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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) March 31, 1998
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METAL MANAGEMENT, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-14836 94-2835068
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(Commission File Number) (I.R.S. Employer Identification No.)
500 N. Dearborn Street, Suite 405, Chicago, IL 60610
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(Address of Principal Executive Offices) (Zip Code)
(312) 645-0700
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(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS
On March 31, 1998, Metal Management, Inc., a Delaware corporation (the
"Company") and its subsidiaries entered into a Credit Agreement (the "Senior
Credit Facility") with BT Commercial Corporation, as agent for the lenders (the
"Agent"), and certain commercial lending institutions. The Senior Credit
Facility provides for a revolving credit and letter of credit facility of
$200,000,000 terminating on March 31, 2001. The Senior Credit Facility bears
interest at a floating rate per annum equal to (at the Company's option): (i)
1.75% over LIBOR or (ii) 0.5% over Bankers Trust Company's prime rate as in
effect from time to time. The Senior Credit Facility is available for working
capital and general corporate purposes,including acquisitions. The Company and
its subsidiaries are required under the Senior Credit Facility to pay the Agent
certain fees and expenses which include an unused line fee on a monthly basis.
The obligations of the Company under the Senior Credit Facility are secured by a
security interest in substantially all of the assets and properties of the
Company and its subsidiaries. Availability of loans and letters of credit under
the Senior Credit Facility is limited to a borrowing base constituted of
eligible accounts receivable and inventory and a fixed asset sublimit that
amortizes on a quarterly basis.
The Senior Credit Facility contains a number of covenants that, among
other things, restrict the ability of the Company to dispose of assets, incur
additional indebtedness, pay dividends or make distributions, create liens on
assets, enter into sale and leaseback transactions, make investments, loans or
advances, make acquisitions, engage in mergers or consolidations and form
subsidiaries and otherwise restrict certain corporate activities. In addition,
the Company is required to comply with specified financial ratios and tests.
The Senior Credit Facility contains various events of default,
including defaults relating to payments, breaches of representations, warranties
and covenants, certain events of bankruptcy and insolvency, defaults on certain
other indebtedness, certain liens and encumbrances on assets and certain changes
of control of the Company.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
10.1 Credit Agreement dated March 31, 1998 by and among Metal
Management, Inc., the subsidiaries of Metal Management, Inc. named therein and
BT Commercial Corporation.
99.1 Press Release dated April 2, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
METAL MANAGEMENT, INC.
Dated: April 15, 1998 By: /s/ Gerard M. Jacobs
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Gerard M. Jacobs
Chief Executive Officer
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EXHIBIT 10.1
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$200,000,000
CREDIT AGREEMENT
AMONG
EACH OF THE PERSONS INITIALLY
A SIGNATORY HERETO,
TOGETHER WITH THOSE PERSONS
HEREAFTER JOINED AS PARTIES HERETO,
AS BORROWERS
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THEIR ASSIGNEES
PURSUANT TO SECTION 11.8 HEREOF,
AS LENDERS
WITH
METAL MANAGEMENT, INC.,
AS FUNDS ADMINISTRATOR
AND
BT COMMERCIAL CORPORATION,
AS AGENT
DATED AS OF MARCH 31, 1998
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS..........................................................................1
1.1 General Definitions........................................................1
1.2 Accounting Terms and Determinations.......................................22
1.3 Other Terms; Headings.....................................................22
ARTICLE 2. REVOLVING LOANS.....................................................................23
2.1 Commitments...............................................................23
2.2 Borrowing of Revolving Loans..............................................23
2.3 Notice of Request for Lender Advances.....................................24
2.4 Periodic Settlement of Agent Advances;
Interest and Fees; Statements.............................................25
2.5 Sharing of Payments.......................................................26
2.6 Defaulting Lenders........................................................26
2.7 Allocation of Revolving Loans and
Expenses..................................................................27
ARTICLE 3. LETTERS OF CREDIT...................................................................29
3.1 Issuance of Letters of Credit.............................................29
3.2 Terms of Letters of Credit................................................29
3.3 Notice of Issuance........................................................29
3.4 Lenders' Participation....................................................30
3.5 Payments of Amounts Drawn Under Letters
of Credit.................................................................30
3.6 Payment by Lenders........................................................30
3.7 Obligations Absolute......................................................30
3.8 Agent's Execution of Applications and
Other Issuing Bank Documentation; Reliance
on Credit Agreement by Issuing Bank.......................................31
ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION
OF COMMITMENTS......................................................................31
4.1 Interest on Revolving Loans...............................................31
4.2 Unused Line Fee...........................................................32
4.3 Letter of Credit Fees.....................................................32
4.4 Interest and Letter of Credit Fees
After Event of Default....................................................33
4.5 Collateral Monitoring Fee.................................................33
4.6 Expenses..................................................................33
4.7 Mandatory Payment of Revolving Loans;
Reductions of Commitments.................................................34
4.8 Maintenance of Loan Account; Statements
of Account................................................................34
4.9 Payment Procedures........................................................34
4.10 Collection of Accounts....................................................35
4.11 Distribution and Application of
Collections and other Amounts.............................................35
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4.12 Calculations..............................................................36
4.13 Special Provisions Relating to LIBOR
Rate Loans................................................................36
4.14 Indemnification in Certain Events.........................................39
4.15 Substitution of Lenders...................................................41
ARTICLE 5. CONDITIONS PRECEDENT................................................................42
5.1 Conditions Precedent to Initial Revolving
Loan and Letter of Credit.................................................42
5.2 Conditions Precedent to All Revolving
Loans and Letters of Credit...............................................42
ARTICLE 6. REPRESENTATIONS AND WARRANTIES......................................................43
6.1 Organization and Qualification............................................43
6.2 Authority.................................................................43
6.3 Enforceability............................................................44
6.4 No Conflict...............................................................44
6.5 Consents and Filings......................................................44
6.6 Government Regulation.....................................................44
6.7 Solvency..................................................................45
6.8 Rights in Collateral; Priority of
Liens.....................................................................45
6.9 Financial Data............................................................45
6.10 Locations of Offices, Records and
Inventory.................................................................45
6.11 Subsidiaries; Ownership of Equity.........................................46
6.12 No Judgments or Litigation................................................46
6.13 No Defaults...............................................................47
6.14 Labor Matters.............................................................47
6.15 Compliance with Law.......................................................47
6.16 ERISA.....................................................................47
6.17 Compliance with Environmental Laws........................................48
6.18 Intellectual Property.....................................................48
6.19 Licenses and Permits......................................................49
6.20 Taxes and Tax Returns.....................................................49
6.21 Material Contracts........................................................49
6.22 Accuracy and Completeness of
Information...............................................................50
6.23 No Change.................................................................50
ARTICLE 7. AFFIRMATIVE COVENANTS...............................................................50
7.1 Financial Reporting.......................................................50
7.2 Collateral Reporting......................................................52
7.3 Notification Requirements.................................................53
7.4 Corporate Existence.......................................................55
7.5 Books and Records; Inspections............................................55
7.6 Insurance.................................................................55
7.7 Taxes.....................................................................56
7.8 Compliance with Laws......................................................56
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7.9 Use of Proceeds...........................................................57
7.10 Fiscal Year...............................................................57
7.11 Maintenance of Property...................................................57
7.12 ERISA Documents...........................................................57
7.13 Environmental and Other Matters...........................................58
7.14 Further Actions...........................................................58
7.15 Deposit of Collections and Other
Proceeds of Collateral....................................................58
ARTICLE 8. NEGATIVE COVENANTS..................................................................59
8.1 Minimum Interest Coverage Ratio...........................................59
8.2 Capital Expenditures......................................................59
8.3 Additional Indebtedness...................................................59
8.4 Liens.....................................................................61
8.5 Contingent Obligations....................................................63
8.6 Sale of Assets............................................................63
8.7 Restricted Payments.......................................................63
8.8 Investments...............................................................64
8.9 Affiliate Transactions....................................................68
8.10 Additional Bank Accounts..................................................68
8.11 Additional Negative Pledges...............................................68
8.12 Subordinated Notes........................................................69
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES......................................................69
9.1 Events of Default.........................................................69
9.2 Acceleration, Termination of
Commitments and Cash Collateralization....................................71
9.3 Rescission of Acceleration................................................71
9.4 Remedies..................................................................72
9.5 Right of Setoff...........................................................72
9.6 License of Use of Software and Other
Intellectual Property.....................................................72
9.7 Application of Proceeds; Surplus;
Deficiencies..............................................................72
ARTICLE 10. THE AGENT..........................................................................73
10.1 Appointment of Agent......................................................73
10.2 Nature of Duties of Agent.................................................73
10.3 Lack of Reliance on Agent.................................................74
10.4 Certain Rights of the Agent...............................................74
10.5 Reliance by Agent.........................................................75
10.6 Indemnification of Agent..................................................75
10.7 The Agent in its Individual Capacity......................................75
10.8 Holders of Notes..........................................................76
10.9 Successor Agent...........................................................76
10.10 Collateral Matters........................................................76
10.11 Actions with Respect to Defaults..........................................78
10.12 Delivery of Information...................................................78
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ARTICLE 11. MISCELLANEOUS......................................................................78
11.1 GOVERNING LAW.............................................................78
11.2 SUBMISSION TO JURISDICTION................................................78
11.3 SERVICE OF PROCESS........................................................79
11.4 JURY TRIAL................................................................79
11.5 LIMITATION OF LIABILITY...................................................79
11.6 Delays....................................................................80
11.7 Notices...................................................................80
11.8 Assignments and Participations............................................80
11.9 Confidentiality...........................................................82
11.10 Indemnification...........................................................83
11.11 Amendments and Waivers....................................................84
11.12 Counterparts and Effectiveness............................................84
11.13 Severability..............................................................85
11.14 Maximum Rate..............................................................85
11.15 Entire Agreement; Successors and
Assigns...................................................................86
11.16 Joint and Several Liability of
Borrowers.................................................................86
11.17 Joinder of Additional Borrowers...........................................88
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ANNEXES
ANNEX I List of Lenders; Commitment Amounts;
Applicable Lending Offices
SCHEDULES
SCHEDULE A Closing Document List
SCHEDULE B Disclosure Schedules
SCHEDULE B, PART 1.1 Property Encumbered by Isaac
Mortgages
SCHEDULE B, PART 6.1 States in which Qualified
SCHEDULE B, PART 6.9 Contingent Obligations and Other
Liabilities
SCHEDULE B, PART 6.10(a) Chief Executive Offices
SCHEDULE B, PART 6.10(b) Locations of Collateral
SCHEDULE B, PART 6.11 Subsidiaries
SCHEDULE B, PART 6.12 Pending Judgments, Litigation and
other Claims
SCHEDULE B, PART 6.14 Labor Contracts
SCHEDULE B, PART 6.16 Benefit Plans
SCHEDULE B, PART 6.17 Environmental Matters
SCHEDULE B, PART 6.20 Tax Matters; Tax Sharing Agreements
SCHEDULE B, PART 6.21 Material Contracts
SCHEDULE B, PART 8.3 Existing Indebtedness
SCHEDULE B, PART 8.4 Existing Liens
SCHEDULE B, PART 8.7(j) Existing Investments
SCHEDULE B, PART 8.10 Disbursement Accounts
EXHIBITS
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B Form of Revolving Note
EXHIBIT C Form of Notice of Continuation
EXHIBIT D Form of Notice of Conversion
EXHIBIT E Form of Auditors' Letter
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Assignment and Assumption
Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("CREDIT AGREEMENT") is entered into as of March
31, 1998, among AEROSPACE METALS, INC., a Delaware corporation, AMERICAN SCRAP
PROCESSING, INC., an Illinois corporation, BRIQUETTING CORPORATION OF AMERICA,
an Ohio corporation, C SHREDDING CORP., an Illinois corporation, CALIFORNIA
METALS RECYCLING, INC., a California corporation, CIM TRUCKING, INC., an
Illinois corporation, COMETCO CORP., an Illinois corporation, COZZI BUILDING
CORPORATION, an Illinois corporation, COZZI IRON & METAL, INC., an Illinois
corporation, EMCO TRADING, INC., an Arizona corporation, FERREX TRADING
CORPORATION, a Delaware corporation, FIRMA, INC., a California corporation,
FIRMA PLASTIC CO., INC., a California corporation, HOUSTON COMPRESSED STEEL
CORP., a Texas corporation, HOUTEX METALS COMPANY, INC., a Texas corporation,
THE ISAAC CORPORATION, an Ohio corporation, P. JOSEPH IRON & METAL, INC., an
Ohio corporation, KANKAKEE SCRAP CORPORATION, an Illinois corporation, MAC LEOD
METALS CO., a California corporation, METAL MANAGEMENT ARIZONA, INC., an Arizona
corporation, METAL MANAGEMENT, INC., a Delaware corporation, METAL MANAGEMENT
REALTY, INC., an Arizona corporation, PAULDING RECYCLING, INC., an Ohio
corporation, PROLER SOUTHWEST INC., a Texas corporation, PROLER STEELWORKS
L.L.C., a Delaware limited liability company, RESERVE IRON & METAL LIMITED
PARTNERSHIP, a Delaware limited partnership, SALT RIVER RECYCLING, L.L.C., an
Arizona limited liability company, SCRAP PROCESSING, INC., an Illinois
corporation, SUPERIOR FORGE, INC., a Delaware corporation, TROJAN TRADING CO., a
California corporation, and USA SOUTHWESTERN CARRIER, INC., an Arizona
corporation (each of the foregoing, together with any other Persons [as
hereinafter defined] from time to time joined as parties hereto pursuant to
SECTION 11.17, hereinafter referred to individually as a "BORROWER" and
collectively as "BORROWERS"); each financial institution identified on ANNEX I
(together with its successors and permitted assigns, hereinafter referred to
individually as a "LENDER" and collectively as "LENDERS"); MTLM, acting in its
capacity as funds administrator hereunder for the Borrowers (MTLM, in such
capacity, the "FUNDS ADMINISTRATOR"); and BT COMMERCIAL CORPORATION, a Delaware
corporation (in its individual capacity, hereinafter referred to as "BTCC"),
acting in its capacity as agent for the Lenders (in such capacity, together with
its successors in such capacity, hereinafter referred to as the "AGENT").
ARTICLE 1. DEFINITIONS.
1.1 GENERAL DEFINITIONS.
ACCOUNT has the meaning set forth in the Security Agreement.
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ACQUISITION means, with respect to any Borrower, any transaction or
series of related transactions for the purpose of, or resulting directly or
indirectly in, (a) the acquisition by such Borrower of all or substantially all
of the assets of any other Person, or of any business or division of any other
Person, (b) the acquisition by such Borrower of in excess of fifty percent (50%)
of the capital stock, partnership interests, membership interests or equity of
any other Person, or otherwise causing any other Person to become a Subsidiary
of such Borrower or (c) a merger or consolidation or any other combination of
such Borrower with any other Person (other than any Person that is a Subsidiary
of such Borrower), PROVIDED, that such Borrower is the surviving entity.
ACQUISITION PROSPECT means each Person whose capital stock, partnership
interests, membership interests or equity, or whose assets, are intended to be
acquired in an Acquisition permitted under SECTION 8.8(g) or SECTION 8.8(h).
AFFILIATE of a Person means another Person who directly or indirectly
controls, is controlled by, is under common control with or is a director or
officer of, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote ten percent (10%) or
more of the securities having ordinary voting power for the election of
directors or the direct or indirect power to direct the management and policies
of a business.
AGENT ADVANCES has the meaning set forth in SECTION 2.2.
ALLOCATION ACCOUNT has the meaning set forth in SECTION 2.7(b).
APPLICABLE LENDING OFFICE means, with respect to each Lender, such
Lender's LIBOR Lending Office in the case of a LIBOR Rate Loan, and such
Lender's Domestic Lending Office in the case of a Prime Rate Loan.
ASSIGNMENT AND ASSUMPTION AGREEMENT has the meaning set forth in
SECTION 11.8(b).
AUDITORS means a nationally recognized firm of independent public
accountants selected by the Borrowers and reasonably satisfactory to the Agent;
PROVIDED, THAT for purposes of this Credit Agreement, the firm of Price
Waterhouse L.L.P. shall be deemed to be satisfactory to the Agent.
BANKRUPTCY CODE means Title 11 of the U.S. Code (11 U.S.C. ss.ss. 101
et seq.), as amended from time to time, and any successor statute.
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BENEFIT PLAN means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower, any Subsidiary of any Borrower or any
ERISA Affiliate has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years.
BORROWING means a borrowing of Revolving Loans of the same Type by the
Funds Administrator for the joint and several account of the Borrowers from each
of the Lenders (or, in the case of Agent Advances, Agent on behalf of each of
the Lenders) on a pro rata basis on a given date (whether pursuant to SECTION
2.2 or resulting from continuations or conversions of Revolving Loans on a given
date pursuant to SECTIONS 4.13(a) and (b), respectively) having, in the case of
LIBOR Rate Loans, the same Interest Period.
BORROWING BASE means, at any time, the sum at such time of:
(a) the Fixed Asset Sublimit, PLUS
(b) eighty-five percent (85%) of Eligible Accounts
Receivable, PLUS
(c) the lesser of $100,000,000 and seventy percent (70%) of
Eligible Inventory.
In addition, in the exercise of its Permitted Discretion, upon one Business
Day's prior written notice to the Funds Administrator, the Agent may (i)
establish and increase or decrease reserves against Eligible Accounts Receivable
and Eligible Inventory, (ii) reduce the advance rates provided for in this
definition, or restore such advance rates to any level equal to or below the
advance rates in effect as of the date of this Credit Agreement, and (iii)
impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in the definitions of "ELIGIBLE ACCOUNTS RECEIVABLE" and
"ELIGIBLE INVENTORY."
BORROWING BASE CERTIFICATE means a certificate of the Funds
Administrator concerning the Borrowing Base, in each case provided under SECTION
7.2 and in form and substance reasonably satisfactory to the Agent.
BT ACCOUNT has the meaning set forth in SECTION 4.10.
BUSINESS DAY means any day that is neither a Saturday nor a Sunday nor
a day on which commercial banks in Chicago, Illinois are required or permitted
by law to be closed and, when used in connection with LIBOR Rate Loans, this
definition will also exclude any day on which commercial banks are not open for
dealing in United States dollar deposits in the London (U.K.) interbank market.
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CAPITAL EXPENDITURES means, for any Person for any period, the sum of
all expenditures which have been, or should have been, capitalized by such
Person for financial statement purposes in accordance with GAAP during such
period (whether payable in cash or other property or accrued as a liability),
including the capitalized portion of capital leases and that portion of
Investments made by such Person allocable to property, plant or equipment.
Capital Expenditures shall exclude proceeds of a casualty loss applied to the
repair or replacement of the property affected by the casualty loss. "CASUALTY
LOSS", as used herein, means, for any Person, (i) the loss, damage, or
destruction of any asset or property owned or used by such Person, (ii) the
condemnation, confiscation, or other taking, in whole or in part, of any such
asset or property, or (iii) the diminishment of the use of any such asset or
property so as to render impracticable or unreasonable the use thereof for its
intended purpose.
CASH EQUIVALENTS means either of the following, so long as the same are
maintained in accounts in which the Agent has a perfected security interest: (i)
securities issued, guarantied or insured by the United States, or any of its
agencies and having maturities of not more than one year; (ii) time deposits or
certificates of deposit having maturities of not more than one year issued by
any Lender or a United States national or state chartered commercial bank of
recognized standing whose combined capital and unimpaired surplus is in excess
of $200,000,000 and whose short-term commercial paper rating, or that of its
parent holding company, is at least "A-1" or the equivalent by S&P and at least
"Prime-1" or the equivalent by Moody's; (iii) shares of money market or similar
funds which comply with Rule 2a-7 or any successor rule of the SEC; (iv)
repurchase agreements with any Lender or any commercial bank satisfying the
requirements of CLAUSE (ii) of this definition with respect to securities
described in CLAUSE (i) of this definition.
CHANGE OF CONTROL means the occurrence, after the date of this Credit
Agreement, of any of the following: (i) (a) any Person or two or more Persons
acting as a "group" within the meaning of Section 13(d) of the Exchange Act,
other than the Principals, acquiring beneficial ownership (within the meaning of
Rule 13d-3 of the SEC under the Exchange Act), directly or indirectly, of
Securities of MTLM (or other Securities convertible into such Securities)
representing thirty-five percent (35%) or more of the combined voting power of
all Securities (including the Securities so acquired) of MTLM entitled to vote
in the election of directors and (b) the Principals "beneficially own" (within
the meaning of Rule 13d-3 of the SEC under the Exchange Act), directly or
indirectly, a lesser percentage of the total voting power of Securities of MTLM
(or other Securities convertible into such Securities) of MTLM entitled to vote
in the election of directors than such other Person or group of Persons and do
not have the
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right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors of MTLM; (ii) during any
period of up to 12 consecutive months, commencing after the date of this Credit
Agreement, individuals who at the beginning of such 12-month period were
directors of MTLM ceasing for any reason to constitute a majority of the Board
of Directors of MTLM, unless the Persons replacing such individuals were
nominated by the Board of Directors of MTLM; or (iii) any "change of control" or
similar event occurs under the Subordinated Note Indenture.
CLOSING DATE means the date of execution and delivery of this Credit
Agreement by all of the parties hereto or, if later, the date on which the
initial Revolving Loan is made or the initial Letter of Credit is issued
hereunder, whichever occurs earlier.
CLOSING DOCUMENT LIST has the meaning set forth in SECTION 5.1.
CODE has the meaning set forth in SECTION 1.3.
COLLATERAL means the Accounts, Inventory, Equipment and other personal
property identified in the Collateral Documents as security for the Obligations.
COLLATERAL ACCESS AGREEMENT means an agreement in form and substance
reasonably satisfactory to the Agent pursuant to which a mortgagee or lessor of
real property on which Collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory, or a consignee of
Inventory, acknowledges the Liens of the Agent and, in the case of any such
agreement with a mortgagee or lessor, permits the Agent access to and use of
such real property for a reasonable amount of time following the occurrence and
during the continuance of an Event of Default to assemble, complete and sell any
Collateral stored or otherwise located thereon.
COLLATERAL DOCUMENTS means, collectively, the Security Agreement and
all other documents, agreements and instruments pursuant to which Liens are now
or hereafter granted to the Agent to secure any or all of the Obligations.
COLLATERAL MONITORING FEE has the meaning set forth in SECTION 4.5.
COLLECTION ACCOUNT has the meaning set forth in SECTION 4.10.
COLLECTION BANKS has the meaning set forth in SECTION 4.10.
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COLLECTIONS means all cash, funds, checks, notes, instruments and any
other form of remittance tendered by account debtors in payment of Accounts of
any Borrower.
COMMITMENT of a Lender means such Lender's commitment, on the terms and
subject to the conditions set forth herein, to make Revolving Loans and to
participate in Letters of Credit, up to the amount set forth below its name on
ANNEX I (as amended from time to time pursuant to SECTION 11.8(b)), as such
amount may be reduced from time to time in accordance with the terms and
provisions of this Credit Agreement.
CONSOLIDATED ENTITY means MTLM and each of its consolidated
Subsidiaries and shall include in any event each Borrower.
CONSOLIDATED NET INCOME means the consolidated net income of the
Consolidated Entity.
CONSOLIDATED REVENUES means, for any fiscal year of the Consolidated
Entity, the amount set forth opposite the caption "Revenues" appearing on the
consolidated statement of income included in the Financial Statements delivered
to the Agent pursuant to SECTION 7.1(b) with respect to such fiscal year.
CONTINGENT OBLIGATION means, with respect to any Person, any direct or
indirect guaranty or obligation of such Person for the Indebtedness of another
Person, except for endorsements in the ordinary course of business.
CREDIT DOCUMENTS means, collectively, this Credit Agreement, the
Revolving Notes, the Letters of Credit, including, without limitation, the Isaac
Letter of Credit and all other letters of credit issued by the Issuing Bank for
the account of any Borrower and outstanding on the Closing Date, each of the
Collateral Documents, the Fee Letter and all other documents, agreements and
instruments now or hereafter executed in connection herewith or therewith in
each case as modified, amended, extended, restated or supplemented from time to
time.
CREDIT PARTY INFORMATION has the meaning set forth in SECTION 11.9.
CREDIT PARTIES means, collectively, the Borrowers, the Funds
Administrator, any Subsidiary of any Borrower and each other party to any of the
Credit Documents (other than the Lenders, the Agent or the Issuing Bank).
DEFAULT means an event, condition or default which with the giving of
notice, the passage of time or both would be an Event of Default.
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DEFAULTING LENDER has the meaning set forth in SECTION 2.6.
DEPOSITARY ACCOUNT AGREEMENTS has the meaning set forth in SECTION
4.10.
DISBURSEMENT ACCOUNT means the operating account of the Funds
Administrator maintained with the Disbursement Account Bank.
DISBURSEMENT ACCOUNT BANK means Bankers Trust Company or any other
financial institution selected from time to time by the Agent and reasonably
acceptable to the Funds Administrator.
DOMESTIC LENDING OFFICE means, with respect to any Lender, the office
of such Lender specified as its "DOMESTIC LENDING OFFICE" on ANNEX I, as such
annex may be amended from time to time, which office shall in any event be
located in the United States.
EBITDA means, for any period, Consolidated Net Income (excluding
extraordinary and non-recurring items, including, without limitation, charges
taken in December, 1997) for such period, PLUS (a) all Interest Expense,
amortization or writeoff of debt discount and issuance costs and other fees and
charges associated with Indebtedness, income tax expense, depreciation and
amortization (including amortization of any goodwill or other intangibles) for
such period; MINUS or PLUS (without double counting) (b) gains and losses
attributable to any fixed asset sales; PLUS or MINUS (c) any other non-cash
charges or gains which have been subtracted or added in calculating such
Consolidated Net Income; PLUS (d) to the extent deducted in determining
Consolidated Net Income, dividends on MTLM's preferred stock to the extent not
paid in cash.
ELIGIBLE ACCOUNTS RECEIVABLE means Accounts of the respective Borrowers
deemed by the Agent in the exercise of its Permitted Discretion to be eligible
for inclusion in the calculation of the Borrowing Base. In determining the
amount to be so included, the face amount of such Accounts shall be reduced by
the amount of all returns, discounts, deductions, claims, credits, charges, or
other allowances. Unless otherwise approved in writing by the Agent, no Account
of any Borrower shall be deemed to be an Eligible Account Receivable if:
(a) it arises out of a sale made by such Borrower to an
Affiliate of such Borrower or to any other Borrower; or
(b) its payment terms are longer than 60 days from date of
invoice; or
(c) it is unpaid (i) more than 60 days after the original
payment due date on payment terms of 30 days or less from date of
invoice, or (ii) more than 30 days after the
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original payment due date on payment terms of or more than 30 days from
date of invoice; or
(d) it is from the same account debtor or its Affiliate and
fifty percent (50%) or more of all Accounts from that account debtor
(and its Affiliates) are ineligible under (c) above; or
(e) when aggregated with all other Accounts of an account
debtor, the Account exceeds forty percent (40%) in face value of all
Accounts of all Borrowers then outstanding, to the extent of such
excess, unless supported by an irrevocable letter of credit
satisfactory to the Agent (as to form, substance and issuer) and
assigned to and directly drawable by the Agent; or
(f) the account debtor for the Account is a creditor of such
Borrower, has or has asserted a right of setoff against such Borrower,
has disputed its liability or made any claim with respect to the
Account or any other Account which has not been resolved, but in each
of the foregoing cases, solely to the extent of the amount of such
actual or asserted right of setoff, or the amount of such dispute or
claim, as the case may be; or
(g) the account debtor is (or the assets of the account debtor
are) the subject of an Insolvency Event; or
(h) the Account is not payable in United States dollars or the
account debtor for the Account is located outside the United States or
Canada, unless the Account is supported by (i) an irrevocable letter of
credit satisfactory to the Agent (as to form, substance and issuer) and
assigned to and directly drawable by the Agent or (ii) credit insurance
satisfactory to the Agent and assigned and payable to the Agent; or
(i) the sale to the account debtor is on a guaranteed sale,
sale-and-return, sale on approval or consignment basis or made pursuant
to any other written agreement providing for repurchase or return; or
(j) the Agent determines by its own credit analysis that
collection of the Account is uncertain or the Account may not be paid;
or
(k) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless such Borrower
duly assigns its rights to payment of such Account to the Agent
pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
ss.ss. 3727 et seq.); or
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(l) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the account debtor, the
services giving rise to such Account have not been performed and
accepted or the Account otherwise does not represent a final sale; or
(m) the Account does not comply with all Requirements of Law,
including, without limitation, the Federal Consumer Protection Act, the
Federal Truth-in-Lending Act and Regulation Z; or
(n) the Account is subject to any adverse security deposit,
progress payment or other similar advance made by or for the benefit of
the applicable account debtor; or
(o) the Account is not subject to a valid and perfected first
priority Lien in favor of the Agent or does not otherwise conform to
the representations and warranties contained in the Credit Documents.
ELIGIBLE INVENTORY means the aggregate amount of Inventory of
the respective Borrowers deemed by the Agent in the exercise of its
Permitted Discretion to be eligible for inclusion in the calculation of the
Borrowing Base. In determining the amount to be so included, Inventory shall be
valued at the lower of cost or market on a basis consistent with the Borrowers'
current and historical accounting practice. Unless otherwise approved in writing
by the Agent, no Inventory of any Borrower shall be deemed Eligible Inventory
if:
(a) it is not owned solely by such Borrower or such
Borrower does not have good and valid title thereto; or
(b) it is not located in the United States or Canada; or
(c) it is not located on property owned by a Borrower or by a
third party that has executed and delivered a Collateral Access
Agreement and, in the case of Inventory located on property owned by
such a third party, it is segregated or otherwise separately
identifiable from goods of others, if any, stored on such property;
PROVIDED, that Inventory shall not be deemed ineligible solely by
reason of this CLAUSE (c) until the date which is ninety (90) days
after the Closing Date; or
(d) it is not subject to a valid and perfected first priority
Lien in favor of the Agent, except, with respect to such Inventory
stored at locations other than locations owned by a Borrower, for Liens
for unpaid rent or normal and customary warehousing charges; or
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(e) it consists of goods returned or rejected by such
Borrower's customers or goods in transit to third parties (other than
to warehouse sites covered by a Collateral Access Agreement); or
(f) it could not reasonably be expected to be sold within
twelve (12) months after the date of its initial processing, or does
not otherwise conform to the represen-
tations and warranties contained in the Credit Documents;
PROVIDED, however, that notwithstanding the foregoing, Inventory of any Borrower
which has been sold and shipped to the applicable Account Debtor but with
respect to which such Account Debtor has not yet been invoiced shall be deemed
Eligible Inventory until issuance of such invoice, provided, further that such
Inventory constituted Eligible Inventory immediately prior to such sale.
EQUITY OFFERING PROCEEDS means proceeds received in cash by any
Borrower from a public offering or private placement of equity Securities
(including, without limitation, common stock, preferred stock and warrants and
options to acquire the same) of such Borrower MINUS, but without duplication,
all underwriting discounts and commissions, placement fees and other
professional fees, expenses and taxes incurred in connection with such offering
or placement. For purposes of this definition, if any such discounts,
commissions, fees, expenses or taxes payable in connection with such offering or
placement are not known as of the date of the distribution of the proceeds
thereof, then such discounts, commissions, fees, expenses or taxes shall be
estimated in good faith by the Funds Administrator and such estimated amounts
shall be deducted from the calculation of Equity Offering Proceeds.
EQUITY OFFERING PROCEEDS ALLOCATION CERTIFICATE means a Certificate
executed by a Responsible Officer of the Funds Administrator and delivered to
the Agent in connection with any Capital Expenditure, repurchase or redemption
of Subordinated Notes or Investment, in each case made with Equity Offering
Proceeds, certifying (a) the aggregate amount of Unallocated Equity Offering
Proceeds as of the date of such Capital Expenditure, repurchase or redemption or
Investment, as the case may be, without giving effect thereto, (b) the amount
and a brief description thereof and (c) the aggregate amount of Unallocated
Equity Offering Proceeds after giving effect thereto.
ERISA means the Employee Retirement Income Security Act of 1974, 29
U.S.C. ss.ss. 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
ERISA AFFILIATE means any entity required to be aggregated with any
Borrower or any Subsidiary of any Borrower under Sections 414 (b) or (c) of the
Internal Revenue Code (or, for purposes of
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<PAGE> 17
Section 412 of the Internal Revenue Code, Sections 414 (m) or (o) of the
Internal Revenue Code).
EVENT OF DEFAULT has the meaning set forth in ARTICLE 9.
EXCHANGE ACT means the Securities and Exchange Act of 1934, amendments
thereto, successor statutes, and regulations or guidance promulgated thereunder.
EXPENSES means all reasonable costs and expenses of the Agent incurred
in connection with the Credit Documents and the transactions contemplated
therein, including, without limitation, (i) the costs of conducting record
searches, examining collateral, opening bank accounts and lockboxes, depositing
checks, and receiving and transferring funds (including charges for checks for
which there are insufficient funds), (ii) the reasonable fees and expenses of
legal counsel and paralegals (including the allocated cost of internal counsel
and paralegals), accountants, appraisers and other consultants, experts or
advisors retained by the Agent, (iii) reasonable fees and expenses of legal
counsel incurred in connection with the documentation of assignments of or sales
of participations in the Revolving Loans, (iv) the cost of title insurance
premiums, real estate survey costs, and fees and taxes in connection with the
filing of financing statements, and (v) the costs of preparing and recording
Collateral Documents, releases of Collateral, and waivers, amendments, and
terminations of any of the Credit Documents. EXPENSES also means all reasonable
costs and expenses (including the reasonable fees and expenses of legal counsel
and other professionals) paid or incurred in connection with the Credit
Documents and the transactions contemplated therein, (a) by the Agent during the
continuance of an Event of Default and (b) by the Agent and any Lender in (i)
enforcing or defending its respective rights under or in respect of this Credit
Agreement, the Credit Documents or any other document or instrument now or
hereafter executed and delivered in connection herewith or therewith, (ii)
collecting the Revolving Loans, (iii) foreclosing or otherwise collecting upon
the Collateral or any part thereof and (iv) obtaining any legal, accounting or
other advice in connection with any of the foregoing.
EXPIRATION DATE means March 31, 2001.
FEDERAL FUNDS RATE means, for any period, a fluctuating interest rate
per annum for each day during such period 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, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent
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from three Federal Funds brokers of recognized standing selected by the Agent.
FEDERAL RESERVE BOARD means the Board of Governors of the
Federal Reserve System or any Governmental Authority succeeding to
its functions.
FEE LETTER means the letter agreement dated as of March 12, 1998,
between BTCC and MTLM.
FEES means, collectively, the Unused Line Fee, the Letter of
Credit Fees, the L/C Facing Fee, the Issuing Bank Fees and the
Collateral Monitoring Fee.
FINANCIAL STATEMENTS means the consolidated and consolidating balance
sheets, statements of operations, statements of cash flows and statements of
changes in shareholder's equity of the Consolidated Entity for the period
specified, prepared in accordance with GAAP and consistently with prior
practices.
FIXED ASSET SUBLIMIT means an amount equal to $40,000,000; PROVIDED,
that:
(a) the Fixed Asset Sublimit shall be automatically and
permanently reduced, (i) on the first business day of each calendar
quarter, commencing July 1, 1998, by $1,400,000 (as such amount may be
increased from time to time pursuant to CLAUSE (b) below) and (ii) on
each date on which Net Proceeds of Sale are received by or for the
account of any Borrower or any Subsidiary of any Borrower (other than
from any other Borrower or any other Subsidiary of a Borrower, as the
case may be), in the amount of such Net Proceeds of Sale; and
(b) the Fixed Asset Sublimit shall be increased, at the
request of the Funds Administrator in connection with any Acquisition
permitted pursuant to SECTION 8.8(g) or SECTION 8.8(h), on the later to
occur of (i) consummation of such Acquisition and (ii) three (3)
Business Days after the Agent's receipt of such request, in an amount
equal to seventy-five percent (75%) of the aggregate orderly
liquidation value of the fixed assets acquired by any Borrower as a
result of such Acquisition; PROVIDED, that (a) on the effective date of
any increase in the Fixed Asset Sublimit pursuant to this CLAUSE (b),
the amount of the automatic and permanent quarterly reduction in the
Fixed Asset Sublimit set forth in CLAUSE (a)(i) above shall
automatically and permanently increase by the amount of such increase
in the Fixed Asset Sublimit DIVIDED BY twenty-eight (28), (b) the Agent
shall have received appraisals of such fixed assets prepared by a
Person, and in form and substance, reasonably satisfactory to the Agent
and (c) such Borrower shall have granted or caused to be
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<PAGE> 19
granted to the Agent for the benefit of Agent and Lenders an
enforceable, first, prior (subject to Permitted Liens) and perfected
Lien thereon.
GAAP means generally accepted accounting principles in the United
States as in effect from time to time.
GOVERNING DOCUMENTS means certificates or articles of incorporation,
by-laws and other similar organizational or governing documents.
GOVERNMENTAL AUTHORITY means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
HIGHEST LAWFUL RATE means, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate that at any time or from time to time may be contracted for, taken,
reserved, charged or received on such Obligations, under the laws of the State
of Illinois (or the law of any other jurisdiction whose laws may be mandatorily
applicable notwithstanding other provisions of this Credit Agreement and any of
the other Credit Documents), or under applicable federal laws which may
presently or hereafter be in effect and which allow a higher maximum nonusurious
interest rate than under the State of Illinois' (or such other jurisdiction's)
law, in any case after taking into account, to the extent permitted by
applicable law, any and all relevant payments or charges under this Credit
Agreement and any other Credit Documents executed in connection herewith, and
any available exemptions, exceptions and exclusions.
INDEBTEDNESS of a Person means, without duplication, (a) indebtedness
for borrowed money or for the deferred purchase price of property or services
(other than trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices), whether on open account or
evidenced by a note, bond, debenture or similar instrument, (b) obligations
under capital leases, (c) reimbursement obligations for letters of credit,
banker's acceptances or other credit accommodations, whether drawn or undrawn,
(d liabilities, as determined by the Agent, under any Interest Rate Agreement,
(e) Contingent Obligations and (f) Indebtedness secured by any Lien on any
property of that Person, even if that Person has not assumed such Indebtedness.
INSOLVENCY EVENT means, with respect to any Person, the occurrence of
any of the following: (a) such Person shall be adjudicated insolvent or
bankrupt, or generally fail to pay, or admit in writing its inability to pay,
its debts as they become due, (b) the voluntary commencement of any proceeding
or the filing
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of any petition under any bankruptcy, insolvency or similar law,
(c) the seeking of dissolution or reorganization or the appointment of a
receiver, trustee, custodian or liquidator for it or a substantial portion of
its property, assets or business or to effect a plan or other arrangement with
its creditors, (d) the filing of any answer admitting the jurisdiction of the
court and the material allegations of an involuntary petition filed against it
in any bankruptcy, insolvency or similar proceeding, (e) the
making by such Person of a general assignment for the benefit of its creditors,
or the consent to, or acquiescence in the appointment of, a receiver, trustee,
custodian or liquidator for a substantial portion of such Person's property,
assets or business. INSOLVENCY EVENT shall also mean, with respect to any
Person, the occurrence of any of the following: an involuntary proceeding or
involuntary petition shall be commenced or filed against such Person under any
bankruptcy, insolvency or similar law seeking the dissolution or reorganization
of it or the appointment of a receiver, trustee, custodian or liquidator for it
or of a substantial part of its property, assets or business, or any writ,
judgment, warrant of attachment, execution or similar process shall be issued or
levied against a substantial part of its property, assets or business, and such
proceedings or petitions shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or
fully bonded, within sixty (60) days after commencement, filing, or levy, as the
case may be, or any order for relief shall be entered in any such proceeding.
INTEREST COVERAGE RATIO means, for any period, the ratio of (i) EBITDA
to (ii) Interest Expense, in each case for the Consolidated Entity for such
period.
INTEREST EXPENSE means, for any period, the aggregate consolidated cash
expense of the Consolidated Entity for interest on Indebtedness for such period,
including, without limitation, (i) amortization of original issue discount, (ii)
incurrence fees (to the extent included in interest expense), (iii) the interest
portion of any deferred payment obligation and (iv) the interest component of
any capital lease obligation.
INTEREST PERIOD means, for any LIBOR Rate Loan, the period commencing
on the date of such Borrowing and ending on the last day of the period selected
by the Funds Administrator pursuant to the provisions below. The duration of
each such Interest Period shall be one, two, three or six months, in each case
as the Funds Administrator may, in an appropriate Notice of Borrowing, Notice of
Continuation or Notice of Conversion, select; PROVIDED, THAT the Funds
Administrator may not select any Interest Period that ends after the Expiration
Date. Whenever the last day of any Interest Period would otherwise occur on a
day other than a Business Day, the last day of such Interest Period shall be
extended to occur
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on the next succeeding Business Day; PROVIDED, THAT if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day.
INTEREST RATE AGREEMENT means any interest rate protection or hedge
agreement, including, without limitation, interest rate future, option, swap,
and cap agreements.
INTERNAL REVENUE CODE means the Internal Revenue Code of 1986,
amendments thereto, successor statutes, and regulations or guidance promulgated
thereunder.
INVENTORY has the meaning set forth in the Security Agreement.
INVESTMENT means all expenditures made and all liabilities incurred
(contingently or otherwise) for or in connection with the acquisition of stock
or Indebtedness of, or for loans, advances, capital contributions or similar
transfers of property to, or acquisition of substantially all the assets of, a
Person. In determining the aggregate amount of Investments outstanding at any
particular time, (i) the amount of any Investment represented by a guaranty
shall be taken at not less than the principal amount of the obligations
guaranteed and outstanding; (ii) there shall be deducted in respect of each such
Investment amounts received in cash as a return of capital or as earnings on
such Investment, whether as dividends, interest or otherwise; and (iii) there
shall not be deducted from the aggregate amount of Investments any decrease in
the market value thereof.
ISAAC AGENTS mean the "Agents" (as such term is defined in the Isaac
Letter of Credit).
ISAAC INDEBTEDNESS means the Indebtedness of MTLM evidenced by the
Isaac Notes.
ISAAC LETTER OF CREDIT shall mean that certain Irrevocable Standby
Letter of Credit No. S830494, dated February 11, 1998, in the original face
amount of $21,660,734, issued by the Issuing Bank for the account of Metal
Management, Inc. and naming the Isaac Agents as the beneficiaries thereunder.
ISAAC NOTES means the "Notes" (as defined in the Isaac Letter of
Credit).
ISAAC MORTGAGES means those certain Open-End Mortgage and Security
Agreements encumbering real property of Isaac described on SCHEDULE B, PART 1.1
and located in Cuyahoga County, Defiance County, and Williams County, Ohio,
respectively, in each case dated as of June 23, 1997, executed and delivered by
Isaac in favor of the Isaac Agents.
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<PAGE> 22
ISSUING BANK means Bankers Trust Company or any Lender or other
financial institution that is acceptable to the Agent and the Borrowers which
may at any time issue or be requested to issue a Letter of Credit for the
account of any Borrower.
ISSUING BANK FEES has the meaning set forth in SECTION 4.3(b).
JOINT VENTURE means a single-purpose corporation, partnership, limited
liability company, joint venture or other similar legal arrangement (whether
created by contract or conducted through a separate legal entity) now or
hereafter formed by any Borrower or any Subsidiary of any Borrower with another
Person (other than a Borrower or a Subsidiary of a Borrower) in order to conduct
a common venture or enterprise with such Person.
L/C FACING FEE has the meaning set forth in SECTION 4.3(a).
LENDER ADVANCES has the meaning set forth in SECTION 2.2.
LETTER OF CREDIT FEE has the meaning set forth in SECTION 4.3(a).
LETTER OF CREDIT OBLIGATIONS means, without duplication, the sum of the
aggregate undrawn face amount of all Letters of Credit outstanding, including,
without limitation the Isaac Letter of Credit and all other letters of credit
issued by the Issuing Bank for the account of any Borrower and outstanding on
the Closing Date, PLUS the aggregate amount of all drawings under Letters of
Credit, including, without limitation the Isaac Letter of Credit and all other
letters of credit issued by the Issuing Bank for the account of any Borrower and
outstanding on the Closing Date, for which the Borrowers have not reimbursed the
Issuing Bank or the Lenders.
LETTER OF CREDIT REQUEST has the meaning set forth in SECTION 3.3.
LETTERS OF CREDIT means all letters of credit issued for the account of
any Borrower under ARTICLE 3 and all amendments, renewals, extensions or
replacements thereof; PROVIDED, that Letters of Credit shall also mean and
include the Isaac Letter of Credit and all other letters of credit issued by the
Issuing Bank for the account of any Borrower and outstanding on the Closing
Date.
LIBOR LENDING OFFICE means, with respect to any Lender, the office of
such Lender specified as its "LIBOR LENDING OFFICE" opposite its name on ANNEX
I, as such annex may be amended from time to time (or, if no such office is
specified, its Domestic Lending Office).
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<PAGE> 23
LIBOR RATE means, with respect to any Interest Period for each LIBOR
Rate Loan comprising part of the same Borrowing, an interest rate per annum
equal to the rate (rounded upward to the nearest whole multiple of one-sixteenth
(1/16) of one percent (1.00%) per annum, if such rate is not such a whole
multiple of one-sixteenth (1/16) of one percent (1.00%)) of the offered
quotation, if any, to first class banks in the London (U.K.) interbank market by
Bankers Trust Company for United States dollar deposits of amounts in
immediately available funds comparable to the principal amount of the LIBOR Rate
Loan of BTCC for which the LIBOR Rate is being determined with maturities
comparable to the Interest Period for which such LIBOR Rate will apply as of
approximately 10:00 a.m. Chicago time two (2) Business Days prior to the
commencement of such Interest Period.
LIBOR RATE LOAN means a Revolving Loan that bears interest as provided
in SECTION 4.1(b) hereof.
LIEN means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title, or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.
LINE OF CREDIT means the aggregate revolving line of credit extended
pursuant to this Credit Agreement by the Lenders to the Borrowers for Revolving
Loans and Letters of Credit, in an amount up to $200,000,000, as such amount may
be reduced from time to time pursuant to the terms and provisions hereof.
LOAN ACCOUNT has the meaning set forth in SECTION 4.8.
MAJORITY LENDERS means those Lenders holding in the aggregate more than
fifty-percent (50%) of the total Commitments, or if the Commitments are
terminated, those Lenders owed more than fifty-percent (50%) of the Revolving
Loans and Letter of Credit Obligations then outstanding.
MATERIAL ADVERSE EFFECT means a material adverse effect on (i) the
business, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of the Credit Parties taken as a whole, (ii) the
ability of any Credit Party to perform its obligations under the Credit
Documents to which it is a party, or on the ability of the Agent or the Lenders
to enforce the Obligations or realize upon the Collateral, or (iii) the value of
the Collateral taken as a whole.
MATERIAL CONTRACT means any contract or other arrangement (i) to which
a Credit Party or any Subsidiary of a Credit Party is a party (other than the
Credit Documents) or by which the property or assets of any Credit Party or any
Subsidiary of a Credit Party are
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<PAGE> 24
bound and (ii) which is material to the business, assets, properties or
prospects of the Consolidated Entity.
MOODY'S means Moody's Investors Services, Inc., or any successor
thereto.
MULTIEMPLOYER PLAN means a "multiemployer plan" (as defined in Section
4001(a) (3) of ERISA) to which a Borrower, any Subsidiary of Borrower or any
ERISA Affiliate has contributed within the past six years or with respect to
which a Borrower or any Subsidiary of a Borrower could reasonably be expected to
incur any liability.
NET PROCEEDS OF SALE means proceeds (including any notes, Securities,
warrants and other non-cash items and money paid into escrow accounts, together
with [or reduced by] all interest paid thereon and capital gains [or capital
losses] realized in connection with the investment thereof) received as
consideration by a Borrower or any Subsidiary of a Borrower (to the extent of
such Borrower's ownership interest in such Subsidiary) from the sale, lease,
transfer or other disposition of any fixed asset (other than any obsolete fixed
asset), net of (a) the cost of such sale, lease, transfer or other disposition,
taxes payable as a result thereof and reasonable reserves associated therewith,
(b) amounts applied to the repayment of Indebtedness (other than Obligations)
secured by a Lien on the fixed asset disposed of and (c) amounts expressly
permitted to be used hereunder, and in fact used, to purchase a replacement
asset. For the purposes hereof, all proceeds of insurance coverage paid or other
recoveries or awards of compensation for any such fixed asset, or group of fixed
assets, taken by condemnation or eminent domain shall be deemed proceeds of the
disposition of that fixed asset.
NON-BORROWER SUBSIDIARY means any Subsidiary of Borrower which is not
itself a Borrower.
NOTICE OF BORROWING means an irrevocable and binding notice delivered
by the Funds Administrator to the Agent either by telephone or by facsimile
transmission (and if by telephone, promptly confirmed in writing) of the request
by the Funds Administrator, for and on behalf of the Borrowers, for a Borrowing,
which notice shall be substantially in the form of EXHIBIT A.
NOTICE OF CONTINUATION has the meaning set forth in SECTION 4.13(a).
NOTICE OF CONVERSION has the meaning set forth in SECTION 4.13(b).
OBLIGATIONS means the unpaid principal and interest hereunder
(including interest accruing on or after the occurrence of an Insolvency Event)
in respect of Revolving Loans, reimbursement
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obligations under Letters of Credit, Fees, Expenses and all other obligations
and liabilities of the Borrowers to the Agent, the Issuing Bank or any of the
Lenders under this Credit Agreement, the Revolving Notes or any of the other
Credit Documents.
OFFERING CIRCULAR means, collectively, the respective drafts of (a) the
Preliminary Offering Circular and (b) the Description of Notes, in each case
delivered to the Agent prior to the Closing Date.
PBGC means the Pension Benefit Guaranty Corporation, and any entity
succeeding to any or all of its functions.
PERMITTED DISCRETION means the Agent's judgment exercised in good faith
and not in an irrational manner based upon its consideration of any factor which
the Agent believes in good faith could affect the value of any Collateral,
including any Inventory or Accounts of any Borrower or the amount which the
Agent and the Lenders would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of such
Collateral. In exercising such judgment, the Agent may consider such factors
which are already included in or tested by the definition of Eligible Accounts
Receivable or Eligible Inventory, as well as any of the following: (i) the
financial and business climate of any Borrower's industry, (ii) changes in
collection history and dilution with respect to the Accounts of any Borrower,
(iii) demand for, and pricing of, Inventory of any Borrower, (iv) changes in any
concentration of risk with respect to Accounts and Inventory of any Borrower,
and (v) any other factors that change the credit risk of lending to the
Borrowers on the security of the Accounts and Inventory of the Borrowers.
PERMITTED LIENS means the Liens referred to in CLAUSES (a) through (L)
of SECTION 8.4.
PERSON means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, entity, party or government (including any
division, agency or department thereof), and its successors, heirs and assigns.
PRIME LENDING RATE means the rate which Bankers Trust Company announces
as its prime lending rate, from time to time. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company and each of the Lenders
may make commercial loans or other loans at rates of interest at, above or below
the Prime Lending Rate.
PRIME RATE LOAN means a Revolving Loan that bears interest as provided
in SECTION 4.1(a) hereof.
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PRINCIPALS means, collectively, (i) Samstock, L.L.C. and its
Affiliates and successors, and (ii) T. Benjamin Jennings, Gerard M.
Jacobs, Albert A. Cozzi, Frank J. Cozzi and Gregory P. Cozzi, and
the respective spouses, parents and lineal descendants (by blood,
adoption or marriage) of the foregoing, trusts the sole
beneficiaries of which (other than contingent beneficiaries) are
any of the foregoing, or corporations, partnerships or limited
liability companies the sole shareholders, partners, or members of
which are any of the foregoing.
PRIOR INDEBTEDNESS means the Indebtedness of the respective Borrowers
set forth on SCHEDULE B, PART 8.3, under the caption "Debt to be Repaid".
PROPORTIONATE SHARE of a Lender means a fraction, expressed as a
percentage, obtained by dividing its Commitment by the Line of Credit or, if the
Commitments are terminated, by dividing its then outstanding Revolving Loans and
Letter of Credit participations by the then outstanding aggregate Revolving
Loans and Letter of Credit Obligations.
PURCHASE MONEY LIENS has the meaning set forth in SECTION 8.3(E).
REGISTER has the meaning set forth in SECTION 11.8(c).
REGULATION D means Regulation D of the Federal Reserve Board, as in
effect from time to time.
REGULATION G means Regulation G of the Federal Reserve Board, as in
effect from time to time.
REGULATION Z means Regulation Z of the Federal Reserve Board, as in
effect from time to time.
REPORTABLE EVENT means any of the events described in Section 4043 of
ERISA and the regulations thereunder (other than any such event for which the
notice requirement under ERISA has been waived).
REQUIREMENT OF LAW means, with respect to any Person, (a) the Governing
Documents of such Person, (b) any law, treaty, rule or regulation or
determination of an arbitrator, court or other Governmental Authority binding on
such Person, or (c) any franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval binding
on a Person or any of its property.
RESPONSIBLE OFFICER means, with respect to any Person, the president,
chief executive officer, chief financial officer, any vice president or
treasurer of such Person.
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RETIREE HEALTH PLAN means an "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA, and any other plan, program or arrangement,
whether oral or written, that provides benefits to persons after termination of
employment, other than as required by Section 601 of ERISA.
REVOLVING LOANS has the meaning set forth in SECTION 2.1.
REVOLVING NOTE means a promissory note of the Borrowers payable to the
order of any Lender, substantially in the form of EXHIBIT B, as amended,
restated, supplemented or otherwise modified from time to time, and including
all notes issued in replacement of, or in substitution or exchange for, any
Revolving Note.
S&P means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.
SEC means the Securities and Exchange Commission, and any Governmental
Authority succeeding to any or all of its functions.
SECURITIES means any stock, shares, voting trust certificates, bonds,
debentures, notes or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly
known as "securities", or any certificates of interest, shares, or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include the Notes or any other evidence of the
Obligations.
SECURITY AGREEMENT means the Security Agreement of even date herewith
executed by the Borrowers in favor of the Agent.
SETTLEMENT DATE has the meaning set forth in SECTION 2.4.
SUBORDINATED NOTE DOCUMENTS means, collectively, the Subordinated Note
Indenture and all other agreements, instruments and documents executed and/or
delivered by any Credit Party pursuant thereto or in connection therewith.
SUBORDINATED NOTE INDENTURE means the indenture pursuant to which the
Subordinated Notes are issued.
SUBORDINATED NOTES means the subordinated notes of MTLM described in
the Offering Circular.
SUBSIDIARY of a Person means a corporation or other entity in which
that Person directly or indirectly owns or controls the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or appoint other managers of such corporation or other
entity.
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TERMINATION EVENT means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of any Borrower, any Subsidiary of any
Borrower or any ERISA Affiliate from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in Section 4001(a) (2) of ERISA);
(iii) the providing of notice of intent to terminate a Benefit Plan in a
distress termination (as described in Section 4041 (c) of ERISA); (iv) the
institution by the Pension Benefit Guaranty Corporation of proceedings to
terminate a Benefit Plan or Multiemployer Plan; (v) any event or condition (a)
which could reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Benefit Plan or Multiemployer Plan, or (b) that would result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or
complete withdrawal, within the meaning of Sections 4203 and 4205 of ERISA, of a
Borrower, any Subsidiary of a Borrower or any ERISA Affiliate from a
Multiemployer Plan.
TYPE means a LIBOR Rate Loan or a Prime Rate Loan.
UNALLOCATED EQUITY OFFERING PROCEEDS means, at any time, the excess, if
any, at such time of (a) the aggregate amount of Equity Offering Proceeds
received by Borrowers after the Closing Date over (b) the aggregate amount
thereof previously allocated to a Capital Expenditure, repurchase or redemption
of Subordinated Notes or Investment pursuant to an Equity Offering Proceeds
Allocation Certificate.
UNUSED LINE FEE has the meaning set forth in SECTION 4.2.
1.2 ACCOUNTING TERMS AND DETERMINATIONS.
Unless otherwise defined or specified herein, all accounting terms used
in this Credit Agreement shall be construed in accordance with GAAP, applied on
a basis consistent in all material respects with the Financial Statements
referred to in SECTION 6.9. All accounting determinations for purposes of
determining compliance with the financial covenants contained in ARTICLE 8 shall
be made in accordance with GAAP as in effect on the Closing Date and applied on
a basis consistent in all material respects with the audited Financial
Statements delivered to the Agent on or before the Closing Date. The Financial
Statements required to be delivered hereunder from and after the Closing Date,
and all financial records, shall be maintained in accordance with GAAP. If GAAP
shall change from the basis used in preparing the audited Financial Statements
delivered to the Agent on or before the Closing Date, the certificates required
to be delivered pursuant to SECTION 7.1 demonstrating compliance with the
covenants contained herein shall include, at the election of the Borrowers or
upon the request of the Majority Lenders, calculations setting forth the
adjustments necessary to demonstrate that the Borrowers are in
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compliance with the financial covenants based upon GAAP as in effect on the
Closing Date.
1.3 OTHER TERMS; HEADINGS.
Terms used herein and not otherwise defined in ARTICLE 1 that are
defined in the Uniform Commercial Code in effect in the State of Illinois (the
"CODE") shall have the meanings given in the Code. Each of the words "hereof,"
"herein," and "hereunder" refer to this Credit Agreement as a whole. An Event of
Default shall "continue" or be "continuing" until such Event of Default has been
waived in accordance with SECTION 11.11 hereof. References to Articles,
Sections, Annexes, Schedules, and Exhibits are internal references to this
Credit Agreement, and to its attachments, unless otherwise specified. The
headings and the Table of Contents are for convenience only and shall not affect
the meaning or construction of any provision of this Credit Agreement.
ARTICLE 2. REVOLVING LOANS.
2.1 COMMITMENTS.
Subject to the terms and conditions set forth in this Credit Agreement,
and in reliance on the representations and warranties of the Borrowers set forth
herein, on and after the Closing Date and to but excluding the Expiration Date,
each Lender severally agrees to make loans and advances to the Borrowers on a
joint and several basis (each a "REVOLVING LOAN") in an amount not to exceed at
any time its Proportionate Share of the lesser at such time of (a) the Line of
Credit and (b) the Borrowing Base MINUS, in each case, the then outstanding
Letter of Credit Obligations. The Revolving Loans shall be evidenced by a
Revolving Note dated as of the Closing Date, issued to the Agent and executed by
each of the Borrowers in the amount of the Line of Credit.
2.2 BORROWING OF REVOLVING LOANS.
Revolving Loans may be made available to the Funds Admini-
strator for the account of the Borrowers directly by the Lenders ("LENDER
ADVANCES") or, in the circumstances described in SECTION 2.2(b), from the Agent
acting on behalf of the Lenders ("AGENT ADVANCES").
(a) LENDER ADVANCES. Subject to the determination by the Agent
and the Lenders that the conditions for borrowing contained in SECTION
5.2 are satisfied, upon receipt of a Notice of Borrowing from the Funds
Administrator received by the Agent before 12:00 noon Chicago time on a
Business Day, Lender Advances of Revolving Loans shall be made to the
extent
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of each Lender's Proportionate Share of the requested Borrowing.
(b) AGENT ADVANCES. The Agent is authorized by the Lenders,
but is not obligated, to make Agent Advances upon a receipt of any
Notice of Borrowing received by the Agent before 3:00 P.M. Chicago time
on a Business Day. Agent Advances shall be subject to periodic
settlement with the Lenders under SECTION 2.4. Agent Advances may be
made only in the following circumstances:
(i) NORMAL COURSE AGENT ADVANCES. For
administrative convenience, the Agent may, but is not
obligated, to make Agent Advances up to the amount available
for borrowing under SECTION 2.1 in reliance upon the actual or
deemed representations of the Borrowers under SECTION 5.2 that
the conditions for borrowing are satisfied.
(ii) OTHER AGENT ADVANCES. When the conditions for
borrowing under SECTION 5.2 cannot be fulfilled, and
notwithstanding the Borrowing Base limitation of SECTION 2.1,
the Agent may, but is not obligated, to continue to make Agent
Advances for seven (7) Business Days or until sooner
instructed by the Majority Lenders to cease, in an aggregate
amount at any time not to exceed $5,000,000.
(c) DISBURSEMENT OF REVOLVING LOANS. The proceeds of
Revolving Loans shall be transmitted: (x) in the circum-
stances described in SECTION 3.5, by the Agent directly to the Issuing
Bank, and (y) in all other circumstances, by the Agent or Lenders, as
the case may be, to the Disbursement Account.
(d) NOTICES OF BORROWING. Notices of Borrowing may be given
under this Section by telephone or facsimile transmission, and, if by
telephone, promptly shall be confirmed in writing. The Funds
Administrator shall specify in each Notice of Borrowing whether the
conditions for the requested Borrowing are satisfied. The Borrowers may
request one or more Borrowings of Revolving Loans constituting Prime
Rate Loans on the same Business Day. Each Notice of Borrowing for LIBOR
Rate Loans shall be given not later than noon Chicago time on the third
Business Day prior to the proposed Borrowing. Each Notice of Borrowing
shall, unless otherwise specifically provided herein, consist entirely
of Revolving Loans of the same Type and, if such Borrowing is to
consist of LIBOR Rate Loans, shall be in an aggregate amount of not
less than $1,000,000 or an integral multiple of $100,000 in excess
thereof. The right of the Borrowers to choose LIBOR Rate Loans is
subject to the provisions of SECTION 4.13. Once given, a Notice of
Borrowing is irrevocable and binding on the
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Borrowers. The Funds Administrator shall provide to the Agent a list,
with specimen signatures, of officers and other Persons, if any,
authorized to request Revolving Loans. The Agent is entitled to rely
upon such list until it is replaced by the Funds Administrator.
2.3 NOTICE OF REQUEST FOR LENDER ADVANCES.
Subject to the last sentence of this Section, the Agent shall give each
Lender prompt notice by telephone or facsimile transmission of a Notice of
Borrowing that is received pursuant to SECTION 2.2(a) and is to be satisfied by
Lender Advances. No later than 3:00 P.M. Chicago time on the date of receipt of
such notice, each Lender shall make available for the account of its Applicable
Lending Office to the Agent at the Agent's address for deposit into the
Disbursement Account, its Proportionate Share of such Borrowing in immediately
available funds. Unless the Agent receives contrary written notice prior to any
such Borrowing, it is entitled to assume that each Lender will make available
its Proportionate Share of the Borrowing and in reliance upon that assumption,
but without any obligation to do so, may advance such Proportionate Share on
behalf of the Lender, without the necessity of giving daily notice to each
Lender of the receipt of a Notice of Borrowing.
2.4 PERIODIC SETTLEMENT OF AGENT ADVANCES; INTEREST AND FEES;
STATEMENTS.
(a) THE SETTLEMENT DATE; ALLOCATION OF INTEREST AND FEES. The
amount of each Lender's Proportionate Share of Revolving Loans shall be
computed weekly (or more frequently in the Agent's discretion) and
shall be adjusted upward or downward based on all Revolving Loans
(including Agent Advances) and repayments received by the Agent as of
5:00 P.M. Chicago time on the last Business Day of the period specified
by the Agent (such date, the "SETTLEMENT DATE").
(b) SUMMARY STATEMENTS; SETTLEMENTS. The Agent shall deliver
to each of the Lenders promptly after the Settlement Date a summary
statement of the account of outstanding Revolving Loans (including
Agent Advances) for the period, the amount of repayments received for
the period, and the amount allocated to each Lender of the interest and
Unused Line Fee for the period. After application of payments under
SECTION 4.11, as reflected on the summary statement, (i) the Agent
shall transfer to each Lender its allocated share of interest and
Unused Line Fee, and its Proportionate Share of repayments received by
the Agent in respect of the period covered by such summary statement;
and (ii) each Lender shall transfer to the Agent, or the Agent shall
transfer to each Lender, such amounts as are necessary to insure that,
after giving effect to all such transfers, the amount of Revolving
Loans made by
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each Lender shall be equal to such Lender's Proportionate Share of the
aggregate amount of Revolving Loans outstanding as of such Settlement
Date. If the summary statement requires transfers to be made to the
Agent by the Lenders and is received by the Lenders prior to 12:00 noon
Chicago time on a Business Day, such transfers shall be made in
immediately available funds no later than 3:00 P.M. Chicago time that
day; and, if received after 12:00 noon Chicago time, then no later than
3:00 P.M. Chicago time on the next Business Day. The obligation of each
Lender to transfer such funds is irrevocable, unconditional and without
recourse to or warranty by the Agent.
(c) DISTRIBUTION OF INTEREST AND UNUSED LINE FEES. Interest on
the Revolving Loans (including Agent Advances) and the Unused Line Fee
shall be allocated by the Agent to each Lender (i) in the case of
interest, in accordance with the Revolving Loans actually advanced by
and repaid to such Lender and (ii) in the case of the Unused Line Fee,
in accordance with the Proportionate Share of such Lender. Interest
shall accrue from and including the date Revolving Loans are advanced
and to but excluding the date such Revolving Loans are either repaid by
the Borrowers or, if later, actually settled under this Section.
Promptly after the end of each month, the Agent shall distribute to
each Lender its portion, allocated as provided above, of the interest
and Unused Line Fee which has been received by the Agent during such
month.
2.5 SHARING OF PAYMENTS.
If any Lender shall obtain any payment (whether made voluntarily or
involuntarily, or through the exercise of any right of set-off, or otherwise) on
account of the Revolving Loans made by it or its participations in the Letter of
Credit Obligations in excess of its Proportionate Share of payments on account
of the Revolving Loans or Letter of Credit Obligations obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Revolving Loans made by them or in their participation in
Letters of Credit as shall be necessary to cause such purchasing Lender to share
the excess payment ratably with each of them; PROVIDED, THAT if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each other Lender shall be rescinded and each such
other Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery, together with an amount equal to such other Lender's
ratable share (according to the proportion of (i) the amount of such Lender's
required repayment to (ii) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing Lender
in respect to the total amount so recovered. The Borrowers agree that any Lender
so purchasing a participation from another Lender
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pursuant to this SECTION 2.5, to the fullest extent permitted by law, may
exercise all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrowers in the amount of such participation.
2.6 DEFAULTING LENDERS.
(a) A Lender who fails to pay the Agent its Proportionate
Share of any Revolving Loans (including Agent Advances) made available
by the Agent on such Lender's behalf, or who fails to pay any other
amounts owing by it hereunder to the Agent, is a "DEFAULTING LENDER."
The Agent is entitled to recover from such Defaulting Lender all such
amounts owing by such Defaulting Lender on demand. If the Defaulting
Lender does not pay such amounts on the Agent's demand, the Agent shall
promptly notify the Funds Administrator and the Borrowers shall pay
such amounts to the Agent (to the extent the Agent has made such
amounts available to or for the account of the Borrowers) within five
(5) Business Days of the receipt by the Funds Administrator of such
notice. In addition, the Defaulting Lender or the Borrowers shall pay
to the Agent for its own account interest on such amount for each day
from the date it was made available by the Agent to the Borrowers to
the date it is recovered by the Agent at a rate per annum equal to (x)
the overnight Federal Funds Rate if paid by the Defaulting Lender, or
(y) the then applicable rate of interest calculated under SECTION 4.1,
if paid by the Borrowers; plus, in each case, the Expenses and losses,
if any, incurred as a result of the Defaulting Lender's failure to
perform its obligations. Nothing herein shall be deemed to relieve any
Lender of its obligation to fulfill its commitments hereunder or to
prejudice any rights which the Borrowers may have against any Lender as
a result of any default by such Lender hereunder, including, without
limitation, the right of the Borrowers to seek reimbursement from any
Defaulting Lender for any amounts paid by the Borrowers under CLAUSE
(y) above on account of such Defaulting Lender's default.
(b) The failure of any Lender to fund its Proportionate Share
of a Revolving Loan shall not relieve any other Lender of its
obligation to fund its Proportionate Share of a Revolving Loan.
Conversely, no Lender shall be responsible for the failure of another
Lender to fund its Proportionate Share of a Revolving Loan.
(c) The Agent shall not be obligated to transfer to a
Defaulting Lender any payment made by the Borrowers to the Agent for
the Defaulting Lender's benefit; nor shall a Defaulting Lender be
entitled to the sharing of any payment
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hereunder. Amounts payable to a Defaulting Lender shall instead be paid
to or retained by the Agent. The Agent may hold and, in its discretion,
re-lend to the Borrowers the amount of all such payments received by it
for the account of such Lender. For purposes of voting or consenting to
matters with respect to the Credit Documents and determining
Proportionate Shares, such Defaulting Lender shall be deemed not to be
a "LENDER" and such Lender's Commitment shall be deemed to be zero
(-0-). This section shall remain effective with respect to such Lender
until (x) the Obligations shall have been declared or shall have become
immediately due and payable or (y) the Majority Lenders, the Agent and
the Borrowers shall have waived such Lender's default in writing. The
operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, or relieve or excuse the
performance by the Borrowers of their respective duties and obligations
hereunder.
2.7 ALLOCATION OF REVOLVING LOANS AND EXPENSES.
(a) The Borrowers maintain an integrated cash management
system reflecting their interdependence on one another and the mutual
benefits shared among them as a result of their respective operations.
In order to efficiently fund and operate their respective businesses
and minimize the number of Borrowings which they will make under this
Credit Agreement and thereby reduce the administrative costs and record
keeping required in connection therewith, including the necessity to
enter into and maintain separately identified and monitored borrowing
facilities, the Borrowers have requested, and the Agent and the Lenders
have agreed that, subject to SECTION 11.16, (i) all Revolving Loans
will be advanced to and for the account of the Borrowers on a joint and
several basis to the Disbursement Account and (ii) all Letters of
Credit will be issued pursuant to an application therefor executed by
the Funds Administrator on behalf and for the account of the Borrower
or Borrowers specified by the Funds Administrator in such application.
Each of the Borrowers hereby acknowledges that it will be receiving a
direct benefit from each Revolving Loan made and each Letter of Credit
issued pursuant to this Credit Agreement.
(b) In order to track more precisely the respective recipients
of the proceeds of each Revolving Loan and the Borrower receiving the
primary benefit from the issuance of each Letter of Credit, and to
assist the Funds Administrator, the Borrowers, the Agent and the
Lenders in administering the Revolving Loans and the Letters of Credit,
each of the Borrowers has agreed with the Agent and the Lenders to
cause the Funds Administrator to establish and maintain, and the Funds
Administrator hereby agrees to establish and maintain,
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accounts with respect to each Borrower (each Borrower's "ALLOCATION
ACCOUNT") in which the Funds Administrator shall record its good faith
allocation to each of the Borrowers of (w) the proceeds, if any, of
each Revolving Loan received by or for the account of such Borrower,
(x) payments made to the Agent on account of the Obligations of such
Borrower, (y) the aggregate face amount of all outstanding Letters of
Credit covering goods which such Borrower will receive and (z) all
previously unallocated Expenses.
(c) As soon as available, but not later than fifteen (15)
Business Days after the last Business Day of each month ending after
the Closing Date, the Funds Administrator shall
deliver to the Agent and each Borrower a report prepared by or under
the supervision of the chief financial officer of the Funds
Administrator, and certified by such officer, setting forth with
respect to each Borrower the balance of the Allocation Account of such
Borrower as of the end of, and all activity occurring in such
Allocation Account during, such month. Absent demonstrable error, each
such monthly statement shall be final, conclusive and binding on the
respective Borrowers.
ARTICLE 3. LETTERS OF CREDIT.
3.1 ISSUANCE OF LETTERS OF CREDIT.
Subject to the terms and conditions hereof and in reliance on the
representations and warranties of the Borrowers set forth herein, the Agent
shall cause the Issuing Bank to issue Letters of Credit hereunder at the request
of the Funds Administrator and for its account, as more specifically described
below. The Agent shall not be obligated to cause the Issuing Bank to issue any
Letter of Credit if:
(a) issuance of the requested Letter of Credit (i) would cause
the Letter of Credit Obligations then outstanding to exceed $50,000,000
or (ii) would cause the sum of the Revolving Loans PLUS the Letter of
Credit Obligations then outstanding to exceed the lesser of (x) the
Line of Credit and (y) the Borrowing Base, in each case then in effect;
or
(b) issuance of the Letter of Credit is enjoined, restrained
or prohibited by any Governmental Authority, Requirement of Law or any
request or directive of any Governmental Authority (whether or not
having the force of law) or would impose upon the Agent or the Issuing
Bank any material restriction, reserve, capital requirement, loss, cost
or expense (for which the Agent or the Issuing Bank is not
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otherwise compensated) not in effect or known as of the Closing Date.
3.2 TERMS OF LETTERS OF CREDIT.
The proposed amount, terms and conditions, and form of each Letter of
Credit (and of any drafts or acceptances thereunder) shall be subject to
approval by the Issuing Bank. The term of each standby Letter of Credit shall
not exceed 360 days, but may be subject to annual renewal. The term of each
documentary Letter of Credit shall not exceed 120 days. No Letter of Credit
shall have an expiry date later than five (5) Business Days prior to the
Expiration Date.
3.3 NOTICE OF ISSUANCE.
A request for issuance of a Letter of Credit (a "LETTER OF CREDIT
REQUEST") may be given in writing or electronically and, if given electronically
and if requested by the Agent, promptly shall be confirmed in writing. A Letter
of Credit Request must be received by the Agent no later than 1:00 P.M. Chicago
time at least three (3) Business Days (or such shorter period as may be agreed
to by the Issuing Bank) in advance of the proposed date of issuance.
3.4 LENDERS' PARTICIPATION.
Immediately upon issuance, amendment or extension of any Letter of
Credit, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received from the Issuing Bank, without recourse or warranty, an
undivided interest and participation in all rights and obligations under such
Letter of Credit (other than fees and other amounts owing to the Issuing Bank)
in accordance with such Lender's Proportionate Share.
3.5 PAYMENTS OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
The Agent shall notify the Funds Administrator of the receipt by the
Agent of notice from the Issuing Bank of a draft or other presentation for
payment or drawing under a Letter of Credit not later than 11:00 A.M. Chicago
time on the Business Day immediately prior to the date on which the Issuing Bank
intends to honor such drawing. Unless the procedures set forth in SECTION 9.2(c)
shall be applicable, the Funds Administrator shall be deemed to have
concurrently given a Notice of Borrowing to the Agent to make a Revolving Loan
in the amount of and at the time of such drawing (which Revolving Loan shall be
a Prime Rate Loan), the proceeds of which shall be applied directly by the Agent
to reimburse the Issuing Bank for the amount of such drawing.
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3.6 PAYMENT BY LENDERS.
If a Revolving Loan is not made in an amount sufficient to reimburse
the Issuing Bank in full for the amount of any draw under a Letter of Credit,
the Agent shall promptly notify each Lender of the unreimbursed amount of such
drawing and of such Lender's respective participation therein. Each Lender shall
make available to the Agent, for the account of the Issuing Bank, the amount of
its participation in immediately available funds not later than 1:00 P.M.
Chicago time on the next Business Day after such Lender receives notice from the
Agent of the amount of such Lender's participation in such unreimbursed amount.
If any Lender fails to make available to the Agent the amount of such Lender's
participation, the Issuing Bank shall be entitled to recover such amount on
demand from such Lender together with interest at the Federal Funds Rate for the
first three Business Days and thereafter at the Prime Lending Rate. For each
Letter of Credit, the Agent shall promptly distribute to each Lender which has
funded the amount of its participation its Proportionate Share of all payments
subsequently received by the Agent from the Borrowers in reimbursement of
honored drawings.
3.7 OBLIGATIONS ABSOLUTE.
The joint and several obligations of the Borrowers to reimburse the
Lenders under SECTION 3.5 hereof shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Credit Agreement
under all circumstances including, without limitation, upon the occurrence and
during the continuance of an Event of Default.
3.8 AGENT'S EXECUTION OF APPLICATIONS AND OTHER ISSUING BANK
DOCUMENTATION; RELIANCE ON CREDIT AGREEMENT BY ISSUING
BANK.
The Agent shall be authorized to execute, deliver and perform on behalf
of the Lenders such letter of credit applications, shipping indemnities, letter
of credit modifications and consents and other undertakings for the benefit of
the Issuing Bank as may be reasonably necessary or appropriate in connection
with the issuance or modification of Letters of Credit requested by the
Borrowers hereunder. The Lenders, the Agent, the Borrowers and the Funds
Administrator all expressly agree that the terms of this ARTICLE 3 and various
other provisions of this Credit Agreement identifying the Issuing Bank are also
intended to benefit the Issuing Bank and the Issuing Bank shall be entitled to
enforce the provisions hereof which are for its benefit.
ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION
OF COMMITMENTS.
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4.1 INTEREST ON REVOLVING LOANS.
(a) Interest on the unpaid principal amount of Revolving Loans
which are Prime Rate Loans shall be payable monthly in arrears, on the
first Business Day of each month, at an interest rate per annum equal
to the Prime Lending Rate PLUS one-half of one percent (0.5%)
calculated on the unpaid principal amount of Revolving Loans at the
close of business each day during the immediately preceding month. The
rate hereunder shall change each day the Prime Lending Rate changes.
(b) Interest on the unpaid principal amount of Revolving Loans
which are LIBOR Rate Loans shall be payable on the earliest to occur of
(i) the last day of each Interest Period with respect to such LIBOR
Rate Loans, (ii) ninety (90) days following the commencement of the
applicable Interest Period for such LIBOR Rate Loans, (iii) the date of
conversion of such LIBOR Rate Loans (or a portion thereof) to a Prime
Rate Loan (on the portion so converted) and (iv) the maturity of such
LIBOR Rate Loans, at an interest rate per annum equal during the
Interest Period for such LIBOR Rate Loans to the LIBOR Rate for the
Interest Period in effect for such LIBOR Rate Loans PLUS one and
three-quarters percent (1.75%). After maturity of such LIBOR Rate Loans
(whether by acceleration or otherwise), interest shall be payable upon
demand. The Agent upon determining the LIBOR Rate for any Interest
Period shall promptly notify the Funds Administrator and the Lenders by
telephone (confirmed promptly in writing) or in writing thereof. Each
determination by the Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent demonstrable error.
(c) Notwithstanding the provisions of SECTION 4.1(b), the
Borrowers shall pay to each Lender, so long as and to the extent such
Lender shall be required under regulations of the Board of Governors of
the Federal Reserve System to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities, additional interest on the unpaid principal amount of each
Revolving Loan comprised of LIBOR Rate Loans of such Lender, from the
date of such LIBOR Rate Loan until such principal amount is paid in
full, at an interest rate per annum equal at all times to the remainder
obtained by subtracting (i) the LIBOR Rate for the applicable Interest
Period for such LIBOR Rate Loan from (ii) the rate obtained by dividing
such LIBOR Rate by a percentage equal to 1 MINUS the stated maximum
rate (stated as a decimal) applicable two (2) Business Days before the
first day of such Interest Period of all reserves, if any, required to
be maintained against "EUROCURRENCY LIABILITIES" as specified in
Regulation D (or against any other category of liabilities
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which includes deposits by reference to which the interest rate on
LIBOR Rate Loans is determined or any category of extensions of credit
or other assets which includes loans by a non-United States office of
any Lender to United States residents) having a term equal to the
Interest Period applicable to such LIBOR Rate Loan. Such Lender shall
as soon as practicable provide notice to the Agent and the Funds
Administrator of any such additional interest arising in connection
with such LIBOR Rate Loan, which notice shall be conclusive and
binding, absent demonstrable error.
4.2 UNUSED LINE FEE.
The Borrowers shall pay to the Agent, for the ratable benefit of the
Lenders, a non-refundable fee (the "UNUSED LINE FEE") equal to three-eighths of
one percent (0.375%) per annum of the unused portion of the Line of Credit (with
any outstanding Letters of Credit constituting usage of the Line of Credit). The
Unused Line Fee shall accrue daily from the Closing Date until the Expiration
Date, and shall be due and payable monthly in arrears, on the first Business Day
of each month and on the Expiration Date.
4.3 LETTER OF CREDIT FEES.
(a) The Agent, for the ratable benefit of the Lenders, shall
be entitled to charge to the account of the Borrowers on the first
Business Day of each month, a fee (the "LETTER OF CREDIT FEE"), in an
amount equal to one and three-quarters percent (1.75%) per annum of the
daily weighted average undrawn amount of Letters of Credit outstanding
during the immediately preceding month. In addition, the Agent, for its
own account, shall be entitled to charge to the account of the
Borrowers on the date of issuance of any standby Letter of Credit, a
facing fee equal to one-half of one percent (0.50%) on the initial face
amount of each such standby Letter of Credit (the "L/C FACING FEE").
(b) The Agent shall also be entitled to charge to the account
of the Borrowers, as and when incurred by the Agent or any Lender, the
customary charges, fees, costs and expenses charged to the Agent or any
Lender for the Borrower's account by any Issuing Bank (the "ISSUING
BANK FEES") in connection with the issuance, transfer, drawing,
amendment or negotiation of any Letters of Credit by the Issuing Bank.
Each determination by the Agent of Letter of Credit Fees, L/C Facing
Fees, Issuing Bank Fees and other fees, costs and expenses charged
under this Section shall be conclusive and binding for all purposes,
absent demonstrable error.
4.4 INTEREST AND LETTER OF CREDIT FEES AFTER EVENT OF
DEFAULT.
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From the date of occurrence of an Event of Default (after giving effect
to any applicable grace period) until the earlier of the date upon which (i) all
Obligations shall have been paid and satisfied in full or (ii) such Event of
Default shall have been cured or waived, interest on the Revolving Loans and
Letter of Credit Fees on Letter of Credit Obligations shall each be payable on
demand at a rate per annum equal to, with respect to the Revolving Loans, the
rate in effect under SECTION 4.1, PLUS two percent (2%), and with respect to the
Letter of Credit Obligations, the rate at which Letter of Credit Fees are
charged pursuant to the first sentence of SECTION 4.3(a), PLUS two percent (2%).
4.5 COLLATERAL MONITORING FEE.
The Borrowers shall pay to the Agent, for its own account, a
non-refundable annual collateral monitoring fee (the "COLLATERAL MONITORING
FEE") in the amount of $175,000. The Collateral Monitoring Fee shall be fully
earned and payable on the Closing Date and on each anniversary thereof.
4.6 EXPENSES.
The Borrowers shall reimburse the Expenses of the Agent or any Lender,
as the case may be, promptly upon demand.
4.7 MANDATORY PAYMENT OF REVOLVING LOANS; REDUCTIONS OF
COMMITMENTS.
(a) Except during the period described in SECTION 2.2(b)(ii),
the aggregate outstanding principal amount of Revolving Loans PLUS
Letter of Credit Obligations at any time in excess of the lesser at
such time of (i) the Line of Credit and (ii) the Borrowing Base, shall
be immediately due and payable without the necessity of any demand.
(b) On the Expiration Date, the Commitment of each Lender
shall automatically reduce to zero (-0-).
(c) The Borrowers may reduce or terminate the Line of Credit
in whole, or in part at any time and from time to time; PROVIDED, that
each such reduction must be in an amount not less than $5,000,000 (and
in increments of $1,000,000 in excess thereof). Once reduced, no
portion of the Line of Credit may be reinstated. If the Borrowers seek
to reduce the Line of Credit to less than $25,000,000, then the Line of
Credit shall be automatically and permanently reduced to zero ($0).
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4.8 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF ACCOUNT.
The Agent shall maintain an account on its books in the name of the
Borrowers (the "LOAN ACCOUNT") in which the Borrowers will be charged with all
loans and advances made by the Lenders to the Borrowers or for the account of
the Borrowers, including the Revolving Loans and all Letter of Credit
Obligations, the Fees, the Expenses and any other Obligations, as and when such
payments become due. The Loan Account will be credited with all payments
received by the Agent from the Borrowers or for the account of the Borrowers,
including all amounts received in the BT Account from the Collection Banks.
After the end of each month, the Agent shall send the Funds Administrator a
monthly statement accounting for the charges, loans, advances and other
transactions occurring among and between the Agent, the Lenders and the
Borrowers during that month, PROVIDED, THAT the failure of the Agent to send
such statement to the Funds Administrator shall not relieve the Borrowers of any
Obligations. Absent demonstrable error, each monthly statement shall be an
account stated and shall be final, conclusive and binding on the Borrowers.
4.9 PAYMENT PROCEDURES.
Payments of Fees, principal of and interest on the Revolving Loans and
Expenses payable to the Agent or any Lender shall be made in each case not later
than 2:00 P.M. Chicago time on the day when due, in immediately available
dollars, to the offices of the Agent, at the address set forth in SECTION 11.7,
or as the Agent may otherwise direct the Funds Administrator. The Borrowers
hereby authorize the Agent to charge the Loan Account with the amount of all
payments to be made hereunder and under the other Credit Documents, including
all Fees and Expenses, as and when such payments become due. The joint and
several obligations of the Borrowers to the Lenders with respect to such
payments shall be discharged by making such payments to the Agent pursuant to
this Section or by the charging of the Loan Account by the Agent.
4.10 COLLECTION OF ACCOUNTS.
Until instructed otherwise by the Agent, each Borrower shall be
entitled to receive Collections directly from account debtors in accordance with
its historical practices. On or prior to the Closing Date, each Borrower, the
Agent and financial institutions selected by such Borrower and reasonably
acceptable to the Agent (the "COLLECTION BANKS") shall enter into agreements in
form and substance satisfactory to Agent (the "DEPOSITARY ACCOUNT AGREEMENTS"),
which among other things shall provide for the opening of an account for the
deposit of Collections (a "COLLECTION ACCOUNT") at a Collection Bank. All
Collections and other amounts received by each Borrower from any account debtor,
in addition to all other cash received in respect of any other Collateral, shall
upon receipt be deposited into a Collection Account. Termination of such
arrangements shall also be subject to approval by the
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Agent. Upon the terms and subject to the conditions set forth in the Depositary
Account Agreements, all available amounts held in each Collection Account shall
be wired each Business Day into an account (the "BT ACCOUNT") maintained by the
Agent at Bankers Trust Company. Amounts received in the BT Account from the
Collection Banks shall be credited to the Loan Account and distributed and
applied as set forth in SECTION 4.11.
4.11 DISTRIBUTION AND APPLICATION OF COLLECTIONS AND OTHER
AMOUNTS.
All Collections received by the Agent, and all other amounts received
by the Borrowers and delivered to the Agent, shall be credited to the Loan
Account; PROVIDED, that if an Event of Default has occurred and is continuing,
all Collections and other amounts received by Agent shall be distributed and
applied in the following order: FIRST, to the payment of any Fees, Expenses or
other Obligations due and payable to the Agent under any of the Credit
Documents, including Agent Advances and any other amounts advanced by the Agent
on behalf of the Lenders; SECOND, to the payment of any Fees, Expenses or other
Obligations due and payable to the Issuing Bank under any of the Credit
Documents; THIRD, to the ratable payment of any Fees, Expenses or other
Obligations due and payable to the Lenders under any of the Credit Documents
other than those Obligations specifically referred to in this Section; FOURTH,
to the ratable payment of interest due on the Revolving Loans; and, FIFTH, to
the ratable payment of principal due on the Revolving Loans.
4.12 CALCULATIONS.
All calculations of (i) interest hereunder and (ii) Fees, including,
without limitation, Unused Line Fees and Letter of Credit Fees, shall be made by
the Agent, on the basis of a year of 360 days, or, if such computation would
cause the interest and fees chargeable hereunder to exceed the Highest Lawful
Rate, 365/366 days, in each case for the actual number of days elapsed
(including the first day but excluding the last day) occurring in the period for
which such interest or Fees are payable. Each determination by the Agent of an
interest rate, Fee or other payment hereunder shall be conclusive and binding
for all purposes, absent demonstrable error.
4.13 SPECIAL PROVISIONS RELATING TO LIBOR RATE LOANS.
(a) CONTINUATION. With respect to any Borrowing consisting of
LIBOR Rate Loans, the Borrowers may, subject to the provisions of
SECTION 4.13(c), elect to maintain such Borrowing or any portion
thereof as consisting of LIBOR Rate Loans by selecting a new Interest
Period for such Borrowing, which new Interest Period shall commence on
the last day of
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the immediately preceding Interest Period. Each selection of a new
Interest Period shall be made by notice given not later than noon
Chicago time on the third Business Day prior to the date of any such
continuation relating to LIBOR Rate Loans, by the Funds Administrator
to the Agent. Such notice by the Funds Administrator of a continuation
(a "NOTICE OF CONTINUATION") shall be by telephone or facsimile
transmission, and if by telephone, promptly confirmed in writing,
substantially in the form of EXHIBIT C, in each case specifying (i)
the date of such continuation, (ii) the aggregate amount of Revolving
Loans subject to such continuation and (iii) the duration of the
selected Interest Period. The Borrowers may elect to maintain more
than one Borrowing consisting of LIBOR Rate Loans by combining such
Borrowings into one Borrowing and selecting a new Interest Period
pursuant to this SECTION 4.13(a). If the Borrowers shall fail to
select a new Interest Period for any Borrowing consisting of LIBOR
Rate Loans in accordance with this SECTION 4.13(a), such Revolving
Loans will automatically, on the last day of the then existing
Interest Period therefor, convert into Prime Rate Loans. The Agent
shall give each Lender prompt notice by telephone or facsimile
transmission of each Notice of Continuation.
(b) CONVERSION. The Borrowers may on any Business Day (so long
as no Default or Event of Default has occurred and is continuing),
upon notice (each such notice, a "NOTICE OF CONVERSION") given to the
Agent, and subject to the provisions of SECTION 4.13(c), convert the
entire amount of or a portion of all Revolving Loans of one Type
comprising the same Borrowing into Revolving Loans of the other Type;
PROVIDED, THAT any conversion of any LIBOR Rate Loans into Prime Rate
Loans shall be made on, and only on, the last day of an Interest
Period for such LIBOR Rate Loans and, upon conversion of any Prime
Rate Loans into LIBOR Rate Loans, the Borrowers shall pay accrued
interest to the date of conversion on the principal amount converted.
Each such Notice of Conversion shall be given not later than Noon
Chicago time on the Business Day prior to the date of any proposed
conversion into Prime Rate Loans and on the third Business Day prior
to the date of any proposed conversion into LIBOR Rate Loans. Subject
to the restrictions specified above, each Notice of Conversion shall
be by telephone or facsimile transmission, and if by telephone,
promptly confirmed in writing, substantially in the form of EXHIBIT D,
in each case specifying (i) the requested date of such conversion,
(ii) the Type of Revolving Loans to be converted (iii) the portion of
such Type of Revolving Loan to be converted, (iv) the Type of
Revolving Loans such Revolving Loans are to be converted into and (v)
if such conversion is into LIBOR Rate Loans, the duration of the
Interest Period of such Revolving Loan. Each conversion shall
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be in an aggregate amount of not less than $1,000,000 or an integral
multiple of $100,000 in excess thereof. The Borrowers may elect to
convert the entire amount of or a portion of all Revolving Loans of
one Type comprising more than one Borrowing into Revolving Loans of
another Type by combining such Borrowings into one Borrowing;
PROVIDED, THAT if the Borrowings so combined consist of LIBOR Rate
Loans, such Loans shall have Interest Periods ending on the same date.
(c) CERTAIN LIMITATIONS ON LIBOR RATE LOANS. The right of the
Borrowers to maintain, select, continue or convert LIBOR Rate Loans
shall be limited as follows:
(i) If the Agent is advised by Bankers Trust
Company that it is not offering United States dollar deposits
(in the applicable amounts) in the London inter-bank market,
or the Agent determines that adequate and fair means do not
otherwise exist for ascertaining the LIBOR Rate or LIBOR Rate
Loans comprising any requested Borrowing, continuation or
conversion, the right of the Borrowers to select or maintain
LIBOR Rate Loans for such Borrowing or any subsequent
Borrowing shall be suspended until the Agent shall notify the
Funds Administrator and the Lenders that the circumstances
causing such suspension no longer exist, and each Revolving
Loan shall be made as a Prime Rate Loan.
(ii) If the Majority Lenders shall, at least two (2)
Business Days before the date of any requested Borrowing,
continuation or conversion, notify the Agent that the LIBOR
Rate for Revolving Loans comprising such Borrowing will not
adequately reflect the cost to such Lenders of making or
funding their respective Revolving Loans for such Borrowing,
the right of the Borrowers to select LIBOR Rate Loans for such
Borrowing shall be suspended until the Agent shall notify the
Funds Administrator and the Lenders that the circumstances
causing such suspension no longer exist, and each Revolving
Loan comprising such Borrowing and each other Borrowing
requested during such period of suspension shall be made as
a Prime Rate Loan.
(iii) If at any time any Lender determines (which
determination shall, absent demonstrable error, be conclusive
and binding on all parties) that the making, continuation or
conversion of any Revolving Loan as a LIBOR Rate Loan by such
Lender has become unlawful or impermissible by reason of
compliance by that Lender with any law, governmental rule,
regulation or order of any Governmental Authority (whether or
not having the force
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of law), then, and in any such event, such Lender may give
notice of that determination in writing, to the Agent and the
Funds Administrator and the Agent shall promptly transmit the
notice to each other Lender. Until such Lender gives notice
otherwise, the right of the Borrowers to select LIBOR Rate
Loans from that Lender shall be suspended and each Revolving
Loan made by that Lender, notwithstanding the Type of
Revolving Loan made by the other Lenders, shall be a Prime
Rate Loan and each LIBOR Rate Loan outstanding from that
Lender shall automatically, on the last day of the existing
Interest Period therefor (or earlier, if so required under
such law, rule, regulation or order), convert to a Prime Rate
Loan.
(iv) No Agent Advance shall be made as a LIBOR Rate
Loan.
(v) Subject to CLAUSE (vii) of this SECTION
4.13(c), no more than five (5) Interest Periods with respect
to LIBOR Rate Loans may be in effect at any time.
(vi) No Revolving Loans may be made, continued or
converted as or to LIBOR Rate Loans at any time that a Default
or Event of Default shall have occurred and be continuing.
(vii) Prior to the earliest to occur of (x) the
completion of the syndication by the Agent in the exercise of
its sole discretion, (y) ninety (90) days after the Closing
Date and (z) receipt by or for the account of MTLM of the net
proceeds of issuance of the Subordinated Notes, Borrowers may
only select LIBOR Loans having an Interest Period of one month
and only one such Interest Period may be in effect at any
time.
(d) COMPENSATION.
(i) Each Notice of Continuation and Notice of
Conversion shall be irrevocable by and binding on the
Borrowers. In the case of any Borrowing, continuation or
conversion that the related Notice of Borrowing, Notice of
Continuation or Notice of Conversion specifies is to be
comprised of LIBOR Rate Loans, the Borrowers shall indemnify
each Lender against any loss, cost or expense incurred by such
Person as a result of any failure to fulfill, on or before the
date for such Borrowing, continuation or conversion specified
in such Notice of Borrowing, Notice of Continuation or Notice
of Conversion, the applicable conditions set forth in ARTICLE
5, including, without limitation, any loss
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(excluding loss of anticipated profits), cost or expense
incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Lender to fund the
Revolving Loan to be made by such Lender as part of such
Borrowing, continuation or conversion.
(ii) If any payment of principal of, or conversion
or continuation of, any LIBOR Rate Loan is made other than on
the last day of the Interest Period for such Loan as a result
of a payment, prepayment, conversion or continuation of such
Loan or acceleration of the maturity of the Revolving Notes or
for any other reason, the Borrowers shall, upon demand by any
Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such
payment, including, without limitation, any loss (excluding
loss of anticipated profits), cost or expense incurred by
reason of the liquidation or re-employment of deposits or
other funds acquired by any Lender to fund or maintain such
Loan.
(iii) Calculation of all amounts payable to a Lender
under this SECTION 4.13(d) shall be made as though such Lender
elected to fund all LIBOR Rate Loans by purchasing United
State dollar deposits in its LIBOR Lending Office's interbank
eurodollar market.
4.14 INDEMNIFICATION IN CERTAIN EVENTS.
(a) INCREASED COSTS. If after the Closing Date, either
(i) any change in or in the interpretation of any law or regulation is
introduced, including, without limitation, with respect to reserve
requirements applicable to the Agent, to any of the Lenders, Bankers
Trust Company or any other affiliated banking or financial institution
from whom any of the Lenders borrows funds or obtains credit (a
"FUNDING BANK"), or (ii) the Agent, a Funding Bank or any of the
Lenders complies with any future guideline or request from any central
bank or other Governmental Authority proposed or promulgated after the
date of the Agreement or (iii) the Agent, a Funding Bank or any of the
Lenders reasonably determines that the adoption of any applicable law,
rule or regulation regarding capital adequacy or any change therein, or
any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof announced after the date
of this Credit Agreement has or would have the effect described below,
or the Agent, a Funding Bank or any of the Lenders complies with any
request
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or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency
announced after the date of this Credit Agreement and in the case of
any event set forth in this clause (iii), such adoption, change or
compliance has or would have the effect of reducing the rate of return
on any of such Person's capital as a consequence of its obligations
hereunder to a level below that which such Person could have achieved
but for such adoption, change or compliance (taking into consideration
such Person's policies with respect to capital adequacy) by an amount
reasonably deemed by such Person to be material, and any of the
foregoing events described in CLAUSES (i), (ii) OR (iii) increases the
cost to the Agent, or any of the Lenders of (a) funding or maintaining
any Commitment or (b) issuing, causing the issuance of making or
maintaining any Letter of Credit or of purchasing or maintaining any
participation therein, or reduces the amount receivable in respect
thereof by the Agent or any Lender, then the Borrowers shall upon
demand by the Agent at any time within one hundred eighty (180) days
after the date on which an officer of the Agent, such Funding Bank or
such Lender, as the case may be, responsible for overseeing this Credit
Agreement knows or has reason to know of its right to additional
compensation under this SECTION 4.14(a), pay to the Agent, for the
account of such Lender or, as applicable, the Agent or a Funding Bank,
additional amounts sufficient to reimburse the Agent, such Funding Bank
and such Lender against such increase in cost or reduction in amount
receivable; PROVIDED, HOWEVER, that if the Agent or any such Lender or
Funding Bank, as the case may be, fails to deliver such demand within
such 180 day period, such entity shall only be entitled to additional
compensation for any such costs incurred from and after the date that
is one hundred eighty (180) days prior to the date the Borrowers
received such demand; and PROVIDED FURTHER, HOWEVER, that before making
any such demand, the Agent and each Lender agree to use reasonable
efforts (consistent with such Person's internal policy and legal and
regulatory restrictions) to mitigate or avoid such increased costs,
including, without limitation, designating a different Applicable
Lending Office if the making of such a designation would avoid the need
for, or reduce the amount of, such increased cost and so long as such
efforts would not, in the reasonable judgment of such Person, be
otherwise disadvantageous to such Person. A certificate as to the
amount of such increased cost, and setting forth in reasonable detail
the calculation thereof, shall be submitted to the Funds Administrator
by the Agent, or the applicable Lender or Funding Bank, and shall be
conclusive absent demonstrable error.
(b) Each Lender will promptly notify the Agent, and the Agent
will promptly notify the Funds Administrator, of any
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event of which it has knowledge that would entitle such entity to
additional compensation under this SECTION 4.14. Neither the Agent nor
any Lender shall request any additional compensation under this SECTION
4.14 unless it is generally making similar requests of other borrowers
similarly situated, and the Agent and each Lender agrees to use a
reasonable basis for calculating amounts allocable to its commitment to
lend or its Loans and Letter of Credit Obligations, if any, hereunder.
4.15 SUBSTITUTION OF LENDERS.
In the event the Borrowers become obligated to pay additional amounts
to any Lender pursuant to SECTION 4.14, or any Lender gives notice under SECTION
4.13(c)(iii), or any Lender is a Defaulting Lender, the Funds Administrator may
designate another Lender (with such other Lender's consent) reasonably
acceptable to the Agent (such other Lender herein called a "REPLACEMENT LENDER")
to purchase the Loans and other Obligations of such Lender and such Lender's
rights hereunder, without recourse to or warranty by, or expense to, such Lender
for a purchase price equal to the outstanding principal amount of the Loans
owing to such Lender PLUS any accrued but unpaid interest on such Loans and
other Obligations and accrued but unpaid Unused Line Fees in respect of such
Lender's Commitment and any other amounts payable to such Lender under this
Credit Agreement, and to assume all the obligations of such Lender hereunder
and, upon such purchase, such Lender shall on longer be a party hereto or have
any rights hereunder (other than indemnities and other similar rights applicable
to such Lender prior to the date of such assignment and assumption) and shall be
relieved from all obligations to the Borrowers hereunder, and the Replacement
Lender shall succeed to the rights and obligations of such Lender hereunder.
ARTICLE 5. CONDITIONS PRECEDENT.
5.1 CONDITIONS PRECEDENT TO INITIAL REVOLVING LOAN AND LETTER
OF CREDIT.
The obligation of each Lender to fund its Proportionate Share of the
initial Borrowing (or, if it shall occur earlier, the obligation of the Agent to
cause the issuance by the Issuing Bank of the initial Letter of Credit and of
each Lender to purchase a participation therein) is in each case subject to the
satisfaction or waiver of the following conditions precedent:
(a) CLOSING DOCUMENTS. The Agent and the Lenders shall have
received each of the agreements, opinions, reports, approvals,
consents, certificates and other documents set forth on the List of
Closing Documents attached hereto as SCHEDULE A (the "CLOSING DOCUMENT
LIST").
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(b) FEES AND EXPENSES. All Fees and Expenses payable by the
Borrowers hereunder on or before the Closing Date shall have been paid
in full.
(c) OTHER DOCUMENTS. Borrowers shall have delivered or caused
to be delivered to the Agent, in each case in form and substance
satisfactory to Agent, (i) all information required pursuant to SECTION
7.2 and (ii) such other business and/or financial and data and other
information as the Agent shall reasonably request.
(d) OFFICER'S CERTIFICATE. The Agent shall have received a
certificate dated the Closing Date signed on behalf of the Funds
Administrator and each of the Borrowers by a Responsible Officer of the
Funds Administrator stating that all of the conditions set forth in
SECTIONS 5.2(a) and (b) have been satisfied on and as of such date.
5.2 CONDITIONS PRECEDENT TO ALL REVOLVING LOANS AND LETTERS
OF CREDIT.
The obligation of each Lender to fund its Proportionate Share of any
requested Revolving Loan (or of the Agent to cause the Issuing Bank to issue any
requested Letter of Credit and of each Lender to purchase a participation
therein) is in each case subject to the satisfaction of the conditions precedent
set forth below. Each Notice of Borrowing, each Letter of Credit Request and
each issuance by any Borrower of a check drawn against, or request for transfer
from, the Disbursement Account shall constitute a representation and warranty to
the Agent and each Lender by the Borrowers that such conditions are satisfied.
(a) All representations and warranties contained in this
Credit Agreement and the other Credit Documents are true and correct in
all material respects on and as of the date of such Notice of
Borrowing, Letter of Credit Request, or issuance of a check drawn
against, or request for transfer from, the Disbursement Account both
before and after giving effect thereto and to the application of the
proceeds thereof, in each case as if then made, other than
representations and warranties that expressly relate solely to an
earlier date (in which case such representations and warranties shall
have been true and accurate in all material respects on and as of such
earlier date); and
(b) No Default or Event of Default shall have occurred or
could reasonably be expected to result from the making of the requested
Revolving Loan or the issuance of the requested Letter of Credit, which
has not been cured or waived.
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ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
To induce the Agent and the Lenders to enter into this Credit Agreement
and to induce the Lenders to make the Loans and other financial accommodations
described herein, each of the Borrowers hereby represents and warrants to the
Agent and the Lenders that the representations and warranties contained in this
ARTICLE 6 are true and correct. Such representations and warranties, and all
other representations and warranties made by the Borrowers in any other Credit
Documents, shall survive the execution and delivery of this Credit Agreement and
such other Credit Documents.
6.1 ORGANIZATION AND QUALIFICATION.
Each Credit Party and each Subsidiary of each Credit Party (i) are
corporations, limited partnerships or limited liability companies, as the case
may be, duly organized, validly existing and in good standing under the laws of
the respective states or other jurisdictions of their formation, (ii) have the
power and authority to own their respective properties and assets and to
transact their respective businesses in which they presently are, or propose to
be, engaged and (iii) are duly qualified and are authorized to do business and
are in good standing in each of the respective jurisdictions where they
presently are, or propose to be, engaged in business, in each case, except where
any failures to do so could not reasonably be expected singly or in the
aggregate to have a Material Adverse Effect. SCHEDULE B, PART 6.1 lists all
jurisdictions in which each Credit Party and each Subsidiary of each Credit
Party are qualified to do business as foreign corporations, limited partnerships
or limited liability companies, as the case may be.
6.2 AUTHORITY.
Each Credit Party and each Subsidiary of each Credit Party has the
requisite power and authority to execute, deliver and perform the respective
Credit Documents to which they are parties. All corporate, partnership or
similar action necessary for the execution, delivery and performance of any of
the Credit Documents by each Credit Party and each Subsidiary of each Credit
Party which is a party thereto has been taken.
6.3 ENFORCEABILITY.
This Credit Agreement and each of the other Credit Documents are the
legal, valid and binding obligations of each Credit Party and each Subsidiary of
each Credit Party which are parties thereto, enforceable in accordance with
their respective terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors' rights generally,
and (ii) general principles of equity.
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6.4 NO CONFLICT.
The execution, delivery and performance of each Credit Document by each
Credit Party and each Subsidiary of each Credit Party which are parties thereto
are not in contravention of (i) the Governing Documents of such Persons, or (ii)
any Requirement of Law, or (iii) any indenture, contract, agreement or
instrument or other commitment to which any or all of such Persons are parties
or by which any of such Persons or any of its properties are bound, and will
not, except as contemplated herein, result in the imposition of any Liens upon
any of the properties of any of such Persons.
6.5 CONSENTS AND FILINGS.
No consent, authorization, permit or filing is required in connection
with the execution, delivery and performance of this Credit Agreement or any
other Credit Document by any Credit Party or any Subsidiary of any Credit Party
which are parties thereto, or in connection with the continuing operations of
such Persons, except (i) those that have been obtained or made and (ii) filings
necessary to create, perfect or retain the perfection of Liens against the
Collateral.
6.6 GOVERNMENT REGULATION.
No Borrower nor any Subsidiary of any Borrower is subject to regulation
under the Public Utility Holding Company Act of 1935, the Investment Company Act
of 1940, the Federal Power Act or any other similar Requirement of Law that
limits the respective abilities of such Persons to incur indebtedness or
consummate the transactions contemplated in this Credit Agreement and the other
Credit Documents.
6.7 SOLVENCY.
The present fair saleable value of the assets of each Borrower exceeds
all its probable liability on its existing debts as they become absolute and
matured, including those to be incurred pursuant to this Credit Agreement and
the other Credit Documents. No Borrower (i) has unreasonably small capital in
relation to the business in which it is or proposes to be engaged and (ii) has
incurred and believes that it will incur, after giving effect to the
transactions contemplated by this Credit Agreement, debts beyond its ability to
pay as such debts become due.
6.8 RIGHTS IN COLLATERAL; PRIORITY OF LIENS.
All property constituting Collateral is owned or leased by the
respective Borrowers, free and clear of any and all Liens in favor of third
parties, other than Permitted Liens. Upon the proper
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filing of the UCC financing and termination statements, in each case listed in
the Closing Document List, the security interests granted pursuant to the Credit
Documents constitute valid and enforceable first, prior (subject to Permitted
Liens) and perfected Liens on the Collateral, to the extent such Liens can be
perfected by the filing of such financing statements.
6.9 FINANCIAL DATA.
(a) The Borrowers have provided or caused to be provided to
the Agent and each of the Lenders complete and accurate copies of the
following Financial Statements: (i) audited Financial Statements as of
March 31, 1997 and (ii) unaudited Financial Statements as of December
31, 1997. All such Financial Statements have been prepared in
accordance with GAAP consistently applied throughout the periods
involved and fairly present the respective consolidated financial
positions, results of operations and cash flows of Persons indicated
for each of the periods covered subject, in the case of interim
Financial Statements, to normal year-end audit adjustments and the
absence of footnotes.
(b) The Consolidated Entity has no material Contingent
Obligation (or any other material liability which was not incurred in
the ordinary course of business) which is not reflected in such
Financial Statements or the footnotes thereto, or is not otherwise
disclosed on SCHEDULE B, PART 6.9.
6.10 LOCATIONS OF OFFICES, RECORDS AND INVENTORY.
(a) The address of the principal place of business and, if
there is more than one principal place of business, the chief executive
office, of each Credit Party is set forth on SCHEDULE B, PART 6.10(a),
as the same may be amended after the Closing Date in accordance with
SECTION 11.11. The books and records of each Credit Party, and all its
chattel paper, if any, and records of Accounts, are maintained
exclusively at one or more of such locations.
(b) There is no location in which any Borrower has any
Collateral (except for vehicles and Inventory in transit) other than
those locations identified on SCHEDULE B, PART 6.10(b), as the same may
be amended after the Closing Date in accordance with SECTION 11.11. A
complete list of the legal name and address of each warehouse at which
Inventory of any Borrower is stored is set forth on SCHEDULE B, PART
6.10(b), as the same may be amended after the Closing Date in
accordance with SECTION 11.11. None of the receipts received and to be
received by any Borrower from any warehouseman state that the Inventory
covered thereby is to be delivered to
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bearer or to the order of a named Person or to a named Person and such
named Person's assigns, in each case other than such Borrower.
6.11 SUBSIDIARIES; OWNERSHIP OF EQUITY.
As of the Closing Date, (i) the only direct or indirect Subsidiaries of
the respective Credit Parties are those listed on SCHEDULE B, PART 6.11, (ii)
each Credit Party is the record and beneficial owner of all of the respective
shares of capital stock, partnership interests or membership interests, as the
case may be, of each of its Subsidiaries listed on SCHEDULE B, PART 6.11, (iii)
there are no proxies, irrevocable or otherwise, with respect to such capital
stock, partnership interests and membership interests, and no equity Securities
of any of such Subsidiaries are or may become required to be issued by reason of
any options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or Securities or rights convertible into
or exchangeable for, shares of any capital stock, partnership interests or
membership interests, as the case may be, of any such Subsidiary, and (iv) there
are no contracts, commitments, understandings or arrangements by which any such
Subsidiary is or may become bound to issue additional shares of its capital
stock, partnership interests or membership interests, as the case may be, or
Securities convertible into or exchangeable therefor. All of such shares,
partnership interests and membership interests so owned by any Credit Party are
owned by such Credit Party free and clear of any Liens other than Liens in favor
of the Agent.
6.12 NO JUDGMENTS OR LITIGATION.
No judgments, orders, writs or decrees are outstanding against any
Credit Party or any Subsidiary of any Credit Party, nor is there now pending or,
to any Credit Party's knowledge, threatened, any litigation, contested claim,
investigation, arbitration, or governmental proceeding by or against any Credit
Party or any Subsidiary of any Credit Party other than (i) as of the Closing
Date, as set forth on SCHEDULE B, PART 6.12, or (ii) with respect to matters
arising after the Closing Date, that singly or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
6.13 NO DEFAULTS.
No Credit Party or any Subsidiary of any Credit Party is in default
under any term of any other indenture, contract, lease, agreement, instrument or
commitment to which any of them is a party or by which any of them is bound the
default under which singly or in the aggregate could reasonably be expected to
have a Material Adverse Effect. No Credit Party knows of any disputes regarding
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any such indenture, contract, lease, agreement, instrument or other commitment
which singly or in the aggregate could reasonably be expected to have a Material
Adverse Effect.
6.14 LABOR MATTERS.
SCHEDULE B, PART 6.14 accurately sets forth all labor union contracts
to which any Borrower or any Subsidiary of any Borrower is a party as of the
Closing Date (including their dates of expiration). There are no existing or, to
the knowledge of any Borrower, threatened strikes, lockouts or other disputes
relating to any collective bargaining or similar agreement to which any Borrower
or any Subsidiary of any Borrower is a party that singly or in the aggregate
could reasonably be expected to have a Material Adverse Effect.
6.15 COMPLIANCE WITH LAW.
No Credit Party nor any Subsidiary of any Credit Party has violated or
failed to comply in any material respect with any Requirements of Law, the
violation of or failure to comply with which could singly or in the aggregate
reasonably be expected to have a Material Adverse Effect.
6.16 ERISA.
No Borrower, no Subsidiary of any Borrower and no ERISA Affiliate
maintains or contributes to any Benefit Plan other than those listed on SCHEDULE
B, PART 6.16. Each Benefit Plan has been and is maintained and funded in all
material respects in accordance with its terms and in compliance with all
applicable provisions of ERISA and the Internal Revenue Code. Each Borrower,
each Subsidiary of a Borrower and each ERISA Affiliate has fulfilled all
contribution obligations for each Benefit Plan (including obligations related to
the minimum funding standards of ERISA and the Internal Revenue Code). No
Termination Events have occurred which singly or in the aggregate could
reasonably be expected to have a Material Adverse Effect. No Borrower, no
Subsidiary of a Borrower and no ERISA Affiliate is required to provide security
to any Benefit Plan under Section 401(a)(29) of the Internal Revenue Code.
6.17 COMPLIANCE WITH ENVIRONMENTAL LAWS.
Except for matters disclosed on SCHEDULE B, PART 6.17 and for matters
arising after the Closing Date, in each case none of which matters could singly
or in the aggregate reasonably be expected to have a Material Adverse Effect,
(i) the operations of each Borrower and each Subsidiary of each Borrower comply
in all material respects with all applicable federal, state and local
environmental, health and safety statutes, regulations, directions,
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ordinances, criteria and guidelines; (ii) no Borrower has received notice that
any of the operations of such Borrower or any of its Subsidiaries is the subject
of any judicial or administrative proceeding alleging the violation of any
federal, state or local environmental, health or safety statute, regulation,
direction, ordinance, criteria or guideline; (iii) none of the operations of
such Borrower or any of its Subsidiaries is the subject of any federal or state
investigation evaluating whether such Borrower or any of its Subsidiaries
disposed of any hazardous or toxic waste, substance or constituent or other
substance at any site that may require remedial action, or any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any hazardous or toxic waste, substance or constituent or other
substance into the environment; (iv) no Borrower nor any Subsidiary of any
Borrower has filed any notice under any federal or state law indicating past or
present treatment, storage or disposal of a hazardous or toxic waste, substance
or constituent or reporting a spill or release of a hazardous or toxic waste,
substance or constituent or other substance into the environment; and (v) no
Borrower nor any Subsidiary of any Borrower has any contingent liability of
which the Borrower has knowledge, or reasonably should have knowledge, in
connection with any release or potential release of any hazardous or toxic
waste, substance or constituent or other substance into the environment, nor has
the Borrower or any of its Subsidiaries received any notice, letter or other
indication of potential liability arising from the disposal of any hazardous or
toxic waste, substance or constituent or other substance into the environment.
6.18 INTELLECTUAL PROPERTY.
Each Borrower and each Subsidiary of each Borrower possesses such
assets, licenses, patents, patent applications, copyrights, service marks,
trademarks and trade names as are necessary or advisable to continue to conduct
their respective present and proposed business activities.
6.19 LICENSES AND PERMITS.
Each Borrower and each Subsidiary of each Borrower has obtained and
holds in full force and effect, all franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way and other
rights and approvals which are necessary or advisable for the operation of its
business as presently conducted and as proposed to be conducted, except for such
licenses, permits, authorizations, qualifications, easements, rights of way and
other rights the failure to obtain or hold in full force and effect could not
reasonably be expected singly or in the aggregate to have a Material Adverse
Effect.
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6.20 TAXES AND TAX RETURNS.
(a) Except as set forth on SCHEDULE B, PART 6.20, all income
tax returns required to be filed by each Credit Party and each
Subsidiary of each Credit Party have been timely filed. The information
filed is complete and accurate in all material respects.
(b) All taxes, assessments, fees and other governmental
charges for periods beginning prior to the date hereof (other than such
taxes, assessments, fees and other governmental charges that are not
yet due and payable and taxes, assessments, fees and charges being
contested in good faith and for which adequate reserves have been made
in accordance with GAAP) have been timely paid and no Credit Party nor
any Subsidiary of any Credit Party has any material liability for taxes
in excess of the amounts so paid or reserves so established.
(c) Except as set forth on SCHEDULE B, PART 6.20, no Credit
Party nor any Subsidiary of any Credit Party has any obligation under
any written tax sharing agreement or agreement regarding payments in
lieu of taxes.
6.21 MATERIAL CONTRACTS.
SCHEDULE B, PART 6.21, contains a true, correct and complete list of
all the Material Contracts in effect on the Closing Date. Except as described on
SCHEDULE B, PART 6.21, and, except to the extent that any such restrictions
singly or in the aggregate could not reasonably be expected to have a Material
Adverse Effect, no Material Contract contains any burdensome restrictions on any
Credit Party or any Subsidiary of any Credit Party or any of their respective
properties that singly or in the aggregate could reasonably be expected to
prevent such Credit Party or Subsidiary from conducting its business as
conducted on the Closing Date. As of the Closing Date, all of the Material
Contracts are in full force and effect, and no defaults currently exist
thereunder by any Credit Party or Subsidiary of a Credit Party that is a party
thereto, or to the knowledge of any Credit Party, any other party thereto.
6.22 ACCURACY AND COMPLETENESS OF INFORMATION.
All factual information (other than financial information or forecasts)
furnished by or on behalf of any Credit Party or any Subsidiary of any Credit
Party in writing to the Agent or any Lender for purposes of or in connection
with this Credit Agreement or any Credit Documents or any transaction
contemplated hereby or thereby, is or will be true and accurate in all material
respects on the date as of which such information is dated or certified and,
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taken as a whole and in the context in which so furnished, is not incomplete by
omitting to state any material fact necessary to make such information not
misleading at such time.
6.23 NO CHANGE.
Since December 31, 1997, no event has occurred which has had or could
reasonably be expected to have a Material Adverse Effect.
ARTICLE 7. AFFIRMATIVE COVENANTS.
Until termination of this Credit Agreement and payment and satisfaction
of all Obligations due hereunder:
7.1 FINANCIAL REPORTING.
The Borrowers shall timely deliver or cause to be timely delivered to
the Agent the following information:
(a) LETTER TO AUDITORS. No later than the date on which the
Auditors commence work on the preparation of the annual audited
Financial Statements, (i) a copy of a letter delivered by MTLM to the
Auditors notifying the Auditors that (x) such Financial Statements will
be delivered by MTLM to the Agent (and thereafter by the Agent to each
of the Lenders) under this Credit Agreement, (y) it is a primary
intention of MTLM in engaging the Auditors' services in connection with
its audit of the Financial Statements for such fiscal year, to satisfy
the financial reporting requirements set forth herein and (z) stating
that the Agent and each of the Lenders intend to rely thereon with
respect to the transactions which are the subject of this Agreement;
and (ii) a copy of a letter delivered by the Auditors to MTLM in the
form attached hereto as EXHIBIT E.
(b) ANNUAL FINANCIAL STATEMENTS. As soon as available, but not
later than 90 days after each fiscal year end: (i) the annual Financial
Statements of the Consolidated Entity and of MTLM; (ii) a comparison in
reasonable detail to the prior year Financial Statements; (iii) the
Auditors' unqualified opinion, "Management Letter" (if any) and
statement indicating whether the Auditors have obtained knowledge of
the existence of any Default or Event of Default during their audit;
(iv) a narrative discussion of the consolidated financial condition and
results of operations and the consolidated liquidity and capital
resources of the Consolidated Entity for such fiscal year, prepared by
the chief financial officer of MTLM; and (v) a compliance certificate
substantially in the form of EXHIBIT F with an attached schedule of
calculations demonstrating compliance with the financial covenants set
forth in ARTICLE 8.
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(c) MONTHLY AND ANNUAL PROJECTIONS. Not later than 45 days
after each fiscal year end, beginning with the fiscal year ended March
31, 1998, monthly projections of the financial condition and results of
operations of the Consolidated Entity for the next succeeding year and
annual projections for each succeeding fiscal year thereafter,
through and including the fiscal year in which the Expiration Date will
occur, in each case containing projected consolidating balance sheets,
statements of operations, statements of cash flows and statements of
changes in shareholders' equity.
(d) QUARTERLY FINANCIAL STATEMENTS. As soon as available,
but not later than 45 days after each end of each of the first
three fiscal quarters: (i) Financial Statements of the Consolidated
Entity and of MTLM as of the fiscal quarter then ended, and for the
fiscal year to date; (ii) a comparison in reasonable detail to the
Financial Statements for the corresponding periods of the prior fiscal
year; (iii) the certification of the chief executive officer, chief
financial officer or treasurer of MTLM that such Financial Statements
have been prepared in accordance with GAAP (subject to year-end audit
adjustments and the absence of footnotes); (iv) a narrative discussion
of the consolidated financial condition and results of operations and
the consolidated liquidity and capital resources of the Consolidated
Entity for such fiscal quarter and fiscal year to date, prepared by the
chief financial officer of MTLM and (v) a compliance certificate
substantially in the form of EXHIBIT F with an attached schedule of
calculations demonstrating compliance with the financial covenants set
forth in ARTICLE 8.
(e) MONTHLY FINANCIAL STATEMENTS. As soon as available, but
not later than 45 days after the end of each month (other than the last
month in each fiscal year of the Consolidated Entity): (a) a balance
sheet for the Consolidated Entity as at the end of such month and for
the fiscal year to date and statements of operations and cash flows for
such month and for the fiscal year to date; (b) a comparison to the
balance sheet, statement of operations and statement of cash flows for
the same periods in the prior year; (c) a certification by the chief
executive officer, chief financial officer or treasurer or MTLM that
such balance sheet, statement of operations and statement of cash flows
have been prepared in accordance with GAAP (subject to year-end audit
adjustments and the absence of footnotes); and (d) a compliance
certificate substantially in the form of EXHIBIT F with an attached
schedule of calculations demonstrating compliance with the financial
covenants set forth in ARTICLE 8.
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(f) MONTHLY COMPARISON TO PRIOR PROJECTIONS. As soon as
available, but not later than 45 days after the end of each month
(other than the last month in each fiscal year of the Consolidated
Entity), a comparison of actual results of operations, cash flows and
capital expenditures for the Consolidated Entity for such month and for
the period from the beginning of the current fiscal year through the
end of such month with amounts previously projected for those periods
(see SECTION 7.1(c)).
(g) PUBLIC REPORTING. Promptly upon their becoming available,
copies of all regular and periodic reports, proxy statements and other
materials, if any, filed by any Borrower with the SEC, or with any
national securities exchange, or distributed to the public stockholders
of MTLM.
7.2 COLLATERAL REPORTING.
The Borrowers shall timely deliver or cause to be delivered to the
Agent the following certificates and reports:
(a) WEEKLY AND MONTHLY BORROWING BASE CERTIFICATES. Weekly,
before 12:00 noon on the third Business Day of each week (except the
last week of each month), monthly, within five (5) Business Days after
the last Business Day of each month, and at any other time reasonably
requested by the Agent, a Borrowing Base Certificate, which shall be:
(i) in form and substance satisfactory to the Agent, detailing the
Eligible Accounts Receivable and Eligible Inventory, in each case of
each of the Borrowers, PROVIDED, HOWEVER, Eligible Inventory shall be
updated only on monthly Borrowing Base Certificates, as of each Friday
of the immediately preceding week (if a weekly Borrowing Base
Certificate), or as of the last Business Day of the immediately
preceding month (if a monthly Borrowing Base Certificate), or as of
such other date as the Agent may request; and (ii) prepared by or under
the supervision of the chief executive officer or chief financial
officers of each Borrower and certified by such officer subject only to
adjustment upon completion of the normal annual audit of physical
inventory. Each Borrowing Base Certificate shall have attached to it
such additional schedules and other information as the Agent may
reasonably request, including, without limitation, an aging of
Accounts. Notwithstanding the foregoing, at any time that the sum of
the aggregate outstanding principal balance of the Revolving Loans PLUS
the aggregate outstanding Letter of Credit Obligations is less than
fifty percent (50%) of the Borrowing Base in effect at such time,
Borrowers shall be required to deliver only the monthly Borrowing Base
Certificates (and related information) described in this SECTION
7.2(b).
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(b) APPRAISALS. When requested by the Agent, (i) so long as an
Event of Default shall not have occurred and be continuing, not more
than once in any fiscal year of the Funds Administrator and (ii)
following the occurrence and during the continuance of an Event of
Default, at any time, a report of Inventory of each Borrower, prepared
on a test or cycle basis, which shall describe each Borrower's
Inventory by category and by item (in reasonable detail) and report the
then appraised value (at lower of cost or market) of such Inventory.
(c) FURTHER ASSURANCES. When and as reasonably requested by
the Agent, any further information regarding the Collateral, business
affairs and financial condition of any Credit Party or any Subsidiary
of any Credit Party.
7.3 NOTIFICATION REQUIREMENTS.
The Borrowers shall timely give to the Agent and each of the Lenders
the following notices:
(a) NOTICE OF DEFAULTS. Promptly, and in any event within five
(5) Business Days after becoming aware of the occurrence of a Default
or Event of Default, a certificate of the chief executive officer or
chief financial officer of the Funds Administrator specifying the
nature thereof and the proposed response of the Credit Parties with
respect thereto, each in reasonable detail.
(b) PROCEEDINGS OR ADVERSE CHANGES. Promptly, and in any event
within five (5) Business Days after any Credit Party becomes aware of
(i) any proceedings being instituted or threatened to be instituted by
or against such Credit Party or any of its Subsidiaries in any federal,
state, local or foreign court or before any commission or other
regulatory body (federal, state, local or foreign) which, if adversely
determined, singly or in the aggregate could reasonably be expected to
have a Material Adverse Effect, (ii) any order, judgment or decree in
excess of $3,000,000 being entered against such Credit Party or any of
its Subsidiaries or any of their respective properties or assets or
(iii) any actual or prospective change, development or event which has
had or could reasonably be expected to have a Material Adverse Effect,
a written statement describing such proceeding, order, judgment,
decree, change, development or event and any action being taken with
respect thereto by such Credit Party or such Subsidiary.
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(c) ERISA NOTICES. (i) Promptly, and in any event within ten
(10) Business Days after any Borrower, any Subsidiary of any Borrower
or any ERISA Affiliate knows that a Termination Event has occurred, a
written statement of the chief financial officer of Funds Administrator
describing such Termination Event and any action that is being taken
with respect thereto by such Borrower, such Subsidiary or such ERISA
Affiliate, and any action taken or threatened by the Internal Revenue
Service, Department of Labor or PBGC; and (ii) promptly, and in any
event within three (3) Business Days after the filing thereof with the
Internal Revenue Service, a copy of each funding waiver request filed
with respect to any Benefit Plan and all communications received by any
Borrower, any Subsidiary of any Borrower or any ERISA Affiliate with
respect to such request.
(d) ENVIRONMENTAL AND HEALTH AND SAFETY NOTICES. Promptly, and
in any event within ten (10) Business Days after receipt by any Credit
Party or any Subsidiary of any Credit Party of any written notice,
complaint or order alleging any actual or prospective material
violation of any environmental, health or safety Requirement of Law or
alleging responsibility for material costs of a cleanup, together with
a copy of such notice, complaint, or order and a written statement
describing any action being taken with respect thereto by such Credit
Party or Subsidiary.
(e) MATERIAL CONTRACTS. Promptly, and in any event within ten
(10) Business Days after any Material Contract of any Credit Party or
any Subsidiary of any Credit Party is terminated or amended or any new
Material Contract is entered into, a written statement describing such
event, with copies of amendments or new contracts, and an explanation
of any actions being taken with respect thereto.
(f) COLLATERAL MATTERS. At least fifteen (15) Business Days'
prior written notice to the Agent of any additional location of any
Collateral of any Borrower or in the location of the chief executive
office or places of business of any Borrower or any Subsidiary of any
Borrower from the respective locations specified in SCHEDULE B, PART
6.10. At least ten (10) Business Days prior to any such change, the
Borrowers shall cause to be executed and delivered to the Agent any
financing statements or other documents reasonably required by the
Agent, all in form and substance reasonably satisfactory to the Agent.
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7.4 CORPORATE EXISTENCE.
Each Borrower shall, and shall cause each of its Subsidiaries to, (i)
maintain its corporate existence (except that Subsidiaries of a Borrower may
merge with each other and with such Borrower, PROVIDED, THAT the Agent receives
five (5) Business Days' prior written notice thereof), (ii) except for failures
to so maintain which singly or in the aggregate could not reasonably be expected
to have a Material Adverse Effect, maintain in full force and effect all
licenses, bonds, franchises, leases, trademarks and qualifications to do
business, and all patents, contracts and other similar rights and (iii) continue
in, and limit their operations to, the same general lines of business as
presently conducted by them and other businesses in the metals industry.
7.5 BOOKS AND RECORDS; INSPECTIONS.
Each Borrower agrees to maintain, and to cause each of its Subsidiaries
to maintain, books and records pertaining to the Collateral in such detail, form
and scope as is consistent with good business practice. Each Borrower agrees
that the Agent, or its agents, may enter upon the premises of such Borrower or
any of its Subsidiaries at any time and from time to time, during normal
business hours and upon reasonable advance notice, and at any time at all upon
the occurrence and during the continuance of an Event of Default, for the
purposes of (i) inspecting and verifying the existence and value of the
Collateral, (ii) inspecting and/or copying (at the expense of such Borrower) any
and all records pertaining thereto, and (iii) discussing the affairs, finances
and business of such Borrower with the Auditors or any Responsible Officer of
such Borrower, PROVIDED, that a Responsible Officer of MTLM shall have the right
to be present at any such discussions with the Auditors.
7.6 INSURANCE.
(a) Each Borrower agrees to maintain, and to cause each of its
Subsidiaries to maintain, public liability insurance, fire and extended
coverage insurance and replacement value insurance on the Collateral
under such policies of insurance, with such insurance companies, in
such amounts and covering such risks as are customarily maintained by
Persons engaged in the same or similar businesses, PROVIDED, that the
Agent acknowledges that the insurance coverage maintained by the
Borrowers and disclosed in writing to the Agent, in each case on or
prior to the Closing Date, satisfies the foregoing requirements. All
policies covering the Collateral are to name the Agent as an additional
insured and/or the loss payee in case of loss, and are to contain such
other provisions as the Agent may reasonably require to fully protect
the Agent's interest in the Collateral and to any payments to be made
under such policies.
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(b) UNLESS THE BORROWERS PROVIDE THE AGENT WITH EVIDENCE
OF THE INSURANCE COVERAGE REQUIRED BY THIS CREDIT AGREEMENT,
THE AGENT MAY PURCHASE INSURANCE AT THE BORROWERS' EXPENSE TO PROTECT
THE AGENT'S INTERESTS IN THE COLLATERAL. THIS INSURANCE MAY, BUT NEED
NOT, PROTECT THE BORROWERS' INTERESTS. THE COVERAGE THAT THE AGENT
PURCHASES MAY NOT PAY ANY CLAIM THAT THE BORROWERS MAY MAKE OR ANY
CLAIM THAT IS MADE AGAINST ANY BORROWER IN CONNECTION WITH THE
COLLATERAL. THE BORROWERS MAY LATER CANCEL ANY INSURANCE PURCHASED BY
THE AGENT, BUT ONLY AFTER PROVIDING THE AGENT WITH EVIDENCE THAT THE
BORROWERS HAVE OBTAINED INSURANCE AS REQUIRED BY THIS CREDIT AGREEMENT.
IF THE AGENT PURCHASES INSURANCE FOR THE COLLATERAL, THE BORROWERS WILL
BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST AND
ANY OTHER CHARGES THAT MAY BE IMPOSED IN CONNECTION WITH THE PLACEMENT
OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR
EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO
THE OBLIGATIONS. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST
OF INSURANCE THE BORROWERS MAY BE ABLE TO OBTAIN ON THEIR OWN.
7.7 TAXES.
Each Borrower agrees to pay, when due, and to cause each of its
Subsidiaries to pay when due, all taxes lawfully levied or assessed against such
Borrower, such Subsidiary or any of the Collateral before any penalty or
interest accrues thereon; PROVIDED, THAT, unless such taxes have become a
federal tax or ERISA Lien on any of the assets of such Credit Party or such
Subsidiary, no such tax need be paid if the same is being contested, in good
faith, by appropriate proceedings promptly instituted and diligently conducted
and if an adequate reserve or other appropriate provision shall have been made
therefor as required in order to be in conformity with GAAP.
7.8 COMPLIANCE WITH LAWS.
Each Borrower agrees to comply, and to cause each of its Subsidiaries
to comply, in all material respects with all Requirements of Law applicable to
the Collateral or any part thereof, or to the operation of its business or its
assets generally, unless such Credit Party contests any such Requirements of Law
in a reasonable manner and in good faith.
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7.9 USE OF PROCEEDS.
The Borrowers shall use the initial extension of credit under the Line
of Credit for (i) the repayment in full on the Closing Date of the Prior
Indebtedness and (ii) to pay the costs and expenses of the transactions
contemplated by this Credit Agreement, including without limitation the Fees and
Expenses payable pursuant to ARTICLE 4 hereof. The proceeds of subsequent
Revolving Loans and other extensions of credit made hereunder shall be used by
the Borrowers solely for ongoing working capital requirements and other general
corporate purposes, including, without limitation, Investments permitted
pursuant to SECTION 8.8. No Borrower shall use any portion of the proceeds of
any Revolving Loans for the purpose of purchasing or carrying any "margin stock"
(as defined in Regulation G) in any manner which violates the provisions of
Regulation G or X or of the terms and conditions of this Credit Agreement or any
other Credit Document.
7.10 FISCAL YEAR.
Each Borrower agrees to maintain, and to cause each of its Subsidiaries
to maintain, its fiscal year as a year ending March 31st.
7.11 MAINTENANCE OF PROPERTY.
Except to the extent otherwise expressly permitted pursuant to SECTION
8.6, each Borrower agrees to keep, and to cause each of its Subsidiaries to
keep, all property useful and necessary to their respective businesses in good
working order and condition (ordinary wear and tear excepted) in accordance with
their past operating practices and not to commit or suffer any waste with
respect to any of their properties.
7.12 ERISA DOCUMENTS.
Each Borrower will cause to be delivered to the Agent, upon the Agent's
request, each of the following: (i) a copy of each Plan (or, where any such plan
is not in writing, complete description thereof) (and if applicable, related
trust agreements or other funding instruments) and all amendments thereto, all
written interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of such Borrower or any of its
Subsidiaries; (ii) the most recent determination letter issued by the Internal
Revenue Service with respect to each Benefit Plan; (iii) for the three most
recent plan years, Annual Reports on Form 5500 Series required to be filed with
any governmental agency for each Benefit Plan; (iv) all actuarial reports
prepared for the last three plan years for each Benefit Plan; (v) a listing of
all Multiemployer Plans, with the aggregate amount of the most recent annual
contributions required to be made
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by such Borrower or any ERISA Affiliate to each such plan and copies of the
collective bargaining agreements requiring such contributions; (vi) any
information that has been provided to such Borrower or any ERISA Affiliate
regarding withdrawal liability under any Multiemployer Plan; and (vii) the
aggregate amount of the most recent annual payments made to former employees of
such Borrower or any ERISA Affiliate under any Retiree Health Plan.
7.13 ENVIRONMENTAL AND OTHER MATTERS.
Each Borrower shall, and shall cause each of its Subsidiaries to,
conduct their businesses so as to comply in all material respects with all
environmental, land use, occupational, safety or health laws, regulations,
directions, ordinances, criteria and guidelines in all jurisdictions in which
any of them is or may at any time be doing business, except to the extent that
such Borrower or such Subsidiary is contesting, in good faith by appropriate
legal proceedings, any such law, regulation, direction, ordinance, criteria,
guideline, or interpretation thereof or application thereof; PROVIDED, THAT such
Borrower and each of its Subsidiaries shall comply with the order of any court
or other Governmental Authority relating to such laws unless such Borrower or
such Subsidiary shall currently be prosecuting an appeal or proceedings for
review and shall have secured a stay of enforcement or execution or other
arrangement postponing enforcement or execution pending such appeal or
proceedings for review.
7.14 FURTHER ACTIONS.
Each Borrower shall take, and shall cause each of its Subsidiaries to
take, all such further actions and execute all such further documents and
instruments as the Agent may at any time reasonably determine to be necessary or
desirable to further carry out and consummate the transactions contemplated by
the Credit Documents, to cause the execution, delivery and performance of the
Credit Documents to be duly authorized and to perfect or protect the Liens (and
the priority status thereof) of the Agent on the Collateral.
7.15 DEPOSIT OF COLLECTIONS AND OTHER PROCEEDS OF COLLATERAL.
From and after the Closing Date, Borrowers shall cause all Collections
on all Accounts of Borrowers, and all other cash payments made for Inventory of
Borrowers, and all other payments of any kind constituting proceeds of
Collateral received by or for the account any Borrower from any Person, promptly
upon receipt thereof to be deposited into a Collection Account or the BT Account
in the identical form in which such payment was made, whether by cash or check.
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ARTICLE 8. NEGATIVE COVENANTS.
Until termination of this Credit Agreement and payment and satisfaction
of all Obligations due hereunder, each Borrower shall comply with, and, where
required, shall cause each of its Subsidiaries to comply with, the following
covenants:
8.1 MINIMUM INTEREST COVERAGE RATIO.
The Borrowers shall not permit the Interest Coverage Ratio to be less
than 1.0 to 1.0, as determined as of: (a) June 30, 1998, for the three (3) month
period ending as of such date, (b) September 30, 1998, for the six (6) month
period ending as of such date, (c) December 31, 1998, for the nine (9) month
period ending as of such date and (d) March 31, 1999 and the end of each fiscal
quarter of the Consolidated Entity ending thereafter, in each case for the
twelve (12) month period ending as of such date.
8.2 CAPITAL EXPENDITURES.
The Borrowers shall not permit Capital Expenditures for the
Consolidated Entity in any fiscal year to exceed (a) Consolidated Revenues for
such fiscal year MULTIPLIED BY (b) two percent (2.00%); PROVIDED, that,
notwithstanding the foregoing, Borrowers' compliance with this SECTION 8.2 shall
be determined without giving effect to any Capital Expenditure made after the
Closing Date with Equity Offering Proceeds constituting Unallocated Equity
Proceeds at the time such Capital Expenditure was made; PROVIDED, FURTHER, that,
concurrently with the making of any Capital Expenditure with Unallocated Equity
Offering Proceeds, the Funds Administrator shall have delivered to the Agent an
Equity Offering Proceeds Allocation Certificate with respect thereto.
8.3 ADDITIONAL INDEBTEDNESS. No Borrower and no Subsidiary of any
Borrower shall directly or indirectly incur, create, assume or suffer to exist
any Indebtedness other than:
(a) the Obligations;
(b) Indebtedness in the ordinary course of business under
Interest Rate Agreements, in each case in form and substance reasonably
satisfactory to the Agent;
(c) Indebtedness of any Borrower to any other Borrower;
PROVIDED, that if and to the extent any of such Indebtedness is
evidenced by a promissory note or any other instrument, such note or
other instrument is shall be endorsed and delivered to the Agent as
additional Collateral;
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(d) Indebtedness of any Non-Borrower Subsidiary to a Borrower
incurred by such Non-Borrower Subsidiary as a result of an Investment
permitted solely pursuant to SECTION 8.8(f);
(e) Indebtedness (other than Prior Indebtedness) described on
SCHEDULE B, PART 8.3 and any refinancing of such Indebtedness, so long
as the aggregate principal amount of the Indebtedness so refinanced
shall not be increased and the refinancing shall be on terms and
conditions no more restrictive than the terms and conditions of the
Indebtedness to be refinanced;
(f) Indebtedness secured by purchase money Liens on equipment
acquired after the date of this Credit Agreement in an outstanding
principal amount not exceeding at any time (when added to the aggregate
imputed amount of all then outstanding capital leases of the Borrowers
and their respective Subsidiaries) $10,000,000 in the aggregate for all
of the Credit Parties combined ("PURCHASE MONEY LIENS"), so long as (i)
each Purchase Money Lien shall attach only to the property to be
acquired, (ii) a description shall have been furnished to the Agent for
any item of equipment for which the purchase price is greater than
$1,000,000 and (iii) the debt incurred shall not exceed one hundred
percent (100%) of the purchase price of the item or items of equipment
purchased;
(g) Indebtedness evidenced by the Subordinated Notes (and
guaranties thereof by Subsidiaries of MTLM) in an aggregate outstanding
principal amount not exceeding $300,000,000 at any time, PROVIDED, that
the net proceeds thereof shall be deposited immediately upon receipt
thereof into the Collection Account for application to the outstanding
principal balance of the Revolving Loans and Letter of Credit
Obligations pursuant to the terms hereof;
(h) Indebtedness consisting of Contingent Obligations
permitted pursuant to SECTION 8.5;
(i) Indebtedness consisting of obligations under capital
leases in an outstanding principal amount not exceeding at any time
(when added to the then outstanding principal amount of the
Indebtedness permitted pursuant to CLAUSE (f) above) $10,000,000 in the
aggregate for all of the Credit Parties combined;
(j) surety bonds and appeal bonds required in the ordinary
course of business in an amount not exceeding at any time $5,000,000 in
the aggregate for all of the Credit Parties combined;
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(k) Indebtedness incurred to finance the payment of insurance
premiums in an amount not exceeding at any time the aggregate unpaid
amount of all such premiums at such time for all of the Credit Parties
combined;
(l) obligations incurred in connection with Acquisitions
permitted pursuant to SECTION 8.8(g) or SECTION 8.8(h) with respect to
customary provisions regarding post-closing purchase price adjustments
and indemnification in the agreements governing such Acquisitions;
(m) other Indebtedness, to the extent that, as of the date of
incurrence or assumption thereof, before and after giving effect to
such incurrence or assumption, as the case may be, the aggregate
principal amount of Indebtedness of the Consolidated Entity permitted
solely by this CLAUSE (M) does not exceed ten percent (10%) of the
consolidated net worth of the Consolidated Entity;
(n) initial or successive refinancings of the Indebtedness
permitted by CLAUSE (g) above, so long as (i) the aggregate outstanding
principal amount of such Indebtedness shall not exceed $300,000,000 at
any time, (ii) such Indebtedness is expressly subordinated to the
Obligations on terms substantially equivalent (or more favorable to the
Agent and the Lenders) to those set forth in the Subordinated Note
Documents, (iii) each such refinancing otherwise shall be on terms and
conditions and governed by documents that are not more restrictive in
any material respect to the Consolidated Entity than the Subordinated
Note Documents, and (iv) such Indebtedness has a final maturity and a
weighted average life to maturity no earlier than the refinanced
Indebtedness; and
(o) the Prior Indebtedness, so long as such Indebtedness is
paid on the Closing Date.
8.4 LIENS.
No Borrower nor any Subsidiary of any Borrower shall directly or
indirectly create, incur, assume, or suffer to exist any Lien on any of its
property now owned or hereafter acquired except:
(a) Liens granted to the Agent under the Credit
Documents;
(b) Liens listed on SCHEDULE B, PART 8.4;
(c) Purchase Money Liens permitted under SECTION 8.3;
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(d) Liens of warehousemen, mechanics, materialmen, workers,
repairmen, common carriers, or landlords and other similar Liens
arising by operation of law, Liens for taxes, assessments or other
governmental charges and other similar Liens arising by operation of
law, in each case for amounts that are not yet due and payable or that
are being diligently contested in good faith by a Borrower or
Subsidiary of a Borrower, so long as adequate reserves are maintained
by such Person for their payment in accordance with GAAP;
(e) Attachment or judgment Liens not to exceed an aggregate of
$3,000,000 for the Borrowers and their Subsidiaries, excluding amounts
(i) bonded to the reasonable satisfaction of the Agent or (ii) covered
by insurance to the reasonable satisfaction of the Agent;
(f) Deposits or pledges to secure obligations under workmen's
compensation, social security or similar laws, under unemployment
insurance, or to secure public or statutory obligations not to exceed
an aggregate of $5,000,000 for all Credit Parties combined;
(g) Deposits or pledges to secure bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like
nature arising in the ordinary course of business not to exceed an
aggregate of $5,000,000 for all Credit Parties combined;
(h) Easements, rights-of-way, restrictions and other similar
encumbrances on title to, or restrictions on the use of, real property,
which, in the aggregate, do not materially detract from the value of
the item of property subject thereto or materially interfere with the
ordinary conduct of the business of any Borrower or any of its
Subsidiaries;
(i) retained interests of lessors under leases;
(j) Liens arising solely out of any statutory or common law
provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained
with a depository institution;
(k) Liens, defects and other matters specifically disclosed on
the title insurance policies delivered to and accepted by the Agent in
connection with the owned real properties of the respective Borrowers
subjected to a mortgage Lien in favor of the Agent on the Closing Date;
(l) leases and subleases granted in the ordinary course
of business;
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(m) Extensions, replacements and renewals of any of the
foregoing so long as the aggregate amount of extended, replaced or
renewed Liens are not increased and are on terms and conditions no more
restrictive than the terms and conditions of the Liens extended or
renewed; and
(n) Liens securing other Indebtedness not expressly permitted
by CLAUSES (a) through (m) above; provided, that the aggregate amount
the Indebtedness secured Liens permitted solely pursuant to this clause
(n) does not exceed at any time $5,000,000 in the aggregate for all of
the Credit Parties combined.
8.5 CONTINGENT OBLIGATIONS.
No Borrower nor any Subsidiary of any Borrower shall directly or
indirectly incur, assume, or suffer to exist any Contingent Obligation,
excluding Contingent Obligations for Indebtedness permitted to be incurred under
Section 8.3, and Investments permitted under Section 8.8.
8.6 SALE OF ASSETS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, sell, lease, assign, transfer or otherwise dispose of any assets
other than: (a) Inventory in the ordinary course of business; (b) redundant,
obsolete or worn out property disposed of in the ordinary course of business;
(c) in connection with the merger of a Borrower or any Subsidiary of any
Borrower into any other Borrower (so long as the survivor of any such merger is
a Borrower); (d) assets the net proceeds of which are reinvested in replacement
or similar assets within one hundred eighty (180) days of such sale or other
disposition; (E) assets of a Borrower or any Subsidiary of a Borrower sold,
leased, assigned or otherwise transferred to such or any other Borrower; and (f)
assets the dispositions of which is not otherwise permitted under this Section
8.6, provided, that, as to clause (f) above, (i) such dispositions are for fair
value, (ii) at least seventy-five percent (75%) of the aggregate consideration
is paid in cash at the time of disposition and is thereupon delivered to the
Agent for application to the outstanding principal balance of the Revolving
Loans and (iii) the aggregate amount of all such dispositions does not exceed
$2,500,000 in the aggregate for any fiscal year of the Consolidated Entity.
8.7 RESTRICTED PAYMENTS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, (a) declare or pay any dividend (other than dividends payable
solely in capital stock of such Person) on, or make any payment on account of,
or set apart assets for a sinking
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or other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of capital stock of such Person or
any warrants, options or rights to purchase any such capital stock, whether now
or hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
such Person or any of its Subsidiaries; or (b) make any optional or mandatory
payment of principal on or optional or mandatory prepayment of principal or
redemption (including, without limitation, by making payments to a sinking or
analogous fund) or repurchase of any Indebtedness subordinated to the
Obligations, including, without limitation, the Subordinated Note Indebtedness;
PROVIDED, THAT, notwithstanding the foregoing:
(i) any Borrower and any Subsidiary of any Borrower
may make payments or prepayments on account of Indebtedness
owing to such or any other Borrower;
(ii) any Subsidiary of any Borrower may declare and
pay dividends to such Borrower or any Subsidiary of such
Borrower;
(iii) so long as, in each case, before and after
giving effect thereto, no Default or Event of Default shall
have occurred and be continuing, Borrowers may prepay
Indebtedness in an aggregate principal amount not exceeding
$5,000,000 in any fiscal year of the Consolidated Entity for
all Credit Parties combined;
(iv) any Borrower or Subsidiary of any Borrower may
engage in a refinancing transaction permitted by SECTION
8.3(E) or SECTION 8.3(N); and
(v) so long as, in each case, before and after
giving effect to each such repurchase or redemption, no
Default or Event of Default shall have occurred and be
continuing, MTLM may repurchase or redeem Subordinated Notes
(including refinancings thereof) at any time with Equity
Offering Proceeds constituting Unallocated Equity Offering
Proceeds at such time; PROVIDED, that, concurrently with the
making of any repurchase or redemption with Unallocated Equity
Offering Proceeds, the Funds Administrator shall have
delivered to the Agent an Equity Offering Proceeds Allocation
Certificate with respect thereto.
8.8 INVESTMENTS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, make any Investment in any Person, whether in cash, securities,
or other property of any kind including, without limitation, any Subsidiary or
Affiliate of any Credit Party, other than:
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(a) Advances or loans made in the ordinary course of business
not to exceed $2,000,000 in the aggregate for all Credit Parties
combined outstanding at any one time;
(b) Loans, investments and advances between a Borrower
and any other Borrower;
(c) Cash Equivalents;
(d) Investments in account debtors received in connection with
the bankruptcy or reorganization, or in settlement of delinquent
obligations of customers, in the ordinary course of business and in
accordance with applicable collection and credit policies established
by such Borrower or such Subsidiary, as the case may be;
(E) extensions of credit in the nature of accounts receivable
or notes receivable arising from the sale or lease of goods and
services in the ordinary course of business.
(f) Investments in Persons other than Borrowers, including,
without limitation, Joint Ventures and Non-Borrower Subsidiaries,
provided, that (i) in each case, before and after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing, (ii) each such Person is or will be engaged at all times
solely in businesses in which a Borrower is permitted to be engaged
pursuant to he terms hereof, (iii) prior to or concurrently with the
making of each such Investment, at the sole cost and expense of
Borrowers, the applicable Borrower or Borrowers shall have granted to
Agent for the benefit of Agent and Lenders an enforceable, first, prior
(subject to Permitted Liens) and perfected Lien on all debt owing to,
or equity or other interests of any kind of, such Borrower arising as a
result of such Investment and shall have duly executed and delivered to
Agent all instruments and documents, and shall have taken such further
action, as Agent may reasonably deem necessary or desirable in
connection therewith, including, without limitation, the filing of
financing statements under the UCC; and (iv) the aggregate outstanding
cash Investments of the Consolidated Entity permitted solely pursuant
to this CLAUSE (f) do not exceed $10,000,000 at any time;
(g) Investments in connection with Acquisitions, PROVIDED
that:
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(i) on the date of consummation of each such
Acquisition, Agent shall have received a certificate duly
executed by a Responsible Officer of MTLM certifying that the
financial condition referred to in CLAUSE (ii) below with
respect thereto is satisfied, together with evidence thereof
reasonably satisfactory to the Agent,
(ii) the Interest Coverage Ratio, determined on a
pro forma basis (giving effect to adjustments to conform
accounting policies, to reflect reduction of compensation and,
to the extent agreed to by the Agent in its sole discretion,
other anticipated cost savings) for the period of four (4)
consecutive fiscal quarters ending on the last day of the last
completed fiscal quarter immediately preceding the proposed
date of consummation of such Acquisition (on the assumption
such Acquisition occurred on the first day of such four fiscal
quarter period and using historical results of the
Consolidated Entity and the related Acquisition Prospect for
such period), shall be at least 1.0 to 1.0,
(iii) each such Acquisition shall be consummated in
accordance with all applicable Requirements of Law and the
related Borrower or Subsidiary shall have obtained all
material governmental consents and approvals necessary in
connection therewith and with the business operations of the
related Acquisition Prospect after such Acquisition,
(iv) no Default or Event of Default shall exist at
the time of consummation thereof or would result therefrom,
(v) the related Acquisition Prospect (or its Board
of Directors or equivalent governing body) has not (a)
announced it will oppose such Acquisition or (b) commenced any
action which alleges that such Acquisition violates, or will
violate, any applicable Requirement of Law,
(vi) if the related Acquisition Prospect survives
such Acquisition, prior to or concurrently with consummation
of such Acquisition, (a) such Acquisition Prospect shall be
joined as a party to this Credit Agreement, the Security
Agreement and all other applicable Credit Documents and shall
have taken such further actions and executed such additional
documents and instruments as the Agent may reasonably
determine to be necessary or desirable to further carry out
and consummate the provisions contemplated by the Credit
Documents with respect to such Acquisition Prospect,
including, without limitation, the granting to the Agent for
the benefit of the Agent and Lenders of an enforceable, first,
prior (subject to Permitted Liens) and perfected Lien on
substantially all properties and assets of such Acquisition
Prospect and (b) the Agent shall have been granted for the
benefit of the Agent and Lenders an
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enforceable, first, prior (subject to Permitted Liens) and
perfected Lien on all equity and other interests of any kind
of therein and shall have received duly executed copies of all
instruments and documents as Agent may reasonably deem
necessary or desirable in connection therewith, including,
without limitation, UCC financing statements, and
(vii) with respect to each such Acquisition
consummated prior to the date on which the proceeds of the
Subordinated Notes are received by or for the account of MTLM,
before and after giving to each such Acquisition, the lesser
at such time of (a) the Line of Credit and (b) the Borrowing
Base MINUS, in each case, the aggregate then outstanding
Revolving Loans and Letter of Credit Obligations, shall not be
less than $10,000,000;
(h) Acquisitions in addition to those permitted pursuant to
Section 8.8(g), provided that:
(i) each such Acquisition consists of the
acquisition by an existing Borrower of all or substantially
all of the assets of any other Person, or of any business or
division of any other Person, in each case so long as such
assets, business or division, as the case may be, are located
in substantially the same metropolitan area as such Borrower,
(ii) the total cash consideration paid by any of the
Credit Parties in respect of any such Acquisition shall not
exceed $10,000,000,
(iii) such Acquisition shall be consummated in
accordance all applicable Requirements of Law and the
applicable Borrower shall have obtained all material
government consents and approvals necessary in connection
therewith and with the business operations of the related
Acquisition Prospect after such Acquisition,
(iv) no Event of Default or Default shall exist at
the time of consummation thereof or would result therefrom,
and
(v) the related Acquisition Prospect (or its Board
of Directors or equivalent governing body) has not (A)
announced it will oppose such Acquisition or (B) commenced any
action which alleges that such Acquisition violates, or will
violate, any applicable Requirement of Law;
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(i) Investments existing on the Closing Date and set
forth on Schedule 8.7(i); and
(j) such other Investments as the Agent may approve in writing
in the exercise of its sole discretion.
Notwithstanding the foregoing, Borrowers' compliance with SECTION
8.8(f)(iv), SECTIONS 8.8(g)(i), (ii) and (vii) and SECTION 8.8(h)(ii) shall be
determined without giving effect to any Investment made with Equity Offering
Proceeds constituting Unallocated Equity Offering Proceeds at the time such
Investment was made; PROVIDED, that, concurrently with the making of any such
Investment made with Unallocated Equity Offering Proceeds, the Funds
Administrator shall have delivered to the Agent an Equity Offering Proceeds
Allocation Certificate with respect thereto.
8.9 AFFILIATE TRANSACTIONS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, enter into any transaction with (including, without limitation,
the purchase, sale or exchange of property or the rendering of any service to)
any Subsidiary or Affiliate of any Borrower, except in the ordinary course of
and pursuant to the reasonable requirements of such Borrower's or such
Subsidiary's business, as the case may be, and upon fair and reasonable terms no
less favorable in any material respect to Borrower or such Subsidiary than could
be obtained in a comparable arm's-length transaction with an unaffiliated
Person, except for transactions otherwise permitted under SECTIONS 8.7, 8.8 and
8.3(f).
8.10 ADDITIONAL BANK ACCOUNTS.
From and after the Closing Date, no Borrower shall, or shall permit any
of its Subsidiaries to, directly or indirectly, open, maintain or otherwise have
any checking, savings or other accounts at any bank or other financial
institution, or any other account where money is or may be deposited or
maintained with any Person, other than (a) the Disbursement Account, (b)
petty-cash accounts, PROVIDED, that the aggregate balance of funds in such
accounts shall not exceed at any time $1,000,000, and (c) payroll, imprest or
medical insurance disbursement accounts, PROVIDED, that the aggregate balance of
funds in each of such accounts shall not exceed at any time that amount which
the Borrower on whose behalf such account is maintained deems reasonably
necessary to satisfy ordinary course disbursements therefrom during the next ten
(10) Business Days.
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8.11 ADDITIONAL NEGATIVE PLEDGES.
Except as otherwise disclosed on SCHEDULES 8.3 or 8.4, no Borrower
shall, or shall permit any of its Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective, (a) any
prohibition or restriction (including any agreement to provide equal and ratable
security to any other Person in the event a Lien is granted to or for the
benefit of the Agent and the Lenders) on the creation or existence of any Lien
upon the assets of such Borrower or any of its Subsidiaries, other than assets
subject to capital leases or Purchase Money Liens, in each case permitted
hereunder, and other than pursuant to (i) this Credit Agreement and the other
Credit Documents, (ii) the Subordinated Note Indenture and the other
Subordinated Note Documents, (iii) the Isaac Mortgages, as in effect on the
Closing Date, (iv) the respective organizational documents of Perlco, L.L.C. and
R & M Iron Ltd., as in effect on the Closing Date, and (v) the documentation
evidencing or otherwise governing Indebtedness permitted under SECTION 8.3(i),
or (b) any contractual obligation (other than contractual obligations arising in
connection with Permitted Liens) which may restrict or inhibit the Agent's
rights or ability to sell or otherwise dispose of the Collateral or any part
thereof after the occurrence of an Event of Default.
8.12 SUBORDINATED NOTES.
(a) NO CHANGE. MTLM shall not amend or otherwise change the
terms of the Subordinated Notes if such change or amendment could
reasonably be expected to affect the Agent or the Lenders in any
material and adverse respect.
(b) NOTICES. MTLM shall deliver to the Agent (i) a copy of
each notice or other communication delivered by or on behalf of such
Borrower to the trustee under the Subordinated Note Documents, such
delivery to be made at the same time and by the same means as such
notice or other communication is delivered to such trustee, and (ii) a
copy of each notice or other communication received by MTLM from such
trustee, such delivery to be made promptly after such notice or other
communication is received by such Borrower.
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES.
9.1 EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an event
of default (each an "EVENT OF DEFAULT") hereunder:
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(a) FAILURE TO PAY. The Borrowers shall fail to pay any
Obligations in respect of principal on the Revolving Loans or interest
on the Revolving Loans, in each case when the same shall become due and
payable or shall fail to pay, within five (5) days after the same shall
become due and payable, any other amount due under this Credit
Agreement or any of the other Credit Documents.
(b) BREACH OF CERTAIN COVENANTS. Any Borrower shall fail to
comply with any covenant contained in ARTICLE 7 (other than SECTION
7.2(a), 7.4, 7.7, 7.8, 7.11, 7.12 and 7.13) or ARTICLE 8.
(c) BREACH OF REPRESENTATION OR WARRANTY. Any representation
or warranty made or deemed to be made by any Credit Party in this
Credit Agreement or in any other Credit Document (and in any statement
or certificate given under this Credit Agreement or any other Credit
Document), shall be false or misleading in any material respect when
made or deemed to be made.
(d) BREACH OF OTHER COVENANTS. Any Credit Party shall fail to
comply with any covenant contained in this Credit Agreement or any
other Credit Document, other than as set forth in SECTION 9.1(b), and
such failure shall continue for (i) in the case of any covenant
contained in SECTION 7.2(a), one Business Day and (ii) in the case of
any other such covenant, thirty (30) days, in each case after the Funds
Administrator receives notice of such failure from Agent.
(e) DISSOLUTION. Any Credit Party shall dissolve, wind up or
otherwise cease its business (other than pursuant to a transaction
expressly permitted hereunder).
(f) INSOLVENCY EVENT. Any Credit Party shall become the
subject of an Insolvency Event.
(g) CHANGE OF CONTROL. A Change of Control shall occur.
(h) CROSS DEFAULT. A default or event of default shall occur
(and continue beyond any applicable grace period) under any note,
agreement or instrument evidencing any other Indebtedness of any Credit
Party or any Subsidiary of any Credit Party, which default or event of
default permits the acceleration of its maturity, PROVIDED THAT the
aggregate principal amount of all such Indebtedness for which the
default or event of default has occurred exceeds $5,000,000.
(i) FAILURE OF ENFORCEABILITY OF CREDIT DOCUMENTS; SECURITY.
Any covenant, agreement or obligation of any Credit Party contained in
or evidenced by any of the Credit Documents
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shall cease to be enforceable, or shall be determined by a court of
competent jurisdiction to be unenforceable, in each case in accordance
with its terms (otherwise than pursuant to its terms or as expressly
permitted hereunder); any Credit Party shall deny or disaffirm its
obligations under any of the Credit Documents or any Liens granted in
connection therewith; or, any Liens granted on any of the Collateral
shall be determined to be void, voidable, invalid or unperfected, are
subordinated or not given the priority contemplated by this Credit
Agreement (otherwise as a result of any action or inaction on the part
of the Agent or any Lender).
9.2 ACCELERATION, TERMINATION OF COMMITMENTS AND CASH
COLLATERALIZATION.
Upon the occurrence and during the continuance of any Event of Default,
without prejudice to the rights of the Agent or any Lender to enforce its claims
against the Credit Parties:
(a) ACCELERATION. Upon the written request of the Majority
Lenders and by delivery of written notice to the Funds Administrator
from the Agent, all Obligations shall be immediately due and payable
(except with respect to any Event of Default set forth in SECTION
9.1(f), in which case all Obligations shall automatically become
immediately due and payable without the necessity of any request of the
Majority Lenders or notice or other demand to the Funds Administrator
or any of the Borrowers) without presentment, demand, protest or any
other action or obligation of the Agent or any Lender.
(b) TERMINATION OF COMMITMENTS. Upon the written request of
the Majority Lenders, and by delivery of written notice to the Funds
Administrator from the Agent (except with respect to any Event of
Default set forth in SECTION 9.1(f)), in which case all of the
Commitments shall automatically and immediately terminate without the
necessity of any request of the Majority Lenders or notice or other
demand to the Funds Administrator or any of the Borrowers) the
Commitments shall be immediately terminated and, at all times
thereafter, all Revolving Loans made by any Lender pursuant to this
Credit Agreement shall be at such Lender's sole discretion, unless such
Event of Default is waived in accordance with SECTION 11.11, in which
case the Commitments shall be automatically reinstated.
(c) CASH COLLATERALIZATION. On demand of the Agent or the
Majority Lenders, the Borrowers shall immediately deposit with the
Agent for each Letter of Credit then outstanding, cash or Cash
Equivalents in an amount equal to 110% of the greatest amount drawable
thereunder. Such deposit shall be held by the Agent and used to
reimburse the Issuing Bank for the amount of each drawing made under
such Letters of Credit, as and when each such drawing is made.
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9.3 RESCISSION OF ACCELERATION.
After acceleration of the maturity of all or any part of the
Obligations, if the Borrowers pay all accrued interest and all principal due
(other than by reason of the acceleration) and all Events of Default are waived
in accordance with SECTION 11.11, the Majority Lenders may elect in their sole
discretion, to rescind the acceleration and return to the Borrowers any cash
collateral, if any, deposited with the Agent pursuant to SECTION 9.2(c). (This
Section is intended only to bind all of the Lenders to a decision of the
Majority Lenders and not to confer any right on the Borrowers, even if the
described conditions for the Majority Lenders' election may be met.)
9.4 REMEDIES.
Upon the occurrence and during the continuance of an Event of Default,
upon the written request and at the direction of the Majority Lenders, the Agent
may exercise any rights and remedies available to it under applicable law
(including under the Code) and under the Collateral Documents. The foregoing
rights and remedies are not intended to be exhaustive and the full or partial
exercise of any right or remedy shall not preclude the full or partial exercise
of any other right or remedy available under this Credit Agreement, any other
Credit Document, at equity or at law.
9.5 RIGHT OF SETOFF.
In addition to and not in limitation of all rights of offset that any
Lender may have under applicable law, upon the occurrence and during the
continuance of any Event of Default, and whether or not any Lender has made any
demand or the Obligations of any Credit Party have matured, each Lender shall
have the right to appropriate and apply to the payment of the Obligations of
such Credit Party all deposits and other obligations then or thereafter owing by
such Lender to such Credit Party. Each Lender exercising such rights shall
notify the Agent thereof and any amount received as a result of the exercise of
such rights shall be shared by the Lenders in accordance with SECTION 2.5.
9.6 LICENSE OF USE OF SOFTWARE AND OTHER INTELLECTUAL
PROPERTY.
Unless expressly prohibited by the licensor thereof, if any, the Agent
is hereby granted a license to use all computer software programs, data bases,
processes and materials used by the Borrowers in connection with their
respective businesses or in connection with any Collateral. The Agent agrees not
to use any such license other than after the occurrence and during the
continuance of an Event of Default.
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9.7 APPLICATION OF PROCEEDS; SURPLUS; DEFICIENCIES.
The net cash proceeds resulting from the Agent's exercise of any of the
foregoing rights against any Collateral (after deducting all of the Agent's
Expenses related thereto) shall be applied by the Agent to the payment of the
Obligations, whether due or to become due, in the order set forth in SECTION
4.11. The Borrowers shall remain liable to the Agent and the Lenders for any
deficiencies, and the Agent and the Lenders in turn agree to remit to the
Borrowers or its successors or assigns, any surplus resulting therefrom.
ARTICLE 10. THE AGENT.
10.1 APPOINTMENT OF AGENT.
(a) Each Lender hereby designates BTCC as Agent to act
as herein specified. Each Lender hereby irrevocably authorizes, and
each holder of any Revolving Note, by the acceptance of such Note,
shall be deemed irrevocably to authorize the Agent to take such action
on its behalf under the provisions of this Credit Agreement and the
other Credit Documents and any other instruments and agreements
referred to herein and therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof
and such other powers as are reasonably incidental thereto. The Agent
shall hold all Collateral and all payments of principal, interest, Fees
(other than Fees that are exclusively for the account of the Agent),
charges and Expenses received pursuant to this Credit Agreement or any
other Credit Document for the ratable benefit of the Lenders. The Agent
may perform any of its duties hereunder by or through its agents or
employees.
(b) Other than rights of the Credit Parties under SECTION
10.9, the provisions of this ARTICLE 10 are for the benefit of the
Agent and the Lenders only and none of the Credit Parties or any other
Persons shall have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties under
this Credit Agreement and the other Credit Documents, the Agent shall
act only for the Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party.
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10.2 NATURE OF DUTIES OF AGENT.
The Agent has no duties or responsibilities except those expressly set
forth in the Credit Documents. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable for any action taken or omitted
hereunder or in connection herewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason of this Credit
Agreement or any of the other Credit Documents a fiduciary relationship in
respect of any Lender or any participant of any Lender; and nothing in this
Credit Agreement or any other Credit Document, expressed or implied, is intended
to or shall be so construed as to impose upon the Agent any obligations in
respect of this Credit Agreement or any other Credit Document, except as
expressly set forth herein or therein.
10.3 LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon the Agent, each
Lender, to the extent it deems appropriate, has made and shall continue
to make (i) its own independent investigation of the financial or other
condition and affairs of each Credit Party in connection with the
taking or not taking of any action in connection herewith and (ii) its
own appraisal of the creditworthiness of each Credit Party, and, except
as expressly provided in this Credit Agreement, the Agent shall have no
duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the
Revolving Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein
or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, priority or sufficiency of
this Credit Agreement or any of the other Credit Documents or the
financial or other condition of any Credit Party. The Agent shall not
be required to make any inquiry concerning either the performance or
observance of any other terms, provisions or conditions of this Credit
Agreement or any of the other Credit Documents, or the financial
condition of any Credit Party, or the existence or possible existence
of any Default or Event of Default, unless specifically requested to do
so in writing by any Lender.
10.4 CERTAIN RIGHTS OF THE AGENT.
The Agent shall have the right to request instructions from the Lenders
by notice to each of such Lenders. If the Agent shall
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request instructions from the Lenders with respect to any act or action
(including the failure to act) in connection with this Credit Agreement, the
Agent shall be entitled to refrain from such act or taking such action unless
and until the Agent shall have received instructions from such Lenders, and the
Agent shall not incur liability to any Person by reason of so refraining.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder in accordance with the instructions of the requisite Lenders
required to give such instructions hereunder. The Agent may give any notice
required under ARTICLE 9 hereof without the consent of any of the Lenders unless
otherwise directed by the Majority Lenders in writing and will, at the direction
of the Majority Lenders, give any such notice required under ARTICLE 9.
10.5 RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, radiogram, order or other
documentary, facsimile or telephone message believed by it to be genuine and
correct and to have been signed, sent or made by the proper person. The Agent
may consult with legal counsel (including counsel for the Credit Parties with
respect to matters concerning the Credit Parties), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
10.6 INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by the
Borrowers, each Lender will reimburse and indemnify the Agent, in proportion to
its respective Commitment, for and against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
counsel fees and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
performing its duties hereunder, in any way relating to or arising out of this
Credit Agreement; PROVIDED, THAT no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct.
10.7 THE AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Credit Agreement, the
Revolving Loans made by it and the Revolving Notes
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issued to it and its participation in Letters of Credit issued hereunder, the
Agent shall have the same rights and powers hereunder as any other Lender or
holder of a Revolving Note or participation interests and may exercise the same
as though it was not performing the duties specified herein; and the terms
"Lenders," "Lenders," "Majority Lenders," "holders of Revolving Notes," or any
similar terms shall, unless the context clearly otherwise indicates, include the
Agent in its individual capacity. The Agent may accept deposits from, lend money
to, acquire equity interests in, and generally engage in any kind of banking,
trust, financial advisory or other business with any Credit Party or any
Affiliate of any Credit Party as if it were not performing the duties specified
herein, and may accept fees and other consideration from any Credit Party for
services in connection with this Credit Agreement and otherwise without having
to account for the same to the Lenders.
10.8 HOLDERS OF NOTES.
The Agent may deem and treat the payee of any Revolving Note as the
owner thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Revolving
Note, shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Revolving Note or of any Revolving Note or Revolving Notes
issued in exchange therefor.
10.9 SUCCESSOR AGENT.
(a) The Agent may, upon five (5) Business Days' notice to the
Lenders and the Funds Administrator, resign at any time (effective upon
the appointment of a successor Agent pursuant to the provisions of this
SECTION 10.9) by giving written notice thereof to the Lenders and the
Funds Administrator. Upon any such resignation, the Majority Lenders
shall have the right, upon five (5) days' notice and approval by the
Credit Parties (which approval shall not be unreasonably withheld or
delayed) to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Majority Lenders and accepted such
appointment, within thirty (30) days after the retiring Agent's giving
of notice of resignation, then the retiring Agent may, on behalf of the
Lenders (and with the approval of the Funds Administrator, which
approval shall not be unreasonably withheld or delayed), appoint a
successor Agent, which shall be a bank or a trust company or other
financial institution which maintains an office in the United States,
or a commercial bank organized under the laws of the United States of
America or of any State thereof, or any Affiliate of such bank or trust
company or other financial institution which is engaged in the banking
business, having a combined capital and surplus of at least
$500,000,000.
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(b) 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 retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Credit Agreement and the other Credit
Documents. After any retiring Agent's resignation hereunder as Agent,
the provisions of this ARTICLE 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under or
in connection with this Credit Agreement.
10.10 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs the Agent to enter into
the Collateral Documents for the benefit of the Lenders. Each Lender
hereby agrees, and each holder of any Revolving Note by the acceptance
thereof will be deemed to agree, that, except as otherwise set forth
herein or in the other Credit Documents, any action taken by the
Majority Lenders in accordance with the provisions of this Credit
Agreement and the other Credit Documents, and the exercise by the
Majority Lenders of the powers set forth herein or therein, together
with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders. The Agent is hereby
authorized on behalf of all of the Lenders, without the necessity of
any notice to or further consent from any Lender, from time to time so
long as an Event of Default shall not then exist, to take any action
with respect to any Collateral or Collateral Documents which may be
necessary to perfect and maintain the perfection of the Liens upon the
Collateral granted pursuant to the Collateral Documents.
(b) The Lenders hereby authorize the Agent, at its
option and in its discretion, to release any Lien granted to or held by
the Agent upon any Collateral (i) upon termination of the Commitments
and payment and satisfaction of all of the Obligations at any time
arising under or in respect of this Credit Agreement or the other
Credit Documents or the transactions contemplated hereby or thereby,
(ii) if approved, authorized or ratified in writing by the Majority
Lenders, unless such release is required to be approved by all of the
Lenders pursuant to SECTION 11.11; or (iii) constituting property sold
or to be sold or disposed of as part of or in connection with any
disposition thereof permitted hereunder. Upon request by the Agent at
any time, the Lenders will confirm in writing the Agent's authority to
release particular types or items of Collateral pursuant to this
SECTION 10.10.
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(c) The Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral exists or
is owned by any Borrower or is cared for, protected or insured or that
the Liens granted to the Agent in or pursuant to any of the Collateral
Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any
manner or under any duty of care, disclosure or fidelity any of the
rights, authorities and powers granted or available to the Agent in
this SECTION 10.10 or in any of the Collateral Documents, it being
understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it
may deem appropriate, in its sole discretion, given the Agent's own
interest in the Collateral as one of the Lenders and that the Agent
shall have no duty or liability whatsoever to the Lenders, except for
its gross negligence or willful misconduct. The Agent agrees to conduct
or cause to be conducted at least one audit of the Collateral during
each year that this Credit Agreement shall remain in effect.
10.11 ACTIONS WITH RESPECT TO DEFAULTS.
In addition to the Agent's right to take actions on its own accord as
permitted under this Credit Agreement, the Agent shall take such action with
respect to a Default or Event of Default as shall be directed by the Majority
Lenders; PROVIDED, THAT until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable and in the best interests of the Lenders.
10.12 DELIVERY OF INFORMATION.
The Agent shall not be required to deliver to any Lender originals or
copies of any documents, instruments, notices, communications or other
information received by the Agent from any of the Credit Parties or any
Subsidiary of any of the Credit Parties, the Majority Lenders, any Lender or any
other Person under or in connection with this Credit Agreement or any other
Credit Document except (i) as specifically provided in this Credit Agreement or
any other Credit Document and (ii) as specifically requested from time to time
in writing by any Lender with respect to a specific document, instrument, notice
or other written communication received by and in the possession of the Agent at
the time of receipt of such request and then only in accordance with such
specific request.
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ARTICLE 11. MISCELLANEOUS.
11.1 GOVERNING LAW.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS CREDIT AGREEMENT
AND EACH OF THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICT
OF LAWS PROVISIONS.
11.2 SUBMISSION TO JURISDICTION.
ALL DISPUTES AMONG THE LENDERS AND THE CREDIT PARTIES (OR THE AGENT OR
FUNDS ADMINISTRATOR, RESPECTIVELY, ACTING ON THEIR BEHALF), WHETHER SOUNDING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL
COURTS LOCATED IN CHICAGO, ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM
MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT ON BEHALF OF THE LENDERS, SHALL
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
THE FUNDS ADMINISTRATOR OR ANY CREDIT PARTY OR THEIR RESPECTIVE PROPERTIES IN
ANY LOCATION REASONABLY SELECTED BY THE AGENT IN GOOD FAITH TO ENABLE THE AGENT
TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE AGENT. THE FUNDS ADMINISTRATOR AND EACH OF THE OTHER CREDIT PARTIES
WAIVE ANY OBJECTION THAT ANY OF SUCH PERSONS MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH THE AGENT OR ANY LENDER HAS COMMENCED A PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON
CONVENIENS.
11.3 SERVICE OF PROCESS.
EACH OF THE FUNDS ADMINISTRATOR AND THE OTHER CREDIT PARTIES HEREBY
WAIVES PERSONAL SERVICE UPON IT AND, AS ADDITIONAL SECURITY FOR THE OBLIGATIONS,
HEREBY IRREVOCABLY DESIGNATES AND APPOINTS ROBERT C. LARRY, WITH AN OFFICE ON
THE DATE HEREOF AT C/O METAL MANAGEMENT, INC., 500 NORTH DEARBORN STREET,
CHICAGO, ILLINOIS 60610, AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY
SUCH PERSON WHICH IRREVOCABLY AGREE IN WRITING TO SO SERVE AS ITS AGENT, TO
RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS ISSUED BY ANY COURT IN ANY LEGAL
ACTION OR OTHER PROCEEDING WITH RESPECT TO THIS CREDIT AGREEMENT OR ANY OTHER
CREDIT DOCUMENT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY SUCH PERSON TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO
SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE FUNDS ADMINISTRATOR AT ITS
ADDRESS PROVIDED HEREIN EXCEPT THAT, UNLESS OTHERWISE PROVIDED BY APPLICABLE
LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF
PROCESS. IF ANY AGENT APPOINTED BY THE FUNDS ADMINISTRATOR OR ANY OTHER CREDIT
PARTIES REFUSES TO ACCEPT SERVICE, EACH SUCH PERSON HEREBY AGREES THAT SERVICE
UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE AND EFFECTIVE AND BINDING
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SERVICE IN EVERY RESPECT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF AGENT OR ANY
LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR SHALL
LIMIT THE RIGHT OF AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE FUNDS
ADMINISTRATOR OR ANY OTHER CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
11.4 JURY TRIAL.
THE FUNDS ADMINISTRATOR, EACH OF THE OTHER CREDIT PARTIES, THE AGENT
AND THE LENDERS HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY DISPUTES
WILL BE RESOLVED IN A BENCH TRIAL.
11.5 LIMITATION OF LIABILITY.
NEITHER THE AGENT NOR ANY LENDER SHALL HAVE ANY LIABILITY TO THE FUNDS
ADMINISTRATOR OR ANY OTHER CREDIT PARTY (WHETHER SOUNDING IN TORT, CONTRACT, OR
OTHERWISE) FOR LOSSES SUFFERED BY ANY SUCH PERSON IN CONNECTION WITH, ARISING
OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED
BY THIS CREDIT AGREEMENT, OR ANY OF THE OTHER CREDIT DOCUMENTS, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY
A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON THE AGENT OR ANY
SUCH LENDER, THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
11.6 DELAYS.
No delay or omission of the Agent or the Lenders in exercising any
right or remedy hereunder shall impair any such right or operate as a waiver
thereof.
11.7 NOTICES.
Except as otherwise provided herein, all notices and correspondences
hereunder shall be in writing and sent by certified or registered mail, return
receipt requested, or by overnight delivery service, with all charges prepaid,
if to the Agent or any of the Lenders, then to BT Commercial Corporation, 233
South Wacker Drive, Chicago, Illinois 60606, Attention: Credit Department, if to
the Funds Administrator or any other Credit Party, then to Metal Management,
Inc., 500 North Dearborn Street, Chicago, Illinois 60610, Attention: Gerard M.
Jacobs, Chief Executive Officer, and Robert C. Larry, Chief Financial Officer,
or by facsimile transmission, promptly confirmed in writing sent by first class
mail, if to the Agent, or any of the Lenders, at (312) 993-8096 and if to the
Funds Administrator or any other Credit Party at (312) 645-0714. All such
notices and correspondence shall be deemed given (i) if sent by certified or
registered mail, three Business Days after being postmarked, (ii) if sent by
overnight delivery service, when received at the above stated addresses or when
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delivery is refused and (iii) if sent by telex or facsimile transmission, when
receipt of such transmission is acknowledged PROVIDED that failure or delay in
delivering copies of any notices to any persons designated above to receive
copies thereof shall in no way adversely affect the effectiveness of such
notice.
11.8 ASSIGNMENTS AND PARTICIPATIONS.
(a) BORROWER ASSIGNMENT. Neither the Funds Administrator nor
any of the other Credit Parties shall have any right to assign this
Credit Agreement or any of the other Credit Documents, or any rights or
obligations hereunder or thereunder, without the prior written consent
of the Agent and the Lenders.
(b) LENDER ASSIGNMENTS. Each Lender may assign to one or more
banks or other financial institutions all or a portion of its rights
and obligations under this Credit Agreement, the Revolving Notes and
the other Credit Documents (which shall be of a constant and not a
varying percentage of the Loans and Commitment assigned), with the
consent of the Agent and, in the case of any such assignment to a bank
or financial institution not disclosed to the Funds Administrator on or
prior to the Closing Date, the consent of the Funds Administrator
(which consent, in the case of the Funds Administrator, shall not be
unreasonably withheld or delayed), and upon execution and delivery to
the Agent, for its acceptance and recording in the Register, of an
agreement in substantially the form of EXHIBIT G (an "ASSIGNMENT AND
ASSUMPTION AGREEMENT"), together with surrender of any Revolving Note
or Revolving Notes subject to such assignment and a processing and
recordation fee of $2,500, such assignment shall be effective and ANNEX
I hereto shall be deemed to be modified accordingly. No such assignment
shall be for less than $10,000,000 of the Commitments unless it is to
another Lender or is an assignment of all of such Lender's rights and
obligations under this Credit Agreement. (This Section does not apply
to branches and Affiliates of a Lender, it being understood that a
Lender may make, carry or transfer Revolving Loans at or for the
account of any of its branch offices or Affiliates without consent of
the Borrowers, the Agent or any other Lender.)
(c) AGENT'S REGISTER. The Agent shall maintain a register of
the names and addresses of the Lenders, their Commitments, and the
principal amount of their Revolving Loans (the "REGISTER") at the
address specified for the Agent in SECTION 11.7. The Agent shall also
maintain a copy of each Assignment and Assumption Agreement delivered
to and accepted by it, and modify the Register to give effect to each
Assignment and Assumption Agreement. Upon its receipt of each
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Assignment and Assumption Agreement and surrender of the affected
Revolving Note or Revolving Notes, the Agent will give prompt notice
thereof to the Funds Administrator and deliver to the Funds
Administrator a copy of the Assignment and Assumption Agreement and the
surrendered Revolving Note or Revolving Notes. Within five Business
Days after its receipt of such notice, the Borrowers shall execute and
deliver to the Agent a substitute Revolving Note or Revolving Notes to
the order of the assignee in the amount of the Commitment or
Commitments assumed by it and to the assignor in the amount of the
Commitment or Commitments retained by it, if any. Such substitute
Revolving Note or Revolving Notes shall re-evidence the Indebtedness
outstanding under the surrendered Revolving Note or Revolving Notes and
shall be dated as of the Closing Date. The Agent shall be entitled to
rely upon the Register exclusively for purposes of identifying the
Lenders hereunder. The Register shall be available for inspection by
the Credit Parties and the Lenders (or any of them) at any reasonable
time and from time to time upon reasonable notice to the Agent.
(d) PARTICIPATIONS. Each Lender may sell participations
(without the consent of the Agent, any Credit Party or any other
Lender) to one or more parties in or to all or a portion of its rights
and obligations under this Credit Agreement, the Revolving Notes and
the other Credit Documents. Notwithstanding a Lender's sale of a
participation interest, its obligations hereunder shall remain
unchanged. The Credit Parties, the Agent, and the other Lenders shall
continue to deal solely and directly with such Lender. No participant
shall have rights to approve any amendment or waiver of this Credit
Agreement or any of the other Credit Documents except to the extent
such amendment or waiver would (i) increase the participant's
obligation in respect of the Commitment of the Lender from whom the
participant purchased its participation interest; (ii) reduce the
principal of, or stated rate or amount of interest on, the Revolving
Loans subject to such participation, (iii) postpone any maturity date
fixed for final payment of principal of the Revolving Loans subject to
the participation interest and (iv) release any guarantor of the
Obligations or all or a substantial portion of the Collateral, other
than when otherwise permitted hereunder.
11.9 CONFIDENTIALITY.
(a) Each Lender agrees that it will use its best efforts not
disclose to any Person, without the prior consent of the Funds
Administrator, any information with respect to any of the Credit
Parties or any Subsidiary of any of the Credit Parties which is
furnished pursuant to this Credit Agreement and which is designated by
the respective Credit Parties to
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the Lenders in writing as confidential (the "CREDIT PARTY
INFORMATION"), PROVIDED, THAT, each Lender may disclose any such
information (i) to its employees, auditors, or counsel, or to another
Lender if the disclosing Lender or such disclosing Lender's holding or
parent company in its sole discretion determines that any such party
should have access to such information, (ii) as has become generally
available to the public, (iii) as may be required in any report,
statement or testimony submitted to any Governmental Authority having
or claiming to have jurisdiction over such Lender, (iv) as may be
required in response to any summons or subpoena or in connection with
any litigation, (v) in order to comply with any Requirement of Law, and
(vi) to any actual or prospective transferee or participant in
connection with any contemplated transfer or participation of any of
the Revolving Notes or Commitments or any interest therein by such
Lender, so long as prior to such disclosure such prospective or actual
transferee or participant has agreed to preserve the confidentiality of
such information on terms substantially similar to those set forth in
this SECTION 11.9 or on terms otherwise satisfactory to the Funds
Administrator.
(b) In the event that the Agent or any Lender is requested or
becomes legally compelled (by interrogatories, requests for information
or documents, subpoena, civil investigative demand or similar process)
to disclose any of the Credit Party Information, such Person will (i)
provide the Funds Administrator with prompt written notice so that the
Credit Parties may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this SECTION 11.9; (ii)
unless the Credit Parties waive compliance by such Person with the
provisions of this SECTION 11.9, make a timely objection to the request
or compulsion to provide such Credit Party Information on the basis
that such Credit Party Information is confidential and subject to the
agreements contained in this SECTION 11.9; and (iii) take action as is
necessary to preserve such confidentiality, such as seeking a
protective order or other appropriate remedy.
In the event that a protective order or other remedy is not obtained,
or the Credit Parties waive compliance with the provisions of this SECTION 11.9,
such Person will furnish only that portion of the Credit Party Information which
is legally required to be furnished and will exercise such Person's best efforts
to obtain reliable assurance that confidential treatment will be accorded to the
Credit Party Information.
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11.10 INDEMNIFICATION.
The Borrowers hereby jointly and severally indemnify and agree to defend
and hold harmless the Agent and each of the Lenders and their respective
directors, officers, agents, employees and counsel from and against any and all
losses, claims, damages, liabilities, deficiencies, judgments or expenses
incurred by any of them (except to the extent that it is finally judicially
determined to have resulted from their own gross negligence or willful
misconduct) arising out of or by reason of (a) any litigations, investigations,
claims or proceedings which arise out of (i) this Credit Agreement or the
transactions contemplated hereby, (ii) the issuance of the Letters of Credit,
(iii) the failure of the Issuing Bank to honor a drawing under any Letter of
Credit, as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or Governmental Authority, (iv)
any actual or proposed use by any Borrower of the proceeds of the Revolving
Loans or (v) the Agent's or the Lenders' entering into this Credit Agreement,
the other Credit Documents or any other agreements and documents relating
hereto, including, without limitation, amounts paid in settlement, court costs
and the fees and disbursements of counsel incurred in connection with any such
litigation, investigation, claim or proceeding or any advice rendered in
connection with any of the foregoing and (b) any remedial or other action taken
by any of the Borrowers or any of the Lenders in connection with compliance by
any of the Borrowers or any Subsidiary of any of the Borrowers, or any of their
respective properties, with any federal, state or local environmental laws,
acts, rules, regulations, orders, directions, ordinances, criteria or
guidelines.
11.11 AMENDMENTS AND WAIVERS.
No amendment or waiver of any provision of this Credit Agreement, any
part of SCHEDULE B, or any other Credit Document shall be effective unless in
writing and signed by the Majority Lenders (or by the Agent on their behalf),
except that:
(a) the consent of all the Lenders is required to (i) increase
the Commitments, (ii) reduce the principal of, or interest on, any
Revolving Note, any Letter of Credit reimbursement obligations or any
Fees hereunder (other than Fees that are exclusively for the account of
the Agent), (iii) postpone any date fixed for any payment in respect of
principal of, or interest on, any Revolving Note, any Letter of Credit
reimbursement obligations or any Fees hereunder, (iv) change the
percentage of the Commitments, or any minimum requirement necessary for
the Lenders or the Majority Lenders to take any action hereunder, (v)
amend or waive this SECTION 11.11(a), or change the definition of
Majority Lenders or (vi) except as otherwise expressly provided in this
Credit Agreement, and other than in connection with the financing,
refinancing, sale or other disposition of any asset of a Borrower
permitted under this Credit Agreement, release any Liens in favor of the
Agent on any of the Collateral; and
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(b) the consent of the Agent shall be required for any
amendment, waiver or consent affecting the rights or duties of the Agent
under any Credit Document, in addition to the consent of the Lenders
otherwise required by this Section.
Neither the consent of the Funds Administrator nor any other Credit
Party shall be required for any amendment, modification or waiver of the
provisions of ARTICLE 10 (other than SECTION 10.9). The Funds Administrator, the
other Credit Parties and the Lenders each hereby authorize the Agent to modify
this Credit Agreement by unilaterally amending or supplementing ANNEX I to
reflect assignments of the Commitments. Notwithstanding the foregoing, the
Credit Parties may amend SCHEDULE B, PARTS 6.1, 6.10, 6.14 and 6.16, without the
consent of the Majority Lenders.
11.12 COUNTERPARTS AND EFFECTIVENESS.
This Credit Agreement and any waiver or amendment hereto may be executed
in any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. This
Credit Agreement shall become effective on the date on which all of the parties
hereto shall have signed a copy hereof (whether the same or different copies)
and shall have delivered the same to the Agent.
11.13 SEVERABILITY.
In case any provision in or obligation under this Credit Agreement, the
Revolving Notes or any of the other Credit Documents shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired thereby.
11.14 MAXIMUM RATE.
Notwithstanding anything to the contrary contained elsewhere in this
Credit Agreement or in any other Credit Document, the Borrowers, the Agent, and
the Lenders hereby agree that all agreements among them under this Credit
Agreement and the other Credit Documents, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be paid, to
the Agent or any Lender for the use, forbearance, or detention of the money
loaned to the Borrowers and evidenced hereby or thereby or for the performance
or payment of any covenant or obligation contained herein or therein, exceed the
Highest Lawful Rate. If due to any circumstance whatsoever, fulfillment of any
provisions of this Credit Agreement or any of the other Credit Documents at the
time performance of such provision shall be due
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shall exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance any
Lender should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied pursuant to the terms hereof to the reduction of the principal amount
then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to the Borrowers.
All sums paid or agreed to be paid to the Agent or any Lender for the use,
forbearance, or detention of the Obligations and other Indebtedness of the
Borrowers to the Agent or any Lender, to the extent permitted by applicable law,
shall be amortized, prorated, allocated and spread throughout the full term of
such Indebtedness, until payment in full thereof, so that the actual rate of
interest on account of all such Indebtedness does not exceed the Highest Lawful
Rate throughout the entire term of such Indebtedness. The terms and provisions
of this SECTION 11.14 shall control over every other provision of this Credit
Agreement, the other Credit Documents, and all agreements among the Borrower,
the Agent and the Lenders.
11.15 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS.
This Credit Agreement and the other Credit Documents constitute the
entire agreement among the Credit Parties, the Agent and the Lenders, supersede
any prior agreements among them, and shall bind and benefit each of such Persons
and their respective successors and permitted assigns.
11.16 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each of the Borrowers shall be jointly and severally
liable hereunder and under each of the other Credit Documents with
respect to all Obligations, regardless of which of the Borrowers
actually receives the proceeds of the Revolving Loans or the benefit of
any other extensions of credit hereunder, or the manner in which the
Funds Administrator, the Borrowers, the Agent or the Lenders account
therefor in their respective books and records. Notwithstanding the
foregoing, (i) each Borrower's obligations and liabilities with respect
to proceeds of Revolving Loans which it receives or Letters of Credit
issued for its account, and related fees, costs and expenses, and (ii)
each Borrower's obligations and liabilities arising as a result of the
joint and several liability of the Borrowers hereunder with respect to
proceeds of Revolving Loans received by, or Letters of Credit issued for
the account of, any of the other Borrowers, together with the related
fees, costs and
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expenses, shall be separate and distinct obligations, both of which are
primary obligations of such Borrower. Neither the joint and several
liability of, nor the Liens granted to the Agent under the Collateral
Documents by, any of the Borrowers shall be impaired or released by (a)
the failure of Agent or any Lender, any successors or assigns thereof,
or any holder of any Note or any of the Obligations to assert any claim
or demand or to exercise or enforce any right, power or remedy against
the Funds Administrator, any Borrower, any Subsidiary of any Borrower,
any other Person, the Collateral or otherwise; (b) any extension or
renewal for any period (whether or not longer than the original period)
or exchange of any of the Obligations or the release or compromise of
any obligation of any nature of any Person with respect thereto; (c)
the surrender, release or exchange of all or any part of any property
(including without limitation the Collateral) securing payment,
performance and/or observance of any of the Obligations or the
compromise or extension or renewal for any period (whether or not
longer than the original period) of any obligations of any nature of
any Person with respect to any such property; (d) any action or
inaction on the part of Agent or any Lender, or any other event or
condition with respect to any other Borrower, including any such action
or inaction or other event or condition, which might otherwise
constitute a defense available to, or a discharge of, such other
Borrower, or a guarantor or surety of or for any or all of the
Obligations; and (E) any other act, matter or thing (other than payment
or performance of the Obligations) which would or might, in the absence
of this provision, operate to release, discharge or otherwise
prejudicially affect the obligations of such or any other Borrower.
(b) Each Borrower understands and acknowledges that if the
Agent forecloses judicially or nonjudicially against any Collateral
consisting of real property, that foreclosure could impair or destroy
any ability that such Borrower may have to seek reimbursement,
contribution or indemnification from any other Borrower or Borrowers or
from others based on any right such Borrower may have of subrogation,
reimbursement, contribution or indemnification in respect of its joint
and several liability hereunder. Each Borrower further understands and
acknowledges that in the absence of this SECTION 11.16(b), such
potential impairment or destruction of such Borrower's rights, if any,
may entitle such Borrower to assert a defense to its joint and several
liability hereunder based on Section 580d of the California Code of
Civil Procedure as interpreted in Union Bank v. Gradsky, 265 Cal.App.2d
40 (1968). By executing this Agreement, each Borrower freely,
irrevocably and unconditionally: (i) waives and relinquishes that
defense and agrees that such Borrower will be fully liable hereunder and
under the other Credit Documents even though the Agent may
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foreclose judicially or nonjudicially against any real property
security for the Obligations; (ii) agrees that such Borrower will not
assert that defense in any action or proceeding which the Agent or any
of the Lenders may commence to enforce this Agreement; (iii)
acknowledges and agrees that the rights and defenses waived by such
Borrower hereunder include any right or defense that such Borrower may
have or be entitled to assert based upon or arising out of any one or
more of Sections 580a, 580b, 580d or 726 of the California Code of
Civil Procedure or Section 2848 of the California Civil Code; and (iv)
acknowledges and agrees that the Agent and each of the Lenders is
relying on this waiver in making the Revolving Loan and other
extensions of credit hereunder, and that this waiver is a material part
of the consideration which the Agent and each Lender is receiving
therefor.
(c) Each Borrower waives any rights and defenses that are or
may become available to such Borrower by reason of Sections 2787 to
2855, inclusive, of the California Civil Code.
(d) Each Borrower waives all rights and defenses that such
Borrower may have because the Revolving Loans and other Obligations are
secured in part by real property. This means, among other things:
(i) the Lenders may collect from such Borrower
without first foreclosing on any real or personal property
Collateral pledged by such or any other Borrower or any other
Person.
(ii) If the Agent forecloses on any real property
Collateral pledged by any Borrower or any other Person:
(A) The amount of the Obligations may be
reduced only by the price for which that
Collateral is sold at the foreclosure sale, even
if the Collateral is worth more than the sale
price.
(B) Lenders may collect from such Borrower
even if the Agent, by foreclosing on the real
property Collateral, has destroyed any right
such Borrower may have to collect from any other
Borrower or Person.
This SECTION 11.16(d) is an unconditional and irrevocable waiver of any
rights and defenses any Borrower may have because the Obligations are secured in
part by real property. These rights and defenses include, but are not limited
to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure.
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11.17 JOINDER OF ADDITIONAL BORROWERS.
Subsequent to the Closing Date, additional wholly-owned Subsidiaries of
MTLM constituting permitted Investments pursuant to SECTION 8.8 may become
joined as Borrowers hereunder and under certain of the other Credit Documents by
executing and delivering to the Agent (i) a joinder agreement in form and
substance satisfactory to the Agent and (ii) such other agreements, documents
and instruments as the Agent shall reasonably deem necessary or desirable in
connection therewith.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the respective parties hereto have caused this
Credit Agreement to be executed and delivered by their duly authorized officers
as of the date first set forth above.
METAL MANAGEMENT, INC., as Funds
Administrator and its individual
capacity as a Borrower
By:
----------------------------
T. Benjamin Jennings
Chairman of the Board
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
BRIQUETTING CORPORATION OF AMERICA
C SHREDDING CORP.
CALIFORNIA METALS RECYCLING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
COZZI BUILDING CORPORATION
COZZI IRON & METAL, INC.
EMCO TRADING, INC.
FERREX TRADING CORPORATION
FIRMA, INC.
FIRMA PLASTIC CO., INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ISAAC CORPORATION
P. JOSEPH IRON & METAL, INC.
KANKAKEE SCRAP CORPORATION
MAC LEOD METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT REALTY, INC.
PAULDING RECYCLING,INC.
PROLER SOUTHWEST INC.
PROLER STEELWORKS L.L.C.
SALT RIVER RECYCLING, L.L.C.
SCRAP PROCESSING, INC.
SUPERIOR FORGE, INC.
TROJAN TRADING CO.
USA SOUTHWESTERN CARRIERS, INC.
<PAGE> 98
RESERVE IRON & METAL LIMITED
PARTNERSHIP
By: P. JOSEPH IRON & METAL, INC.,
its general partner
By:
--------------------------
Robert C. Larry
Vice President
<PAGE> 99
AGENT:
BT COMMERCIAL CORPORATION, as
Agent
By:
--------------------------
Wayne D. Hillock
Senior Vice President
LENDERS:
BT COMMERCIAL CORPORATION,
individually, as a Lender
By:
--------------------------
Wayne D. Hillock
Senior Vice President
<PAGE> 100
ANNEX I
TO
CREDIT AGREEMENT
DATED AS OF MARCH 31, 1998
LIST OF LENDERS; COMMITMENT
AMOUNTS; APPLICABLE LENDING OFFICES
1. BT COMMERCIAL CORPORATION
233 South Wacker Drive
Chicago, Illinois 60606
COMMITMENT AMOUNT: $200,000,000
DOMESTIC LENDING OFFICE: 233 South Wacker Drive
Chicago, Illinois 60606
LIBOR LENDING OFFICE: 233 South Wacker Drive
Chicago, Illinois 60606
<PAGE> 101
SCHEDULE A
TO
CREDIT AGREEMENT
DATED AS OF MARCH 31, 1998
CLOSING DOCUMENT LIST
Attached
<PAGE> 102
SCHEDULE B
TO
CREDIT AGREEMENT
DATED AS OF MARCH 31, 1998
DISCLOSURE SCHEDULES
Attached
<PAGE> 1
EXHIBIT 99.1
[METAL MANAGEMENT LOGO]
FOR IMMEDIATE RELEASE
FOR MORE INFORMATION CONTACT:
Xavier Hermosillo, Corporate Communications and Investor Relations:
Midwest/East - Call (312) 645-0445 - West Coast - Call (310) 832-2999
MEATAL MANAGEMENT ANNOUNCES A
$200-MILLION CREDIT FACILITY
Chicago, IL - April 2, 1998 - Metal Management, Inc. (NASDAQ symbol-MTLM)("the
Company") today announced that it has entered into a $200-million Credit
Agreement ("Credit Facility") with BT Commercial Corporation, an affiliate of
Bankers Trust Company. The Credit Facility will refinance all secured debt of
MTLM and its subsidiaries and provide working capital. The Credit Facility is
secured by substantially all of the assets of MTLM and will provide availability
as percentages of accounts receivable, inventory and certain other assets of
the Company.
T. Benjamin Jennings, Metal Management's Chairman of the Board and Chief
Development Officer, said, "This Credit Facility is an important step in the
development of our Company. We are excited to have the support of Bankers Trust
with its substantial and diversified resources. This Credit Facility will
provide an immediate enhancement to our liquidity and is a cost effective
component of our capital structure."
Metal Management, Inc., headquartered in Chicago, is a rapidly-growing
consolidator of the scrap metal recycling industry, building a quality company
through strategic integration and internal growth.
MORE * MORE * MORE * MORE
<PAGE> 2
METAL MANAGEMENT ANNOUNCES A $200 - MILLION PAGE 2
CREDIT FACILITY
The Metal Management family of companies includes: Cozzi Iron & Metal, Inc. of
Chicago, one of the largest scrap metal operations in the U.S.; three recycling
companies in Houston, Texas - Proler Southwest, Inc., a leading recycler of
industrial ferrous scrap on the Houston Ship Channel, HouTex Metals Company,
Inc., a significant supplier of ferrous metals to minimills, which is also
located on the Houston Ship Channel, as well as Houston Compressed Steel Corp.,
a ferrous scrap recycler; The Issac Group of Companies of Toledo, one of the
world's largest briquetting operations; Reserve Iron & Metal L.P. of Cleveland
and Chicago, major ferrous metal-breaking operation; the MacLeod Group of
Companies in Los Angeles, a major wire chopper and processor; Aerospace Metals,
Inc. of Hartford, Connecticut, one of the world's leading recyclers of high
temperature nickel and cobalt alloys and titanium; Metal Management Arizona, of
Phoenix, Arizona, the largest scrap metal processor in Arizona; and Superior
Forge, Inc., of Huntington Beach, California, a significant generator and
processor of aluminum and aluminum scrap.
Metal Management also has several acquisitions pending. The Company has signed
letters of intent to acquire Goldin Industries of Gulfport, Mississippi;
PerlCo, L.L.C. of Memphis, Tennessee; Chicago-area scrap metal recyclers 138
Scrap Inc. and Katrick Inc.; M. Kimerling & Sons, Inc., of Birmingham, Alabama,
one of the largest aluminum wire chopping operations in the United States; the
Charles Bluestone Company of Elizabeth, Pennsylvania, one of the leading
processors of stainless steel, nickel and cobalt alloys, and titanium in the
United States; Newell Recycling of Denver, Inc., one of the largest scrap metal
recycling operations in the Rocky Mountain region; and Michael Schiavone & Sons,
Inc., of North Haven, Connecticut, one of the largest scrap metal recycling
operations in the New England region.
All of the statements in this release, other than historical facts, are
forward-looking statements made in reliance upon the Safe Harbor Provisions of
the Private Securities Litigation Reform Act of 1995. As such, they involve
risks and uncertainties and are subject to change at any time.
MORE * MORE * MORE * MORE
<PAGE> 3
METAL MANAGEMENT ANNOUNCES A $200 - MILLION PAGE 3
CREDIT FACILITY
These statement reflect the Company's current expectations regarding the future
profitability of the Company and its subsidiaries and the benefits to be
derived from the Company's execution of the Company's industry consolidation
strategy. As discussed in the Company's annual report for the period ended
March 31, 1997, its quarterly reports for the periods ended June 30, 1997,
September 30, 1997 and December 31, 1997, its proxy statement dated November
20, 1997, and its Registration Statements on Form S-3 effective as of January
14, 1998 and March 12, 1998, some of the factors which could affect the
Company's performance include, among other things; possible inability to
replace short term financing with longer term capital commitments, possible
inability to obtain capital through debt and/or equity placements sufficient to
fund cash requirements under acquisition and merger agreements, risk of
expansion strategy, cyclicality of operating results, price fluctuations,
existing and future debt of the Company, competition in the scrap metal
industry, immediate and future capital requirements, substantial leverage,
reliance on management and principal stockholders, and environmental matters.
# # # #
