrowing shall be delivered to the Agent
before (a) 11:00 a.m. E.S.T. in the case of LIBOR Loans, on the date three
Business Days prior to the proposed date of such borrowing and (b) 12:00 noon
E.S.T. in the case of Base Rate Loans, on the proposed date of such borrowing.
Any such telephonic notice shall include all information to be specified in a
written Notice of Borrowing and shall be promptly confirmed in writing by the
Borrower pursuant to a Notice of Borrowing sent to the Agent by telecopy on the
same day of the giving of such telephonic notice. The Agent will transmit by
telecopy the Notice of Borrowing (or the information contained in such Notice of
Borrowing) to each Lender promptly upon receipt by the Agent. Each Notice of
Borrowing or telephonic notice of each borrowing shall be irrevocable once given
and binding on the Borrower.
(c) Disbursements of Revolving Loan Proceeds. No later than 2:30 p.m.
E.S.T. on the date specified in the Notice of Borrowing, each Lender will make
available for the account of its applicable Lending Office to the Agent at the
Principal Office, in immediately available funds, the proceeds of the Revolving
Loan to be made by such Lender. With respect to Revolving Loans to be made after
the Effective Date, unless the Agent shall have been notified by any Lender
prior to the specified date of borrowing that such Lender does not intend to
make available to the Agent the Revolving Loan to be made by such Lender on such
date, the Agent may assume that such Lender will make the proceeds of such
Revolving Loan available to the Agent on the date of the requested borrowing as
set forth in the Notice of Borrowing and the Agent may (but shall not be
obligated to), in reliance upon such assumption, make available to the Borrower
the amount of such Revolving Loan to be provided by such Lender. Subject to
satisfaction of the applicable conditions set forth in Article V. for such
borrowing, the Agent will make the proceeds of such borrowing available to the
Borrower no later than 3:00 p.m. E.S.T. on the date and at the account specified
by the Borrower in such Notice of Borrowing.
Section 2.2 Bid Rate Loans.
(a) Bid Rate Loans. In addition to borrowings of Revolving Loans, at
any time during the period from the Effective Date to but excluding the
Termination Date, the Borrower may, as set forth in this Section, request the
Lenders to make offers to make Bid Rate Loans to the Borrower in Dollars. The
Lenders may, but shall have no obligation to, make such offers and the Borrower
may, but shall have no obligation to, accept any such offers in the manner set
forth in this Section.
(b) Requests for Bid Rate Loans. When the Borrower wishes to request
from the Lenders offers to make Bid Rate Loans, it shall either (x) give the
Agent notice or (y) give all of the Lenders notice directly (each such notice a
"Bid Rate Quote Request") so as to be received no later than 11:00 a.m. E.S.T.
on the Business Day next preceding the date of borrowing proposed therein (or
such other time and date as the Borrower and the Agent, with the consent of the
Requisite Lenders, may agree). If the Borrower has elected to give a Bid Rate
Quote Request to the Agent only (an "Agented Bid Rate Quote Request"), the
Borrower shall indicate this in such Agented Bid Rate Quote Request. The Agent
shall deliver to each Lender a copy of each Agented Bid Rate Quote Request
promptly upon receipt thereof by the Agent. The Borrower may request offers to
make Bid Rate Loans for up to 3 different Interest Periods in each Bid Rate
Quote Request (for which purpose Interest Periods in different lettered clauses
of the definition of the term "Interest Period" shall be deemed to be different
Interest Periods even if they are coterminous); provided that the request for
each separate Interest Period shall be deemed to be a separate Bid Rate Quote
Request for a separate borrowing (a "Bid Rate Borrowing"). Each Agented Bid Rate
Quote Request shall be substantially in the form of Exhibit G-1 and each Bid
Rate Quote Request to be administered by the Borrower shall be substantially in
the form of Exhibit G-2, and in each case shall specify as to each Bid Rate
Borrowing:
(i) the proposed date of such borrowing, which shall be a
Business Day;
(ii) the aggregate amount of such Bid Rate Borrowing,
which shall not cause any of the limits specified in Section 2.14. to be
violated; and
(iii) the duration of the Interest Period applicable
thereto.
Except as otherwise provided in this subsection (b), no Agented Bid Rate Quote
Request shall be given within five Business Days (or such other number of days
as the Borrower and the Agent, with the consent of the Requisite Lenders, may
agree) of the giving of any other Agented Bid Rate Quote Request.
(c) Bid Rate Quotes.
(i) Each Lender may submit one or more Bid Rate Quotes, each
containing an offer to make a Bid Rate Loan in response to any Bid Rate
Quote Request; provided that, if the Borrower's request under Section
2.2.(b) specified more than one Interest Period, such Lender may make a
single submission containing one or more Bid Rate Quotes for each such
Interest Period. Each Bid Rate Quote (x) in response to an Agented Bid
Rate Quote Request must be submitted to the Agent and (y) in response
to any other Bid Rate Quote Request must be submitted directly to the
Borrower, in each case not later than 10:30 a.m. E.S.T. on the proposed
date of borrowing (or such other time and date as the Borrower and the
Agent, with the consent of the Requisite Lenders, may agree); provided
that the Lender then acting as Agent may submit a Bid Rate Quote in
response to an Agented Bid Rate Quote Request only if it notifies the
Borrower of the terms of the offer contained therein not later than
10:15 a.m. E.S.T. on the proposed date of such borrowing. Subject to
Articles V. and X., any Bid Rate Quote so made shall be irrevocable.
(ii) Each Bid Rate Quote shall be substantially in the
form of Exhibit H and shall specify:
(A) the proposed date of borrowing and the
Interest Period therefor;
(B) the principal amount of the Bid Rate Loan for
which each such offer is being made; provided that the
aggregate principal amount of all Bid Rate Loans for which a
Lender submits Bid Rate Quotes (x) may be greater or less than
the Commitment of such Lender but (y) shall not exceed the
principal amount of the Bid Rate Borrowing for a particular
Interest Period for which offers were requested;
(C) the rate of interest per annum (rounded
upwards, if necessary, to the nearest 1/10,000th of 1%) offered for each such
Bid Rate Loan (the "Bid Rate"); and
(D) the identity of the quoting Lender.
No Bid Rate Quote shall contain qualifying, conditional or similar
language or propose terms other than or in addition to those set forth
in the applicable Bid Rate Quote Request and, in particular, no Bid
Rate Quote may be conditioned upon acceptance by the Borrower of all
(or some specified minimum) of the principal amount of the Bid Rate
Loan for which such Bid Rate Quote is being made.
(d) Notification by Agent. In the case of Bid Rate Quotes given in
response to an Agented Bid Rate Quote Request, the Agent shall, as promptly as
practicable after such Bid Rate Quotes are submitted (but in any event not later
than 11:00 a.m. E.S.T. on the proposed date of borrowing), notify the Borrower
of the terms (i) of any such Bid Rate Quote submitted by a Lender that is in
accordance with Section 2.2.(c) and (ii) of any such Bid Rate Quote that amends,
modifies or is otherwise inconsistent with a previous Bid Rate Quote submitted
by such Lender with respect to the same Bid Rate Quote Request. Any such
subsequent Bid Rate Quote shall be disregarded by the Agent unless such
subsequent Bid Rate Quote is submitted solely to correct a manifest error in
such former Bid Rate Quote. The Agent's notice to the Borrower shall specify (A)
the aggregate principal amount of the Bid Rate Borrowing for which offers have
been received and (B) the principal amounts and Bid Rates so offered by each
Lender (identifying the Lender that made each Bid Rate Quote).
(e) Acceptance by Borrower.
(i) Not later than 12:00 noon E.S.T. on the proposed date of
borrowing (or such other time and date as the Borrower and the Agent,
with the consent of the Requisite Lenders, may agree), the Borrower
shall notify (x) the Agent (and the Agent shall then promptly notify
each affected Lender) of the Borrower's acceptance or nonacceptance of
the Bid Rate Quotes so notified to the Borrower pursuant to Section
2.2.(d) or (y) all of the affected Lenders and the Agent of the
Borrower's acceptance or nonacceptance of the Bid Rate Quotes so
notified to the Borrower pursuant to Section 2.2.(c)(i)(x). Such notice
by the Borrower shall be in the form of Exhibit I. In the case of
acceptance, such notice shall specify the aggregate principal amount of
offers for each Interest Period that are accepted. The failure of the
Borrower to give such notice by such time shall constitute
nonacceptance. The Borrower may accept any Bid Rate Quote in whole or
in part; provided that:
(A) the aggregate principal amount of each Bid
Rate Borrowing may not exceed the applicable amount set forth in the related
Bid Rate Quote Request;
(B) the aggregate principal amount of each Bid
Rate Borrowing shall comply with the provisions of Section 3.5. but shall not
cause the limits specified in Section 2.14. to be violated;
(C) acceptance of offers may be made only in
ascending order of Bid Rates in each case beginning with the lowest rate so
offered; and
(D) the Borrower may not accept any offer that
fails to comply with Section 2.2.(c) or otherwise fails to comply with the
requirements of this Agreement).
(ii) If offers are made by two or more Lenders with the same
Bid Rates for a greater aggregate principal amount than the amount in
respect of which offers are accepted for the related Interest Period,
the principal amount of Bid Rate Loans in respect of which such offers
are accepted shall be allocated among such Lenders in proportion to the
aggregate principal amount of such offers. Determinations by the Agent
of the amounts of Bid Rate Loans shall be conclusive in the absence of
manifest error.
(f) Obligation to Make Bid Rate Loans. Any Lender whose offer to
make any Bid Rate Loan has been accepted shall, not later than 2:30 p.m. E.S.T.
on the date specified for the making of such Loan, make the amount of such Loan
available to the Agent at its Principal Office in immediately available funds,
for account of the Borrower. The amount so received by the Agent shall, subject
to the terms and conditions of this Agreement, be made available to the Borrower
no later than 3:00 p.m. E.S.T. on such date by depositing
the same, in immediately available funds, in an account of the Borrower
designated by the Borrower.
(g) No Effect on Commitment. Except for the purpose and to the
extent expressly stated in Section 2.12., the amount of any Bid Rate Loan made
by any Lender shall not constitute a utilization of such Lender's Commitment.
Section 2.3 Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions of this
Agreement, the Agent, on behalf of the Lenders, agrees to issue for the account
of the Borrower during the period from and including the Effective Date to, but
excluding, the date 90 days prior to the Termination Date one or more stand-by
letters of credit (each a "Letter of Credit") up to a maximum aggregate Stated
Amount at any one time outstanding not to exceed the L/C Commitment Amount.
(b) Terms of Letters of Credit. At the time of issuance, the amount,
form, terms and conditions of each Letter of Credit, and of any drafts or
acceptances thereunder, shall be subject to approval by the Agent and the
Borrower. Notwithstanding the foregoing, in no event may the expiration date of
any Letter of Credit extend beyond the date 5 Business Days prior to the
Termination Date, and any Letter of Credit containing an automatic renewal
provision shall also contain a provision pursuant to which, notwithstanding any
other provisions thereof, it shall have a final expiration date no later than
the date 5 Business Days prior to the Termination Date.
(c) Requests for Issuance of Letters of Credit. The Borrower shall give
the Agent written notice (or telephonic notice promptly confirmed in writing) at
least 3 Business Days prior to the requested date of issuance of a Letter of
Credit, such notice to describe in reasonable detail the proposed terms of such
Letter of Credit and the nature of the transactions or obligations proposed to
be supported by such Letter of Credit, and in any event shall set forth with
respect to such Letter of Credit (i) the proposed initial Stated Amount, (ii)
the beneficiary or beneficiaries, and (iii) the proposed expiration date. The
Borrower shall also execute and deliver such customary letter of credit
application forms as requested from time to time by the Agent. Provided the
Borrower has given the notice prescribed by Section 2.3.(a) and subject to
Section 2.14. and the other terms and conditions of this Agreement, including
the satisfaction of any applicable conditions precedent set forth in Article V.,
the Agent shall issue the requested Letter of Credit on the requested date of
issuance for the benefit of the stipulated beneficiary. Upon the written request
of the Borrower, the Agent shall deliver to the Borrower a copy of (x) any
Letter of Credit proposed to be issued hereunder prior to the issuance thereof
and (y) each issued Letter of Credit within a reasonable time after the date of
issuance thereof. To the extent any term of a Letter of Credit Document is
inconsistent with a term of any Loan Document, the term of such Loan Document
shall control.
(d) Reimbursement Obligations. Upon receipt by the Agent from the
beneficiary of a Letter of Credit of any demand for payment under such Letter of
Credit, the Agent shall promptly notify the Borrower of the amount to be paid by
the Agent as a result of such demand and the date on which payment is to be made
by the Agent to such beneficiary in respect of such demand. The Borrower hereby
unconditionally and irrevocably agrees to pay and reimburse the Agent for the
amount of each demand for payment under such Letter of Credit at or prior to the
date on which payment is to be made by the Agent to the beneficiary thereunder,
without presentment, demand, protest or other formalities of any kind. Upon
receipt by the Agent of any payment in respect of any Reimbursement Obligation,
the Agent shall promptly pay to each Lender that has acquired a participation
therein under the second sentence of Section 2.3.(i) such Lender's Commitment
Percentage of such payment.
(e) Manner of Reimbursement. Upon its receipt of a notice referred to
in the immediately preceding subsection (d), the Borrower shall advise the Agent
whether or not the Borrower intends to borrow hereunder to finance its
obligation to reimburse the Agent for the amount of the related demand for
payment and, if it does, the Borrower shall submit a timely Notice of Borrowing
as provided in Section 2.1.(b) in the case of the borrowing of Revolving Loans,
a timely Bid Rate Quote Request as provided in Section 2.2.(b) in the case of
the borrowing of Bid Rate Loans or a timely request for a Swingline Loan as
provided in Section 2.4.(a) in the case of the borrowing of a Swingline Loan. If
the Borrower fails to so advise the Agent, or if the Borrower fails to reimburse
the Agent for a demand for payment under a Letter of Credit by the date of such
payment, then (i) if the applicable conditions contained in Article V. would
permit the making of Revolving Loans, the Borrower shall be deemed to have
requested a borrowing of Revolving Loans (which shall be Base Rate Loans) in an
amount equal to the unpaid Reimbursement Obligation and the Agent shall give
each Lender prompt notice of the amount of the Revolving Loan to be made by such
Lender, the proceeds of which such Lender shall make available to the Agent not
later than 3:00 p.m. E.S.T. and (ii) if such conditions would not permit the
making of Revolving Loans, the provisions of subsection (j) of this Section
shall apply.
(f) Effect of Letters of Credit on Commitments. Upon the issuance by
the Agent of any Letter of Credit and until such Letter of Credit shall have
expired or been terminated, the Commitment of each Lender shall be deemed to be
utilized for all purposes of this Agreement in an amount equal to such Lender's
Commitment Percentage of the Stated Amount of such Letter of Credit plus any
related Reimbursement Obligations then outstanding.
(g) Agent's Duties Regarding Letters of Credit; Unconditional Nature of
Reimbursement Obligation. In examining documents presented in connection with
drawings under Letters of Credit and making payments under such Letters of
Credit against such documents, the Agent shall use the same standard of care as
it uses in connection with examining documents presented in connection with
drawings under letters of credit in which it has not sold participations and
making payments under such letters of credit. The Borrower assumes all risks of
the acts and omissions of, or misuse of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, neither the Agent nor any of the Lenders shall be responsible for
(i) the form, validity, sufficiency, accuracy, genuineness or legal effects of
any document submitted by any party in connection with the application for and
issuance of or any drawing honored under any Letter of Credit even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (ii) 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; (iii) failure
of the beneficiary of any Letter of Credit to comply fully with conditions
required in order to draw upon such Letter of Credit; (iv) errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telex, telecopy or otherwise, whether or not they be in cipher; (v)
errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit, or of the proceeds thereof; (vii) the misapplication
by the beneficiary of any such Letter of Credit, or the proceeds of any drawing
under such Letter of Credit; or (viii) any consequences arising from causes
beyond the control of the Agent or the Lenders. None of the above shall affect,
impair or prevent the vesting of any of the Agent's rights or powers hereunder.
Any action taken or omitted to be taken by the Agent under or in connection with
any Letter of Credit, if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create against the Agent any liability to the
Borrower or any Lender. In this connection, the obligation of the Borrower to
reimburse the Agent for any drawing made under any Letter of Credit shall be
absolute, unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Agreement under all circumstances whatsoever, including
without limitation, the following circumstances: (A) any lack of validity or
enforceability of any Letter of Credit Document or any term or provisions
therein; (B) any amendment or waiver of or any consent to departure from all or
any of the Letter of Credit Documents; (C) the existence of any claim, setoff,
defense or other right which the Borrower may have at any time against the
Agent, any Lender, any beneficiary of a Letter of Credit or any other Person,
whether in connection with this Agreement, the transactions contemplated hereby
or in the Letter of Credit Documents or any unrelated transaction; (D) any
breach of contract or dispute between the Borrower, the Agent, any Lender or any
other Person; (E) any demand, statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein or made in connection therewith being
untrue or inaccurate in any respect whatsoever; (F) any non-application or
misapplication by the beneficiary of a Letter of Credit of the proceeds of any
drawing under such Letter of Credit; (G) payment by the Agent under the Letter
of Credit against presentation of a draft or certificate which does not strictly
comply with the terms of the Letter of Credit; and (H) any other act, omission
to act, delay or circumstance whatsoever that might, but for the provisions of
this Section, constitute a legal or equitable defense to or discharge of the
Borrower's Reimbursement Obligations; provided, however, nothing contained in
this sentence shall abrogate or be deemed a waiver of any right which the
Borrower may have to recover damages from the Agent.
(h) Amendments, Etc. The issuance by the Agent of any amendment,
supplement or other modification to any Letter of Credit shall be subject to the
same conditions applicable under this Agreement to the issuance of new Letters
of Credit (including, without limitation, that the request therefor be made
through the Agent), and no such amendment, supplement or other modification
shall be issued unless either (i) the respective Letter of Credit affected
thereby would have complied with such conditions had it originally been issued
hereunder in such amended, supplemented or modified form or (ii) the Requisite
Lenders shall have consented thereto.
(i) Lenders' Participation in Letters of Credit. Immediately upon the
issuance by the Agent of any Letter of Credit each Lender shall be deemed to
have irrevocably and unconditionally purchased and received from the Agent,
without recourse or warranty, an undivided interest and participation to the
extent of such Lender's Commitment Percentage of the liability of the Agent with
respect to such Letter of Credit and each Lender thereby shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as surety,
and shall be unconditionally obligated to the Agent to pay and discharge when
due, such Lender's Commitment Percentage of the Agent's liability under such
Letter of Credit. In addition, upon the making of each payment by a Lender to
the Agent in respect of any Letter of Credit pursuant to the immediately
following subsection (j), such Lender shall, automatically and without any
further action on the part of the Agent or such Lender, acquire (i) a
participation in an amount equal to such payment in the Reimbursement Obligation
owing to the Agent by the Borrower in respect of such Letter of Credit and (ii)
a participation in a percentage equal to such Lender's Commitment Percentage in
any interest or other amounts payable by the Borrower in respect of such
Reimbursement Obligation (other than the Fees payable to the Agent pursuant to
the second and last sentences of Section 3.6.(b)).
(j) Payment Obligation of Lenders. Each Lender severally agrees to pay
to the Agent on demand in immediately available funds in Dollars the amount of
such Lender's Commitment Percentage of each drawing paid by the Agent under each
Letter of Credit to the extent such amount is not reimbursed by the Borrower
pursuant to Section 2.3.(d) and not otherwise available from funds deposited in
the cash collateral account referred to in Section 2.13. Each such Lender's
obligation to make such payments to the Agent under this subsection, and the
Agent's right to receive the same, shall be absolute, irrevocable and
unconditional and shall not be affected in any way by any circumstance
whatsoever, including without limitation, (i) the failure of any other Lender to
make its payment under this subsection, (ii) the financial condition of the
Borrower or any of its Subsidiaries, (iii) the existence of any Default or Event
of Default, including any Event of Default described in Section 10.1.(e) or
10.1.(f) or (iv) the termination of the Commitments. Each such payment to the
Agent shall be made without any offset, abatement, withholding or deduction
whatsoever.
(k) Information to Lenders. Promptly following the end of each calendar
quarter in which any Letters of Credit are outstanding, the Agent shall deliver
to each Lender and the Borrower a notice describing the aggregate amount of all
Letters of Credit outstanding at the end of such quarter. Upon the request of
any Lender from time to time, the Agent shall deliver any other information
reasonably requested by such Lender with respect to each Letter of Credit then
outstanding. Other than as set forth in this subsection, the Agent shall have no
duty to notify the Lenders regarding the issuance or other matters regarding
Letters of Credit issued hereunder. The failure of the Agent to perform its
requirements under this subsection shall not relieve any Lender from its
obligations under Section 2.3.(j).
Section 2.4 Swingline Loans.
(a) Swing Line Loans. Subject to the terms and conditions hereof,
during the period from the Effective Date to but excluding the Termination Date,
the Swingline Lender agrees to make Swingline Loans to the Borrower in an
aggregate principal amount at any one time outstanding up to, but not exceeding,
the amount of the Swingline Commitment; provided, however, that in no event
shall (i) the aggregate principal amount of all outstanding Swingline Loans,
together with the aggregate principal amount of all outstanding Revolving Loans,
the aggregate amount of all Letter of Credit Liabilities and the aggregate
principal amount of all outstanding Bid Rate Loans, exceed the aggregate amount
of the Commitments as in effect from time to time. If at any time the aggregate
principal amount of the Swingline Loans outstanding at such time exceeds the
Swingline Commitment in effect at such time, the Borrower shall immediately pay
the Swingline Lender the amount of such excess. Subject to the terms and
conditions of this Agreement, the Borrower may borrow, repay and reborrow
Swingline Loans hereunder.
(b) Procedure for Borrowing Swingline Loans. The Borrower shall give
the Swingline Lender notice pursuant to a Notice of Swingline Borrowing or
telephonic notice of each borrowing of Revolving Loans. Each Notice of Swingline
Borrowing shall be delivered to the Swingline Lender before 3:00 p.m. E.S.T. on
the proposed date of such borrowing. Any such telephonic notice shall include
all information to be specified in a written Notice of Swingline Borrowing and
shall be promptly confirmed in writing by the Borrower pursuant to a Notice of
Swingline Borrowing sent to the Swingline Lender by telecopy on the same day of
the giving of such telephonic notice. Not later than 5:00 p.m. E.S.T. on the
date of the requested Swingline Loan and subject to satisfaction of the
applicable conditions set forth in Article V. for such borrowing, the Swingline
Lender will make the proceeds of such Swingline Loan available to the Borrower
in Dollars, in immediately available funds, at the account specified by the
Borrower in the Notice of Borrowing.
(c) Interest. Swingline Loans shall bear interest at the Base Rate or
at such other rate or rates as the Borrower and the Swingline Lender may agree
from time to time in writing. Interest payable on Swingline Loans is solely for
the account of the Swingline Lender. All accrued and unpaid interest on
Swingline Loans shall be payable on the dates and in the manner provided in
Section 2.5. with respect to interest on Base Rate Loans (except as the
Swingline Lender and the Borrower may otherwise agree in connection with any
particular Swingline Loan).
(d) Swingline Loan Amounts, Etc. Each Swingline Loan shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in
excess thereof or such other minimum amounts agreed to by the Swingline Lender
and the Borrower. Any voluntary prepayment of a Swingline Loan must be in
integral multiples of $100,000 or the aggregate principal amount of all
outstanding Swingline Loans (or such other minimum amounts upon which the
Swingline Lender and the Borrower may agree). No more than three Swingline Loans
may be outstanding at any given time unless otherwise agreed in writing by the
Borrower and the Swingline Lender. The Swingline Loans shall, in addition to
this Agreement, be evidenced by the Swingline Note.
(e) Repayment and Participations of Swingline Loans. The Borrower
agrees to repay all Swingline Loans within one Business Day of demand therefor
by the Swingline Lender and in any event, the Borrower shall repay the entire
outstanding principal amount of, and all accrued but unpaid interest on, the
Swingline Loans on the Termination Date (or such earlier date as the Swingline
Lender and the Borrower may agree in writing). If the Borrower shall fail to
timely repay any Swingline Loan, and in any event upon (i) a request by the
Swingline Lender, (ii) the occurrence of an Event of Default described in
Section 10.1.(e) or 10.1.(f) or (iii) the acceleration of any Loan or
termination of any Commitment pursuant to Section 10.2., each other Lender shall
purchase from the Swingline Lender, without recourse or warranty, an undivided
interest and participation to the extent of such Lender's Commitment Percentage
of such Swingline Loan, by directly purchasing a participation in such Swingline
Loan in such amount (regardless of whether the conditions precedent thereto set
forth in Section 5.2. are then satisfied, whether or not the Borrower has
submitted a Notice of Borrowing and whether or not the Commitments are then in
effect, any Event of Default exists or all the Loans have been accelerated) and
paying the proceeds thereof to the Agent on behalf of the Swingline Lender in
Dollars and in immediately available funds. If such amount is not in fact made
available to the Swingline Lender by any Lender, the Swingline Lender shall be
entitled to recover such amount on demand from such Lender, together with
accrued interest thereon for each day from the date of demand thereof, at the
Federal Funds Rate. If such Lender does not pay such amount forthwith upon the
Swingline Lender's demand therefor, and until such time as such Lender makes the
required payment, the Swingline Lender shall be deemed to continue to have
outstanding Swingline Loans in the amount of such unpaid participation
obligation for all purposes of the Loan Documents (other than those provisions
requiring the other Lenders to purchase a participation therein). Further, such
Lender shall be deemed to have assigned any and all payments made of principal
and interest on its Loans, and any other amounts due to it hereunder, to the
Swingline Lender to fund Swingline Loans in the amount of the participation in
Swingline Loans that such Lender failed to purchase pursuant to this Section
until such amount has been purchased (as a result of such assignment or
otherwise).
Section 2.5 Rates and Payment of Interest on Loans.
(a) Rates. The Borrower promises to pay to the Agent for account of
each Lender interest on the unpaid principal amount of each Loan made by such
Lender for the period from and including the date of the making of such Loan to
but excluding the date such Loan shall be paid in full, at the following per
annum rates:
(i) during such periods as such Loan is a Base Rate Loan,
at the Base Rate (as in effect from time to time);
(ii) during such periods as such Loan is a LIBOR Loan, at the
Adjusted Eurodollar Rate for such Loan for the Interest Period therefor, plus
the Applicable Margin; and
(iii) if such Loan is a Bid Rate Loan, at the Bid Rate for
such Loan for the Interest Period therefor quoted by the Lender making such Loan
in accordance with Section 2.2.
Notwithstanding the foregoing, the Borrower hereby promises to pay to the Agent
for account of each Lender interest at the applicable Post-Default Rate on any
principal of any Loan made by such Lender, on all Reimbursement Obligations and
on any other amount payable by the Borrower hereunder or under the Notes held by
such Lender to or for account of such Lender, which shall not be paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full.
(b) Payment. Accrued interest on each Loan shall be payable (i) in the
case of a Base Rate Loan, quarterly on the Quarterly Dates, (ii) in the case of
a LIBOR Loan or a Bid Rate Loan, on the last day of each Interest Period
therefor and, if such Interest Period is longer than three months, at
three-month intervals following the first day of such Interest Period, (iii) in
the case of any LIBOR Loan, upon the payment, prepayment or Continuation thereof
or the Conversion of such Loan to a Loan of another Type (but only on the
principal amount so paid, prepaid or Converted) and (iv) in the case of any Base
Rate Loan, upon the payment or prepayment thereof in full. Interest payable at
the Post-Default Rate shall be payable from time to time on demand. Promptly
after the determination of any interest rate provided for herein or any change
therein, the Agent shall give notice thereof to the Lenders to which such
interest is payable and to the Borrower. All determinations by the Agent of an
interest rate hereunder shall be conclusive and binding on the Lenders and the
Borrower for all purposes, absent manifest error.
Section 2.6 Number of Interest Periods.
There may be no more than 12 different Interest Periods for both
Revolving Loans and Bid Rate Loans outstanding at the same time (for which
purpose Interest Periods described in different lettered clauses of the
definition of the term "Interest Period" shall be deemed to be different
Interest Periods even if they are coterminous).
Section 2.7 Repayment of Loans.
(a) Revolving Loans. The Borrower shall repay the entire
outstanding principal amount of, and all accrued but unpaid interest on, the
Revolving Loans on the Termination Date.
(b) Bid Rate Loans. The Borrower shall repay the entire outstanding
principal amount of, and all accrued but unpaid interest on, each Bid Rate Loan
on the last day of the Interest Period of such Bid Rate Loan.
Section 2.8 Prepayments.
(a) Optional. Subject to Section 4.4., the Borrower may prepay any Loan
(other than a Bid Rate Loan) at any time without premium or penalty. Bid Rate
Loans may not be prepaid at the option of the Borrower. The Borrower shall give
the Agent at least three Business Days prior written notice of the prepayment of
any Loan.
(b) Mandatory. If at any time the aggregate principal amount of all
outstanding Revolving Loans, together with the aggregate amount of all Letter of
Credit Liabilities, the aggregate principal amount of all outstanding Swingline
Loans and the aggregate principal amount of all outstanding Bid Rate Loans,
exceeds the aggregate amount of the Commitments in effect at such time, the
Borrower shall immediately pay to the Agent for the accounts of the Lenders the
amount of such excess. Such payment shall be applied first to pay all amounts of
principal outstanding on the Swingline Loans and then to pay all amounts of
principal outstanding on the other Loans and any Reimbursement Obligations pro
rata in accordance with Section 3.2. If the Borrower is required to pay any
outstanding LIBOR Loans by reason of this Section prior to the end of the
applicable Interest Period therefor, the Borrower shall pay all amounts due
under Section 4.4.
Section 2.9 Continuation.
So long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day, with respect to any LIBOR
Loan, elect to maintain such LIBOR Loan or any portion thereof as a LIBOR Loan
by selecting a new Interest Period for such LIBOR Loan. Each new Interest Period
selected under this Section shall commence on the last day of the immediately
preceding Interest Period. Each selection of a new Interest Period shall be made
by the Borrower giving to the Agent a Notice of Continuation not later than
12:00 noon E.S.T. on the third Business Day prior to the date of any such
Continuation. Such notice by the Borrower of a Continuation shall be by
telephone or telecopy, confirmed immediately in writing if by telephone, in the
form of a Notice of Continuation, specifying (a) the proposed date of such
Continuation, (b) the LIBOR Loan and portion thereof subject to such
Continuation and (c) the duration of the selected Interest Period, all of which
shall be specified in such manner as is necessary to comply with all limitations
on Loans outstanding hereunder. Each Notice of Continuation shall be irrevocable
by and binding on the Borrower once given. Promptly after receipt of a Notice of
Continuation, the Agent shall notify each Lender by telecopy or other similar
form of transmission of the proposed Continuation. If the Borrower shall fail to
select in a timely manner a new Interest Period for any LIBOR Loan in accordance
with this Section, such Loan will automatically, on the last day of the current
Interest Period therefore, Convert into a Base Rate Loan notwithstanding failure
of the Borrower to comply with Section 2.10.
Section 2.10 Conversion.
So long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day, upon the Borrower's giving of
a Notice of Conversion to the Agent, Convert all or a portion of a Loan of one
Type into a Loan of another Type. Promptly after receipt of a Notice of
Conversion, the Agent shall notify each Lender by telecopy or other similar form
of transmission of the proposed Conversion. Any Conversion of a LIBOR Loan into
a Base Rate Loan shall be made on, and only on, the last day of an Interest
Period for such LIBOR Loan and, upon Conversion of a Base Rate Loan into a LIBOR
Loan, the Borrower shall pay accrued interest to the date of Conversion on the
principal amount so Converted. Each such Notice of Conversion shall be given not
later than 12:00 noon E.S.T. on the Business Day prior to the date of any
proposed Conversion into Base Rate Loans and on the third Business Day prior to
the date of any proposed Conversion into LIBOR Loans. Subject to the
restrictions specified above, each Notice of Conversion shall be by telephone or
telecopy, confirmed immediately in writing if by telephone, in the form of a
Notice of Conversion specifying (a) the requested date of such Conversion, (b)
the Type of Loan to be Converted, (c) the portion of such Type of Loan to be
Converted, (d) the Type of Loan such Loan is to be Converted into and (e) if
such Conversion is into a LIBOR Loan, the requested duration of the Interest
Period of such Loan. Each Notice of Conversion shall be irrevocable by and
binding on the Borrower once given.
Section 2.11 Notes.
(a) Revolving Note. The Revolving Loans made by each Lender shall, in
addition to this Agreement, also be evidenced by a promissory note of the
Borrower substantially in the form of Exhibit J (each a "Revolving Note"),
payable to the order of such Lender in a principal amount equal to the amount of
its Commitment as originally in effect and otherwise duly completed.
(b) Bid Rate Notes. The Bid Rate Loans made by any Lender shall, in
addition to this Agreement, also be evidenced by a single promissory note of the
Borrower substantially in the form of Exhibit K (each a "Bid Rate Note"), dated
the date hereof, payable to the order of such Lender and otherwise duly
completed.
(c) Records; Endorsement on Transfer. The date, amount, interest rate,
Type and duration of Interest Periods (if applicable) of each Loan made by each
Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by such Lender on its books and such entries shall be
binding on the Borrower absent manifest error. Prior to the transfer of any
Note, the Lender shall endorse such items on such Note or any allonge thereof;
provided that the failure of such Lender to make any such recordation or
endorsement shall not affect the obligations of the Borrower to make a payment
when due of any amount owing hereunder or under such Note in respect of the
Loans evidenced by such Note.
Section 2.12 Voluntary Reductions of the Commitment.
The Borrower shall have the right to terminate or reduce the aggregate
unused amount of the Commitments (for which purpose use of the Commitments shall
be deemed to include the aggregate amount of Letter of Credit Liabilities and
the aggregate principal amount of all outstanding Bid Rate Loans and Swingline
Loans) at any time and from time to time without penalty or premium upon not
less than 5 Business Days prior written notice to the Agent of each such
termination or reduction, which notice shall specify the effective date thereof
and the amount of any such reduction and shall be irrevocable once given and
effective only upon receipt by the Agent. The Agent will promptly transmit such
notice to each Lender.
Section 2.13 Expiration or Maturity Date of Letters of Credit Past Termination
Date.
If on the date (the "Facility Termination Date") the Commitments are
terminated (whether voluntarily, by reason of the occurrence of an Event of
Default or otherwise), there are any Letters of Credit outstanding hereunder,
the Borrower shall, on the Facility Termination Date, pay to the Agent an amount
of money equal to the Stated Amount of such Letter(s) of Credit for deposit into
a cash collateral account maintained with the Agent and under its sole dominion
and control. If a drawing pursuant to any such Letter of Credit occurs on or
prior to the expiration date of such Letter of Credit, the Borrower authorizes
the Agent to use the monies deposited in such cash collateral account to make
payment to the beneficiary with respect to such drawing or the payee with
respect to such presentment. If no drawing occurs on or prior to the expiration
date of such Letter of Credit and so long as no Default or Event of Default
shall be continuing, the Agent shall pay to the Borrower (or to whomever else
may be legally entitled thereto) the monies deposited in such cash collateral
account with respect to such outstanding Letter of Credit on or before the date
3 Business Days after the expiration date of such Letter of Credit.
Section 2.14 Amount Limitations.
Notwithstanding any other term of this Agreement or any other Loan
Document, at no time may the aggregate principal amount of all outstanding
Revolving Loans, together with the aggregate principal amount of all outstanding
Bid Rate Loans, the aggregate principal amount of all outstanding Swingline
Loans and the aggregate amount of all Letter of Credit Liabilities, exceed the
aggregate amount of the Commitments at such time.
ARTICLE 3 PAYMENTS, FEES AND OTHER GENERAL PROVISIONS Section 3.1
Payments.
Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this
Agreement or any other Loan Document shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Agent at its
Principal Office, not later than 2:00 p.m. E.S.T. on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day).
Subject to Sections 3.2. and 3.3., the Agent, or any Lender for whose account
any such payment is made, may (but shall not be obligated to) debit the amount
of any such payment which is not made by such time from any special or general
deposit account of the Borrower with the Agent or such Lender, as the case may
be (with notice to the Borrower, the other Lenders and the Agent). The Borrower
shall, at the time of making each payment under this Agreement or any Note,
specify to the Agent the amounts payable by the Borrower hereunder to which such
payment is to be applied. Each payment received by the Agent for the account of
a Lender under this Agreement or any Note shall be paid promptly to such Lender
at the applicable Lending Office of such Lender. If the due date of any payment
under this Agreement or any other Loan Document would otherwise fall on a day
which is not a Business Day such date shall be extended to the next succeeding
Business Day and interest shall be payable for the period of such extension.
Section 3.2 Pro Rata Treatment.
Except to the extent otherwise provided herein: (a) each borrowing from
the Lenders under Section 2.1.(a) shall be made from the Lenders, each payment
of the Fees under Section 3.6.(a) and the first sentence of Section 3.6.(b)
shall be made for account of the Lenders, and each termination or reduction of
the amount of the Commitments under Section 2.12. shall be applied to the
respective Commitments of the Lenders, pro rata according to the amounts of
their respective Commitments; (b) each payment or prepayment of principal of
Revolving Loans by the Borrower shall be made for account of the Lenders pro
rata in accordance with the respective unpaid principal amounts of the Revolving
Loans held by them, provided that if immediately prior to giving effect to any
such payment in respect of any Revolving Loans the outstanding principal amount
of the Revolving Loans shall not be held by the Lenders pro rata in accordance
with their respective Commitments in effect at the time such Loans were made,
then such payment shall be applied to the Revolving Loans in such manner as
shall result, as nearly as is practicable, in the outstanding principal amount
of the Revolving Loans being held by the Lenders pro rata in accordance with
their respective Commitments; (c) each payment of interest on Revolving Loans by
the Borrower shall be made for account of the Lenders pro rata in accordance
with the amounts of interest on such Loans then due and payable to the
respective Lenders; (d) the making, Conversion and Continuation of Revolving
Loans of a particular Type (other than Conversions provided for by Section 4.5.)
shall be made pro rata among the Lenders according to the amounts of their
respective Commitments (in the case of making of Loans) or their respective
Loans (in the case of Conversions and Continuations of Loans) and the then
current Interest Period for each Lender's portion of each Loan of such Type
shall be coterminous; and (e) the Lenders' participation in, and payment
obligations in respect of, Letters of Credit under Section 2.3. and Swingline
Loans under Section 2.4., shall be pro rata in accordance with their respective
Commitments. All payments of principal, interest, fees and other amounts in
respect of the Swingline Loans shall be for the account of the Swingline Lender
only (except to the extent any Lender shall have acquired a participating
interest in any such Swingline Loan pursuant to Section 2.4.(e)).
Section 3.3 Sharing of Payments, Etc.
If a Lender shall obtain payment of any principal of, or interest on,
any Loan made by it to the Borrower under this Agreement, or, subject to Section
12.3., shall obtain payment on any other Obligation through the exercise of any
right of counterclaim or similar right or otherwise or through voluntary
prepayments directly to a Lender or other payments made by the Borrower to a
Lender not in accordance with the terms of this Agreement and such payment
should be distributed to the Lenders pro rata in accordance with Section 3.2. or
Section 10.3, as applicable, such Lender shall promptly purchase from the other
Lenders participations in (or, if and to the extent specified by such Lender,
direct interests in) the Loans made by the other Lenders or other Obligations
owed to such other Lenders in such amounts, and make such other adjustments from
time to time as shall be equitable, to the end that all the Lenders shall share
the benefit of such payment (net of any reasonable expenses which may be
incurred by such Lender in obtaining or preserving such benefit) pro rata in
accordance with Section 3.2. or Section 10.3, as applicable. To such end, all
the Lenders shall make appropriate adjustments among themselves (by the resale
of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees that any Lender so purchasing a
participation (or direct interest) in the Loans or other Obligations owed to
such other Lenders may, subject to Section 12.3., exercise all rights of
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans in the amount of such participation.
Nothing contained herein shall require any Lender to exercise any such right or
shall affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower.
Section 3.4 Several Obligations.
No Lender shall be responsible for the failure of any other Lender to
make a Loan or to perform any other obligation to be made or performed by such
other Lender hereunder, and the failure of any Lender to make a Loan or to
perform any other obligation to be made or performed by it hereunder shall not
relieve the obligation of any other Lender to make any Loan or to perform any
other obligation to be made or performed by such other Lender.
Section 3.5 Minimum Amounts.
(a) Borrowings and Conversions. Each borrowing of Base Rate Loans shall
be in an aggregate minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof. Each borrowing of LIBOR Loans, and each Conversion
of a Loan from a Base Rate Loan to a LIBOR Loan, shall be in an aggregate
minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of
that amount. Each Bid Rate Loan shall be in a minimum amount of $5,000,000 and
integral multiples of $1,000,000 in excess thereof.
(b) Prepayments. Each voluntary prepayment of Revolving Loans
shall be in an aggregate minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof.
(c) Reductions of Commitments. Each reduction of the Commitments
under Section 2.12. shall be in an aggregate minimum amount of $10,000,000 and
integral multiples of $5,000,000 in excess thereof.
(d) Letters of Credit. The initial Stated Amount of each Letter
of Credit shall be at least $100,000.
Section 3.6 Fees.
(a) Facility Fees. The Borrower agrees to pay to the Agent for the
account of the Lenders a facility fee on the average daily aggregate amount of
the Commitments (whether or not utilized) at a per annum rate equal to the
Applicable Facility Fee for the period from and including the Agreement Date to
but excluding the date the Commitments are terminated or reduced to zero or the
Termination Date. Such facility fee shall be payable in arrears on (i) each
Quarterly Date, (ii) on the Termination Date, (iii) on the date the Commitments
are otherwise terminated or reduced to zero and (iv) thereafter from time to
time on demand of the Agent.
(b) Letter of Credit Fees. The Borrower agrees to pay to the Agent for
account of each Lender a letter of credit fee at a rate per annum equal to the
Applicable Margin of the daily average Stated Amount of each Letter of Credit
for the period from and including the date of issuance of such Letter of Credit
to and including the date such Letter of Credit is drawn in full, expires or is
terminated. In addition, the Borrower shall pay to the Agent for its own account
and not the account of any Lender, a fronting fee in respect of each Letter of
Credit at the rate per annum equal to one-tenth of one percent (0.10%) per annum
on the daily average Stated Amount of such Letter of Credit for the period from
and including the date of issuance of such Letter of Credit to and including the
date such Letter of Credit is drawn in full, expires or is terminated. The fees
provided for in the immediately preceding two sentences shall be nonrefundable
and paid in arrears (i) on each Quarterly Date, (ii) on the Termination Date,
(iii) on the date the Commitments are terminated or reduced to zero and (iv)
thereafter from time to time on demand of the Agent. The Borrower shall pay
directly to the Agent from time to time on demand all commissions, charges,
costs and expenses in the amounts customarily charged by the Agent from time to
time in like circumstances with respect to the issuance of each Letter of
Credit, drawings, amendments and other transactions relating thereto.
(c) Bid Rate Loan Fees. The Borrower agrees to pay to the Agent
in connection with each Agented Bid Rate Loan Request an administrative fee as
agreed upon by the Borrower and the Agent from time to time.
(d) Administrative and Other Fees. The Borrower agrees to pay the
administrative fees of the Agent annually and other fees of the Agent from time
to time, in each case as agreed upon by the Borrower and the Agent.
Section 3.7 Computations.
Unless otherwise expressly set forth herein, any accrued interest on
any Loan, Fees or other Obligation due hereunder shall be computed on the basis
of a year of 360 days and the actual number of days elapsed.
Section 3.8 Usury.
In no event shall the amount of interest due or payable on the Loans or
other Obligations exceed the maximum rate of interest allowed by Applicable Law
and, if any such payment is paid by the Borrower or received by any Lender, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the respective Lender in writing that the Borrower elects to have
such excess sum returned to it forthwith. It is the express intent of the
parties hereto that the Borrower not pay and the Lenders not receive, directly
or indirectly, in any manner whatsoever, interest in excess of that which may be
lawfully paid by the Borrower under Applicable Law.
Section 3.9 Agreement Regarding Interest and Charges.
The parties hereto hereby agree and stipulate that the only charge
imposed upon the Borrower for the use of money in connection with this Agreement
is and shall be the interest specifically described in Sections 2.5.(a)(i)
through (iii) and, with respect to Swingline Loans, in Section 2.4.(c).
Notwithstanding the foregoing, the parties hereto further agree and stipulate
that all agency fees, syndication fees, facility fees, letter of credit fees,
underwriting fees, default charges, late charges, funding or "breakage" charges,
increased cost charges, attorneys' fees and reimbursement for costs and expenses
paid by the Agent or any Lender to third parties or for damages incurred by the
Agent or any Lender, are charges made to compensate the Agent or any such Lender
for underwriting or administrative services and costs or losses performed or
incurred, and to be performed or incurred, by the Agent and the Lenders in
connection with this Agreement and shall under no circumstances be deemed to be
charges for the use of money pursuant to Official Code of Georgia Annotated
Sections 7-4-2 and 7-4-18. All charges other than charges for the use of money
shall be fully earned and nonrefundable when due.
Section 3.10 Statements of Account.
The Agent will maintain records with respect to, and account to the
Borrower quarterly with respect to, Loans, Letters of Credit, accrued interest
and Fees, charges and payments made pursuant to this Agreement and the other
Loan Documents, and such records and accounts rendered by the Agent shall be
deemed conclusive upon Borrower absent manifest error. The failure of the Agent
to maintain such records or to deliver any such statement of account shall not
relieve or discharge the Borrower from any of its obligations hereunder.
Section 3.11 Defaulting Lenders.
(a) Generally. If for any reason any Lender (a "Defaulting Lender")
shall fail or refuse to perform any of its obligations under this Agreement or
any other Loan Document to which it is a party within the time period specified
for performance of such obligation or, if no time period is specified, if such
failure or refusal continues for a period of two Business Days after notice from
the Agent, then, in addition to the rights and remedies that may be available to
the Agent or the Borrower under this Agreement or Applicable Law, such
Defaulting Lender's right to participate in the administration of the Loans,
this Agreement and the other Loan Documents, including without limitation, any
right to vote in respect of, to consent to or to direct any action or inaction
of the Agent or to be taken into account in the calculation of the Requisite
Lenders, shall be suspended during the pendency of such failure or refusal. If a
Lender is a Defaulting Lender because it has failed to make timely payment to
the Agent of any amount required to be paid to the Agent hereunder (without
giving effect to any notice or cure periods), in addition to other rights and
remedies which the Agent or the Borrower may have under the immediately
preceding provisions or otherwise, the Agent shall be entitled (i) to collect
interest from such Defaulting Lender on such delinquent payment for the period
from the date on which the payment was due until the date on which the payment
is made at the Federal Funds Rate, (ii) to withhold or setoff and to apply in
satisfaction of the defaulted payment and any related interest, any amounts
otherwise payable to such Defaulting Lender under this Agreement or any other
Loan Document and (iii) to bring an action or suit against such Defaulting
Lender in a court of competent jurisdiction to recover the defaulted amount and
any related interest. Any amounts received by the Agent in respect of a
Defaulting Lender's Loans shall not be paid to such Defaulting Lender and shall
be held by the Agent and either applied against the purchase price of such Loans
under the following subsection (b) or paid to such Defaulting Lender upon the
Defaulting Lender's curing of its default. A Defaulting Lender shall not be
entitled to the benefits of Section 12.17. with respect to events or
circumstances arising or occurring on or after it became a Defaulting Lender.
(b) Purchase of Defaulting Lender's Commitment. Any Lender who is not a
Defaulting Lender shall have the right, but not the obligation, in its sole
discretion, to acquire all of a Defaulting Lender's Commitment. If more than one
Lender exercises such right, each such Lender shall have the right to acquire
such proportion of such Defaulting Lender's Commitment as they may mutually
agree. Upon any such purchase, the Defaulting Lender's interest in the Loans and
its rights hereunder (but not its liability in respect thereof or under the Loan
Documents or this Agreement to the extent the same relate to the period prior to
the effective date of the purchase) shall terminate on the date of purchase, and
the Defaulting Lender shall promptly execute all documents reasonably requested
to surrender and transfer such interest to the purchaser thereof, including an
appropriate Assignment and Acceptance Agreement and shall comply with the
provisions of Section 12.5.(d) in connection with such Assignment and Acceptance
Agreement. The purchase price for the Commitment of a Defaulting Lender shall be
equal to the amount of the principal balance of the Loans outstanding and owed
by the Borrower to the Defaulting Lender. Prior to payment of such purchase
price to a Defaulting Lender, the Agent shall apply against such purchase price
any amounts retained by the Agent pursuant to the last sentence of the
immediately preceding subsection (a). The Defaulting Lender shall be entitled to
receive all unpaid interest, Fees and other amounts owed to it by the Borrower
under the Loan Documents which accrued prior to the date of the default by the
Defaulting Lender, to the extent the same are received by the Agent from or on
behalf of the Borrower. There shall be no recourse against any Lender or the
Agent for the payment of such sums except to the extent of the receipt of
payments from any other party or in respect of the Loans.
Section 3.12 Taxes.
(a) Taxes Generally. All payments by the Borrower of principal of, and
interest on, the Loans and all other Obligations shall be made free and clear of
and without deduction for any present or future excise, stamp or other taxes,
fees, duties, levies, imposts, charges, deductions, withholdings or other
charges of any nature whatsoever imposed by any taxing authority, but excluding
(i) franchise taxes, (ii) any taxes (other than withholding taxes) that would
not be imposed but for a connection between the Agent or a Lender and the
jurisdiction imposing such taxes (other than a connection arising solely by
virtue of the activities of the Agent or such Lender pursuant to or in respect
of this Agreement or any other Loan Document), (iii) any withholding taxes
payable with respect to payments hereunder or under any other Loan Document
under Applicable Law in effect on the Agreement Date, (iv) any taxes imposed on
or measured by any Lender's assets, net income, receipts or branch profits and
(v) any taxes arising after the Agreement Date solely as a result of or
attributable to a Lender changing its designated Lending Office after the date
such Lender becomes a party hereto (such non-excluded items being collectively
called "Taxes"). If any withholding or deduction from any payment to be made by
the Borrower hereunder is required in respect of any Taxes pursuant to any
Applicable Law, then the Borrower will:
(i) pay directly to the relevant Governmental Authority
the full amount required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such payment to such
Governmental Authority; and
(iii) pay to the Agent for its account or the account of the
applicable Lender, as the case may be, such additional amount or
amounts as is necessary to ensure that the net amount actually received
by the Agent or such Lender will equal the full amount that the Agent
or such Lender would have received had no such withholding or deduction
been required.
(b) Tax Indemnification. If the Borrower fails to pay any Taxes when
due to the appropriate Governmental Authority or fails to remit to the Agent,
for its account or the account of the respective Lender, as the case may be, the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental Taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. For purposes of this Section, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
(c) Tax Forms. Prior to the date that any Lender or participant
organized under the laws of a jurisdiction outside the United States of America
becomes a party hereto, such Person shall deliver to the Borrower and the Agent
such certificates, documents or other evidence, as required by the Internal
Revenue Code or Treasury Regulations issued pursuant thereto (including Internal
Revenue Service Forms 4224 or 1001, as applicable, or appropriate successor
forms), properly completed, currently effective and duly executed by such Lender
or participant establishing that payments to it hereunder and under the Notes
are (i) not subject to United States Federal backup withholding tax or (ii) not
subject to United States Federal withholding tax under the Code because such
payment is either effectively connected with the conduct by such Lender or
participant of a trade or business in the United States or totally exempt from
United States Federal withholding tax by reason of the application of the
provisions of a treaty to which the United States is a party or such Lender is
otherwise exempt.
ARTICLE 4 YIELD PROTECTION, ETC.
Section 4.1 Additional Costs; Capital Adequacy.
(a) Additional Costs. The Borrower shall promptly pay to the Agent for
the account of a Lender from time to time such amounts as such Lender may
determine to be necessary to compensate such Lender for any costs incurred by
such Lender that it determines are attributable to its making or maintaining of
any LIBOR Loans or its obligation to make any LIBOR Loans hereunder, or its
obligation to purchase participations in Swingline Loans, or any reduction in
any amount receivable by such Lender under this Agreement or any of the other
Loan Documents in respect of any of such Loans or such obligations or the
maintenance by such Lender of capital in respect of its Loans or its Commitments
(such increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory Change that: (i)
changes the basis of taxation of any amounts payable to such Lender under this
Agreement or any of the other Loan Documents in respect of any of such Loans or
its Commitments (other than taxes imposed on or measured by the overall net
income of such Lender or of its Lending Office for any of such Loans by the
jurisdiction in which such Lender has its principal office or such Lending
Office); or (ii) imposes or modifies any reserve, special deposit or similar
requirements (other than Regulation D of the Board of Governors of the Federal
Reserve System or other reserve requirement utilized in the determination of the
Adjusted Eurodollar Rate for such Loan) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of, such Lender, or
any commitment of such Lender (including, without limitation, the Commitments of
such Lender hereunder); or (iii) has or would have the effect of reducing the
rate of return on capital of such Lender to a level below that which such Lender
could have achieved but for such Regulatory Change (taking into consideration
such Lender's policies with respect to capital adequacy).
(b) Lender's Suspension of LIBOR Loans. Without limiting the effect of
the provisions of the immediately preceding subsection (a), if by reason of any
Regulatory Change, any Lender either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender that includes deposits by reference
to which the interest rate on LIBOR Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender
that includes LIBOR Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets that it may hold, then, if such
Lender so elects by notice to the Borrower (with a copy to the Agent), the
obligation of such Lender to make or Continue, or to Convert Base Rate Loans
into, LIBOR Loans hereunder shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provisions of Section 4.5. shall
apply).
(c) Additional Costs in Respect of Letters of Credit. Without limiting
the obligations of the Borrower under the preceding subsections of this Section
(but without duplication), if as a result of any Regulatory Change or any
risk-based capital guideline or other requirement heretofore or hereafter issued
by any Governmental Authority there shall be imposed, modified or deemed
applicable any tax, reserve, special deposit, capital adequacy or similar
requirement against or with respect to or measured by reference to Letters of
Credit and the result shall be to increase the cost to the Agent of issuing (or
any Lender purchasing participations in) or maintaining its obligation hereunder
to issue (or purchase participations in) any Letter of Credit or reduce any
amount receivable by the Agent or any Lender hereunder in respect of any Letter
of Credit, then, upon demand by the Agent or such Lender, the Borrower shall pay
immediately to the Agent for its account or the account of such Lender, as
applicable, from time to time as specified by the Agent or a Lender, such
additional amounts as shall be sufficient to compensate the Agent or such Lender
for such increased costs or reductions in amount.
(d) Notification and Determination of Additional Costs. Each of the
Agent and each Lender agrees to notify the Borrower of any event occurring after
the Agreement Date entitling the Agent or such Lender to compensation under any
of the preceding subsections of this Section as promptly as practicable;
provided, however, the failure of the Agent or any Lender to give such notice
shall not release the Borrower from any of its obligations hereunder. The Agent
and or such Lender agrees to furnish to the Borrower a certificate setting forth
the basis and amount of each request by the Agent or such Lender for
compensation under this Section. Determinations by the Agent or any Lender of
the effect of any Regulatory Change shall be conclusive absent manifest error,
provided that such determinations are made on a reasonable basis and in good
faith.
Section 4.2 Suspension of LIBOR Loans.
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any Adjusted Eurodollar Rate for any Interest Period:
(a) the Agent reasonably determines (which determination shall
be conclusive) that quotations of interest rates for the relevant
deposits referred to in the definition of LIBOR are not being provided
in the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for LIBOR Loans as provided herein or is
otherwise unable to determine the Adjusted Eurodollar Rate, or
(b) the Agent reasonably determines (which determination shall
be conclusive) that the relevant rates of interest referred to in the
definition of LIBOR upon the basis of which the rate of interest for
LIBOR Loans for such Interest Period is to be determined are not likely
adequately to cover the cost to the Lenders of making or maintaining
LIBOR Loans for such Interest Period;
then the Agent shall give the Borrower and each Lender prompt notice thereof
and, so long as such condition remains in effect, the Lenders shall be under no
obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans
or Convert Loans into LIBOR Loans and the Borrower shall, on the last day of
each current Interest Period for each outstanding LIBOR Loan, either repay such
Loan or Convert such Loan into a Base Rate Loan.
Section 4.3 Illegality.
Notwithstanding any other provision of this Agreement, if it becomes
unlawful for any Lender to honor its obligation to make or maintain LIBOR Loans
hereunder, then such Lender shall promptly notify the Borrower thereof (with a
copy to the Agent) and such Lender's obligation to make or Continue, or to
Convert Loans of any other Type into, LIBOR Loans shall be suspended until such
time as such Lender may again make and maintain LIBOR Loans (in which case the
provisions of Section 4.5. shall be applicable).
Section 4.4 Compensation.
The Borrower shall pay to the Agent for account of each Lender, upon
the request of such Lender through the Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Lender) to compensate it for any
loss, cost or expense that such Lender determines is attributable to:
(a) any payment or prepayment (whether mandatory or optional)
of a LIBOR Loan or Bid Rate Loan, or Conversion of a LIBOR Loan, made by such
Lender for any reason (including, without limitation, acceleration) on a date
other than the last day of the Interest Period for such
Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any of the applicable conditions
precedent specified in Article V. to be satisfied) to borrow a LIBOR
Loan or Bid Rate Loan from such Lender on the date for such borrowing,
or to Convert a Base Rate Loan into a LIBOR Loan or Continue a LIBOR
Loan on the requested date of such Conversion or Continuation,
such compensation to include, without limitation, an amount equal to the excess,
if any, of (i) the amount of interest that otherwise would have accrued on the
principal amount so paid, prepaid or Converted or not borrowed for the period
from the date of such payment, prepayment, Conversion or failure to borrow or
Convert to the last day of the then current Interest Period for such Loan (or,
in the case of a failure to borrow or Convert, the Interest Period for such Loan
that would have commenced on the date specified for such borrowing or
Conversion) at the applicable rate of interest for such Loan provided for herein
over (ii) LIBOR (as to LIBOR Loans) or other appropriate cost of funds (in the
case of Bid Rate Loans), in each case as reasonably determined by such Lender,
for Dollar deposits of amounts comparable to such principal amount and
maturities comparable to such period. Upon the Borrower's request, any Lender
requesting compensation under this Section shall provide the Borrower with a
statement setting forth the basis for requesting such compensation and the
method for determining the amount thereof. Any such statement shall be
conclusive absent manifest error.
Section 4.5 Treatment of Affected Loans.
If the obligation of any Lender to make LIBOR Loans or to Continue, or
to Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to
Section 4.1.(b), Section 4.2. or Section 4.3., then such Lender's LIBOR Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion
required by Section 4.1.(b) or 4.3., on such earlier date as such Lender may
specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 4.1., Section 4.2. or 4.3. that gave rise to such Conversion no longer
exist:
(a) to the extent that such Lender's LIBOR Loans have been so
Converted, all payments and prepayments of principal that would otherwise be
applied to such Lender's LIBOR Loans shall be applied instead to its Base Rate
Loans; and
(b) all Loans that would otherwise be made or Continued by
such Lender as LIBOR Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be Converted
into LIBOR Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 4.1. or 4.3. that gave rise to the Conversion
of such Lender's LIBOR Loans pursuant to this Section no longer exist (which
such Lender agrees to do promptly upon such circumstances ceasing to exist) at a
time when LIBOR Loans made by other Lenders are outstanding, then such Lender's
Base Rate Loans shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding LIBOR Loans, to the
extent necessary so that, after giving effect thereto, all Loans held by the
Lenders holding LIBOR Loans and by such Lender are held pro rata (as to
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.
Section 4.6 Change of Lending Office.
Each Lender agrees that it will use reasonable efforts to designate an
alternate Lending Office with respect to any of its Loans affected by the
matters or circumstances described in Sections 3.12., 4.1. or 4.3. to reduce the
liability of the Borrower or avoid the results provided thereunder, so long as
such designation is not disadvantageous to such Lender as determined by such
Lender in its sole discretion, except that such Lender shall have no obligation
to designate a Lending Office located in the United States of America.
Section 4.7 Assumptions Concerning Funding of LIBOR Loans.
Calculation of all amounts payable to a Lender under this Article IV.
shall be made as though such Lender had actually funded LIBOR Loans through the
purchase of deposits in the relevant market bearing interest at the rate
applicable to such LIBOR Loans in an amount equal to the amount of the LIBOR
Loans and having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit and the foregoing assumption shall be used only for
calculation of amounts payable under this Article IV.
ARTICLE 5 CONDITIONS PRECEDENT
Section 5.1 Initial Conditions Precedent.
The obligation of the Lenders to effect or permit the occurrence of the
first Credit Event hereunder, whether as the making of any Revolving Loans or
Bid Rate Loans, the issuance of a Letter of Credit or the making of a Swingline
Loan, is subject to the following conditions precedent:
(a) The Agent shall have received each of the following, in form
and substance satisfactory to the Agent:
(i) Counterparts of this Agreement executed by each of
the parties hereto;
(ii) Notes executed by the Borrower, payable to each
Lender and complying with the terms of Section 2.11.(a) and (b) and the
Swingline Note executed by the Borrower;
(iii) An opinion of Balch & Bingham, LLP, counsel to the
Borrower, addressed to the Agent and the Lenders, in substantially the
form of Exhibit L-1 and an opinion of B. Judson Hennington III,
Assistant General Counsel of the Borrower, addressed to the Agent and
the Lenders, in substantially the form of Exhibit L-2;
(iv) The Certificate of Incorporation of the Borrower
certified as of a recent date by the Secretary of State of the State of
Delaware;
(v) A long-form good standing certificate with respect to
the Borrower issued as of a recent date by the Secretary of State of the State
of Delaware;
(vi) A certificate of incumbency signed by the Secretary or
Assistant Secretary of the Borrower with respect to each of the officers of the
Borrower authorized to execute and deliver the Loan Documents to which the
Borrower is a party;
(vii) Copies (certified by the Secretary or Assistant
Secretary of the Borrower) of the bylaws of the Borrower and of all corporate
action taken by the Borrower to authorize the execution, delivery and
performance of the Loan Documents to which it is a party;
(viii) A certificate from the Chief Financial Officer or
Treasurer of the Borrower certifying that (1) there does not then exist
any default or event of default under any Debt of the Borrower or any
Restricted Subsidiary having an outstanding principal balance of
$2,500,000 or more, (2) the aggregate principal amount of each item of
Debt of the Borrower or any Restricted Subsidiary having an outstanding
principal balance of less than $2,500,000 and in respect of which
either the Borrower or such Restricted Subsidiary has failed to perform
any of the material terms or any default or event of default, or event
or condition which with the giving of notice, the lapse of time, or
otherwise, would constitute such a default or event of default, exists,
does not exceed $2,500,000, and (3) immediately after giving effect to
the first Credit Event hereunder, there will not exist any Default or
Event of Default and the Borrower will be Solvent;
(ix) A pay-out letter from each holder of the Debt described
on Schedule 7.7. setting forth, among other things, the total amount of Debt
owing by the Borrower to such holder and appropriate wire transfer instructions
to effect the payment in full of such Debt;
(x) Evidence that all insurance required to be maintained
by the Borrower and the Subsidiaries under the terms of the Loan Documents is in
effect;
(xi) The Fees, if any, then due under Section 3.6.; and
(xii) Such other documents, agreements and instruments as
the Agent or any Lender may reasonably request; and
(b) In the good faith judgment of the Agent and the Lenders:
(i) There shall not have occurred or become known to the Agent
or the Lenders any event, condition, situation or status since the date
of the information contained in the financial and business projections,
budgets, pro forma data and forecasts concerning the Borrower and its
Subsidiaries delivered to the Agent and the Lenders prior to the
Agreement Date that has had or could reasonably be expected to result
in a Material Adverse Effect;
(ii) No litigation, action, suit, investigation or other
arbitral, administrative or judicial proceeding shall be pending or
threatened which could reasonably be expected to (1) result in a
Material Adverse Effect or (2) restrain or enjoin, impose materially
burdensome conditions on, or otherwise materially and adversely affect
the ability of the Borrower to fulfill its obligations under the Loan
Documents;
(iii) The Borrower and its Subsidiaries shall have received
all approvals, consents and waivers, and shall have made or given all
necessary filings and notices as shall be required to consummate the
transactions contemplated hereby without the occurrence of any default
under, conflict with or violation of (1) any Applicable Law or (2) any
agreement, document or instrument to which the Borrower or any
Subsidiary is a party or by which any of them or their respective
properties is bound, except for such approvals, consents, waivers,
filings and notices the receipt, making or giving of which would not
reasonably be likely to (A) have a Material Adverse Effect, or (B)
restrain or enjoin, impose materially burdensome conditions on, or
otherwise materially and adversely affect the ability of the Borrower
to fulfill its obligations under the Loan Documents; and
(iv) There shall not have occurred or exist any other material
disruption of financial or capital markets that could reasonably be expected to
materially and adversely affect the transactions contemplated by the Loan
Documents.
Section 5.2 Conditions Precedent to All Loans and Letters of Credit.
The obligation of the Lenders to make any Revolving Loans and Bid
Loans, the obligation of the Agent to issue Letters of Credit and the obligation
of the Swingline Lender to make any Swingline Loans, are all subject to the
further condition precedent that, as of the date of the making of such Loan or
date of issuance of such Letter of Credit and after giving effect thereto: (a)
no Default or Event of Default shall have occurred and be continuing and (b) the
representations and warranties made or deemed made by the Borrower in the Loan
Documents to which it is a party, shall be true and correct on and as of the
date of the making of such Loan or date of issuance of such Letter of Credit
with the same force and effect as if made on and as of such date except to the
extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date) and except for changes in
factual circumstances specifically and expressly permitted hereunder. Each
Credit Event shall constitute a certification by the Borrower to the effect set
forth in the preceding sentence (both as of the date of the giving of notice
relating to such Credit Event and, unless the Borrower otherwise notifies the
Agent prior to the date of such Credit Event, as of the date of the occurrence
of such Credit Event).
ARTICLE 6 REPRESENTATIONS AND WARRANTIES Section 6.1
Representations and Warranties.
In order to induce the Agent and each Lender to enter into this
Agreement and to make Loans and issue Letters of Credit, the Borrower represents
and warrants to the Agent and each Lender as follows:
(a) Organization; Power; Qualification. The Borrower is a corporation,
and each of its Subsidiaries is a corporation, partnership, limited liability
company or other business entity, and all of which are duly organized, validly
existing and in good standing under the respective jurisdictions of formation.
Each of the Borrower and its Subsidiaries has the power and authority to own or
lease its respective properties and to carry on its respective business as now
being and hereafter proposed to be conducted and is duly qualified and is in
good standing as a foreign corporation, and authorized to do business, in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization and where the failure to
be so qualified or authorized could reasonably be expected to have, in each
instance, a Material Adverse Effect.
(b) Ownership Structure. Schedule 6.1.(b) correctly sets forth the
corporate structure and ownership interests of the Borrower's Subsidiaries
including the correct legal name of each Subsidiary, its jurisdiction of
formation, the Persons holding equity interests in such Subsidiaries and their
percentage equity or voting interest in such Subsidiaries and whether such
Subsidiary is a Restricted Subsidiary or an Unrestricted Subsidiary as of the
Agreement Date. Except as set forth in such Schedule:
(i) no Subsidiary has issued to any third party any securities
convertible into such Subsidiary's capital stock or other equity interests or
any options, warrants or other rights to acquire any securities convertible into
such capital stock or other equity interests, and
(ii) the outstanding capital stock of, or other equity
interests in, each such Subsidiary are owned by the Borrower and its
Subsidiaries indicated on such Schedule, free and clear of all Liens, warrants,
options and rights of others of any kind whatsoever. All such outstanding
capital stock and other equity interests have been validly issued and, in the
case of capital stock, are fully paid and nonassessable.
(c) Authorization of Agreement, Notes, Loan Documents and Borrowings.
The Borrower has the right and power, and has taken all necessary action to
authorize it, to borrow hereunder and to execute, deliver and perform this
Agreement, the Notes and the other Loan Documents to which it is a party in
accordance with their respective terms and to consummate the transactions
contemplated hereby. This Agreement, the Notes and each of the other Loan
Documents to which the Borrower is a party have been duly executed and delivered
by the duly authorized officers of the Borrower and each is a legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its respective terms except as may be limited by bankruptcy,
insolvency or other laws of general application relating to or affecting the
enforcement of creditors' rights generally and general principles of equity.
(d) Compliance of Agreement, Notes, Loan Documents and Borrowing with
Laws, etc. The execution, delivery and performance of this Agreement, the Notes
and the other Loan Documents to which the Borrower is a party in accordance with
their respective terms and the borrowings hereunder do not and will not, by the
passage of time, the giving of notice, or otherwise: (i) require any
Governmental Approval or violate any Applicable Law relating to the Borrower or
any Subsidiary; (ii) conflict with, result in a breach of or constitute a
default under the certificate of incorporation or the bylaws of the Borrower, or
any indenture, agreement or other instrument to which the Borrower or any
Subsidiary is a party or by which the Borrower or any Subsidiary or any of its
respective properties may be bound; or (iii) result in or require the creation
or imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by the Borrower or any Subsidiary. As of the Agreement Date,
neither the Borrower nor any of its Subsidiaries is a party to, or otherwise
subject to any provision contained in, any instrument evidencing indebtedness of
the Borrower or such Subsidiary, any agreement relating thereto or any other
contract or agreement (including its charter) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Debt by the Borrower of the
type of the Obligations except as set forth in the agreements listed on Schedule
6.1.(d).
(e) Compliance with Law; Governmental Approvals. The Borrower and each
Subsidiary is in compliance with each Governmental Approval applicable to it and
in compliance with all other Applicable Law relating to it except for
noncompliances which, and Governmental Approvals the failure to possess which,
could not, singly or in the aggregate, cause a Default or Event of Default or
could reasonably be expected to have a Material Adverse Effect.
(f) Title to Properties; Leases. Each of the Borrower and its
Subsidiaries has good, marketable and legal title to, or a valid leasehold
interest in, its respective assets, free and clear of all Liens except for those
described in Schedule 6.1.(f). All leases necessary in any material respect for
the conduct of the respective businesses of the Borrower and its Subsidiaries
are valid and subsisting and are in full force and effect.
(g) Debt. Schedule 6.1.(g) is, as of the Agreement Date, a complete and
correct listing of all (i) Debt of the Borrower and its Restricted Subsidiaries
(including all guarantees of Debt of another Person) and (ii) all letters of
credit and acceptance facilities extended to the Borrower or any Restricted
Subsidiary. The Borrower and such Subsidiaries have performed and are in
compliance with all of the material terms of such Debt having an outstanding
principal balance of $2,500,000 or more and all instruments and agreements
relating thereto, and no default or event of default, or event or condition
which with the giving of notice, the lapse of time, or otherwise, would
constitute such a default or event of default, exists with respect to any such
Debt. The aggregate principal amount of each item of Debt of the Borrower or any
Restricted Subsidiary having an outstanding principal balance of less than
$2,500,000 and in respect of which either the Borrower or such Restricted
Subsidiary has failed to perform any of the material terms or any default or
event of default, or event or condition which with the giving of notice, the
lapse of time, or otherwise, would constitute such a default or event of
default, exists, does not exceed $2,500,000. All Debt of the Borrower (other
than Debt secured by a Lien permitted hereunder) ranks pari passu in right of
repayment to all of the Obligations.
(h) Other Agreements. Neither the Borrower nor any Subsidiary is: (i) a
party to or subject to any judgment, order, decree, agreement, lease or
instrument, or subject to other restrictions, which individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect; or
(ii) in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Material Contract to which
the Borrower or any Subsidiary is a party, which default has had, or if not
remedied within any applicable grace period could reasonably be expected to
have, a Material Adverse Effect.
(i) Litigation. There are no actions, suits or proceedings pending
(nor, to the knowledge of the Borrower, are there any actions, suits or
proceedings threatened) against or in any other way relating adversely to or
affecting the Borrower or any Subsidiary or any of its respective property in
any court or before any arbitrator of any kind or before or by any governmental
body which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect, and there are no strikes, slow downs, work stoppages or
walkouts or other labor disputes in progress, or to the knowledge of the
Borrower threatened, relating to the Borrower or any Subsidiary. With respect to
the representations made in this subsection, the Borrower wishes to bring to the
attention of the Lenders and the Agent the matters set forth on Schedule
6.1.(i), none of which could reasonably be expected to have a Material Adverse
Effect.
(j) Taxes. All federal, state and other tax returns of the Borrower and
any Subsidiary required by Applicable Law to be filed have been duly filed, and
all federal, state and other taxes, assessments and other governmental charges
or levies upon the Borrower or any Subsidiary and its respective properties,
income, profits and assets which are due and payable have been paid, except any
such nonpayment which is at the time permitted under Section 7.5.
(k) Financial Statements and Condition. The Borrower has furnished to
each Lender copies of the audited consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as at June 30, 1996, and the related consolidated
statements of income, retained earnings and cash flow for the fiscal year ending
on such date, with the opinion thereon of Ernst & Young LLP, and the unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at December 31, 1996, and the related consolidated statements of income,
retained earnings and cash flow of the Borrower and its consolidated
Subsidiaries for the fiscal quarter ending on such date. All such financial
statements (including in each case related schedules and notes) are complete and
correct and present fairly, in accordance with GAAP consistently applied
throughout the periods involved, in all material respects, the consolidated
financial position of the Borrower and its consolidated Subsidiaries as at their
respective dates and the results of operations and the cash flow for such
periods (subject, as to interim statements, to changes resulting from audits and
normal year-end adjustments). Since June 30, 1996, there has been no material
adverse change in the financial condition, operations, or business of the
Borrower and its consolidated Subsidiaries taken as a whole. The Borrower is
Solvent.
(l) ERISA.
(i) Each of the Borrower, its Subsidiaries, and each other
ERISA Affiliate, is in compliance with all applicable provisions of
ERISA and the regulations and published interpretations thereunder
except for noncompliances which could not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each Employee
Benefit Plan that is intended to be qualified under Section 401(a) of
the Internal Revenue Code has been determined by the Internal Revenue
Service to be so qualified, and each trust related to such plan has
been determined to be exempt under Section 501(a) of the Internal
Revenue Code. No liability has been incurred by the Borrower, any
Subsidiary or any other ERISA Affiliate which remains unsatisfied for
any taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan which liability could reasonably be expected to have
a Material Adverse Effect.
(ii) Neither the Borrower, any Subsidiary nor any other ERISA
Affiliate has (A) engaged in a nonexempt prohibited transaction
described in Section 4975 of the Internal Revenue Code or Section 406
of ERISA affecting any of the Employee Benefit Plans or the trusts
created thereunder which could subject any such Employee Benefit Plan
or trust to a tax or penalty on prohibited transactions imposed under
Section 4975 of the Internal Revenue Code or under ERISA, (B) incurred
any accumulated funding deficiency with respect to any Employee Benefit
Plan, whether or not waived, or any other liability to the PBGC which
remains outstanding other than the payment of premiums and there are no
premium payments which are due and unpaid, (C) failed to make a
required contribution or payment to a Multiemployer Plan, or (D) failed
to make a required installment or other required payment under Section
412 of the Code, Section 302 of ERISA or the terms of such Employee
Benefit Plan, which tax, penalty, accumulated funding deficiency,
liability or failure could reasonably be expected to have a Material
Adverse Effect.
(iii) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan or Multiemployer
Plan, and neither the Borrower, any Subsidiary nor any other ERISA
Affiliate has incurred any unpaid withdrawal liability with respect to
any Multiemployer Plan.
(iv) The present value of all vested accrued benefits under
each Employee Benefit Plan which is subject to Title IV of ERISA, did
not, as of the most recent valuation date for each such plan, exceed
the then current value of the assets of such Employee Benefit Plan
allocable to such benefits.
(v) To the best of the Borrower's knowledge, each Employee
Benefit Plan subject to Title IV of ERISA, maintained by the Borrower,
any Subsidiary or any other ERISA Affiliate, has been administered in
accordance with its terms in all material respects and is in compliance
in all material respects with all applicable requirements of ERISA and
other Applicable Laws except for such noncompliances which could not
reasonably be expected to have a Material Adverse Effect.
(vi) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or administrative
exemption.
(vii) No proceeding, claim, lawsuit and/or investigation
exists or, to the best knowledge of the Borrower after due inquiry, is
threatened concerning or involving any Employee Benefit Plan which if adversely
determined could reasonably be expected to have a Material Adverse Effect.
(m) Environmental Laws. Each of the Borrower and its Subsidiaries has
obtained all Governmental Approvals which are required under Environmental Laws
and is in compliance with all terms and conditions of such Governmental
Approvals except for those Governmental Approvals, the failure to obtain or the
failure with which to comply, could not reasonably be expected to have a
Material Adverse Effect. Each of the Borrower and its Subsidiaries is also in
material compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and timetables
contained in the Environmental Laws. Except for matters which could not
reasonably be expected to have a Material Adverse Effect, the Borrower is not
aware of, and has not received notice of, any past, present, or future events,
conditions, circumstances, activities, practices, incidents, actions, or plans
which, with respect to the Borrower or any of its Subsidiaries, may interfere
with or prevent compliance or continued compliance with Environmental Laws, or
may give rise to any common-law or legal liability, or otherwise form the basis
of any claim, action, demand, suit, proceeding, hearing, study, or
investigation, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial, toxic, or other Hazardous Material; and
there is no civil, criminal, or administrative action, suit, demand, claim,
hearing, notice, or demand letter, notice of violation, investigation, or
proceeding pending or, to the Borrower's knowledge, threatened, against the
Borrower or any of its Subsidiaries relating in any way to Environmental Laws an
adverse determination in respect of which could reasonably be expected to have a
Material Adverse Effect. With respect to the representations made in this
subsection, the Borrower wishes to bring to the attention of the Lenders and the
Agent the matters set forth on Schedule 6.1.(m), none of which could reasonably
be expected to have a Material Adverse Effect.
(n) Investment Company; Public Utility Holding Company. Neither the
Borrower nor any Subsidiary is (i) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) subject to any other
Applicable Law which purports to regulate or restrict its ability to borrow
money or to consummate the transactions contemplated by this Agreement or to
perform its obligations under any Loan Document to which it is a party.
(o) Margin Stock. Neither the Borrower nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose, whether immediate, incidental or ultimate, of buying or
carrying "margin stock" within the meaning of Regulations G, U and X of the
Board of Governors of the Federal Reserve System.
(p) Affiliate Transactions. Except as permitted by Section 9.3.,
neither the Borrower nor any Restricted Subsidiary is a party to or bound by any
agreement or arrangement (whether oral or written) to which any Affiliate of the
Borrower or any Restricted Subsidiary is a party.
(q) Intellectual Property. The Borrower and each Subsidiary owns or has
the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights (collectively, "Intellectual
Property") necessary to or used in the conduct of its businesses as now
conducted and as contemplated by the Loan Documents, without known conflict with
any patent, license, franchise, trademark, trade secret, trade name, copyright,
or other proprietary right of any other Person.
(r) Accuracy and Completeness of Information. Other than statements,
estimates and projections provided by the Borrower with respect to the
anticipated future performance of the Borrower and its Subsidiaries, all written
information, reports and other papers and data furnished to the Agent or any
Lender by, on behalf of, or at the direction of, the Borrower or any Subsidiary
in connection with any of the Loan Documents were, at the time the same were so
furnished, complete and correct in all material respects, to the extent
necessary to give the recipient a true and accurate knowledge of the subject
matter and did not contain any untrue statement of a fact material to the
creditworthiness of the Borrower or any Subsidiary and did not omit to state a
material fact necessary in order to make the statements contained therein not
misleading, or, in the case of financial statements, present fairly, in all
material respects and in accordance with GAAP consistently applied throughout
the periods involved, the financial position of the Persons involved as at the
date thereof and the results of operations for such periods. Although the
Borrower offers no assurances as to future events, all statements, estimates and
projections provided by the Borrower with respect to the anticipated future
performance of the Borrower and its Subsidiaries and previously delivered to the
Lenders have been prepared on the basis of reasonable assumptions regarding the
Borrower and the Subsidiaries and their projected growth and performance, the
future of the steel industry, the present and future state of the economy and
other variables and factors used in the preparation of such projections.
Section 6.2 Survival of Representations and Warranties, Etc.
All statements contained in any certificate, financial statement or
other instrument delivered by or on behalf of the Borrower or any Subsidiary to
the Agent or any Lender pursuant to or in connection with this Agreement or any
of the other Loan Documents (including, but not limited to, any such statement
made in or in connection with any amendment thereto or any statement contained
in any certificate, financial statement or other instrument delivered by or on
behalf of the Borrower prior to the Agreement Date and delivered to the Agent or
any Lender in connection with closing the transactions contemplated hereby)
shall constitute representations and warranties made by the Borrower under this
Agreement. All representations and warranties made under this Agreement shall be
deemed to be made at and as of the Agreement Date, the Effective Date and at and
as of the date of the occurrence of any Credit Event, except to the extent that
such representations and warranties expressly relate solely to an earlier date
(in which case such representations and warranties shall have been true and
accurate on and as of such earlier date) and except for changes in factual
circumstances specifically permitted hereunder.
ARTICLE 7 AFFIRMATIVE COVENANTS
For so long as this Agreement is in effect, unless the Requisite
Lenders (or, if required pursuant to Section 12.6., all of the Lenders) shall
otherwise consent in the manner provided for in Section 12.6., the Borrower
shall:
Section 7.1 Preservation of Existence and Similar Matters.
Preserve and maintain, and cause each Subsidiary (other than those
Subsidiaries not material to the financial condition or business operations of
the Borrower and its Subsidiaries taken as a whole) to preserve and maintain,
its respective existence, rights, franchises, licenses and privileges in the
jurisdiction of its formation and qualify and remain qualified and authorized to
do business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification and authorization and where
the failure to be so authorized and qualified could reasonably be expected to
have a Material Adverse Effect.
Section 7.2 Compliance with Applicable Law and Material Contracts.
Comply, and cause each Subsidiary to comply, with (a) all Applicable
Law, including the obtaining of all Governmental Approvals, if the failure to
comply with which could reasonably be expected to have a Material Adverse
Effect, and (b) all material terms and conditions of all Material Contracts to
which it is a party.
Section 7.3 Maintenance of Property.
In addition to the requirements of any of the other Loan Documents, (a)
protect and preserve, and cause each Restricted Subsidiary to protect and
preserve, all of its material properties, including, but not limited to, all
Intellectual Property, and maintain in good repair, working order and condition
all tangible properties, and (b) from time to time make or cause to be made all
needed and appropriate repairs, renewals, replacements and additions to such
properties, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
Section 7.4 Insurance.
In addition to the requirements of any of the other Loan Documents,
maintain, and cause each Subsidiary to maintain, insurance with financially
sound and reputable insurance companies against such risks and in such amounts
as is customarily maintained by similar businesses or as may be required by
Applicable Law, and within 15 days after the delivery of the financial
statements under Section 8.2., the Borrower will deliver to the Agent a list
specifying the details of such insurance then in effect. Notwithstanding the
foregoing, the Borrower and its Subsidiaries may, to the extent permitted by
Applicable Law, establish and responsibly maintain a sound system of
self-insurance against liabilities for employee health benefits and personal
injuries and property damage, provided that the Borrower will maintain adequate
reserves with respect thereto and, at all times, the Borrower will maintain an
amount of excess insurance to cover casualties and contingencies greater than
such reserves.
Section 7.5 Payment of Taxes and Claims.
Pay or discharge, and cause each Subsidiary to pay and discharge, when
due (a) all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits or upon any properties belonging to it, and (b)
all lawful claims of materialmen, mechanics, carriers, warehousemen and
landlords for labor, materials, supplies and rentals which, if unpaid, might
become a Lien on any properties of such Person; provided, however, that this
Section shall not require the payment or discharge of any such tax, assessment,
charge, levy or claim which is being contested in good faith by appropriate
proceedings which operate to suspend the collection thereof and for which
adequate reserves have been established on the books of the Borrower or such
Subsidiary, as applicable, in accordance with GAAP.
Section 7.6 Visits and Inspections.
Permit, and cause each Subsidiary to permit, representatives or agents
of the Agent or any Lender, from time to time, as often as may be reasonably
requested in light of all circumstances, financial or otherwise, surrounding the
Borrower and its operations, but only during normal business hours, and at the
expense of the Agent or such Lender so long as no Event of Default shall be
continuing, to: (a) visit and inspect all properties of the Borrower and its
Subsidiaries; (b) inspect and make extracts from their respective relevant books
and records, including but not limited to management letters prepared by
independent accountants; and (c) discuss with its principal officers, and its
independent accountants, the business, assets, liabilities, financial conditions
and results of operations of the Borrower and its Subsidiaries. If requested by
the Agent, the Borrower shall execute an authorization letter addressed to its
accountants authorizing the Agent or any Lender to discuss the financial affairs
of the Borrower and any Subsidiary with its accountants.
Section 7.7 Use of Proceeds; Letters of Credit.
(a) Use the proceeds of the initial Loans to repay in full the Debt
described on Schedule 7.7.; (b) use the proceeds of all subsequent Loans and all
Letters of Credit for general corporate and working capital purposes only,
including without limitation, the funding of Capital Expenditures; and (c) not
use any part of such proceeds or Letters of Credit to purchase or carry, or to
reduce or retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulations U and X of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any such margin stock if such use would result
in a violation of such Regulations or any other Applicable Law.
Section 7.8 Environmental Matters.
Comply, and cause all of its Subsidiaries to comply, with all
Environmental Laws the failure with which to comply could reasonably be expected
to have a Material Adverse Effect. If the Borrower or any Subsidiary shall (a)
receive notice that any violation of any Environmental Law which could
reasonably be expected to have a Material Adverse Effect may have been committed
or is about to be committed by such Person, (b) receive notice that any
administrative or judicial complaint or order has been filed or is about to be
filed against the Borrower or any Subsidiary alleging violations of any
Environmental Law or requiring the Borrower or any Subsidiary to take any action
in connection with the release of Hazardous Materials, which violation or
required action could reasonably be expected to have a Material Adverse Effect
or (c) receive any notice from a Governmental Authority or private party
alleging that the Borrower or any Subsidiary may be liable or responsible for
costs associated with a response to or cleanup of a release of a Hazardous
Materials or any damages caused thereby, which liability, responsibility or
damages could reasonably be expected to have a Material Adverse Effect, then the
Borrower shall provide the Agent with a copy of such notice within 10 days after
the receipt thereof by the Borrower or any of the Subsidiaries. The Borrower and
the Subsidiaries shall promptly take all actions necessary to prevent the
imposition of any Liens on any of their respective properties arising out of or
related to any Environmental Laws.
Section 7.9 Books and Records.
Maintain, and cause each of the Subsidiaries to maintain, books and
records pertaining to its business operations in such detail, form and scope as
is consistent with good business practice and in accordance with GAAP.
Section 7.10 Further Assurances.
At the Borrower's cost and expense, upon request of the Agent, duly
execute and deliver or cause to be duly executed and delivered, to the Agent
such further instruments, documents and certificates, and do and cause to be
done such further acts that may be reasonably necessary or advisable in the
reasonable opinion of the Agent to carry out more effectively the provisions and
purposes of this Agreement and the other Loan Documents.
ARTICLE 8 INFORMATION
For so long as this Agreement is in effect, unless the Requisite
Lenders (or, if required pursuant to Section 12.6., all of the Lenders) shall
otherwise consent in the manner set forth in Section 12.6., the Borrower shall
furnish to each Lender (or to the Agent if so provided below) at its Lending
Office:
Section 8.1 Quarterly Financial Statements.
As soon as available and in any event within 45 days after the close of
each of the first, second and third fiscal quarters of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such period and the related consolidated statements of income, retained earnings
and cash flows of the Borrower and its Subsidiaries for such period, setting
forth in each case in comparative form the figures for the corresponding periods
of the previous fiscal year, all of which shall be certified by the treasurer or
chief financial officer of the Borrower, in his or her opinion, to present
fairly, in accordance with GAAP and in all material respects, the consolidated
financial position of the Borrower and its Subsidiaries as at the date thereof
and the results of operations for such period (subject to normal year-end
adjustments); provided, however, that delivery pursuant to Section 8.4.(b) of
copies of the Quarterly Report on Form 10-Q of the Borrower for such quarterly
period substantially in the form as now filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section.
Section 8.2 Year-End Statements.
As soon as available and in any event within 90 days after the end of
each fiscal year of the Borrower, the audited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year and the related
audited consolidated statements of income, retained earnings and cash flows of
the Borrower and its Subsidiaries for such fiscal year, setting forth in
comparative form the figures as at the end of and for the previous fiscal year,
all of which shall be certified by the treasurer or chief financial officer of
the Borrower, in his or her opinion, to present fairly, in accordance with GAAP
and in all material respects, the financial position of the Borrower and its
Subsidiaries as at the date thereof and the result of operations for such period
and by independent certified public accountants of recognized national standing
acceptable to the Agent, whose certificate shall be in scope and substance
satisfactory to the Agent and who shall have authorized the Borrower to deliver
such financial statements and certification thereof to the Agent and the Lenders
pursuant to this Agreement; provided, however, that delivery pursuant to Section
8.4.(b) of copies of the Annual Report on Form 10-K of the Borrower for such
fiscal year substantially in the form as now filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this Section.
Section 8.3 Compliance Certificate; Accountant's Letter.
At the time the financial statements are furnished pursuant to Sections
8.1. and 8.2., a certificate in the form of Exhibit M (a "Compliance
Certificate") executed by the treasurer or chief financial officer of the
Borrower: (a) setting forth in reasonable detail as at the end of such quarterly
accounting period or fiscal year, as the case may be, the calculations required
to establish whether or not the Borrower, and when appropriate its consolidated
Subsidiaries, were in compliance with the covenants contained in Sections 9.1.
and 9.2.; and (b) stating that, to the best of his or her knowledge, information
and belief, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default and its nature, when it occurred and
whether it is continuing and the steps being taken by the Borrower with respect
to such event, condition or failure. At the time the financial statements are
furnished pursuant to Section 8.2., the Borrower will deliver to the Lenders a
certificate of the independent accountants performing the audit of such
financial statements to the effect that, in making such audit, nothing came to
their attention that caused them to believe that the Borrower failed to comply
with any of the terms, covenants, provisions or conditions contained in this
Agreement insofar as they relate to accounting matters. Such accountants,
however, shall not be liable to any Person by reason of their failure to obtain
knowledge of any Event of Default or Default which would not be disclosed in the
course of an audit conducted in accordance with GAAP.
Section 8.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of Directors by its independent public
accountants in connection with any annual, interim or special audit, including,
without limitation, any management report;
(b) Promptly upon their becoming available, copies of all financial
statements or other financial information, all registration statements (without
exhibits and other than those on Form S-8) and other periodic or special
reports, if any, which the Borrower shall file with the Securities and Exchange
Commission (or any Governmental Authority substituted therefor) or any national
securities exchange; and
(c) Promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports, notices and
proxy statements so mailed.
Section 8.5 Notice of Litigation and Other Matters.
Prompt notice of:
(a) to the extent the Borrower is aware of the same, the commencement
of any proceeding or investigation by or before any Governmental Authority and
any action or proceeding in any court or other tribunal or before any arbitrator
against or in any other way relating adversely to, or adversely affecting, the
Borrower or any Subsidiary or any of their respective properties, assets or
businesses which, if determined or resolved adversely to such Person, could
reasonably be expected to have a Material Adverse Effect;
(b) any amendment to the articles of incorporation or bylaws of
the Borrower;
(c) any material change in the senior management of the Borrower
or any Restricted Subsidiary;
(d) any change in the business, assets, liabilities, financial
condition or results of operations of the Borrower or any Subsidiary which has
had, or could reasonably be expected to have, a Material Adverse Effect;
(e) the occurrence of any Default or Event of Default or any event
which constitutes or which with the passage of time, the giving of notice or
otherwise would constitute a default or event of default by the Borrower or any
Subsidiary under any Material Contract to which any such Person is a party or by
which any such Person or any of its respective properties may be bound;
(f) any material order, judgment or decree having been entered
against the Borrower or any Subsidiary or any of their respective properties or
assets;
(g) any notification of a violation of any Applicable Law or any
inquiry regarding any alleged violation of any Applicable Law which violation
could reasonably be expected to have a Material Adverse Effect shall have been
received by the Borrower or any of the Subsidiaries from any Governmental
Authority; and
(h) the proposed sale, transfer or other disposition of any
material assets of the Borrower or any Subsidiary to any other Person (other
than to the Borrower or a Subsidiary).
Section 8.6 ERISA.
To the Agent:
(a) Together with the financial statements required to be delivered
pursuant to Section 8.1. and 8.2., notice of (i) the establishment of any new
Pension Plan (which notice shall include a copy of such plan), (ii) the
commencement of contributions to any Employee Benefit Plan to which the
Borrower, any Subsidiary or any of its ERISA Affiliates was not previously
contributing, (iii) any material increase in the benefits of any existing
Employee Benefit Plan, (iv) each funding waiver request filed with respect to
any Employee Benefit Plan and all communications received or sent by the
Borrower, any Subsidiary or any ERISA Affiliate with respect to such request and
(v) the failure of the Borrower, any Subsidiary or any ERISA Affiliate to make a
required installment or payment under Section 302 of ERISA or Section 412 of the
Code by the due date;
(b) Promptly and in any event within fifteen (15) days of becoming
aware of the occurrence or forthcoming occurrence of any (i) Termination Event
or (ii) nonexempt "prohibited transaction," as such term is defined in Section
406 of ERISA or Section 4975 of the Code, in connection with any Pension Plan or
any trust created thereunder, a notice specifying the nature thereof, what
action the Borrower, any Subsidiary or any ERISA Affiliate has taken, is taking
or proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto; and
(c) With reasonable promptness (but in any event within 15 days for
purposes of the following clauses (i) and (ii)), copies of (i) any unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of an Employee Benefit Plan under Section 401(a) of the Code, (ii)
all notices received by the Borrower, any Subsidiary or any ERISA Affiliate of
the PBGC's intent to terminate any Pension Plan or to have a trustee appointed
to administer any Pension Plan, and (iii) all notices received by the Borrower,
any Subsidiary or any ERISA Affiliate from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant to Section
4202 of ERISA. The Borrower will notify the Agent in writing within 5 Business
Days of the Borrower, any Subsidiary or any ERISA Affiliate obtaining knowledge
or reason to know that the Borrower, any Subsidiary or any ERISA Affiliate has
filed or intends to file a notice of intent to terminate any Pension Plan under
a distress termination within the meaning of Section 4041(c) of ERISA.
Section 8.7 Other Information.
From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the business, assets, liabilities, financial condition, or results of operations
of the Borrower or any of its Subsidiaries as the Agent or any Lender may
reasonably request.
ARTICLE 9 NEGATIVE COVENANTS
For so long as this Agreement is in effect, unless the Requisite
Lenders (or, if required pursuant to Section 12.6., all of the Lenders) shall
otherwise consent in the manner set forth in Section 12.6., the Borrower shall
comply with the following covenants:
Section 9.1 Financial Covenants.
The Borrower shall not:
(a) Debt to Capitalization Ratio. Permit the Debt to
Capitalization Ratio to be greater than 0.60 to 1.00 at the end of any fiscal
quarter.
(b) Interest Coverage Ratio. Permit the ratio of Consolidated
EBIT to Consolidated Interest Expense to be less than 1.75 to 1.00 at the end of
any Four-Quarter Period.
(c) Minimum Tangible Net Worth. Permit Consolidated Tangible Net Worth
to be less than (i) $284,000,000 plus (ii) 50% of Consolidated Net Income (only
if greater than $0) for each fiscal quarter of the Borrower ending after
September 30, 1996.
Section 9.2 Liens, Debt and Other Restrictions.
(a) Negative Pledge. The Borrower covenants that it will not, and will
not permit any Restricted Subsidiary to, cause or permit to exist, or agree or
consent to cause or permit to exist in the future (upon the happening of a
contingency or otherwise), any of their Property, whether now owned or hereafter
acquired, to be subject to a Lien except:
(i) Liens securing taxes, assessments or governmental charges
or levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons;
(ii) Liens incurred or deposits made in the ordinary
course of business
(1) in connection with workers' compensation,
unemployment insurance, social security and other like laws, and
(2) to secure the performance of letters of credit,
bids, tenders, sales contracts, leases, statutory obligations,
surety and performance bonds (of a type other than set forth
in the immediately following subsection (iii)) and other
similar obligations not incurred in connection with the
borrowing of money, the obtaining of advances or the payment
of the deferred purchase price of Property;
(iii) Liens
(1) arising from judicial attachments and
judgments,
(2) securing appeal bonds, supersedeas bonds,
and
(3) arising in connection with court proceedings
(including, without limitation, surety bonds and letters of credit or any other
instrument serving a similar purpose),
provided that the execution or other enforcement of such Liens
is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate
proceedings, and provided further that the aggregate amount so
secured will not at any time exceed $10,000,000;
(iv) Liens on Property of a Restricted Subsidiary,
provided that such Liens secure only obligations owing to the Borrower or a
Restricted Subsidiary;
(v) Liens in the nature of reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other similar title exceptions or encumbrances
affecting real property, provided that such exceptions and encumbrances
could not reasonably be expected to materially interfere with the use
of such Property in the ordinary conduct of the business of the
Borrower and the Restricted Subsidiaries;
(vi) (1) Liens securing Debt in existence and listed
in Schedule 6.1.(f), and
(2) Liens securing renewals, extensions (as to time)
and refinancings of such Debt secured by such Liens listed in
such Schedule, provided that the amount of Debt secured by
each such Lien is not increased in excess of the amount of
Debt outstanding on the date of such renewal, extension or
refinancing, and none of such Liens is, or is required to be,
extended to include any additional Property of the Borrower or
any Restricted Subsidiary as a condition to, or as a result
of, such renewal, extension or refinancing;
(vii) additional Liens securing Debt of the Borrower or any
Restricted Subsidiary not otherwise permitted pursuant to the immediately
preceding clauses (i) through clause (vi), provided that,
(1) in the case of Purchase Money Liens, each such
Purchase Money Lien secures Debt of the Borrower or a
Restricted Subsidiary in an amount not exceeding one hundred
percent (100%) of the cost of construction or acquisition of
the particular Property to which such Debt relates (or, in the
case of a Lien existing on any Property of any corporation the
time it becomes a Restricted Subsidiary, the Fair Market Value
of such Property at such time),
(2) immediately after, and after giving effect
thereto, no Default or Event of Default would exist; and
(3) At any time, the sum of
(A) the aggregate amount of all Debt and
other obligations secured by such Liens at such time, plus, without duplication,
(B) the total outstanding amount of Debt
of all Restricted Subsidiaries (determined after elimination of intercompany
items among such Persons) not secured by such Liens, does not exceed 13.0% of
Consolidated Assets.
In addition, the Borrower will not, and will not permit any Restricted
Subsidiary to, enter into, assume or permit to exist any agreement evidencing
Debt secured by a Purchase Money Lien which prohibits the creation or assumption
of any Lien upon its respective properties or assets, whether now owned or
hereafter acquired other than the Property subject to such Purchase Money Lien.
(b) Equal and Ratable Lien; Equitable Lien. In case any Property shall
be subject to a Lien in violation of this Section 9.2., the Borrower will
forthwith make or cause to be made, to the fullest extent permitted by
applicable law, provision whereby the Obligations will be secured equally and
ratably with all other obligations secured thereby pursuant to such agreements
and instruments as shall be approved by the Agent, and the Borrower will cause
to be delivered to the Agent an opinion of independent counsel to the effect
that such agreements and instruments are enforceable in accordance with their
terms, and in any such case the Obligations shall have the benefit, to the full
extent that, and with such priority as, the holders of obligations may be
entitled under applicable law, of an equitable Lien on such Property securing
the Obligations. A violation of this Section 9.2. will constitute an Event of
Default hereunder, whether or not the Borrower complies with this subsection.
(c) Financing Statements. The Borrower will not, and will not permit
any Restricted Subsidiary to, sign or file a financing statement under the
Uniform Commercial Code of any jurisdiction that names the Borrower or such
Restricted Subsidiary as debtor, or sign any security agreement authorizing any
secured party thereunder to file any such financing statement, except, in any
such case, a financing statement filed or to be filed to perfect or protect a
security interest that the Borrower or such Restricted Subsidiary is entitled to
create, assume or incur, or permit to exist, under the foregoing provisions of
this Section 9.2. or to evidence for information purposes a lessor's interest in
Property leased to the Borrower or any such Restricted Subsidiary.
(d) Debt. The Borrower will not permit any Restricted Subsidiary to
incur or in any other manner become liable in respect of any Debt at any time
unless, after giving effect thereto and to any concurrent transactions:
(i) such Debt is owed to the Borrower or to another
Restricted Subsidiary;
(ii) such Debt existed on the Agreement Date and is listed
on Schedule 6.1.(g); or
(iii) both
(1) the total outstanding amount of Debt of all
Restricted Subsidiaries (determined after elimination of
intercompany items among such Persons) plus the aggregate
amount of all Debt and other obligations secured by Liens
permitted by Section 9.2.(a)(vii) does not exceed 13.0% of
Consolidated Assets; and
(2) immediately before and immediately after
giving effect to such transaction, no Default or Event of Default exists or
would exist.
(e) Investments. The Borrower will not, and will not permit any
Restricted Subsidiary to, make any Investment other than Permitted Investments.
(f) Disposal of Restricted Subsidiary Securities. The Borrower will
not, and will not permit any Restricted Subsidiary to, at any time Transfer any
shares of the stock or other Securities (or any options or warrants to purchase
stock or other Securities exchangeable for or convertible into stock) of any
Restricted Subsidiary (such stock, options, warrants and other Securities herein
called "Restricted Subsidiary Stock") or Debt of any Restricted Subsidiary, nor
will the Borrower permit any Restricted Subsidiary to issue its own Restricted
Subsidiary Stock, or to Transfer any shares of Restricted Subsidiary Stock
issued by any other Restricted Subsidiary, if the effect of the transaction
would be to reduce the proportionate interest of the Borrower and the other
Restricted Subsidiaries in the outstanding Restricted Subsidiary Stock (the
"Disposition Stock") of the Restricted Subsidiary (the "Disposition Subsidiary")
whose shares are the subject of the transaction or in any manner increase the
amount of Debt of any Restricted Subsidiary held by Persons other than the
Borrower and other Restricted Subsidiaries, provided that the foregoing
restrictions do not apply to:
(i) the issuance of directors' qualifying shares;
(ii) the issuance of Disposition Stock by a Disposition
Subsidiary in satisfaction of the rights of minority shareholders of
such Disposition Subsidiary to receive such Disposition Stock, provided
that the transaction does not result in the reduction of the
proportionate interest of the Borrower and the other Restricted
Subsidiaries in the outstanding Disposition Stock; and
(iii) the Transfer for an Acceptable Consideration payable at
one time (the "Disposition Date") to a Person (other than directly or
indirectly to an Affiliate) of the Disposition Stock, and the Debt of
such Disposition Subsidiary held by the Borrower and the other
Restricted Subsidiaries, if all of the following conditions shall have
been satisfied:
(1) the Board of Directors of the Borrower and
each Restricted Subsidiary, in each case owning any such Disposition Stock,
shall have approved such Transfer of Disposition Stock and Debt as in the best
interests of the Borrower or such Restricted Subsidiary, as the case may be;
(2) the consideration paid for such Disposition
Stock and Debt is deemed adequate and satisfactory by each such Board of
Directors;
(3) if all shares of Disposition Stock and all Debt
of such Disposition Subsidiary held by the Borrower and the
Subsidiaries are being simultaneously sold, the Restricted
Subsidiary being disposed of shall not have any continuing
Investment in the Borrower or any Subsidiary not being
simultaneously disposed of;
(4) if applicable, the Borrower shall have
complied with Section 12.8. regarding the designation of such Disposition
Subsidiary as an Unrestricted Subsidiary; and
(5) such Transfer satisfies the requirements of
Section 9.2.(g)(ii).
For purposes of determining the book value of Property constituting
Disposition Stock being Transferred as provided in clause (iii) above,
such book value shall be deemed to be the aggregate book value of all
assets of the Disposition Subsidiary that shall have issued such
Disposition Stock. The designation of a Restricted Subsidiary as an
Unrestricted Subsidiary shall be treated, for the purposes of this
subsection (f), as a deemed sale of all of the Restricted Subsidiary
Stock of such Restricted Subsidiary by the Borrower.
(g) Mergers; Consolidations; Transfers of Property; Disposal of
Shares of a Restricted Subsidiary.
(i) Mergers; Consolidations. The Borrower will not, and will
not permit any Restricted Subsidiary to, merge with or into or
consolidate with or into any other Person or permit any other Person to
merge or consolidate with or into it (except that a Restricted
Subsidiary may merge into or consolidate with the Borrower or a
Wholly-Owned Restricted Subsidiary), provided, that the foregoing
restriction does not apply to the merger or consolidation of the
Borrower with another corporation if:
(1) the Borrower is the surviving corporation of
such merger or consolidation;
(2) immediately prior to, and immediately after
the consummation of the transaction, and after giving effect thereto, no Default
or Event of Default would exist; and
(3) immediately prior to, and immediately after
the consummation of the transaction, and after giving effect thereto, a
Restricted Subsidiary would be permitted to incur at least $1.00 of Debt
pursuant to the provisions of Section 9.2.(d)(iii); and
(ii) Transfers of Property. The Borrower will not, and will
not permit any Restricted Subsidiary to, sell (including, without
limitation, any sale and subsequent leasing as lessee of such
Property), lease as lessor, transfer or otherwise dispose of any
Property (collectively referred to as "Transfers"; the various verb
forms of the term "Transfer" shall have correlative meanings as used
herein), except:
(1) Transfers of inventory, of unuseful,
obsolete or worn out Property and of delinquent accounts receivables, in each
case in the ordinary course of business of the Borrower or such Restricted
Subsidiary;
(2) Transfers from a Restricted Subsidiary to
the Borrower or to a Wholly-Owned Restricted Subsidiary; and
(3) any other Transfer of Property at any time
to a Person, other than an Affiliate, for an Acceptable Consideration if:
(A) the aggregate of the amounts
representing, in each case, the book value of each
item of Property of the Borrower and the Restricted
Subsidiaries Transferred (other than in Transfers
referred to in the foregoing clause (1) and clause
(2) (collectively, "Excluded Transfers")) during the
period
(I) of 365 days ended on the
date of such Transfer, would not exceed 15% of Consolidated Assets as of the
last day of the fiscal year then most recently ended, and
(II) from the Agreement Date
and ending on the date of such Transfer, would not exceed 40% of Consolidated
Assets as of the close of the last day of the fiscal year then most recently
ended; and
(B) the aggregate Operating Income
Contribution Percentages of all items of Property of
the Borrower and the Restricted Subsidiaries
Transferred (other than in Excluded Transfers) during
the period of 365 days ended on the date of such
Transfer, would not exceed 20%, and any certificate
contemplated by the definition of Operating Income
Contribution Percentage shall have been timely
delivered to the Agent in respect of such Transfer.
Section 9.3 Transactions with Affiliates.
The Borrower covenants that it will not, and will not permit any
Restricted Subsidiary to, enter into any transaction, including, without
limitation, the purchase, sale or exchange of Property or the rendering of any
service, with any Affiliate, except in the ordinary course of and pursuant to
the reasonable requirements of the Borrower's or such Restricted Subsidiary's
business and upon fair and reasonable terms no less favorable to the Borrower or
such Restricted Subsidiary than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate.
Section 9.4 Line of Business.
The Borrower covenants that it will not, and will not permit any
Restricted Subsidiary to, engage in any business other than the businesses
related to their present businesses or those that are substantially similar to
their present businesses.
ARTICLE 10 DEFAULT
Section 10.1 Events of Default.
Each of the following shall constitute an Event of Default, whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of Applicable Law or pursuant to any judgment or order of
any Governmental Authority:
(a) Default in Payment. (i) The Borrower shall fail to pay when due
(whether upon demand, at maturity, by reason of acceleration or otherwise) the
principal of any of the Loans, or any Reimbursement Obligation or (ii) the
Borrower shall fail to pay when due any interest on any of the Loans or any of
the other payment Obligations owing by the Borrower under this Agreement or any
other Loan Document and in the case of this clause (ii), such failure shall
continue for a period of 5 days.
(b) Default in Performance. (i) The Borrower shall fail to perform or
observe any term, covenant, condition or agreement contained in Article IX. or
(ii) the Borrower shall fail to perform or observe any term, covenant, condition
or agreement contained in this Agreement or any other Loan Document to which it
is a party and not otherwise mentioned in this Section and such failure shall
continue for a period of 30 days after the earlier of (x) the date upon which
the Borrower obtains knowledge of such failure or (y) the date upon which the
Borrower has received written notice of such failure from the Agent.
(c) Misrepresentations. Any written statement, representation or
warranty made or deemed made by or on behalf of the Borrower under this
Agreement or under any other Loan Document, or any amendment hereto or thereto,
or in any other writing or statement at any time furnished or made or deemed
made by or on behalf of the Borrower to the Agent or any Lender, shall at any
time prove to have been incorrect or misleading in any material respect when
furnished or made.
(d) Debt Cross-Default.
(i) The Borrower or any Subsidiary shall fail to pay when due
and payable and after the expiration of any applicable grace and cure
periods the principal of, or interest on, any Debt other than the Loans
having an aggregate outstanding principal amount of $10,000,000 or more
("Material Debt"); or
(ii) the maturity of any such Material Debt shall have (x)
been accelerated in accordance with the provisions of any indenture,
contract or instrument evidencing, providing for the creation of or
otherwise concerning such Material Debt or (y) been required to be
prepaid prior to the stated maturity thereof; provided, however, this
clause (y) shall not be deemed to apply to the Debt evidenced by the
industrial revenue bonds described on Schedule 6.1.(g) which are
supported by letters of credit issued for the account of the Borrower
or American Steel & Wire Corporation; or
(iii) any other event shall have occurred and be continuing
which, with or without the passage of time, the giving of notice, or
otherwise, would permit any holder or holders of such Material Debt,
any trustee or agent acting on behalf of such holder or holders or any
other Person, (x) to accelerate the maturity of any such Material Debt
or (y) require any such Material Debt to be prepaid prior to its stated
maturity; provided, however, this clause (y) shall not be deemed to
apply to the Debt evidenced by the industrial revenue bonds described
on Schedule 6.1. (g) which are supported by letters of credit issued
for the account of
the Borrower or American Steel & Wire Corporation.
(e) Voluntary Bankruptcy Proceeding. The Borrower or any Subsidiary
shall: (i) commence a voluntary case under the Bankruptcy Code of 1978, as
amended or other federal bankruptcy laws (as now or hereafter in effect); (ii)
file a petition seeking to take advantage of any other Applicable Laws, domestic
or foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts; (iii) consent to, or fail to contest in a
timely and appropriate manner, any petition filed against it in an involuntary
case under such bankruptcy laws or other Applicable Laws or consent to any
proceeding or action described in the immediately following subsection; (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner,
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign; (v) admit in writing its inability to pay its debts as they
become due; (vi) make a general assignment for the benefit of creditors; (vii)
make a conveyance fraudulent as to creditors under any Applicable Law; or (viii)
take any corporate or similar action for the purpose of effecting any of the
foregoing.
(f) Involuntary Bankruptcy Proceeding. A case or other proceeding shall
be commenced against the Borrower or any Subsidiary in any court of competent
jurisdiction seeking: (i) relief under the Bankruptcy Code of 1978, as amended
or other federal bankruptcy laws (as now or hereafter in effect) or under any
other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts; or (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of such
Person, or of all or any substantial part of the assets, domestic or foreign, of
such Person, and such case or proceeding shall continue undismissed or unstayed
for a period of 45 consecutive calendar days, or an order granting the relief
requested in such case or proceeding against the Borrower or such Subsidiary
(including, but not limited to, an order for relief under such Bankruptcy Code
or such other federal bankruptcy laws) shall be entered
(g) Contesting Loan Documents. The Borrower shall disavow, revoke or
terminate any Loan Document to which it is a party or shall otherwise challenge
or contest in any action, suit or proceeding in any court or before any
Governmental Authority the validity or enforceability of any Loan Document.
(h) Judgment. A judgment or order for the payment of money (not
adequately covered by insurance as to which the insurance company has
acknowledged coverage in writing) shall be entered against the Borrower or any
Subsidiary by any court or other tribunal which exceeds, individually or
together with all other such judgments or orders entered against the Borrower
and its Subsidiaries, $10,000,000 in amount and such judgment or order shall
continue for a period of 30 days without being stayed or dismissed through
appropriate appellate proceedings.
(i) Attachment. A warrant, writ of attachment, execution or similar
process shall be issued against any property of the Borrower or any of its
Subsidiaries which exceeds, individually or together with all other such
warrants, writs, executions and processes, $10,000,000 in amount and such
warrant, writ, execution or process shall not be discharged, vacated, stayed or
bonded for a period of 30 days; provided, however, that if a bond has been
issued in favor of the claimant or other Person obtaining such warrant, writ,
execution or process, the issuer of such bond shall execute a waiver or
subordination agreement in form and substance satisfactory to the Agent pursuant
to which the issuer of such bond (i) subordinates its claim of reimbursement,
contribution or subrogation to the Obligations if, under Applicable Law, such
claim ranks prior in right of repayment to, and not pari passu with, the
Obligations, and (ii) waives or subordinates any Lien it may have on the assets
of the Borrower or any of its Subsidiaries.
(j) ERISA. (i) The occurrence of any Termination Event which would
result in a liability on the part of the Borrower or any ERISA Affiliate to the
PBGC; (ii) the present value of all benefit liabilities under all Pension Plans
shall exceed by more than $10,000,000 the current value of the assets of such
Pension Plans allocable to such benefit liabilities; (iii) the occurrence of any
accumulated funding deficiency (as defined in Section 302 of ERISA and Section
412 of the Code) with respect to any Pension Plan, whether or not waived; (iv)
the Borrower, any Subsidiary or any other ERISA Affiliate shall fail to make any
contribution or payment to any Multiemployer Plan which is required to make
under any agreement relating to such Multiemployer Plan, or any Applicable Law;
or (v) the Borrower, any Subsidiary or any other ERISA Affiliate shall engage in
any prohibited transaction under Section 406 of ERISA or Sections 4975 of the
Code for which a civil penalty pursuant to Section 502(I) of ERISA or a tax
pursuant to Section 4975 of the Code may be imposed.
(k) Loan Documents. An Event of Default (as defined therein)
shall occur and be continuing under any of the other Loan Documents.
(l) Change of Control. If (i) any Person (or two or more Persons acting
in concert) shall acquire "beneficial ownership" within the meaning of Rule
13d-3 of the Securities Exchange Act of 1934, as amended, of the capital stock
or securities of the Borrower representing 35% or more of the aggregate voting
power of all classes of capital stock and securities of the Borrower entitled to
vote for the election of directors or (ii) during any twelve-month period
(commencing both before and after the Agreement Date), a majority of the Board
of Directors of the Borrower shall no longer be composed of individuals (i) who
were members of such Board of Directors on the first date of such period, (ii)
whose election or nomination to such Board of Directors was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of such Board of Directors or (iii)
whose election or nomination to such Board of Directors was approved by
individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of such Board of Directors.
(m) Dissolution. Any order, judgment or decree is entered against the
Borrower or any of its Restricted Subsidiaries decreeing the dissolution or
split up of the Borrower or that Restricted Subsidiary and such order remains
undischarged or unstayed for a period in excess of 30 days.
(n) Suspension of Business. The cessation or substantial curtailment of
revenue producing activities of the Borrower or any Restricted Subsidiary shall
occur (whether as a result of strike, lockout, labor dispute, embargo,
condemnation, force majeure or otherwise) which could reasonably be expected to
have a Material Adverse Effect.
Section 10.2 Remedies Upon Event of Default.
Upon the occurrence of an Event of Default the following provisions
shall apply:
(a) Acceleration; Termination of Facilities.
(i) Automatic. Upon the occurrence of an Event of Default
specified in Sections 10.1.(e) or 10.1.(f), (A)(i) the principal of,
and all accrued interest on, the Loans and the Notes at the time
outstanding, (ii) an amount equal to the Stated Amount of all Letters
of Credit outstanding as of the date of the occurrence of the Event of
Default and (iii) all of the other Obligations of the Borrower,
including, but not limited to, the other amounts owed to the Lenders,
the Swingline Lender and the Agent under this Agreement, the Notes or
any of the other Loan Documents shall become immediately and
automatically due and payable by the Borrower without presentment,
demand, protest, or other notice of any kind, all of which are
expressly waived by the Borrower and (B) each of the Commitments, the
Swingline Commitment, the obligation of the Lenders to make Revolving
Loans and Bid Rate Loans hereunder, the obligation of the Agent to
issue Letters of Credit hereunder, and the obligation of the Swingline
Lender to make Swingline Loans hereunder, shall immediately and
automatically terminate.
(ii) Optional. If any other Event of Default shall have
occurred and be continuing, the Requisite Lenders may direct the Agent
to, and the Agent if so directed shall: (I) declare (1) the principal
of, and accrued interest on, the Revolving Loans and Bid Rate Loans and
the Notes at the time outstanding, (2) an amount equal to the Stated
Amount of all Letters of Credit outstanding as of the date of the
occurrence of the Event of Default and (3) all of the other
Obligations, including, but not limited to, the other amounts owed to
the Lenders and the Agent under this Agreement, the Notes or any of the
other Loan Documents to be forthwith due and payable, whereupon the
same shall immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly
waived by the Borrower and (II) terminate the Commitments, the
obligation of the Lenders to make Revolving Loans and Bid Rate Loans
hereunder and the obligation of the Agent to issue Letters of Credit
hereunder. Further, if the Requisite Lenders have exercised any of
their rights under the preceding sentence, the Swingline Lender may:
(x) declare the principal of, and accrued interest on, the Swingline
Loans and the Swingline Note at the time outstanding, and all of the
other Obligations owing to the Swingline Lender, to be forthwith due
and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any
kind, all of which are expressly waived by the Borrower and (y)
terminate the Swingline Commitment and the obligation of the Swingline
Lender to make Swingline Loans.
(b) Loan Documents. The Requisite Lenders may direct the Agent
to, and the Agent if so directed shall, exercise any and all of its rights under
any and all of the other Loan Documents.
(c) Applicable Law. The Requisite Lenders may direct the Agent
to, and the Agent if so directed shall, exercise all other rights and remedies
it may have under any Applicable Law.
(d) Appointment of Receiver. To the extent permitted by Applicable Law,
the Agent and the Lenders shall be entitled to the appointment of a receiver for
the assets and properties of the Borrower and its Subsidiaries, without notice
of any kind whatsoever and without regard to the adequacy of any security for
the Obligations or the solvency of any party bound for its payment, to take
possession of all or any portion of the business operations of the Borrower and
its Subsidiaries and to exercise such power as the court shall confer upon such
receiver.
Section 10.3 Allocation of Proceeds.
If an Event of Default shall have occurred and be continuing and the
maturity of the Notes has been accelerated, all payments received by the Agent
under any of the Loan Documents, in respect of any principal of or interest on
the Obligations or any other amounts payable by the Borrower hereunder or
thereunder, shall be applied by the Agent in the following order and priority:
(a) amounts due to the Agent and the Lenders in respect
of Fees and expenses due under Section 12.2.;
(b) payments of interest on Loans and Reimbursement
Obligations, to be applied for the ratable benefit of the Lenders (with amounts
payable in respect of Swingline Loans being included in such calculation and
paid to the Swingline Lender);
(c) payments of principal of Loans and Reimbursement
Obligations, to be applied for the ratable benefit of the Lenders (with amounts
payable in respect of Swingline Loans being included in such calculation and
paid to the Swingline Lender);
(d) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to Section 2.13.;
(e) amounts due to the Agent and the Lenders pursuant to
Sections 11.6. and 12.11.;
(f) payments of all other amounts due under any of the
Loan Documents, if any, to be applied for the ratable benefit of the Lenders;
and
(g) any amount remaining after application as provided above,
shall be paid to the Borrower or whomever else may be legally entitled thereto.
Section 10.4 Performance by Agent.
If the Borrower shall fail to perform any covenant, duty or agreement
contained in any of the Loan Documents, the Agent may perform or attempt to
perform such covenant, duty or agreement on behalf of the Borrower after the
expiration of any cure or grace periods set forth herein. In such event, the
Borrower shall, at the request of the Agent, promptly pay any amount reasonably
expended by the Agent in such performance or attempted performance to the Agent,
together with interest thereon at the applicable Post-Default Rate from the date
of such expenditure until paid. Notwithstanding the foregoing, neither the Agent
nor any Lender shall have any liability or responsibility whatsoever for the
performance of any obligation of the Borrower under this Agreement or any other
Loan Document.
Section 10.5 Rights Cumulative.
The rights and remedies of the Agent and the Lenders under this
Agreement and each of the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies which any of them may otherwise have under
Applicable Law. In exercising their respective rights and remedies the Agent and
the Lenders may be selective and no failure or delay by the Agent or any of the
Lenders in exercising any right shall operate as a waiver of it, nor shall any
single or partial exercise of any power or right preclude its other or further
exercise or the exercise of any other power or right.
Section 10.6 Recision of Acceleration by Requisite Lenders.
If at any time after acceleration of the maturity of the Obligations,
the Borrower shall pay all arrears of interest and all payments on account of
principal of the Obligations which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by
Applicable Law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Defaults (other than nonpayment of principal of
and accrued interest on the Obligations due and payable solely by virtue of
acceleration) shall be remedied or waived to the satisfaction of the Requisite
Lenders, then by written notice to the Borrower, the Requisite Lenders may
elect, in the sole discretion of such Requisite Lenders, to rescind and annul
the acceleration and its consequences; but such action shall not affect any
subsequent Default or Event of Default or impair any right or remedy consequent
thereon. The provisions of the preceding sentence are intended merely to bind
the Lenders to a decision which may be made at the election of the Requisite
Lenders; they are not intended to benefit the Borrower and do not give the
Borrower the right to require the Lenders to rescind or annul any acceleration
hereunder, even if the conditions set forth herein are satisfied.
ARTICLE 11 THE AGENT
Section 11.1 Authorization and Action.
Each Lender hereby appoints and authorizes the Agent to take such
action as agent on such Lender's behalf and to exercise such powers under this
Agreement and the other Loan Documents as are specifically delegated to the
Agent by the terms and thereof, together with such powers as are reasonably
incidental thereto. The relationship between the Agent and the Lenders shall be
that of principal and agent only and nothing herein shall be construed to deem
the Agent a trustee or fiduciary for any Lender nor to impose on the Agent
duties or obligations other than those expressly provided for herein. At the
request of a Lender, the Agent will forward to each Lender copies or, where
appropriate, originals of the documents delivered to the Agent pursuant to this
Agreement or the other Loan Documents. The Agent will also furnish to any
Lender, upon the request of such Lender, a copy of any certificate or notice
furnished to the Agent by the Borrower, any Subsidiary or any other Affiliate of
the Borrower, pursuant to this Agreement or any other Loan Document not already
delivered to such Lender pursuant to the terms of this Agreement or any such
other Loan Document. As to any matters not expressly provided for by the Loan
Documents (including, without limitation, enforcement or collection of any of
the Obligations), the Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Requisite Lenders, and such instructions shall be binding
upon all Lenders and all holders of any of the Obligations; provided, however,
that, notwithstanding anything in this Agreement to the contrary, the Agent
shall not be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or any other Loan Document or
Applicable Law. Not in limitation of the foregoing, the Agent shall not exercise
any right or remedy it or the Lenders may have under any Loan Document upon the
occurrence of a Default or an Event of Default unless the Requisite Lenders have
so directed the Agent to exercise such right or remedy.
Section 11.2 Agent's Reliance, Etc.
Neither the Agent nor any of its directors, officers, agents, employees
or counsel shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement, except for its or their own
gross negligence or willful misconduct. Without limiting the generality of the
foregoing, the Agent: (a) may treat the payee of any Note as the holder thereof
until the Agent receives written notice of the assignment or transfer thereof
signed by such payee and in form satisfactory to the Agent; (b) may consult with
legal counsel (including its own counsel or counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Lender or any other Person and shall not be
responsible to any Lender or any other Person for any statements, warranties or
representations made by any Person in or in connection with this Agreement or
any other Loan Document; (d) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
of any of this Agreement or any other Loan Document or the satisfaction of any
conditions precedent under this Agreement or any Loan Document on the part of
the Borrower or other Persons or inspect the property, books or records of the
Borrower or any other Person; (e) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document, any other instrument or
document furnished pursuant thereto or any collateral covered thereby or the
perfection or priority of any Lien in favor of the Agent on behalf of the
Lenders in any such collateral; and (f) shall incur no liability under or in
respect of this Agreement or any other Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telephone
or telecopy) believed by it to be genuine and signed, sent or given by the
proper party or parties.
Section 11.3 Notice of Defaults.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default unless the Agent has received notice
from a Lender or the Borrower referring to this Agreement, describing with
reasonable specificity such Default or Event of Default and stating that such
notice is a "notice of default." If any Lender becomes aware of any Default or
Event of Default, it shall promptly send to the Agent such a "notice of
default." Further, if the Agent receives such a "notice of default", the Agent
shall give prompt notice thereof to the Lenders.
Section 11.4 NationsBank as Lender.
NationsBank, as a Lender, shall have the same rights and powers under
this Agreement and any other Loan Document as any other Lender and may exercise
the same as though it were not the Agent; and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include NationsBank in each case in
its individual capacity. NationsBank and its Affiliates may each accept deposits
from, maintain deposits or credit balances for, invest in, lend money to, act as
trustee under indentures of, serve as financial advisor to, and generally engage
in any kind of business with the Borrower, any Subsidiary or any other Affiliate
thereof as if it were any other bank and without any duty to account therefor to
the other Lenders. Further, the Agent and any Affiliate may accept fees and
other consideration from the Borrower for services in connection with this
Agreement and otherwise without having to account for the same to the other
Lenders.
Section 11.5 Lender Credit Decision, Etc.
Each Lender expressly acknowledges and agrees that neither the Agent
nor any of its officers, directors, employees, agents, counsel,
attorneys-in-fact or other Affiliates has made any representations or warranties
as to the financial condition, operations, creditworthiness, solvency or other
information concerning the business or affairs of the Borrower, any Subsidiary
or other Person to such Lender and that no act by the Agent hereinafter taken,
including any review of the affairs of the Borrower, shall be deemed to
constitute any such representation or warranty by the Agent to any Lender. Each
Lender acknowledges that it has, independently and without reliance upon the
Agent, any other Lender or counsel to the Agent, or any of their respective
officers, directors, employees and agents, and based on the financial statements
of the Borrower, the Subsidiaries or any other Affiliate thereof, and inquiries
of such Persons, its independent due diligence of the business and affairs of
the Borrower, the Subsidiaries and other Persons, its review of the Loan
Documents, the legal opinions required to be delivered to it hereunder, the
advice of its own counsel and such other documents and information as it has
deemed appropriate, made its own credit and legal analysis and decision to enter
into this Agreement and the transaction contemplated hereby. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent,
any other Lender or counsel to the Agent or any of their respective officers,
directors, employees and agents, and based on such review, advice, documents and
information as it shall deem appropriate at the time, continue to make its own
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall have no duty or responsibility
to provide any Lender with any credit or other information concerning the
business, operations, property, financial and other condition or
creditworthiness of the Borrower, any Subsidiary or any other Affiliate thereof
which may come into possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or other Affiliates.
Section 11.6 Indemnification of Agent.
Each Lender agrees to indemnify the Agent (to the extent not reimbursed
by the Borrower and without limiting the obligation of the Borrower to do so)
pro rata in accordance with such Lender's respective Commitment Percentage, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of the Loan Documents,
any transaction contemplated hereby or thereby or any action taken or omitted by
the Agent under the Loan Documents; provided, however, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent resulting from the Agent's gross negligence or willful misconduct or if
the Agent fails to follow the written direction of the Requisite Lenders unless
such failure is pursuant to the advice of counsel of which the Lenders have
received notice. Without limiting the generality of the foregoing, each Lender
agrees to reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees of the counsel of the Agent's own
choosing) incurred by the Agent in connection with the preparation, execution,
administration, or enforcement of, or legal advice with respect to the rights or
responsibilities of the parties under, the Loan Documents, any suit or action
brought by the Agent to enforce the terms of the Loan Documents and/or collect
any Obligations, any "lender liability" suit or claim brought against the Agent
and/or the Lenders, and any claim or suit brought against the Agent and/or the
Lenders arising under any Environmental Laws, to the extent that the Agent is
not reimbursed for such expenses by the Borrower. Such out-of-pocket expenses
(including counsel fees) shall be advanced by the Lenders on the request of the
Agent notwithstanding any claim or assertion that the Agent is not entitled to
indemnification hereunder upon receipt of an undertaking by the Agent that the
Agent will reimburse the Lenders if it is actually and finally determined by a
court of competent jurisdiction that the Agent is not so entitled to
indemnification. The agreements in this Section shall survive the payment of the
Loans and all other amounts payable hereunder or under the other Loan Documents
and the termination of this Agreement.
Section 11.7 Successor Agent.
The Agent may resign at any time as Agent under the Loan Documents by
giving written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Requisite
Lenders, and shall have accepted such appointment, within 30 days after the
resigning Agent's giving of notice of resignation, then the resigning Agent may,
on behalf of the Lenders, appoint a successor Agent, which shall be a Lender, if
any Lender shall be willing to serve, and otherwise shall be a commercial bank
having combined capital and surplus of at least $1,000,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any resigning Agent's resignation hereunder as Agent, the
provisions of this Article XI. shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under the Loan Documents.
Section 11.8 Co-Agents.
Each Co-Agent in its capacity as a Co-Agent, assumes no responsibility
or obligation hereunder, including, without limitation, for servicing,
syndication, documentation, enforcement or collection of any of the Loans, nor
any duties as agent hereunder for the Lenders. The title of Co-Agent is solely
honorific and implies no fiduciary responsibility on the part of either
Co-Agent, in its capacity as such, to the Agent, the Borrower or any Lender and
the use of such title does not impose on either Co-Agent any duties or
obligations greater than those of any other Lender or entitle either Co-Agent to
any rights other than those to which any other Lender is entitled.
ARTICLE 12 MISCELLANEOUS
Section 12.1 Notices.
Unless otherwise provided herein, communications provided for hereunder
shall be in writing and shall be mailed, telecopied or delivered as follows:
If to the Borrower:
1000 Urban Center Parkway, Suite 300
Birmingham, Alabama 35242
Attention: Chief Financial Officer
Telecopy Number: (205) 970-1352
Telephone Number: (205) 970-1200
If to the Agent:
600 Peachtree Street, N.E., 21st Floor
Atlanta, Georgia 30308
Attention: Corporate Finance
Telecopy Number: (404) 607-6484
Telephone Number: (404) 607-5539
If to a Lender:
To such Lender's address or telecopy number, as applicable,
set forth on its signature page hereto or in the applicable Assignment and
Acceptance Agreement.
or, as to each party at such other address as shall be designated by such party
in a written notice to the other parties delivered in compliance with this
Section. All such notices and other communications shall be effective (i) if
mailed, when received; (ii) if telecopied, when transmitted; or (iii) if hand
delivered, when delivered. Notwithstanding the immediately preceding sentence,
all notices or communications to the Agent or any Lender under Articles II.
shall be effective only when actually received. Neither the Agent nor any Lender
shall incur any liability to the Borrower (nor shall the Agent incur any
liability to the Lenders) for acting upon any telephonic notice referred to in
this Agreement which the Agent or such Lender, as the case may be, believes in
good faith to have been given by a Person authorized to deliver such notice or
for otherwise acting in good faith under hereunder.
Section 12.2 Expenses.
The Borrower agrees (a) to pay or reimburse the Agent for all of its
reasonable out-of-pocket costs and expenses incurred in connection with the
preparation, negotiation and execution of, and any amendment, supplement or
modification to, any of the Loan Documents (including due diligence expenses and
travel expenses relating to closing), and the consummation of the transactions
contemplated thereby, including the reasonable fees and disbursements of counsel
to the Agent, (b) to pay or reimburse the Agent and the Lenders for all their
costs and expenses incurred in connection with the enforcement or preservation
of any rights under the Loan Documents, including the reasonable fees and
disbursements of their respective counsel (including the allocated fees and
expenses of in-house counsel) and any payments in indemnification or otherwise
payable by the Lenders to the Agent pursuant to the Loan Documents, (c) to pay,
indemnify and hold the Agent and the Lenders harmless from any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any failure to pay or delay in paying, documentary, stamp, excise and other
similar taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of any of the Loan Documents, or
consummation of any amendment, supplement or modification of, or any waiver or
consent under or in respect of, any Loan Document and (d) to the extent not
already covered by any of the preceding subsections, to pay or reimburse the
Agent and the Lenders for all their costs and expenses incurred in connection
with any bankruptcy or other proceeding of the type described in Sections
10.1.(e) or 10.1.(f), including the reasonable fees and disbursements of counsel
to the Agent and any Lender, whether such fees and expenses are incurred prior
to, during or after the commencement of such proceeding or the confirmation or
conclusion of any such proceeding.
Section 12.3 Setoff.
Each of the Agent and the Lenders hereby waives any right of set-off or
banker's lien which it may have by way of contract or under Applicable Law with
respect to any deposits (whether general or special, and including indebtedness
evidenced by certificates of deposit) maintained by the Borrower with the Agent
or such Lender. Further, a Participant by acquiring a participating interest as
contemplated by Section 12.5.(c), shall be deemed to have waived any right of
set-off or banker's lien which it may have by way of contract or under
Applicable Law with respect to any such deposits maintained by the Borrower with
such Participant. Notwithstanding the foregoing, the Borrower agrees that
immediately upon the termination of all documents, instruments and agreements to
which the Borrower is subject which contain prohibitions on the existence of
rights of set-off and banker's liens in favor of the Agent and the Lenders, and
without any further action on the part of any Person, the Agent and each Lender
shall again have all rights of set-off and banker's liens to which they are
entitled under Applicable Law and shall be authorized, at any time or from time
to time during the continuance of an Event of Default, without notice to the
Borrower or to any other Person, any such notice being hereby expressly waived,
to set-off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured) and any other indebtedness at any time
held or owing by the Agent, such Lender or any affiliate of such the Agent or
such Lender, to or for the credit or the account of the Borrower against and on
account of any of the Obligations, irrespective of whether or not the Requisite
Lenders shall have declared any or all of the Loans and all other Obligations to
be due and payable as permitted by Section 10.2., and although such obligations
shall be contingent or unmatured.
Section 12.4 Litigation; Jurisdiction; Other Matters; Waivers.
(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY
BETWEEN OR AMONG THE BORROWER, THE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON
DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND
EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE LENDERS, THE AGENT AND THE BORROWER HEREBY WAIVES ITS RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR
TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO
ARISING OUT OF THIS AGREEMENT, THE NOTES, OR ANY OTHER LOAN DOCUMENT.
(b) EACH OF THE BORROWER, THE AGENT AND EACH LENDER HEREBY AGREES THAT
THE FEDERAL DISTRICT COURT OF THE NORTHERN DISTRICT OF GEORGIA OR, AT THE OPTION
OF THE AGENT, ANY STATE COURT LOCATED IN FULTON COUNTY, GEORGIA, SHALL HAVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE
BORROWER, THE AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO
THIS AGREEMENT, THE LOANS AND LETTERS OF CREDIT, THE NOTES OR ANY OTHER LOAN
DOCUMENT OR TO ANY MATTER ARISING HEREFROM OR THEREFROM. THE BORROWER AND EACH
OF THE LENDERS EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
THE STATE OF GEORGIA IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS. THE
BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER
PROCESS OR PAPERS ISSUED THEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND
COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO THE BORROWER AT ITS ADDRESS FOR NOTICES PROVIDED FOR HEREIN.
(c) THE BORROWER, THE AGENT AND THE LENDERS EXPRESSLY ACKNOWLEDGE AND
AGREE THAT (i) NONE OF THIS AGREEMENT NOR ANY OF THE OTHER LOAN DOCUMENTS, WERE
OR WILL BE MADE OR ENTERED INTO IN THE STATE OF ALABAMA, (ii) NONE OF THE
OBLIGATIONS OF ANY PARTY TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
ARE TO BE PERFORMED IN THE STATE OF ALABAMA, AND (iii) THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ARE TRANSACTIONS IN
INTERSTATE COMMERCE WITHIN THE MEANING OF THE APPLICABLE PROVISIONS OF THE
CONSTITUTION OF THE UNITED STATES OF AMERICA. IN THE EVENT THAT, NOTWITHSTANDING
THE FOREGOING, ANY COURT OF COMPETENT JURISDICTION SHOULD REACH A CONTRARY
CONCLUSION, THE BORROWER HEREBY EXPRESSLY WAIVES, DISCLAIMS AND AGREES NOT TO
ASSERT OR OTHERWISE SEEK TO INVOKE ANY RIGHT, REMEDY OR OPTION THE BORROWER MAY
HAVE IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE RELATED DOCUMENTS UNDER OR
AS A RESULT OF ANY APPLICABLE LAW OF THE STATE OF ALABAMA, INCLUDING WITHOUT
LIMITATION SECTION 10-2B-15.02 OF THE CODE OF ALABAMA, 1975, RELATING TO THE
TRANSACTING OF INTRASTATE BUSINESS BY CORPORATIONS NOT QUALIFIED TO DO BUSINESS
IN THE STATE
OF ALABAMA.
(d) EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT
OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH
AGREES NOT TO PLEAD OR CLAIM THE SAME.
(e) THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED
TO PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT, ANY LENDER OR THE BORROWER,
OR THE ENFORCEMENT BY THE AGENT, ANY LENDER OR THE BORROWER OF ANY JUDGMENT
OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.
(f) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND
WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE
THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE
OTHER LOAN DOCUMENTS AND THE TERMINATION OF THIS AGREEMENT.
Section 12.5 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise transfer any of its rights
under this Agreement without the prior written consent of all Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an affiliate of such
Lender except to the extent such transfer would result in increased costs to the
Borrower.
(c) Any Lender may at any time grant to one or more banks or other
financial institutions (each a "Participant") participating interests in its
Commitment or the Obligations owing to such Lender; provided, however, any such
participating interest must be for a constant and not a varying percentage
interest. No Participant shall have any rights or benefits under this Agreement
or any other Loan Document. In the event of any such grant by a Lender of a
participating interest to a Participant, such Lender shall remain responsible
for the performance of its obligations hereunder, and the Borrower and the Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement. Any agreement
pursuant to which any Lender may grant such a participating interest shall
provide that such Lender shall retain the sole right and responsibility to
enforce the obligations of the Borrower hereunder including, without limitation,
the right to approve any amendment, modification or waiver of any provision of
this Agreement; provided, however, such Lender may agree with the Participant
that it will not, without the consent of the Participant, agree to (i) increase,
or extend the term or extend the time or waive any requirement for the reduction
or termination of, such Lender's Commitment, (ii) extend the date fixed for the
payment of principal of or interest on the Loans or portions thereof owing to
such Lender, (iii) reduce the amount of any such payment of principal, or (iv)
reduce the rate at which interest is payable thereon. An assignment or other
transfer which is not permitted by subsection (d) or (e) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (c). The selling Lender
shall notify the Agent and the Borrower of the sale of any participation
hereunder (other than the sale of a participation in any Bid Rate Loan) and the
terms thereof.
(d) Any Lender may with the prior written consent of the Agent and, so
long as no Default or Event of Default shall have accrued and be continuing, the
Borrower, (which consent, in each case, shall not be unreasonably withheld)
assign to one or more banks or other financial institutions (each an "Assignee")
all or a portion of its Commitment and its other rights and obligations under
this Agreement and the Notes; provided, however, (i) no such consent by the
Borrower or the Agent shall be required in the case of any assignment to another
Lender or any affiliate of such Lender or another Lender; (ii) any partial
assignment shall be in an amount at least equal to $5,000,000 and integral
multiples of $1,000,000 in excess thereof; (iii) each such assignment shall be
for a constant and not a varying percentage and (iv) each such assignment shall
be effected by means of an Assignment and Acceptance Agreement. Upon execution
and delivery of such instrument and payment by such Assignee to such transferor
Lender of an amount equal to the purchase price agreed between such transferor
Lender and such Assignee, such Assignee shall be deemed to be a Lender party to
this Agreement as of the effective date of the Assignment and Acceptance
Agreement and shall have all the rights and obligations of a Lender with a
Commitment as set forth in such Assignment and Acceptance Agreement, and the
transferor Lender shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this subsection
(d), the transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that new Notes are issued to the Assignee and such transferor
Lender, as appropriate. In connection with any such assignment, the transferor
Lender shall pay to the Agent an administrative fee for processing such
assignment in the amount of $3,500.
(e) The Agent shall maintain at the Principal Office a copy of each
Assignment and Acceptance Agreement delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitments of each Lender from time to time (the "Register"). The Agent shall
give each Lender and the Borrower notice of the assignment by any Lender of its
rights as contemplated by this Section. The Borrower, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register and copies of each
Assignment and Acceptance Agreement shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice to the Agent. Upon its receipt of an Assignment and
Acceptance Agreement executed by an assigning Lender, together with each Note
subject to such assignment (the "Surrendered Note"), the Agent shall, if such
Assignment and Acceptance Agreement has been completed and if the Agent receives
the processing and recording fee described in subsection (d) above, (i) accept
such Assignment and Acceptance Agreement, (ii) record the information contained
therein in the Register, and (iii) give prompt notice thereof to the Borrower.
(f) In addition to the assignments and participations permitted under
the foregoing provisions of this Section, any Lender may assign and pledge all
or any portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank, and such Loans and Notes shall be fully
transferable as provided therein. No such assignment shall release the assigning
Lender from its obligations hereunder.
(g) A Lender may furnish any information concerning the Borrower or any
of its Subsidiaries in the possession of such Lender from time to time to
Assignees and Participants (including prospective Assignees and Participants) so
long as such Persons agree to keep such information confidential as provided in
Section 12.10.
(h) Anything in this Section to the contrary notwithstanding, no Lender
may assign or participate any interest in any Loan held by it hereunder to the
Borrower or any of its Affiliates or Subsidiaries.
(i) Each Lender agrees that, without the prior written consent of the
Borrower and the Agent, it will not make any assignment hereunder in any manner
or under any circumstances that would require registration or qualification of,
or filings in respect of, any Loan or Note under the Securities Act or any other
securities laws United States of America or of any other jurisdiction.
Section 12.6 Amendments.
Except as otherwise expressly provided in this Agreement, any consent
or approval required or permitted by this Agreement or in any Loan Document to
be given by the Lenders may be given, and any term of this Agreement or of any
other Loan Document may be amended, and the performance or observance by the
Borrower or any Subsidiary of any terms of this Agreement or such other Loan
Document or the continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Requisite Lenders
(and, in the case of an amendment to any Loan Document, the written consent of
the Borrower). Notwithstanding the foregoing, no amendment, waiver or consent
shall, unless in writing, and signed by all of the Lenders (or by the Agent at
the written direction of all of the Lenders), do any of the following: (a)
increase the Commitments of the Lenders or subject the Lenders to any additional
obligations; (b) reduce the principal of, or interest rates that have accrued or
that will be charged on the outstanding principal amount of, any Loans or other
Obligations; (c) reduce the amount of any Fees payable hereunder; (d) postpone
any date fixed for any payment of any principal of, interest on, or Fees with
respect to, any Loans or any other Obligations; (e) change the Commitment
Percentages; (f) amend this Section or amend the definitions of the terms used
in this Agreement or the other Loan Documents insofar as such definitions affect
the substance of this Section or (g) modify the definition of the term
"Requisite Lenders" or modify in any other manner the number or percentage of
the Lenders required to make any determinations or waive any rights hereunder or
to modify any provision hereof. Any amendment, waiver or consent relating to
Section 2.4. or the obligations of the Swingline Lender or the Borrower with
respect thereto shall require only the written consent of the Swingline Lender
and the Borrower. Further, no amendment, waiver or consent unless in writing and
signed by the Agent, in addition to the Lenders required hereinabove to take
such action, shall affect the rights or duties of the Agent under this Agreement
or any of the other Loan Documents. No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon and any
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose set forth therein. No course of dealing or delay or
omission on the part of the Agent or any Lender in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. Except as
otherwise explicitly provided for herein or in any other Loan Document, no
notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
Section 12.7 Removal of Lenders.
If (a) a Lender requests compensation pursuant to Section 3.12. or
Section 4.1. and the Requisite Lenders are not also doing the same, (b) the
obligation of a Lender to make LIBOR Loans or to Continue, or to Convert Base
Rate Loans into, LIBOR Loans shall be suspended pursuant to Section 4.1.(b),
Section 4.2. or Section 4.3. but the obligation of the Requisite Lenders shall
not have been suspended under such Sections, or (c) any Lender refuses or
otherwise fails to consent to any waiver, amendment or other modification of any
Loan Document which (i) requires the unanimous written consent of all Lenders
under Section 12.6. and (ii) has been approved in writing by the Requisite
Lenders, then, so long as there does not then exist any Default or Event of
Default, the Borrower may either (A) demand that such Lender (the "Affected
Lender"), and upon such demand the Affected Lender shall promptly, assign its
Commitment and all of its Loans to another financial institution subject to and
in accordance with the provisions of Section 12.5.(d) for a purchase price equal
to the aggregate principal balance of Loans then owing to the Affected Lender
plus any accrued but unpaid interest thereon, accrued but unpaid Fees owing to
the Affected Lender and any amounts owing the Affected Lender under Section
4.4., or (B) pay to the Affected Lender the aggregate principal balance of Loans
then owing to the Affected Lender plus any accrued but unpaid interest thereon,
accrued but unpaid Fees owing to the Affected Lender and any amounts owing the
Affected Lender under Section 4.4., whereupon the Affected Lender shall no
longer be a party hereto or have any rights or obligations hereunder or under
any of the other Loan Documents. Each of the Agent and the Affected Lender shall
reasonably cooperate in effectuating the replacement of an Affected Lender under
this Section, but at no time shall the Agent or the Affected Lender be obligated
in any way whatsoever to initiate any such replacement. The exercise by the
Borrower of its rights under this Section shall be at the Borrower's sole cost
and expenses and at no cost or expense to the Agent, the Affected Lender or any
of the other Lenders. The terms of this Section shall not in any way limit the
Borrower's obligation to pay to any Affected Lender compensation owing to such
Affected Lender pursuant to Section 3.12. or Section 4.1.
Section 12.8 Designation of Subsidiaries.
(a) Right of Designation. Subject to the satisfaction of the
requirements of subsection (c) below, the Borrower shall have the right to
designate each Subsidiary as a Restricted Subsidiary or an Unrestricted
Subsidiary by delivering to the Agent and each of the Lenders a writing, signed
by the Chairman, the Vice Chairman, the President or a Vice President of the
Borrower, so designating such Subsidiary within 30 days of the acquisition by
the Borrower or any Restricted Subsidiary of the necessary percentages of Voting
Stock and other equity interests of such Subsidiary as set forth in the
definition of Restricted Subsidiary. Any such Subsidiary not so designated
within such 30-day period shall be deemed, on and after such date and without
any further action by the Borrower, the Agent or any of the Lenders, to have
been designated by the Borrower as a Restricted Subsidiary. Each Subsidiary
designated as a Restricted Subsidiary in Schedule 6.1.(b) shall, so long as it
shall continue to satisfy the requirements of the definition of Restricted
Subsidiary, be a Restricted Subsidiary on and after the Agreement Date and all
other Subsidiaries, if any, listed in such Schedule shall, subject to the
immediately following subsection (b), be Unrestricted Subsidiaries on and after
the Agreement Date.
(b) Right of Redesignation. Subject to the satisfaction of the
requirements of the immediately following subsection (c), the Borrower may at
any time designate
(i) any Unrestricted Subsidiary as a Restricted
Subsidiary, or
(ii) any Restricted Subsidiary as an Unrestricted
Subsidiary,
by delivering a written notice to such effect, signed by the Chairman, the Vice
Chairman, the President or a Vice President of the Borrower, to the Agent and
the Lenders.
(c) Designation Criteria.
(i) No Subsidiary shall at any time be designated as a
Restricted Subsidiary unless:
(1) such Subsidiary at such time meets all of
the requirements of a Restricted Subsidiary as set forth in the definition
thereof;
(2) immediately before and after, and after giving
effect to such designation, and assuming that all obligations
and liabilities of, and all Liens on the Property of, such
Subsidiary being so designated were incurred contemporaneously
with such designation, no Default or Event of Default exists
or would exist; and
(3) such Subsidiary shall not previously have
been designated (not including any designation pursuant to the immediately
preceding subsection (a)) pursuant to this Section more than once;
(ii) No Subsidiary shall at any time be designated as an
Unrestricted Subsidiary unless:
(1) immediately before and after, and after
giving effect to such designation, no Default or Event of Default exists or
would exist;
(2) such Subsidiary shall not previously have
been designated (not including any designation pursuant to the immediately
preceding subsection (a)) pursuant to this Section more than once; and
(3) such Subsidiary at such time meets all of
the requirements of an Unrestricted Subsidiary as set forth in the definition
thereof.
Section 12.9 Nonliability of Agent and Lenders.
The relationship between the Borrower and the Lenders and the Agent
shall be solely that of borrower and lender. Neither the Agent nor any Lender
shall have any fiduciary responsibilities to the Borrower. Neither the Agent nor
any Lender undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower's business
or operations.
Section 12.10 Confidentiality.
Except as otherwise provided by Applicable Law, the Agent and each
Lender shall utilize all non-public information obtained pursuant to the
requirements of this Agreement which has been identified as confidential or
proprietary by the Borrower in accordance with its customary procedure for
handling confidential information of this nature and in accordance with safe and
sound banking practices but in any event may make disclosure: (a) to any of
their respective affiliates (provided they shall agree to keep such information
confidential in accordance with the terms of this Section); (b) as reasonably
required by any bona fide Assignee, Participant or other transferee in
connection with the contemplated transfer of any Commitment or participations
therein as permitted hereunder (provided they shall agree to keep such
information confidential in accordance with the terms of this Section); (c) as
required or requested by any Governmental Authority or representative thereof or
pursuant to legal process or in connection with any legal proceedings relating
to any of the Loan Documents or the transactions contemplated thereby; (d) to
the Agent's or such Lender's independent auditors and other professional
advisors (provided they shall be notified of the confidential nature of the
information); and (e) after the happening and during the continuance of an Event
of Default, to any other Person, in connection with the exercise by the Agent or
the Lenders of rights hereunder or under any of the other Loan Documents.
Section 12.11 Indemnification.
(a) The Borrower shall and hereby agrees to indemnify, defend and hold
harmless the Agent, any affiliate of the Agent (including, without limitation,
NCMI) and each of the Lenders and their respective directors, officers,
shareholders, agents, employees and counsel (each referred to herein as an
"Indemnified Party") from and against any and all losses, claims, damages,
liabilities, deficiencies, judgments or expenses of every kind and nature
(including, without limitation, amounts paid in settlement, court costs and the
fees and disbursements of counsel incurred in connection with any litigation,
investigation, claim or proceeding or any advice rendered in connection
therewith) (the foregoing items referred to herein as "Claims and Expenses")
incurred by an Indemnified Party arising out of or by reason of any suit, cause
of action, claim, arbitration, investigation or settlement, consent decree or
other proceeding (the foregoing referred to herein as an "Indemnity Proceeding")
which arise out of, or are in any way related directly or indirectly to: (i)
this Agreement or any other Loan Document or the transactions contemplated
thereby; (ii) the making of any Loans or issuance of Letters of Credit
hereunder; (iii) any actual or proposed use by the Borrower of the proceeds of
the Loans or Letters of Credit; (iv) the Agent's or any Lender's entering into
this Agreement; (v) the fact that the Agent and the Lenders have established the
credit facility evidenced hereby in favor of the Borrower; (vi) the fact that
the Agent and the Lenders are creditors of the Borrower and have or are alleged
to have information regarding the financial condition, strategic plans or
business operations of the Borrower and the Subsidiaries; (vii) the fact that
the Agent and the Lenders are material creditors of the Borrower and are alleged
to influence directly or indirectly the business decisions or affairs of the
Borrower and the Subsidiaries or their financial condition; (viii) the exercise
of any right or remedy the Agent or the Lenders may have under this Agreement or
the other Loan Documents; provided, however, that the Borrower shall not be
obligated to indemnify any Indemnified Party for any acts or omissions of such
Indemnified Party in connection with matters described in this subparagraph
(viii) that constitute gross negligence or willful misconduct; (ix) any
violation or non-compliance by the Borrower or any Subsidiary of any Applicable
Law (including any Environmental Law) including, but not limited to, any
Indemnity Proceeding commenced by (A) the Internal Revenue Service or state
taxing authority or (B) any Governmental Authority or other Person under any
Environmental Law, including any Indemnity Proceeding commenced by a
Governmental Authority or other Person seeking remedial or other action to cause
the Borrower or its Subsidiaries (or its respective properties) (or the Agent
and/or the Lenders as successors to the Borrower) to be in compliance with such
Environmental Laws.
(b) This indemnification shall apply to all Indemnity Proceedings
arising out of, or related to, the foregoing whether or not an Indemnified Party
is a named party in such Indemnity Proceeding. In this connection, this
indemnification shall cover all costs and expenses of any Indemnified Party in
connection with any deposition of any Indemnified Party or compliance with any
subpoena (including any subpoena requesting the production of documents). This
indemnification shall, among other things, apply to any Indemnity Proceeding
commenced by other creditors of the Borrower or any Subsidiary, any shareholder
of the Borrower or any Subsidiary (whether such shareholder(s) are prosecuting
such Indemnity Proceeding in their individual capacity or derivately on behalf
of the Borrower), any account debtor of the Borrower or any Subsidiary or by any
Governmental Authority.
(c) This indemnification shall apply to any Indemnity Proceeding
arising during the pendency of any bankruptcy proceeding filed by or against the
Borrower and/or any Subsidiary.
(d) An Indemnified Party may conduct its own investigation and defense
of, and may formulate its own strategy with respect to, any Indemnified
Proceeding covered by this Section and, as provided above, all costs and
expenses incurred by the Indemnified Party shall be reimbursed by the Borrower
if (i) such investigation and defense has been specifically authorized in
writing by the Borrower, or (ii) the named parties to any Indemnified Proceeding
(including any impleaded parties) include both the Borrower and such Indemnified
Party and representation of both the Borrower and such Indemnified Party by the
same counsel would be inappropriate due to actual or potential conflicts of
interests. No action taken by legal counsel chosen by an Indemnified Party in
investigating or defending against any such Indemnified Proceeding shall vitiate
or in any way impair the obligations and duties of the Borrower hereunder to
indemnify and hold harmless each such Indemnified Party; provided, however, that
(i) if the Borrower is required to indemnify an Indemnified Party pursuant
hereto and (ii) the Borrower has provided evidence reasonably satisfactory to
such Indemnified Party that the Borrower has the financial wherewithal to
reimburse such Indemnified Party for any amount paid by such Indemnified Party
with respect to such Indemnified Proceeding, such Indemnified Party shall not
settle or compromise any such Indemnified Proceeding without the prior written
consent of the Borrower (which consent shall not be unreasonably withheld or
delayed).
(e) If and to the extent that the obligations of the Borrower hereunder
are unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under Applicable Law.
(f) Subject to the immediately following subsection (h), the Borrower's
obligations hereunder shall survive any termination of this Agreement and the
other Loan Documents and the payment in full of the Obligations, and are in
addition to, and not in substitution of, any other of their obligations set
forth in this Agreement or any other Loan Document to which it is a party.
(g) Notwithstanding the foregoing, the Borrower shall have no
obligation to any Indemnified Party under the provisions of this Section with
respect to Claims and Expenses incurred or arising after the date (the "Cutoff
Date") five years following the indefeasible payment in full of all Obligations
and the termination of this Agreement and the other Loan Documents in accordance
with their terms; provided, however, the foregoing limitation shall not apply to
Claims and Expenses (i) in respect of which an Indemnified Party has
specifically made written demand for indemnification under this Section prior to
the Cutoff Date or (ii) relating to alleged criminal acts of the Borrower, any
Subsidiary, or any of their respective officers, directors, employees and
agents.
Section 12.12 Termination; Survival.
At such time as (a) all of the Commitments have been terminated, (b)
none of the Lenders is obligated any longer under this Agreement to make any
Loans, (c) the Agent is no longer obligated any longer under this Agreement to
issue any Letters of Credit, (d) no Letters of Credit remain issued and
outstanding and (e) all Obligations (other than obligations which survive as
provided in the following sentence) have been paid and satisfied in full, this
Agreement shall terminate. Notwithstanding any termination of this Agreement, or
of the other Loan Documents, the indemnities to which the Agent and the Lenders
are entitled under the provisions of Sections 11.6., 12.2. and 12.11. and any
other provision of this Agreement and the other Loan Documents, and the waivers
of jury trial and submission to jurisdictions contained in Section 12.4., shall
continue in full force and effect and shall protect the Agent and the Lenders
against events arising after such termination as well as before (subject, in the
case of obligations under Section 12.11., to the limitations of subsection (h)
of such Section).
Section 12.13 Severability of Provisions.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 12.14 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE
FULLY PERFORMED, IN SUCH STATE.
Section 12.15 Counterparts.
This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
Section 12.16 No Fiduciary Relationship.
No provision in this Agreement or in any of the other Loan Documents
and no course of dealing between the parties shall be deemed to create any
fiduciary duty owing by the Agent or any Lender to any Lender, the Borrower or
any Subsidiary.
Section 12.17 Limitation of Liability.
Neither the Agent nor any Lender, nor any affiliate, officer, director,
employee, attorney, or agent of the Agent or any Lender shall have any liability
with respect to, and the Borrower hereby waives, releases, and agrees not to sue
any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by the Borrower in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of the other Loan Documents. The Borrower hereby waives, releases, and agrees
not to sue the Agent or any Lender or any of the Agent's or any Lender's
affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or financed hereby.
Section 12.18 Entire Agreement.
This Agreement, the Notes, and the other Loan Documents referred to
herein embody the final, entire agreement among the parties hereto and supersede
any and all prior commitments, agreements, representations, and understandings,
whether written or oral, relating to the subject matter hereof and may not be
contradicted or varied by evidence of prior, contemporaneous, or subsequent oral
agreements or discussions of the parties hereto.
Section 12.19 Construction.
The Agent, the Borrower and each Lender acknowledge that each of them
has had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Loan Documents with its legal
counsel and that this Agreement and the other Loan Documents shall be construed
as if jointly drafted by the Agent, the Borrower and each Lender.
[Signatures on Following Pages]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their authorized officers all as of the day and year
first above written.
BIRMINGHAM STEEL CORPORATION
By:James F. Tierney
Name:James F. Tierney
Title:Vice President & Treasurer
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
NATIONSBANK, N.A. (SOUTH), as Agent,
as Arranger and as a Lender
By:Nancy S. Goldman
Name:Nancy S. Goldman
Title:Vice President
Initial Commitment Amount:
$50,000,000
Lending Office (all Types of Loans):
600 Peachtree Street
21st Floor
Atlanta, Georgia 30308
Attn: Corporate Finance
Telecopier: (404) 607-6484
Telephone: (404) 607-5539
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
PNC BANK, NATIONAL ASSOCIATION, as
Co-Agent and as a Lender
By:Matthew D.Tevis
Name:Matthew D. Tevis
Title:Vice President
Initial Commitment Amount:
$38,000,000
Lending Office (all Types of Loans):
249 Fifth Avenue
Second Floor
Pittsburgh, Pennsylvania 1522-2707
Attn: Stephanie Valentine
Telecopier: (412) 768-4586
Telephone: (412) 768-4262
Address for notices:
201 E. Fifth Street
PNC Center, 26th Floor
Cincinnati, Ohio 45281
Attn: Matthew Tevis
Telecopier: (513) 651-8952
Telephone: (513) 651-8686
[Signatures Continued on Next Page]
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<PAGE>
[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
THE BANK OF NOVA SCOTIA, as Co-Agent
as a Lender
By: P. M. Brown
Name:P. M. Brown
Title:Relationship Manager
Initial Commitment Amount:
$38,000,000
Lending Office (all Types of Loans):
600 Peachtree Street
Suite 2700
Atlanta, Georgia 30308
Attn: Phyllis Walker
Telecopier: (404) 888-8998
Telephone: (404) 877-1552
Address for notices:
600 Peachtree Street
Suite 2700
Atlanta, Georgia 30308
Attn: James Yager
Telecopier: (404) 888-8998
Telephone: (404) 877-1508
[Signatures Continued on Next Page]
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<PAGE>
[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
BANK OF AMERICA ILLINOIS
By:Deirdre B. Doyle
Name:Deirdre B. Doyle
Title:Vice President
Initial Commitment Amount:
$15,000,000
Lending Office (all Types of Loans):
1850 Gateway Blvd.
Concord, California 94520
Attn: Gigi Juarez
Telecopier: (510) 675-7531 or 7532
Telephone: (510) 675-7733
Address for notices:
1230 Peachtree Street
Suite 3800
Atlanta, Georgia 30309
Attn: Deirdre B. Doyle
Telecopier: (404) 249-6938
Telephone: (404) 249-6905
[Signatures continue on the following page]
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<PAGE>
[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
THE BANK OF TOKYO - MITSUBISHI, LTD
ATLANTA AGENCY
By:Nathaniel W. Lea
Name:Nathaniel W. Lea
Title:Assistant Vice President
Initial Commitment Amount:
$15,000,000
Lending Office (all Types of Loans):
133 Peachtree Street, N.E.
Suite 4970
Atlanta, Georgia 30303
Attn: Sharon Durham/Lynn Miles
Telecopier: (404) 577-1155
Telephone: (404) 577-2960
(404) 222-4215/4214
Address for notices:
133 Peachtree Street, N.E.
Suite 4970
Atlanta, Georgia 30303
Attn: Nathaniel W. Lea IV
Telecopier: (404) 577-1155
Telephone: (404) 577-2960
[Signatures continue on the following page]
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<PAGE>
[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
CIBC INC.
By:William C. Humphries
Name:William C. Humphries
Title:Director, CIBC Wood Gundy
Securities Corp as Agent
Initial Commitment Amount:
$15,000,000
Lending Office (all Types of Loans):
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Attn: Chris Hiott
Telecopier: (770) 319-4950/4951
Telephone: (770) 319-4831
Address for notices:
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Attn: Katherine Bass
Telecopier: (770) 319-4954
Telephone: (770) 319-4914
[Signatures continue on the following page]
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<PAGE>
[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
COMMERZBANK AG ATLANTA AGENCY
By:Andreas Bremer
Name:Andreas Bremer
Title:Senior Vice President
By:Eric Kagerer
Name:Eric Kagerer
Title:Vice President
Initial Commitment Amount:
$15,000,000
Lending Office (all Types of Loans):
2 World Financial Center
New York, New York 10281-1050
Attn: Caroline Perez-Gomez
Telecopier: (212) 266-7593
Telephone: (212) 266-7314
Address for notices:
1230 Peachtree N.E.
Promenade Two
Suite 3500
Atlanta, Georgia 30309
Attn: Eric Kagerer
Telecopier: (404) 888-6539
Telephone: (404) 888-6517
[Signatures continue on the following page]
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<PAGE>
[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
CAYMAN ISLAND BRANCH
By:Bobby R. Oliver, Jr.
Name:Bobby R. Oliver, Jr.
Title:Assistant Vice President
By:William J. Bartlett
Name:William J. Bartlett
Title: Assistant Vice President
Initial Commitment Amount:
$23,000,000
Lending Office (all Types of Loans):
609 Fifth Avenue
New York, New York 10017
Attn: Trevor Brooks
Telecopier: (212) 745-1556/1550
Telephone: (212) 745-1564
Address for notices:
One Peachtree Center
303 Peachtree Street, N.E.
Suite 2900
Atlanta, Georgia 30308
Attn: John W. Somers
Telecopier: (404) 524-4006
Telephone: (404) 524-3966
[Signatures continue on the following page]
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<PAGE>
[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
LTCB TRUST COMPANY
By:John J. Sullivan
Name:John J. Sullivan
Title:Executive Vice President
Initial Commitment Amount:
$23,000,000
Lending Office (all Types of Loans):
165 Broadway
New York, New York 10006
Attn: Winston Brown
Telecopier: (212) 608-3081
Telephone: (212) 335-4854
Address for notices:
245 Peachtree Center Avenue, N.E.
Suite 2801, Marquis One Tower
Atlanta, Georgia 30303
Attn: Becky Silbert/Darin Hall
Telecopier: (404) 658-9751
Telephone: (404) 659-7210
[Signatures continue on the following page]
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<PAGE>
[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
THE FIRST NATIONAL BANK OF CHICAGO
By:Amy R. Fahey
Name:Amy R. Fahey
Title:Vice President
Initial Commitment Amount:
$15,000,000
Lending Office (all Types of Loans):
One First National Plaza
Suite 0634
Chicago, Illinois 60670
Attn: Gloria Steinbrenner
Telecopier: (312) 732-4840
Telephone: (312) 732-5714
Address for notices:
One First National Plaza
Suite 0324
Chicago, Illinois 60670
Attn: Dave McNeela
Telecopier: (312) 732-5296
Telephone: (312) 732-5730
[Signatures continue on the following page]
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<PAGE>
[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
THE SAKURA BANK, LIMITED, ATLANTA
AGENCY
By:Hiroyasu Imanishi
Name:Jiroyasu Imanishi
Title:V.P. & Senior Manager
Initial Commitment Amount:
$15,000,000
Lending Office (all Types of Loans):
245 Peachtree Center Avenue, N.E.
Suite 2703
Atlanta, Georgia 30303
Attn: Christy Joel
Telecopier: (404) 521-1133
Telephone: (404) 521-3111
Address for notices:
245 Peachtree Center Avenue, N.E.
Suite 2703
Atlanta, Georgia 30303
Attn: Charles S. Zimmerman
Telecopier: (404) 521-1133
Telephone: (404) 521-3111
[Signatures continue on the following page]
- 13 -
<PAGE>
[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
THE SANWA BANK, LIMITED
By:Raymond F. Hamilton
Name:Raymond F. Hamilton
Title:Vice President
Initial Commitment Amount:
$23,000,000
Lending Office (all Types of Loans):
55 East 52nd Street
New York, New York 10055
Attn: Renko Hara
Telecopier: (212) 754-2368
Telephone: (212) 339-6390
Address for notices:
4950 Georgia Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Raymond Hamilton
Telecopier: (404) 589-1629
Telephone: (404) 586-8805
[Signatures continue on the following page]
- 14 -
<PAGE>
[Signature Page to Credit Agreement dated as of
March 17, 1997 with Birmingham Steel Corporation]
UNION BANK OF SWITZERLAND
By:Dieter Hoeppli
Name:Dieter Hoeppli
Title:Vice President
By:Samuel Azizo
Name:Samuel Azizo
Title:Vice President
Initial Commitment Amount:
$15,000,000
Lending Office (all Types of Loans):
Union Bank of Switzerland,
New York Branch
299 Park Avenue
New York, New York 10171
Attn: Mike Peterson
Telecopier: (212) 821-3259
Telephone: (212) 821-3230
Address for notices:
Union Bank of Switzerland,
New York Branch
299 Park Avenue
New York, new York 10171
Attn: Robert Casey/Dieter Hoeppli
Telecopier: (212) 821-3383
Telephone: (212) 821-3329/3415
- 15 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the March
31, 1997 Consolidated Balance Sheets and Consolidated Statements of Operations
of Biringham Steel Corporation and is qualified in its entirety by reference
to such.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Jun-30-1997
<PERIOD-END> Mar-31-1997
<CASH> 1,823
<SECURITIES> 0
<RECEIVABLES> 132,006
<ALLOWANCES> 1,508
<INVENTORY> 214,504
<CURRENT-ASSETS> 364,887
<PP&E> 885,546
<DEPRECIATION> 162,737
<TOTAL-ASSETS> 1,177,801
<CURRENT-LIABILITIES> 114,875
<BONDS> 333,500
0
0
<COMMON> 297
<OTHER-SE> 472,585
<TOTAL-LIABILITY-AND-EQUITY> 1,177,801
<SALES> 701,420
<TOTAL-REVENUES> 701,420
<CGS> 635,038
<TOTAL-COSTS> 635,038
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9,091
<INTEREST-EXPENSE> 14,310
<INCOME-PRETAX> 21,800
<INCOME-TAX> 8,938
<INCOME-CONTINUING> 12,862
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,862
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
</TABLE>
