UNITED STATES
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)
JUNE 20, 1995
BAYOU STEEL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-22603 72-1125783
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
RIVER ROAD, P.O. BOX 5000, LAPLACE, LOUISIANA 70069
(Address of principal executive offices)
(Zip Code)
(504) 652-4900
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. OTHER EVENTS
On June 20, 1995, Bayou Steel Corporation (the "Company") completed the
issuance and sale of 15,000 shares of its redeemable preferred stock, par value
$.01 per share ("Preferred Stock"), and warrants to purchase, at an exercise
price of $.01 per share, six percent (6%) of the Company's Class A Common Stock
to Rice Partners II, L.P. for $15 million. The Preferred stock is mandatorily
redeemable by the Company seven years after issuance and requires the payment of
quarterly dividends, at a rate of 14.5% per annum. The holders of the Preferred
Stock are entitled to have one representative on the Board of Directors of the
Company at all times. In addition, upon certain defaults by the Company such
holders will have the right to additional warrants and to elect up to two
additional members of the Board. In connection with the sale, the Company
increased the size of the Board from seven to ten members, and the Company's
Class A directors elected Jeffrey P. Sangalis of Rice to fill one of the
newly-created vacancies. The other two vacancies will be filled by the Company's
Class B Directors.
Simultaneously with the sale of the Preferred Stock, the Company entered
into agreements with Chemical Bank and certain other lenders providing for an
increase in the Company's revolving credit facility from $30 millon to $45
million, and a term loan of $10 million to the Company's wholly-owned
subsidiary, Bayou Steel Corporation (Tennessee).
The proceeds received from the sale of Preferred Stock and the term loan
were used to repay indebtedness outstanding under the Company's revolving credit
facility which had been incurred to acquire substantially all of the assets of
Tennessee Valley Steel Corporation.
Item 7. EXHIBITS
3.1 Second Restated Certificate of Incorporation of the Company.
3.2 Statement of Designations, Preferences, Limitations and Relative
Rights of Series A Preferred Stock and Series B Preferred Stock.
10.1 Preferred Stock and Warrant Purchase Agreement, dated as of June 13,
1995, by and between the Company and Rice Partners II, L.P.
10.2 Shareholder Agreement, dated as of June 13, 1995, by and among the
Company, Bayou Steel Properties Limited, Howard M. Meyers and Rice
Partners II, L.P.
10.3 Credit Agreement, dated as of June 28, 1989, as amended and restated
through June 1, 1995, among the Company, the lenders named therein,
and Chemical Bank, as agent.
10.4 Term Loan Agreement, dated as of June 1, 1995, among Bayou Steel
Corporation (Tennessee), the several term loan lenders from time to
time parties thereto, and Chemical Bank, as agent.
Page 2
<PAGE>
SIGNATURE
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.
BAYOU STEEL CORPORATION
(Registrant)
By /S/ RICHARD J. GONZALEZ
Richard J. Gonzalez,
Vice President, Treasurer, Chief
Financial Officer, and Secretary
Date: June 20, 1995
Page 3
<PAGE>
INDEX TO EXHIBITS
PAGE
EXHIBIT NUMBER
------- ------
3.1 Second Restated Certificate of 5
Incorporation of the Company.
3.2 Statement of Designations, 30
Preferences, Limitations and
Relative Rights of Series A
Preferred Stock and series B
Preferred Stock.
10.1 Preferred Stock and Warrant Purchase 39
Agreement, dated as of June 13,
1995, by and between Bayou Steel
Corporation (the "Company") and Rice
Partners II, L.P.
10.2 Shareholder Agreement, dated as of 117
June 13, 1995, by and among the
Company, Bayou Steel Properties
Limited, Howard M. Meyers and Rice
Partners II, L.P.
10.3 Credit Agreement, dated as of June 136
28, 1989, as amended and restated
through June 1, 1995, among the
Company, the lenders named therein,
and Chemical Bank, as agent.
10.4 Term Loan Agreement, dated as of 252
June 1, 1995, among Bayou Steel
Corporation (Tennessee), the several
term loan lenders from time to time
parties thereto, and Chemical Bank,
as agent.
Page 4
EXHIBIT 3.1
SECOND RESTATED CERTIFICATE OF INCORPORATION
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"BAYOU STEEL CORPORATION", FILED IN THIS OFFICE ON THE THIRD DAY OF AUGUST,
A.D. 1988, AT 12:50 O'CLOCK P.M.
EDWARD J. FREEL
EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION: 7546242
Date: 06-20-95
[SEAL]
<PAGE>
SECOND RESTATED
CERTIFICATE OF INCORPORATION
OF
BAYOU STEEL CORPORATION
FIRST: The original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on May 26, 1988 under the name
"Bayou Steel Corporation (Of La Place)."
SECOND: The Restated Certificate of Incorporation is hereby amended and
restated in its entirety to read as set forth below.
THIRD: This Second Restated Certificate of Incorporation has been duly
adopted by resolutions proposed and declared advisable by the Board of
Directors of the Corporation and duly adopted by the holders of not less than
80% of the voting power of the Corporation by written consent in accordance
with Section 228 of the Delaware General Corporation Law and prompt notice to
the stockholders of the Corporation who have not consented in writing thereto
has been given as provided in said Section 228.
1. Name. The name of the Corporation is:
BAYOU STEEL CORPORATION
2. Registered Office and Registered Agent. The address of the
Corporation's registered office in Delaware is Corporation Trust Center, 1209
Orange Street, Wilmington, New Castle County, Delaware 19801. The Corporation
Trust Company is the Corporation's registered agent at that address.
3. Purpose. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Delaware General
Corporation Law.
4. Number of Shares. The total number of shares which the Corporation
shall have authority to issue, the number of shares of each class, and the par
value of each share of each class are as follows:
The aggregate number of shares which the Corporation shall have authority
to issue is 38,573,574 divided as follows:
NAME OF CLASS NUMBER OF SHARES PAR VALUE
- ------------------------------------- ---------------- ---------
Series Preferred Stock 10,000,000 $ .01
Class A Common Stock 24,271,127 $ .01
Class B Common Stock 4,302,347 $ .01
Class C Common Stock 100 $ .01
5. Designation of Classes; Relative Rights, etc. A statement of the
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of the shares of each class is as follow:
5.1 Definitions.
"Acquisition Agreement" shall mean the Acquisition Agreement dated as of
June 16, 1986, as amended, among Bayou Steel Corporation, Bayou Steel
Acquisition Corporation, Voest-Alpine International Corporation, La Place
Corporation and Voest-Alpine A.G.
"Amoco Tax Lease Agreements" shall mean the four "safe harbor lease"
Agreements dated November 11, 1981 and December 11, 1981 between Amoco Tax
Leasing I Corporation and the Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Common Stock" shall refer collectively to each of the Class A Common
Stock, the Class B Common Stock and the Class C Common Stock of the
Corporation.
"Consolidated Net Worth" shall mean the excess of (i) all assets of the
Corporation and its Subsidiaries computed and consolidated in accordance with
generally accepted accounting principles, less (ii) the sum of all liabilities
of the Corporation and its Subsidiaries, computed and consolidated in
accordance with generally accepted accounting principles.
"Employment Agreement" shall mean the Employment Agreement dated September
5, 1986 from the Corporation to Howard M. Meyers as in effect on September 5,
1986.
"Entity" shall mean and include any corporation, person or other entity
and any other entity with which it or its "affiliate" or "associate" (as
defined below) has any agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting or disposing of
stock of the Corporation, or which is its "affiliate" or "associate" as those
terms are defined in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended, together with the successors and
assigns of such persons in any merger or consolidation of such persons or the
sale of all or substantially all of such persons' assets.
"Fair market value" of the Class A Common Stock shall mean the average of
the daily closing prices of the Class A Common Stock for 15 consecutive
trading days commencing 20 trading days before the date of such computation.
The closing price is the last reported sale price on the principal national
securities exchange on which the Class A Common Stock is listed or, if the
Class A Common Stock is not listed on any national securities exchange, the
NASDAQ National Market System, or, if the Class A Common Stock is not
designated for trading on the NASDAQ National Market System, the average of
the closing bid and asked prices as reported on NASDAQ or, if not so reported,
as furnished by the National Quotation Bureau Incorporated. In the absence of
such a quotation, the Company shall determine the current market price on a
reasonable and appropriate basis of the average of the daily closing prices
for 15 consecutive trading days commencing 20 trading days before the date of
such computation.
"Permanent Disability" and "Permanently Disabled" shall mean such physical
or mental disability or incapacity of Howard M. Meyers which has substantially
prevented him or will substantially prevent him from performing his duties as
Chief Executive Officer of the Corporation for more than a total of 150 days
during any 365-day period as determined by unanimous or majority vote of a
panel of medical practitioners consisting of one person selected by a majority
of directors elected by holders of Class A Common Stock and one person
selected by a majority of directors elected by holders of Class B Common Stock
and, if the foregoing two persons cannot agree, a third person mutually
acceptable to a majority of both classes of directors (the "Panel"), which
Panel may be convened at any time by a majority of directors elected by either
the holders of Class A Common Stock or Class B Common Stock and, in the event
Howard M. Meyers is deemed Permanently Disabled, then thereafter the Panel may
be convened to review such determination by a majority of directors elected by
either the holders of Class A Common Stock or Class B Common Stock at any time
or by Howard M. Meyers once every 90 calendar days; provided that any fees for
such panel need only be paid by the Corporation once every 12 months.
"Removal for Cause" shall mean the removal of Howard M. Meyers as Chief
Executive Officer of the Corporation for "Cause" as defined in paragraph 9 of
the Employment Agreement and only upon the affirmative vote of the holders of
a majority of shares of Class A Common Stock, voting as a class, regardless of
whether the Employment Agreement is in effect at any given time.
"Senior Note Indenture" shall mean the Indenture dated September 5, 1986
between Bayou Steel Acquisition Corporation and First National Bank of
Commerce.
"Series Preferred Stock" shall mean the Series Preferred Stock of the
Corporation.
"Subsidiary" shall mean a corporation of which a majority of the capital
stock having voting power under ordinary circumstances to elect a majority of
the board of directors is owned by the Corporation, the Corporation and one or
more Subsidiaries, or one or more Subsidiaries.
5.2 Class A Common Stock.
5.2.1 Dividends. The holders of the outstanding shares of Class A Common
Stock shall be entitled to receive dividends as and when declared by the Board
of Directors out of funds legally available therefor in amounts per share
declared for the Class B Common Stock and Class C Common Stock; provided that
dividends shall be declared or funds set aside for payment on the Class A Common
Stock only if dividends are declared or funds set aside for payment concurrently
on the Class B Common Stock and Class C Common Stock; and, provided further that
no dividends or other distribution in any given fiscal year of the Corporation
shall be declared or funds set aside for payment thereof on the Class A Common
Stock until any preferred dividend or other distribution for such fiscal year
shall have been declared and funds set aside with respect to any shares of
Series Preferred Stock outstanding.
5.2.2 Conversion. The holders of the outstanding Class A Common Stock will
not be entitled to convert such shares into any other class of stock of the
Corporation.
5.2.3 Voting Rights.
(a) General. Subject to the provisions of this Certificate of
Incorporation relating to class voting, the holders of the Class A Common
Stock shall be entitled to one vote per share on all matters other than the
election of directors, voting together with the holders of the Class B Common
Stock and Class C Common Stock and not as a separate class.
(b) Right to Elect Directors. The holders of the shares of Class A Common
Stock shall have the right solely to vote for and elect, as a class, that
number of directors which, rounded to the nearest whole number, represents 40%
of the number of directors then comprising the Board of Directors, and to
remove such directors with or without cause at any time and to fill all
vacancies in such directorships; provided, however, as long as the Class A
Common Stock is listed on the American Stock Exchange and in order to maintain
such listing, then from and after the time that the number of outstanding
shares of Class B Common Stock is less than 12.5% of the aggregate number of
outstanding shares of Common Stock, in addition to the foregoing right to
elect 40% of the directors, the Class A Common Stock will vote as one class
with the Class B Common Stock for the election of the remaining 60% of the
Board of Directors, with the Class B Common Stock having ten votes per share
and the Class A Common Stock having one vote per share. Notwithstanding the
foregoing, however, from and after the resignation (provided, however, that
the expiration of the term of the Employment Agreement shall not, in and of
itself, be deemed a resignation), or Removal for Cause or retirement of Howard
M. Meyers as Chief Executive Officer of the Corporation, or death or Permanent
Disability of Howard M. Meyers (except with respect to the cessation of
Permanent Disability pursuant to Article 5.3.3(a)(1) hereof), or such time as
more than 1,362,676 shares (as such number may be adjusted from time to time
under Article 5.5(a)) of Class B Common Stock have been converted into Class A
Common Stock, the holders of the outstanding Class A Common Stock shall be
entitled to one vote per share in the election of directors of the
Corporation, voting together with the holders of the Class B Common Stock and
the Class C Common Stock, each of which shall have one vote per share, and not
as a separate class.
5.3 Class B Common Stock.
5.3.1 Dividends. The holders of the outstanding shares of Class B Common
Stock shall be entitled to receive dividends as and when declared by the Board
of Directors out of funds legally available therefor in amounts per share
equal to the amounts per share declared for the Class A Common Stock and Class
C Common Stock; provided that dividends shall be declared or funds set aside
for payment on the Class B Common Stock only if dividends are declared or
funds set aside for payment concurrently on the Class A Common Stock and Class
C Common Stock; and, provided further that no dividends or other distribution
in any given fiscal year of the Corporation, shall be declared or funds set
aside for payment on the Class B Common Stock until any preferred dividend or
distribution for such fiscal year shall have been declared and funds set aside
with respect to any shares of Series Preferred Stock outstanding.
5.3.2 Conversion.
(a) The holder of any share or shares outstanding of Class B Common Stock
shall have the right, at the holder's option, to convert all or any portion of
such shares into fully paid and nonassessable shares of Class A Common Stock
at any time and from time to time, at the rate of one share of Class A Common
Stock for one share of Class B Common Stock (the "Class B Conversion Rate").
(b) The Class B Common Stock shall be convertible at the principal office
of the Corporation into fully paid and nonassessable shares of Class A Common
Stock at the Class B Conversion Rate.
(c) In order to convert shares of Class B Common Stock into shares of
Class A Common Stock pursuant to the right of conversion set forth in Article
5.3.2(a), the holder thereof shall surrender the certificate or certificates
representing Class B Common Stock, duly endorsed to the Corporation or in
blank, at the principal office of the Corporation and shall give written
notice to the Corporation that such holder elects to convert the same, stating
in such notice the number of shares such holder desires to convert and name or
names in which such holder wishes the certificate or certificates representing
shares of Class A Common Stock to be issued. The Corporation shall, within ten
business days, deliver at said office or other place to such holder of Class B
Common Stock, or to such holder's nominee or nominees, a certificate or
certificates for the number of shares of Class A Common Stock to which such
holder shall be entitled as aforesaid. Shares of Class B Common Stock shall be
deemed to have been converted as of the date of the surrender of such shares
for conversion as provided above, and the person or persons entitled to
receive the shares of Class A Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such shares of
Class A Common Stock on such date. Upon conversion of only a portion of the
number of shares covered by a certificate representing shares of Class B
Common Stock surrendered for conversion, the Corporation shall issue and
deliver to, or upon written order of, the holder of the certificate so
surrendered for conversion, at the expense of the Corporation, a new
certificate covering the number of shares of Class B Common Stock representing
the unconverted portion of the certificate so surrendered, which new
certificates shall entitle the holder thereof to the rights of the shares of
Class B Common Stock represented thereby to the same extent as if the
certificate theretofore covering such unconverted shares had not been
surrendered for conversion.
(d) The issuance of certificates for shares of Class A Common Stock upon
the conversion of shares of Class B Common stock shall be made without charge
to the converting stockholder for the original issue or transfer tax in
respect of the issuance of such certificates and any such tax shall be paid by
the Corporation.
(e) In case the Corporation shall effect a reorganization, shall merge
with or consolidate into another corporation, or shall sell, transfer or
otherwise dispose of all or substantially all of its property, assets or
business and, pursuant to the terms of such reorganization, merger,
consolidation or disposition of assets, shares of stock or other securities,
property or assets of the Corporation, successor or transferee or an affiliate
thereof or cash are to be received by or distributed to the holders of Class A
Common Stock, then each holder of Class B Common Stock shall be given a
written notice from the Corporation informing each holder of the terms of such
reorganization, merger, consolidation, or disposition of assets and of the
record date thereof for any distribution pursuant thereto, at least ten days
in advance of such record date, and each holder of Class B Common Stock shall
have the right thereafter to receive, upon conversion of such Class B Common
Stock, the number of shares of stock or other securities, property or assets
of the Corporation, successor or transferee or affiliates thereof or cash
receivable upon or as a result of such reorganization, merger, consolidation
or disposition of assets which a holder of that number of shares of Class A
Common Stock equal to the Class B Conversion Rate immediately prior to such
event would be entitled to receive, multiplied by the number of shares of
Class B Common Stock as may be converted. The provisions of this subparagraph
(e) shall similarly apply to successive reorganizations, mergers,
consolidations or dispositions of assets.
(f) If a state of facts shall occur which, without being specifically
controlled by the provisions of this Article 5.3, would not fairly protect the
conversion rights of the Class B Common Stock in accordance with the essential
intent that Class A Common Stock and Class B Common Stock be equivalent except
for the distinction in voting rights as provided in this Certificate of
Incorporation, then the Board of Directors of the Corporation shall make an
adjustment in the application of such provisions, in accordance with such
essential intent, as to protect such conversion rights.
(g) The Corporation shall, so long as any of the Class B Common Stock
remains outstanding, reserve and keep available out of its authorized and
unissued Class A Common Stock, solely for the purpose of effecting the
conversion of the Class B Common Stock, such number of shares of Class A Common
Stock as shall from time to time be sufficient to effect the conversion of all
shares of the Class B Common Stock, then outstanding. The Corporation shall from
time to time increase its authorized Class A Common Stock and take such other
action as may be necessary to permit the issuance from time to time of the
shares of Class A Common Stock, as fully paid and nonassessable shares, upon the
conversion of the Class B Common Stock, as herein provided.
5.3.3 Voting Rights.
(a) General. (i) Subject to the provisions of this Certificate of
Incorporation relating to class voting, the holders of the Class B Common
Stock shall be entitled to the number of votes per share on all matters other
than the election of directors, voting together with the holders of
outstanding shares of Class A Common Stock and Class C Common Stock, as would
entitle such holders to cast, in the aggregate, 60% of the total number of
votes therefor; provided, that as long as the Class A Common Stock is listed
on the American Stock Exchange and if necessary to maintain the listing of the
Class A Common Stock on the American Stock Exchange or if at any time the
holders of Class B Common Stock shall be entitled to cast more than ten votes
for every one of the Class A Common Stock, then the Class B Common Stock shall
be entitled to no more than ten votes per share. Notwithstanding the
foregoing, from and after the resignation (provided, however, that the
expiration of the term of the Employment Agreement shall not, in and of
itself, be deemed a resignation), or Removal for Cause or retirement of Howard
M. Meyers as Chief Executive Officer of the Corporation or the death or
Permanent Disability of Howard M. Meyers, or such time as more than 1,362,676
shares (as such number may be adjusted from time to time under Article 5.5(a))
of Class B Common Stock have been converted into Class A Common Stock, the
holders of the outstanding Class B Common Stock shall be entitled to one vote
per share on all matters other than the election of directors voting together
with the holders of the Class A Common Stock and Class C Common Stock and not
as a separate class; provided, that if at any time within five years after
Howard M. Meyers is deemed Permanently Disabled, the Panel determines that
Howard M. Meyers is not Permanently Disabled, the holders of Class B Common
Stock shall then be entitled to the votes per share described in the first
sentence of this Article 5.3.3(a)(i).
(ii) The holders of the shares of Class B Common Stock shall be entitled
to vote on, as a class, and the approval of the holders of a majority of such
shares of Class B Common Stock shall be required for, (A) any merger,
consolidation or reorganization of the Corporation with or into another
corporation in which the Corporation is not the surviving entity in such
merger, consolidation or reorganization (other than a merger or reorganization
of the Corporation for the purpose of reincorporation in another state which
does not adversely affect the rights of holders of Class B Common Stock), (B)
any dissolution or liquidation by dividend or otherwise of the Corporation,
(C) any sale, assignment, or other disposition of (other than a sale,
assignment or disposition of (r) property subject to an Amoco Tax Lease
Agreement or (s) any Amoco Tax Lease Agreement, occurring by reason of action
taken pursuant to a mortgage or similar security instrument placed on (i) the
property subject to the Amoco Tax Lease Agreements or (ii) any Amoco Tax Lease
Agreement) the Corporation's interest in (1) any property that is subject to
an Amoco Tax Lease Agreement or (2) any Amoco Tax Lease Agreement, unless (a)
such sale, assignment, or other disposition fully complies with the terms of
the applicable Amoco Tax Lease Agreement, the provisions of Section 168(f)(8)
of the Code, as in effect on the dates on which the Amoco Tax Lease Agreements
were entered into, and the U.S. Income Tax Regulations promulgated thereunder
from time to time (whether in temporary, proposed, or final form (the
"Regulations")), and (b) any purchaser, assignee, or transferee of any such
interest agrees in writing prior to such sale, assignment or other disposition
(x) to take such property subject to the applicable Amoco Tax Lease Agreement
within the meaning of Section 5c.168(f)(8)-2 of the Regulations, (y) to take
any action, including the filing of any statement with its Federal income tax
return or the furnishing of any written consent or statement to any person,
necessary in order to preserve the character of the applicable Amoco Tax Lease
Agreement as a lease for United States Federal income tax purposes in
accordance with Section 168(f)(8) of the Code as in effect on the dates on
which the Amoco Tax Lease Agreements were entered into (in each case under
this clause as provided in Section 168(f)(8) of the Code, as in effect on the
dates on which the Amoco Tax Lease Agreements were entered into, or the
Regulations promulgated thereunder from time to time) and (z) to comply fully
with each undertaking agreed to by Bayou Steel Acquisition Corporation in
Sections 7.9(f), 7.9(g), 7.9(h), 7.9(j), 7.9(k), 7.9(l), 7.9(m), 7.9(n), 7.5(b),
7.5(c) and 7.6 of the Acquisition Agreement as if such purchaser, assignee or
transferee were therein named. The voting requirements of this Article
5.3.3(a)(ii) shall apply whether or not the Corporation is insolvent.
Additionally, no voting rights shall be conferred upon the holders of any bonds,
debentures or other obligations issued by the Corporation or any other person
which would adversely affect the rights of the holders of the Class B Common
Stock in any respect. The provisions of this Article 5.3.3(a)(ii) shall not
require a shareholder vote in connection with the granting of any mortgage or
other security interest pursuant to or in connection with the Senior Note
Indenture.
(b) Right to Elect Directors. The holders of the shares of Class B Common
Stock shall have the right solely to vote for and elect, as a class, that
number of directors which, rounded to the nearest whole number, represents 60%
of the number of directors then comprising the Board of Directors, and to
remove such directors with or without cause at any time and to fill all
vacancies in such directorships; provided, however, as long as the Class A
Common Stock is listed on the American Stock Exchange and in order to maintain
such listing, then from and after the time that the number of outstanding
shares of Class B Common Stock is less than 12.5% of the aggregate number of
outstanding shares of Common Stock, the Class B Common Stock will vote as one
class with the Class A Common Stock for the election of such 60% of the Board
of Directors, with the Class B Common Stock having ten votes per share and the
Class A Common Stock having one vote per share. Notwithstanding the foregoing,
however, from and after the resignation (provided, however, that the
expiration of the term of the Employment Agreement shall not, in and of
itself, be deemed a resignation), or Removal for Cause or retirement of Howard
M. Meyers as Chief Executive Officer of the Corporation, or death or Permanent
Disability of Howard M. Meyers (except with respect to the cessation of
Permanent Disability pursuant to Article 5.3.3(a)(i) above) or such time as
more than 1,362,676 shares (as such number may be adjusted from time to time
under Article 5.5(a)), of Class B Common Stock have been converted into Class
A Common Stock, the holders of the outstanding Class B Common Stock shall be
entitled to one vote per share, voting together with the holders of the Class
A Common Stock and the Class C Common Stock and not as a separate class, in
the election of directors of the Corporation. The foregoing rights of the
holders of Class B Common Stock to elect directors, as a class, are modified
by and subject to the provisions of Article 5.4.3(c).
5.4 Class C Common Stock.
5.4.1 Dividends. The holders of the outstanding shares of Class C Common
Stock shall be entitled to receive dividends as and when declared by the Board
of Directors out of funds legally available therefor in amounts per share equal
to the amounts per share declared for the Class A Common Stock and Class B
Common Stock; provided that dividends shall be declared or funds set aside for
the payment on the Class C Common Stock only if dividends are declared and funds
set aside concurrently on the Class A Common Stock and Class B Common Stock.
5.4.2 Conversion. The holders of the outstanding shares of Class C Common
Stock will not be entitled to convert such shares into any other class of stock
of the Corporation. No holder of shares of any other class of stock of the
Corporation or any obligations of the Corporation or any other person shall have
or may be given the right to convert such shares of stock or obligations into
shares of Class C Common Stock.
5.4.3 Voting Rights.
(a) Subject to the provisions of this Certificate of Incorporation relating
to class voting and Article 5.4.3(c) hereof, the holders of the Class C Common
Stock shall be entitled to one vote per share voting together with the holders
of the Class A Common Stock and the Class B Common Stock and not as a separate
class, unless otherwise required by law.
(b) The holders of the shares of Class C Common Stock shall be entitled to
vote on, as a class, and the approval of 100% of the holders of such shares of
Class C Common Stock shall be required for (i) any merger, consolidation or
reorganization of the Corporation with or into another corporation in which the
Corporation is not the surviving entity in such merger, consolidation or
reorganization (other than a merger or reorganization of the Corporation for the
purpose of reincorporation in another state which does not adversely affect the
rights of the holders of the Class C Common Stock), (ii) any dissolution or
liquidation by dividend or otherwise of the Corporation, (iii) any sale,
assignment, or other disposition of (other than a sale, assignment or
disposition of (a) property subject to an Amoco Tax Lease Agreement or (b) any
Amoco Tax Lease Agreement, occurring by reason of action taken pursuant to a
mortgage or similar security instrument placed on (r) the property subject to
the Amoco Tax Lease Agreements or (s) any Amoco Tax Lease Agreement, the
Corporation's interest in (A) any property that is subject to an Amoco Tax Lease
Agreement or (B) any Amoco Tax Lease Agreement, unless (1) such sale,
assignment, or other disposition fully complies with the terms of the applicable
Amoco Tax Lease Agreement, the provisions of Section 168(f)(8) of the Code, as
in effect on the dates on which the Amoco Tax Lease Agreements were entered
into, and the Regulations promulgated thereunder from time to time, and (2) any
purchaser, assignee, or transferee of any such interest agrees in writing prior
to such sale, assignment or other disposition (x) to take such property subject
to the applicable Amoco Tax Lease Agreement within the meaning of Section
5c.168(f)(8)-2 of the Regulations, (y) to take any action, including the filing
of any statement with its Federal income tax return or the furnishing of any
written consent or statement to any person, necessary in order to preserve the
character of the applicable Amoco Tax Lease Agreement as a lease for United
States Federal income tax purposes in accordance with Section 168(f)(8) of the
Code, as in effect on the dates on which the Amoco Tax Lease Agreements were
entered into (in each case under this clause as provided in Section 168(f)(8) of
the Code, as in effect on the dates on which the Amoco Tax Lease Agreements were
entered into, or the Regulations promulgated thereunder from time to time) and
(z) to comply fully with each undertaking agreed to by Bayou Steel Acquisition
Corporation in Sections 7.9(f), 7.9(g), 7.9(h), 7.9(j), 7.9(k), 7.9(l), 7.9(m),
7.9(n), 7.5(b), 7.5(c) and 7.6 of the Acquisition Agreement as if such
purchaser, assignee or transferee were therein named, and (iv) any amendment to
this Certificate of Incorporation that would increase the number of authorized
shares of Class C Common Stock, modify Article 5.4 in any way or adversely
affect the rights of the holders of Class C Common Stock in any respect. The
voting requirements of this Article 5.4.3(b) shall apply whether or not the
Corporation is insolvent. Additionally, no voting rights shall be conferred upon
the holders of any bonds, debentures or other obligations issued by the
Corporation or any other person which would adversely affect the rights of the
holders of the Class C Common Stock in any respect. The provisions of this
Article 5.4.3(b) shall not require a shareholder vote in connection with the
granting of any mortgage or other security interest pursuant to or in connection
with the Senior Note Indenture.
(c) If any corporation or affiliated group, as defined in Section
338(h)(5) of the Code, or any comparable provision of any superseding Federal
tax statute, and the Regulations promulgated thereunder from time to time (a
"Third Party Purchaser") acquires directly or indirectly through any other
entity, person, agent, or nominee, by any means (including, but not limited
to, a redemption of shares of the stock of the Corporation held by any other
person) any share or shares of the stock of the Corporation which, when
aggregated with all other shares of the stock of the Corporation held by such
Third Party Purchaser, would, but for this Article 5.4.3(c), allow such Third
Party Purchaser to possess, directly or indirectly, in the aggregate at least
that percentage of the Total Combined Voting Power (as defined below) which is
equal to the percentage determined by subtracting two percentage points from
the Minimum Percentage (as defined below), then, and for so long as possession
of such percentage is maintained, the outstanding shares of Class C Common
Stock shall, in the aggregate, automatically possess that percentage of that
Total Combined Voting Power which is equal to the sum of one percent plus the
difference between 100 percent and the Minimum Percentage, such increase in
voting power to become effective simultaneously with the acquisition by such
Third Party Purchaser of any share or shares of the stock of the Corporation
which, when aggregated with all other shares of the stock of the Corporation
held by such Third Party Purchaser, would allow such Third Party Purchaser to
possess, directly or indirectly, in the aggregate at least two percentage
points less than the Minimum Percentage of the Total Combined Voting Power.
Possession of such percentage of Total Combined Voting Power by the holders of
the Class C Common Stock shall mean with respect to the election of directors
that (i) if the holders of the shares of Class A Common Stock, Class B Common
Stock and Class C Common Stock have, at the time of any election of directors,
the right to elect the entire Board of Directors voting together and not as
separate classes, the holders of the Class C Common Stock shall be entitled to
cast the percentage of votes in such election as is equal to the sum of one
percent plus the difference between 100 percent and the Minimum Percentage and
(ii) if Class A Common Stock, Class B Common Stock or Preferred Stock have, at
the time of any any election of directors, the right to elect, by class vote,
any directors of the Corporation, the holders of the Class C Common Stock shall
have the sole right to vote for and elect, as a class, one percent plus the
difference between 100 percent and the Minimum Percentage of the number of
directors of the Corporation (rounded up to the nearest whole number) and to
remove such directors with or without cause at any time and to fill all
vacancies in such directorship and, if required to permit such election, the
number of directors which the holders of the Class B Common Stock are entitled
to elect as a class pursuant to Article 5.3.3(b) shall be reduced to the extent
necessary. Such right of the Class C Common Stock to elect directors as a class
shall be eliminated upon the effectiveness of any registration statement
relating to the Class A Common Stock under the Federal securities laws.
Additionally, such right of the Class C Common Stock to elect directors, as a
class, shall be eliminated and such increased voting power shall be reduced to
the number of votes to which such shares of Class C Common Stock otherwise would
be entitled but for this Article 5.4.3(c) upon the occurrence of any of the
following events, but only for so long as the circumstances or agreements
contemplated by such event exist or are fully complied with by such Third Party
Purchaser:
(i) such Third Party Purchaser enters into a written agreement with the
holder of the then outstanding shares of Class C Common Stock (x) not to make
an election pursuant to Section 338 of the Code, or any comparable provision
of any superseding Federal tax statute, and the Regulations promulgated
thereunder (the "Section 338 Election") with respect to the Corporation, (y)
not to, and to cause the Corporation not to, take or fail to take any action
if the taking of such action or the failure to take such action would result
in a deemed Section 338 Election pursuant to Section 338(e) or (f) of the
Code, or any comparable provision of any superseding Federal tax statute, and
the Regulations promulgated thereunder, and (z) to file with the Internal
Revenue Service, at the request of the holders of the then outstanding shares
of Class C Common Stock, any and all documents evidencing its decision (A) not
to make a Section 338 Election, including, but not limited to a "protective
carryover election," as defined in Section 1.338-4T(f)(6) of the Regulations,
and (B) not to, and to cause the Corporation not to, take, or fail to take,
any action if the taking of such action or failure to take such action would
result in a deemed Section 338 Election, or
(ii) such Third Party Purchaser furnishes to the holders of the then
outstanding shares of Class C Common Stock an irrevocable letter of credit,
for a term ending December 31, 2003, in favor of such holders and reasonably
satisfactory in form and substance to such holders, issued by a U.S. financial
institution that is acceptable to such holders in an amount at least
sufficient, in the reasonable opinion of such holders, to reimburse them on a
net after-tax basis for any payments any or all of them would be required to
make to any party pursuant to any or both of the letters dated November 11,
1981 and December 7, 1981, respectively, to Amoco Tax Leasing I Corporation
from Voest-Alpine A.G., Voest-Alpine International Corporation, and certain
other corporations, or any successor or substitute letter thereto, as a result
of a Section 338 Election being made, or deemed made, by such Third Party
Purchaser with respect to the Corporation, or
(iii) at any time after the last date on which a Section 338 Election may
be made, or deemed made, with respect to the Corporation as a result of a
"qualified stock purchase," as defined in Section 338(d)(3) of the Code, or
any comparable provision of any superseding Federal tax statute, of the stock
of the Corporation, which purchase occurs during the term of any of the Amoco
Tax Lease Agreements.
The "Minimum Percentage" shall be the percentage of the Total Combined
Voting Power of all classes of stock of a corporation entitled to vote that is
required under Section 338(d)(3)(a) of the Code for purposes of a "qualified
stock purchase" as defined in said Section.
The "Total Combined Voting Power" shall be the total combined voting power
of all classes of stock of the Corporation entitled to vote as determined in
the manner provided in Section 338 of the Code, or any comparable provision of
any superseding Federal tax statute.
5.5 Relative Rights of Class A Common Stock and Class B Common Stock. (a)
The Corporation shall not (i) declare or pay to the holders of Class A Common
Stock or Class B Common Stock a dividend or other distribution payable in
stock or securities of the Corporation, (ii) subdivide the outstanding shares
of Class A Common Stock or Class B Common Stock into a greater number of
shares of Class A Common Stock or Class B Common Stock, (iii) combine the
outstanding shares of Class A Common Stock or Class B Common Stock into a
lesser number of shares, or (iv) issue by reclassification of its shares of
Class A Common Stock or Class B Common Stock any shares of the Corporation,
unless, in each case, the Corporation shall effect concurrently an equivalent
dividend, distribution, subdivisions, combination or reclassification with
respect to Class A Common Stock and Class B Common Stock.
(b) Except as permitted by Article 5.5(a), the Corporation shall not issue
additional shares of Class A Common Stock for any reason unless it offers to
the holders of Class B Common Stock the right to purchase all or any part of
such additional shares of Class B Common Stock, in such amount as to maintain
after the issuance the ratio that the number of shares of Class B Common Stock
bears to the aggregate number of shares of Common Stock outstanding
immediately prior to the issuance of the shares of Class A Common Stock, for
such consideration per share equal to the fair market value of the
consideration per share being paid for the Class A Common Stock being issued.
If such consideration is other than cash, the Corporation shall determine the
fair market value thereof, which determination shall be final and conclusive.
(c) No additional shares of Class B Common Stock shall be issued except in
order to satisfy the adjustment requirements of this Article 5.5.
5.6 Series Preferred Stock. The Board of Directors of the Corporation,
with the approval of all of the directors elected by the holders of each of
the Class A Common Stock and the Class B Common Stock (or only a majority of
the entire Board of Directors if directors are no longer elected by class), is
authorized, subject to the limitations prescribed by law or this Certificate
of Incorporation and the provisions of this Article 5.6, to provide for the
issuance from time to time in one or more series of any number of shares of
Series Preferred Stock, and, by filing a certificate pursuant to the Delaware
General Corporation Law, to establish the number of shares to be included in
each such series, and to fix the designation, relative rights, preferences,
qualifications and limitations of the shares of each such series. The
authority of the Board of Directors with respect to each series shall include,
but not be limited to, determination of the following:
(i) The number of shares constituting that series and the distinctive
designation of that series;
(ii) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and whether they
shall be payable in preference to, or in another relation to, the dividends
payable on any other class or classes or series of stock;
(iii) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(iv) Whether that series shall have conversion or exchange privileges,
and, if so, the terms and conditions of such conversion or exchange, including
provision for adjustment of the conversion or exchange rate in such events as
the Board of Directors shall determine;
(v) Whether or not the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the manner of
selecting shares for redemption if less than all shares are to be redeemed,
the date or dates upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(vi) Whether that series shall be entitled to the benefit of a sinking
fund to be applied to the purchase or redemption of shares of that series,
and, if so, the terms and amounts of such sinking fund;
(vii) The right of the shares of that series to the benefit of conditions
and restrictions upon the creation of indebtedness of the Corporation or any
subsidiary, upon the issue of any additional stock (including additional shares
of such series or of any other series) and upon the payment of dividends or the
making of other distributions on, and the purchase, redemption or other
acquisition by the Corporation or any subsidiary of any outstanding stock of the
Corporation;
(viii) The right of the shares of that series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and whether such rights shall be in preference to, or in another
relation to, the comparable rights of any other class or classes or series of
stock; and
(ix) Any other relative, participating, optional or other special rights,
qualifications, limitations or restrictions of that series.
Shares of any series of Series Preferred Stock which have been redeemed
(whether through the operation of a sinking fund or otherwise) or which, if
convertible or exchangeable, have been converted into or exchanged for shares
of stock of any other class or classes shall have the status of authorized and
unissued shares of Series Preferred Stock of the same series and may be
reissued as a part of the series of which they were originally a part or may
be reclassified and reissued as part of a new series of Series Preferred Stock
to be created by resolution(s) of the Board of Directors or as part of any
other series of Series Preferred Stock, all subject to the conditions and the
restrictions on issuance set forth in the resolution(s) adopted by the Board
of Directors providing for the issue of any series of Series Preferred Stock.
5.7 Special Meetings of Stockholders to Elect Directors. As promptly as
practicable after the time when (i) the holders of the Class B Common Stock
become entitled to only one vote per share, voting together as one class with
the holders of the Class A and Class C Common Stock, or (ii) a panel
determination of Howard M. Meyer's Permanent Disability is made pursuant to
Article 5.3.3(a)(i), a special meeting of the stockholders shall be called for
the purpose of electing new directors. At that time, or as soon as permitted
by applicable law, the terms of the office of the directors then in office
shall terminate and new directors shall be elected in accordance with the
provisions of this Certificate of Incorporation.
5.8 Amendment to Certificate of Incorporation. Any amendment to this
Certificate of Incorporation which would adversely affect the rights of any
class of stock of the Corporation shall require the affirmative vote of
holders of a majority of shares of stock of such class, voting as a single
class.
5.9 Restrictions on Transfers of Class A Common Stock and Class B Common
Stock.
(a) Any attempted sale, transfer, assignment, conveyance, pledge or other
disposition of any share of the Corporation's Class A or Class B Common Stock
or any option to purchase such Class A or Class B Common Stock (or similar
right described in Sections 382(k)(6)(B) or 382 (l) of the Code and the
regulations thereunder) to any person (a "Person," which term shall have the
meaning set forth in Section 2(2) of the Securities Act of 1933, as amended)
who directly or indirectly, beneficially owns (as determined pursuant to Rules
13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended), or, as
a result of such attempted disposition, would beneficially own, or whose
shares would be attributed pursuant to the applicable attribution provisions
of the Code to any Person who would so directly or indirectly beneficially
own, after giving effect to the applicable attribution provisions of the Code,
5% or more of the fair market value of the Corporation's Class A Common Stock
outstanding shall be null and void AB INITIO insofar as it purports to
transfer ownership of any shares that would cause the transferee to attain
such 5% ownership level or if such transferee owned Class A or Class B Common
Stock with a fair market value equal to 5% or more of the fair market value of
the Corporation's Class A Common Stock prior to the attempted disposition, the
entire attempted disposition shall be null and void AB INITIO.
(b) Nothing contained in Article 5.9(a) shall prevent an otherwise valid
transfer if the transferee obtains the written approval of all of the directors
elected by the holders of each of the Class A Common Stock and Class B Common
Stock (or only a majority of the entire Board of Directors if directors are no
longer elected by class) and, except to the extent the Board of Directors of the
Corporation in its discretion waives the requirement, provides the Corporation
with an opinion of reputable tax counsel satisfactory to the Corporation and its
tax counsel that the transfer shall not result in the application of any tax law
limitation on the use of the Corporation's losses of other tax attributes.
Notwithstanding the foregoing, Article 5.9(a) shall not apply to (i) the
issuance of shares of Common Stock in the merger of Bayou Steel Corporation (of
La Place), a Louisiana corporation, into the Corporation, provided that any
increase in the ownership of Common Stock by Persons who receive such shares in
the merger is subject thereto; (ii) any transfer of shares of Class B Common
Stock in accordance with clause (i) Article 6(a) hereof; (iii) any issuance of
shares of Common Stock to the shareholders of RSR Steel Corporation in a merger
with the Corporation or in connection with the sale of all or substantially all
of the assets of RSR Steel Corporation to the Corporation, provided that all of
the Class B Common Stock of the Corporation (and no other stock of the
Corporation) is owned by RSR Steel Corporation, that the issuance of such shares
shall not result in the application of any tax law limitation on the use of the
Corporation's losses or other tax attributes, that any increase in the ownership
of Common Stock by persons who receive such shares pursuant to the merger over
the amount of stock held by RSR Steel Corporation at the time of the merger is
subject thereto and that any other increase in the ownership of Common Stock by
persons who receive such shares is subject thereto; and (iv) any conversion of
Class B Common Stock into shares of Class A Common Stock pursuant to the
provisions of Article 5.3.2 hereof to the extent that the shares of Class A
Common Stock received upon conversion are owned by the same Person who effected
the conversion.
(c) No employee or agent, including any independent transfer agent or
registrar, of the Corporation shall be permitted to record any attempted or
purported transfer made in violation of this Article 5.9 and no intended
transferee of shares of Common Stock of the Corporation attempted to be
transferred in violation of this Article 5.9 shall be recognized as a holder
of such shares for any purpose whatever, including, but not limited to, the
right to vote such shares of capital stock of the Corporation or to receive
dividends or other distributions in respect thereof, if any. Any such intended
transferee shall be deemed to have appointed the Corporation as
attorney-in-fact, with full power of substitution and full power and
authority, in the name and on behalf of the intended transferee, to sell,
assign and transfer the shares of Common Stock of the Corporation attempted to
be transferred in violation of this Article 5.9, and to do all lawful acts and
execute all documents deemed necessary or advisable to effect such sale,
assignment and transfer, in an arm's length transaction, to another Person;
provided that the sale, assignment and transfer to such other Person does not
violate the provisions of this Article 5.9. The Corporation shall apply the
proceeds of any such sale first, to pay the expenses of the sale; second, to
pay the intended transferee on whose behalf the shares were sold, an amount
equal to (i) the sum of the intended transferee's cost of such shares
(inclusive of brokerage fees and expenses), plus interest on such cost at the
then minimum rate of interest which would prevent interest on a non-interest
bearing obligation from being imputed by the Internal Revenue Service, less
the amount of any dividends or other distributions inadvertently paid to said
intended transferee in respect of such shares, or (ii) the balance of such
proceeds, whichever is less; and third, the balance of such proceeds if any,
shall be paid to the Corporation. The Corporation shall take all appropriate
legal action to enforce the provisions of this Article 5.9 in every case where
there has been an attempted or purported transfer made in violation hereof. In
taking any action hereunder, the Corporation, and its directors, officers and
agents, will be fully protected in relying upon any notice, paper or other
document reasonably believed by the Corporation or any such person to be
genuine and sufficient, and, to the extent permitted by law, in no event shall
the Corporation, or any of its directors, officers or agents be liable for any
act performed or omitted to be performed hereunder in the absence of gross
negligence or willful misconduct. The Corporation and its directors, officers
and agents may consult with counsel in connection with its duties hereunder
and, to the extent permitted by law, each shall be fully protected by any act
taken, suffered or permitted in good faith in accordance with the advice of
such counsel.
(d) The by-laws of the Corporation shall make appropriate provisions to
effectuate the requirements of this Article 5.9.
(e) All certificates evidencing ownership of shares of Common Stock of the
Corporation shall bear a conspicuous legend as follows:
"THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS SET
FORTH IN THE CERTIFICATE OF INCORPORATION OF THE CORPORATION, A COPY OF WHICH
IS AVAILABLE FOR INSPECTION AT THE CORPORATION'S PRINCIPAL PLACE OF BUSINESS
LOCATED AT RIVER ROAD (P.O. BOX 5000), LA PLACE, LOUISIANA 70068."
(f) The restrictions on transfers set forth in this Article 5.9 shall
remain in effect until December 31, 2003.
(g) The restrictions on transfer set forth in this Article 5.9 do not
apply to the Class C Common Stock and do not and are not intended to affect
the Class C Common Stock in any way.
6. Restrictions On Transfer of Class B Common Stock. (a) Except for
transfers (i) to or for the benefit of any direct or indirect beneficial
holder of the Class B Common Stock or the immediate family (such term having
the meaning of closer than second cousin) of any such stockholder so long as
such direct or indirect beneficial holder or its immediate family retains all
the attributes of such direct or indirect beneficial ownership of such Class B
Common Stock or (ii) approved by the holders of 75% of the then outstanding
Class A Common Stock, shares of Class B Common Stock are not transferable
except as provided in Article 6(b).
(b) Shares of Class B Common Stock are transferrable only upon conversion
of such shares into Class A Common Stock and provided no acceleration of any
indebtedness of the Corporation shall occur solely as a result of such
conversion and transfer. Notwithstanding the foregoing, in any sale
transaction or series of related transactions which result in more than
1,362,676 (as such number may be adjusted from time to time under Article
5.5(a)) of Class B Common Stock being converted into Class A Common Stock
where the highest consideration per share of Class A Common Stock received in
such transaction(s) exceeds the fair market value of a share of Class A Common
Stock, the entity which acquires the shares of Class A common Stock shall give
a written undertaking to the Corporation that if, within 24 months after such
sale, such entity makes a public tender offer or other proposal to acquire all
or any portion of the remaining Class A Common Stock, the consideration to be
paid by such entity shall not be less than the highest consideration per share
paid in such Class A Common Stock transaction. In computing the amount of
consideration to be offered to holders of Class A Common Stock pursuant to
this Article 6(b), all amounts to be paid to, or value to be received by, the
transferor in connection with such transfer shall be included.
7. Mergers and Acquisitions; Sales and Purchases of Property; Issuance of
Shares; and Amendments to Certificate of Incorporation. (a) Subject to the
provisions of Articles 5.3.3(a)(ii) and 5.4.3(b), without the consent of
holders of Common Stock having 80% or more of the number of votes that may be
cast for all matters other than the election of directors, voting together as
one class, the Corporation shall not (A) merge with or into another
corporation, other than a direct or indirect Subsidiary of the Corporation,
(B) acquire assets of any other person the amount of which exceeds 20% of the
Corporation's Consolidated Net Worth prior to the acquisition, except in the
case of capital expenditures or inventory in the ordinary course of business,
unless all of the directors elected by holders of each of the Class A Common
Stock and Class B Common Stock (or only a majority of the entire Board of
Directors if directors are no longer elected by class), shall have approved of
the matter, (C) dispose of assets of the Corporation the amount of which
exceeds 20% of the Corporation's Consolidated Net Worth, other than in the
ordinary course of business, (D) purchase any equity interest (or any interest
convertible into an equity interest) in any corporation or partnership, the
amount of which exceeds 20% of the Corporation's Consolidated Net Worth prior
to the acquisition, unless all of the directors elected by holders of each of
the Class A Common Stock and Class B Common Stock (or only a majority of the
entire Board of Directors if directors are no longer elected by class) shall
have approved of the matter, or (E) amend the Certificate of Incorporation.
The Corporation shall not issue or sell or permit the issuance or sale of, or
grant any right to subscribe for or to purchase any options for the purchase
of any shares of stock or other equity interest (or any interest convertible
into an equity interest) in the Corporation, unless all of the directors
elected by holders of each of the Class A Common Stock and Class B Common
Stock (or only a majority of the entire Board of Directors if directors are no
longer elected by class) have approved.
(b) Subject to the provisions of Articles 5.3.3(a)(ii) and 5.4.3(b), but
notwithstanding any other provision of this Certificate of Incorporation, no
stockholder consent shall be required for (i) the Corporation to grant any
mortgages, pledges, assignments for security purposes, or other security
interests affecting all or any part of the Corporation's property, or (ii) the
transfer of title to the Corporation's property resulting from the enforcement
of such security rights.
8. Special Meeting of Stockholders. In addition to the special meetings of
stockholders which may be held pursuant to Article 5.7 hereof, special
meetings of stockholders of the Corporation may be called by holders of Common
Stock having 10% or more of the number of votes that may be cast for all
matters other than the election of directors.
9. Number of Directors. The Board of Directors shall consist of seven
directors; provided, however, that until such time as more than 1,362,676
shares (as such number may be adjusted from time to time under Article 5.5(a))
of Class B Common Stock have been converted into Class A Common Stock, the
number of directors may be increased to ten by the vote of a majority of the
directors elected by the holders of each of the Class A Common Stock and Class
B Common Stock.
10. Acquisition Agreement, Employment Agreement and Other Agreements. The
Acquisition Agreement, the Employment Agreement, the Amoco Tax Lease
Agreements and the letters dated November 11, 1981 and December 7, 1981,
respectively, to Amoco Tax Leasing I Corporation from Voest-Alpine A.G.,
Voest-Alpine International Corporation, and certain other corporations, shall
be kept on file at the offices of the Corporation and made available to the
stockholders for their inspection during normal business hours.
11. Election of Directors. The election of the Board of Directors need not
be by written ballot.
12. Removal of Chief Executive Officer. During the term of the Employment
Agreement, the Chief Executive Officer may be removed only for "Cause" as
defined in paragraph 9 of the Employment Agreement and upon the mechanism
provided in the Employment Agreement. After the term of the Employment
Agreement, the Chief Executive Officer may be removed (a) without cause by the
affirmative vote of a majority of the directors of the Corporation or (b) for
"Cause" as defined in paragraph 9 of the Employment Agreement and upon the
mechanism provided in the Employment Agreement.
13. Indemnification.
(a) The Corporation shall indemnify to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law, as amended from time to
time, each person that such Section grants the Corporation the power to
indemnify.
(b) No director shall be personally liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director for any act or omission occurring subsequent to the date when this
provision becomes effective, except that such director may be liable (i) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any transaction from
which the director derived an improper personal benefit.
14. By-laws. The Board of Directors shall have the power to make, alter or
repeal the By-laws of the Corporation.
Dated: August 3, 1988
OTTO S. SPRAGUE, Vice President
Attest: HOWARD B. MYERS,
Secretary
EXHIBIT 3.2
CERTIFICATE OF DESIGNATIONS
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
-----------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "BAYOU STEEL CORPORATION", FILED IN THIS OFFICE ON THE TWENTIETH
DAY OF JUNE, A.D. 1995, AT 3 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
EDWARD J. FREEL
Edward J. Freel, Secretary of State
2161945 8100 AUTHENTICATION: 7546297
950137257 DATE: 06-20-95
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:00 PM 06/20/1995
950 137257 - 2161945
STATEMENT OF DESIGNATIONS, PREFERENCES, LIMITATIONS
AND RELATIVE RIGHTS OF SERIES A PREFERRED
STOCK AND SERIES B PREFERRED STOCK
To the Secretary of State
of the State of Delaware:
Pursuant to the provisions of Section 151 of the Delaware General
Corporation Law of the state of Delaware and Section 5.6 of its Second Restated
Certificate of Incorporation, Bayou Steel Corporation, a Delaware corporation
(the "Company") submits the following statement for the purpose of establishing
a series of preferred stock and fixing and determining the designations,
preferences, limitations and relative rights thereof:
1. The name of the Company is "Bayou Steel Corporation".
2. The resolution establishing two series of preferred stock and fixing
and determining the designations, preferences, limitations and relative rights
thereof attached hereto as EXHIBIT A was duly adopted by all necessary action on
the part of the Company on June 13, 1995, and is incorporated herein by
reference.
BAYOU STEEL CORPORATION
By: RICHARD J. GONZALEZ
Name: Richard J. Gonzalez
Title: VP & CFO
- 1 -
<PAGE>
EXHIBIT A
RESOLUTION
WHEREAS, pursuant to Section 5.6 of the Company's Second Restated
Certificate of Incorporation, the Company's Board of Directors is expressly
authorized to establish series of unissued shares of preferred stock by fixing
and determining the designations, preferences, limitations and relative rights,
including voting rights, of the shares of any series so established;
NOW THEREFORE, BE IT RESOLVED, that (i) a series of preferred stock is
hereby established consisting of 15,000 shares of Series A redeemable preferred
stock, $.01 par value (the "SERIES A PREFERRED STOCK"), and (ii) a series of
preferred stock is hereby established consisting of 18,375 shares of Series B
redeemable preferred stock, $.01 par value (the "SERIES B PREFERRED STOCK"),
each such series of preferred stock having the designations, preferences,
limitations and relative rights herein set forth below:
DESIGNATIONS, PREFERENCES, LIMITATIONS
AND RELATIVE RIGHTS OF SERIES A PREFERRED
STOCK AND SERIES B PREFERRED STOCK
Section 1. DEFINITIONS. For purposes of this Resolution, the following
definitions shall apply:
"BOARD" shall mean the Board of Directors of the Company.
"COMMON STOCK" shall mean the Class A Common Stock, Class B
Common Stock and Class C Common Stock of the Company. Except as otherwise
expressly provided herein, for purposes of calculating any ownership of any
class of Common Stock by a record owner of Common Stock, such ownership shall
include any Common Stock issuable upon the exercise, conversion or exchange of
any Equity Security.
"COMPANY" shall mean Bayou Steel Corporation, a Delaware
corporation.
"DIVIDEND RATE" shall mean (a) so long as no Issuance Event has
occurred and is continuing, a rate of 14.5% of the liquidation preference per
annum per Preferred Share, and (b) upon the occurrence and during the
continuance of an Issuance Event, an annual rate of 17.5% of the liquidation
preference per annum per Preferred Share.
"EQUITY SECURITY" shall mean any stock or other security of the
Company, including without limitation securities containing equity features and
securities containing profit participation features, and any debt or equity
security convertible or exchangeable, with or without consideration, into or for
any stock or similar security, or any security carrying any warrant, option or
right to subscribe to or purchase any of the foregoing.
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"INITIAL ISSUE DATE" shall mean the initial date of issuance of
the Series A Preferred Stock.
"ISSUANCE EVENT" shall mean the failure for any reason
(including, without limitation, insufficiency of legally available funds) of the
Company to pay the full redemption amounts required pursuant to SECTION 5(B)
hereof.
"JUNIOR SECURITIES" shall mean all Equity Securities, whether
issued or to be issued, to which the Series A Preferred Stock and Series B
Preferred Stock rank prior with respect to the payment of dividends or the
distribution of assets upon Liquidation, including without limitation the Common
Stock.
"LIQUIDATION" means any liquidation, dissolution or winding up of
the affairs of the Company; provided, however that a merger or consolidation of
the Company into or with another entity or a sale or conveyance of all or any
part of the assets of the Company (which does not in fact result in the
liquidation of the Company and the distribution of assets to its stockholders)
will not be deemed to constitute a liquidation, dissolution or winding up of the
affairs of the Company for the purposes of this definition.
"PERSON" shall include all natural persons, corporations,
business trusts, associations, companies, partnerships, joint ventures and other
entities and governments and agencies and political subdivisions.
"PREFERRED SHARES" shall mean the shares of Series A Preferred
Stock and Series B Preferred Stock.
"REDEMPTION AMOUNT" shall mean an amount per share equal to the
liquidation preference of the Series A Preferred Stock or the Series B Preferred
Stock, as applicable, plus all accrued but unpaid dividends with respect thereto
through the date of redemption.
"RICE" shall mean Rice Partners II, L.P.
"SERIES A PREFERRED STOCK" shall mean the Series A Redeemable
Preferred Stock of the Company.
"SERIES B PREFERRED STOCK" shall mean the Series B Redeemable
Preferred Stock of the Company.
"SUBSIDIARY" shall mean any corporation, partnership, joint
venture, association or other business entity at least fifty percent (50%) of
the outstanding voting stock, voting interests, capital or profits interest of
which is at the time owned directly or indirectly by the Company or by one or
more of such subsidiary entities, or both.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
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Section 2. RANK. The Series A Preferred Stock and the Series B Preferred
Stock shall, with respect to dividends and rights on Liquidation rank PARI PASSU
with each other and prior to all other Equity Securities. The Company shall not
authorize or issue any Equity Securities that rank senior to or PARI PASSU with
the Series A Preferred Stock or the Series B Preferred Stock with respect to
dividends or rights on Liquidation.
Section 3. DIVIDENDS.
(a) RIGHT TO CUMULATIVE DIVIDENDS - SERIES A PREFERRED STOCK. The
holders of the then outstanding Series A Preferred Stock shall be entitled to
receive, when and as declared by the Board, and out of any funds legally
available therefor, quarterly dividends at the applicable Dividend Rate, payable
in the number of shares of Series B Preferred Stock (which do not have to be in
the form of certificated securities) having an aggregate liquidation preference
equal to the amount of such dividend on the last day of March, June, September
and December of each year commencing June, 1995 (PROVIDED, HOWEVER, that
accumulated and unpaid dividends will bear interest at a rate not greater than
14.5% per annum until September 30, 1995), to the holders of record on the date
immediately preceding the payment date. Dividends on the Series A Preferred
Stock will be cumulative from the Initial Issue Date (whether or not declared
and whether or not in any dividend period or dividend periods there are net
profits or net assets of the Company legally available for the payment of those
dividends).
(b) RIGHT TO CUMULATIVE DIVIDENDS - SERIES B PREFERRED STOCK. The
holders of the then outstanding Series B Preferred Stock shall be entitled to
receive, when and as declared by the Board, and out of any funds legally
available therefor, quarterly dividends at the applicable Dividend Rate, in cash
on the last day of March, June, September and December of each year commencing
June, 1995 (PROVIDED, HOWEVER, that accumulated and unpaid dividends will bear
interest at a rate not greater than 14.5% per annum until September 30, 1995) to
the holders of record on the date immediately preceding the payment date.
Dividends on the Series B Preferred Stock will be cumulative from the date of
issuance of each share of Series B Preferred Stock (whether or not declared and
whether or not in any dividend period or dividend periods there are net profits
or net assets of the Company legally available for the payment of those
dividends). Accumulated and unpaid dividends on the Series B Preferred Stock
will bear interest at a rate of 17.5% per annum (PROVIDED, HOWEVER, that
accumulated and unpaid dividends will bear interest at a rate not greater than
14.5% per annum until September 30, 1995).
(c) PRIORITY. For so long as any shares of Series A Preferred Stock or
Series B Preferred Stock are outstanding, (1) no dividend whatsoever shall be
paid or declared, and no distribution shall be made, on any Equity Security
other than the Series A Preferred Stock and the Series B Preferred Stock, and
(2) no Equity Security, other than the Series A Preferred Stock and the Series B
Preferred Stock shall be purchased, redeemed or acquired by the Company or any
Subsidiary and no monies shall be paid into or set aside or made available for a
sinking fund for the purchase, redemption or acquisition thereof by the Company
or any Subsidiary.
Section 4. LIQUIDATION RIGHTS.
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(a) In the event of any Liquidation whether voluntary or involuntary,
the holders of the Series A Preferred Stock and Series B Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Company
available for distribution to its stockholders, whether such assets are capital,
surplus, or earnings, prior to and in preference of any payment or declaration
and setting apart for payment of any amount shall be made in respect of any
other class of Equity Securities, an amount equal to the sum of (i) $1,000 per
share, PLUS (ii) all accrued and unpaid dividends thereon, whether or not
declared, to and including the date full payment shall be irrevocably tendered
to the holders of the Series A Preferred Stock and Series B Preferred Stock with
respect to such Liquidation. If upon any Liquidation, whether voluntary or
involuntary, the assets to be distributed to the holders of the Series A
Preferred Stock and Series B Preferred Stock shall be insufficient to permit the
payment of such stockholders of their full preferential amounts, then all
available assets of the Company shall be distributed ratably to the holders of
the Series A Preferred Stock and Series B Preferred Stock in proportion to the
full preference amount each such holder is entitled to receive.
(b) Preferences of the Series A Preferred Stock and Series B Preferred
Stock over the Equity Securities shall also apply to any stock hereafter
authorized, and all prohibitions, limitations or restrictions upon the
declaration or payment of any dividends upon, the making of any distribution of
assets upon, or the application of any assets to the purchase, redemption or
other acquisition of Equity Securities shall correspondingly apply to similar
action in respect of such Equity Securities.
Section 5. REDEMPTIONS.
(a) OPTIONAL REDEMPTION. Commencing on the first anniversary of the
Initial Issue Date, the Series A Preferred Stock and Series B Preferred Stock
may be redeemed at the Company's option (subject to the legal availability of
funds) at any time and from time to time, in whole or in part, but in any event
in increments of not less than the lesser of (a) $3,000,000.00 or (b) the amount
necessary to redeem all Series A Preferred Stock and Series B Preferred Stock,
at a redemption price per share equal to the following amounts, determined on
the date of redemption:
REDEMPTION DATE PRICE
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(i) On or after the first anniversary of the 113% of the Redemption
Initial Issue Date and before the second Amount
anniversary of the Initial Issue Date
(ii) On or after the second anniversary of the 108.3% of the Redemption
Initial Issue Date and before the third Amount
anniversary of the Initial Issue Date
(iii) On or after the third anniversary of the 105.5% of the Redemption
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Initial Issue Date and before the fourth Amount
anniversary of the Initial Issue Date
(iv) On or after the fourth anniversary of the 102.8% of the Redemption
Initial Issue Date and before the fifth Amount
anniversary of the Initial Issue Date
(v) On or after the fifth anniversary of the 100% of the Redemption
Initial Issue Date and before the seventh Amount
anniversary of the Initial Issue Date
(b) MANDATORY REDEMPTIONS. Commencing on the Initial Issue Date and
until the seventh anniversary of the Initial Issue Date, the Company shall
redeem at the end of each calendar quarter (subject to the legal availability of
funds and unless prohibited by the Senior Loan Documents or amendments or
refinancings thereof) all shares of the Series B Preferred Stock issued and
outstanding from time to time; PROVIDED, HOWEVER, that if the Company fails to
redeem any such shares in contravention of the Preferred Stock and Warrant
Purchase Agreement, dated as of June 13, 1995, between Rice and the Company (the
"PURCHASE AGREEMENT"), including, without limitation, failure to redeem any such
shares as a result of any amendment or refinancing that is in contravention of
Section 4.20(a) of the Purchase Agreement, the Holders (as defined in the
Purchase Agreement) shall be entitled to all rights and remedies at law or in
equity, including without limitation, any and all rights and remedies set forth
in the Purchase Agreement. In addition, on the seventh anniversary of the
Initial Issue Date, the Company shall redeem (subject to the legal availability
of funds) all issued and outstanding shares of Series A Preferred Stock and
Series B Preferred Stock.
(c) CONTINUING OBLIGATIONS. In the event any redemption required by this
SECTION 5 is not completed for any reason, the obligation of the Company to
redeem all or a portion of the Series A Preferred Stock and/or the Series B
Preferred Stock, as the case may be, will continue until the earliest time as
the circumstance preventing such redemption no longer exists, at which time the
Company will redeem such Series A Preferred Stock and/or the Series B Preferred
Stock, as the case may be. The Company will use its best efforts to make funds
legally available for such redemptions, including, without limitation, revaluing
assets of the Company.
(d) REDEMPTION NOTICE. The Company shall, not less than seven (7) days
nor more than fourteen (14) days prior to the date fixed for any redemption
pursuant to SECTION 5(A) ("REDEMPTION DATE"), mail written notice ("REDEMPTION
NOTICE"), postage prepaid, return receipt requested, to each holder of shares of
record of Series A Preferred Stock and Series B Preferred Stock to be redeemed
at such holder's address last shown on the records of the Company. The
Redemption Notice shall state:
(1) The total number of shares of Series A Preferred Stock and/or
Series B Preferred Stock that the Company intends to redeem;
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(2) The number of shares of Series A Preferred Stock and Series B
Preferred Stock held by the holder that the Company intends to redeem;
(3) The Redemption Date and Redemption Amount; and
(4) The time, place and manner in which the holder is to
surrender to the Company the certificate or certificates representing the shares
of Series A Preferred Stock and/or Series B Preferred Stock to be redeemed.
(e) SURRENDER OF STOCK. On or before the Redemption Date, each holder of
Series A Preferred Stock and/or Series B Preferred Stock to be redeemed shall
surrender the certificate or certificates (if any) representing such shares to
the Company, in the manner and at the place designated in the Redemption Notice,
and thereupon the Redemption Amount for such shares shall be payable to the
order of the person whose name appears on such certificate or certificates (or
that is entitled to such payment if there is no certificate) as the owner
thereof or such person's designee, and each surrendered certificate shall be
canceled and retired. In the event fewer than all of the shares represented by
such certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares.
(f) TERMINATION OF RIGHTS. If the Redemption Notice is duly given, and
if by the Redemption Date the Redemption Amount is either paid or made
irrevocably available for payment, then notwithstanding that the certificates
evidencing any of the shares of Series A Preferred Stock and Series B Preferred
Stock so called for redemption have not been surrendered, all rights with
respect to such shares shall forthwith after the Redemption Date cease, except
only the right of the holders to receive the Redemption Amount without interest
upon surrender of their certificates therefor.
(g) REDEMPTION PRO RATA. In the event that fewer than all of the
outstanding shares of Series A Preferred Stock and/or Series B Preferred Stock
are to be redeemed, such shares to be redeemed shall be redeemed pro rata among
all holders thereof in accordance with the number of shares owned.
(h) NO REISSUANCE OF SERIES A PREFERRED STOCK AND SERIES B PREFERRED
STOCK. No Series A Preferred Stock or Series B Preferred Stock acquired by the
Company by reason of redemption, purchase, or otherwise will be reissued, and
all such shares will be canceled, retired and eliminated from the shares that
the Company will be authorized to issue.
Section 6. LOST, STOLEN, MUTILATED, OR DESTROYED CERTIFICATES;
FRACTIONAL SHARES. If any certificate evidencing Series A Preferred Stock or
Series B Preferred Stock shall become lost, stolen, mutilated, or destroyed, the
Company shall issue a new certificate of like denomination, tenor, and date upon
receipt from the record owner of such Series A Preferred Stock or Series B
Preferred Stock of a representation of such loss, theft, mutilation or
destruction, without any requirement of bond or other extraordinary action. The
Company may issue fractional shares of Series A Preferred Stock and Series B
Preferred Stock.
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Section 7. AMENDMENT. So long as any shares of Series A Preferred Stock
or Series B Preferred Stock are outstanding, the Company shall not, without the
affirmative vote of the holders of at least a majority of the outstanding shares
of Series A Preferred Stock and Series B Preferred Stock at the time
outstanding, amend, alter or repeal any of the rights, preferences or powers of
the holders of the shares of Series A Preferred Stock or Series B Preferred
Stock.
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EXHIBIT 10.1
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
BAYOU STEEL CORPORATION
THE "COMPANY"
AND
RICE PARTNERS II, L.P.
THE "PURCHASER"
JUNE 13, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
----
Article I Definitions.................................................... 1
Article II The Warrant and Preferred Shares...............................15
2.01 The Warrant and Preferred Shares.........................15
2.02 Vesting of Second Warrants...............................15
2.03 Legend...................................................16
2.04 Exercise Price...........................................17
2.05 Exercise.................................................17
2.06 Taxes....................................................18
2.07 Register.................................................18
2.08 Transfer and Exchange....................................18
2.09 Adjustments to Number of Shares Purchasable..............18
2.10 Lost, Stolen, Mutilated, or Destroyed Instruments........22
2.11 Stock Legend.............................................22
Article III Representations and Warranties.................................22
3.01 Representations and Warranties of the Company............22
3.02 Representations and Warranties of the Purchaser..........29
Article IV Covenants......................................................30
4.01 Financial Statements.....................................30
4.02 Books and Records........................................31
4.03 Disclosure of Material Matters...........................32
4.04 Preservation of Existence and Conduct of Business........32
4.05 Maintenance of Properties................................32
4.06 Payment of Taxes and Claims..............................32
4.07 Payment of Expenses......................................32
4.08 Insurance................................................33
4.09 Notices..................................................33
4.10 Amendments to other Documents............................33
4.11 Further Assurances.......................................33
4.12 Compliance with ERISA and the Code.......................34
4.13 Compliance with Regulations G, T, U and X................34
4.14 Financial Covenants......................................34
4.15 Fiscal Year..............................................36
4.16 Board Observation and Membership.........................36
4.17 Environmental Costs......................................37
4.18 Laws.....................................................37
(i)
4.19 Inspection...............................................37
4.20 Negative Covenants.......................................37
4.21 Accountants..............................................39
4.22 Notice...................................................39
4.23 Warrant Rights...........................................40
Article V Conditions.....................................................40
5.01 Effectiveness of Senior Loan Documents...................40
5.02 Series A Preferred Shares and Warrants...................40
5.03 Acquisition..............................................41
5.04 Due Diligence............................................41
5.05 Approval.................................................41
5.06 No Litigation; Consummation of Transactions..............41
5.07 Closing Deliveries.......................................41
5.08 Material Adverse Change..................................43
5.09 Fees.....................................................43
5.10 Representations and Agreements...........................43
5.11 Proceedings; Consents....................................43
Article VI Issuance Events................................................43
6.01 Issuance Events..........................................43
6.02 Remedies of Holders upon Occurrence of an Issuance Event.44
6.03 Notice of Issuance Event.................................44
Article VII Miscellaneous..................................................45
7.01 Indemnification..........................................45
7.02 Default..................................................45
7.03 Integration..............................................45
7.04 Headings.................................................45
7.05 Severability.............................................46
7.06 Notices..................................................46
7.07 Successors...............................................47
7.08 Remedies.................................................47
7.09 Survival.................................................47
7.10 Counterparts.............................................47
7.11 Other Business...........................................47
7.12 Choice of Law............................................47
7.13 Waivers; Modification....................................48
7.14 Waiver of Jury Trial.....................................48
7.15 Duties Among Holders.....................................48
7.16 Actions By Holders.......................................48
(ii)
ANNEX A Form of Shareholder Agreement..................................51
ANNEX B Form of Warrant................................................52
ANNEX C Form of Second Warrants........................................53
ANNEX D Statement of Designations, Preferences, Limitations and
Relative Rights of Preferred Stock............................54
ANNEX E Confidentiality Agreement......................................55
(iii)
<PAGE>
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "AGREEMENT") made as
of June 13, 1995, by and between BAYOU STEEL CORPORATION, a Delaware corporation
(the "COMPANY") and RICE PARTNERS II, L.P., a Delaware limited partnership (the
"PURCHASER").
R E C I T A L S:
Howard M. Meyers and Bayou Steel Properties Limited, a Delaware
corporation (individually, a "SHAREHOLDER" and collectively, the "SHAREHOLDERS")
own beneficially and of record shares of the issued and outstanding capital
stock of the Company as set forth on SCHEDULE 1.
The Company and the Shareholders have entered into a Shareholder Agreement
(the "SHAREHOLDER AGREEMENT") dated of even date with this Agreement with the
Purchaser.
THEREFORE, in consideration of the foregoing, the mutual covenants
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser and the
Company, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms have the meanings
indicated:
ACQUISITION. The transactions contemplated by the Acquisition Documents
pursuant to which the Company acquired substantially all of the assets of
Tennessee Valley Steel Corporation.
ACQUISITION AGREEMENT. The Asset Purchase Agreement dated as of January
30, 1995, among Tennessee Valley Steel Corporation, TV Acquisition Corp.,
Bayou Steel Corporation, BT Commercial Corporation, and NationsBank, N.A.
(Carolinas).
ACQUISITION DOCUMENTS. The Acquisition Agreement and the agreements,
documents, and instruments executed in connection with the Acquisition
Agreement or contemplated by the Acquisition Agreement, and all
amendments, modifications and supplements to the Acquisition Documents.
ADDITIONAL SECURITIES. This term is defined in SECTION 2.09(A)(IV).
AFFILIATE. With respect to any Person: (a) a Person that, directly or
indirectly or through one or more intermediaries, controls, is controlled
by, or is under common control with, such Person; (b) any Person of which
such Person or such Person's spouse is an officer, director, security
holder, partner, or, in the case of a trust, the beneficiary or trustee;
and (c) any Person that is an officer, director, security holder, partner,
or, in the case of a trust, the beneficiary or trustee of such Person. The
term "control" as used with respect
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to any Person, means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract,
or otherwise.
AGREEMENT. This term is defined in the preamble.
ANNUALIZED PRINCIPAL AMORTIZATION. At any date, this term shall mean all
regularly scheduled amortization payments made by the Company on
Indebtedness during the twelve-month period ending on such date, excluding
any excess cash flow recapture and excluding balloon payments due beyond
five (5) years from the Closing Date.
APPRAISED VALUE. The value determined in accordance with the following
procedures. For a period of 30 days after the date of a Valuation Event
(the "NEGOTIATION PERIOD"), each party to this Agreement agrees to
negotiate in good faith to reach agreement on the Appraised Value of the
securities or property at issue, as of the date of the Valuation Event,
that will be the fair market value of such securities or property, without
premium for control or discount for minority interests, illiquidity, or
restrictions on transfer. In the event that the parties are unable to
agree upon the Appraised Value of such securities or other property by the
end of the Negotiation Period, then the Appraised Value of such securities
or property will be determined for purposes of this Agreement by a
recognized appraisal or investment banking firm mutually agreeable to the
Holders and the Company (the "APPRAISER"). If the Holders and the Company
cannot agree on an Appraiser within fifteen (15) days after the end of the
Negotiation Period, the Company, on the one hand, and the Holders, on the
other hand, will each select an Appraiser within twenty-one (21) days
after the end of the Negotiation Period and those two Appraisers will
select within twenty-five (25) days after the end of the Negotiation
Period an independent Appraiser to determine the fair market value of such
securities or property, without premium for control, discount for minority
interests, illiquidity, or restrictions on transfer. Such independent
Appraiser will be directed to determine fair market value of such
securities or property as soon as practicable, but in no event later than
sixty (60) days from the date of its selection. The determination of the
fair market value pursuant to the procedure set forth herein will be
conclusive and binding on all parties to this Agreement. Appraised Value
of each share of Common Stock at a time when (i) the Company is not a
reporting company under the Exchange Act and (ii) no class of the Common
Stock is traded in the organized securities markets, will, in all cases,
be calculated by determining the Appraised Value of the entire Company
taken as a whole and dividing that value by the sum of (x) the number of
shares of Common Stock then outstanding plus (y) the number of shares of
Common Stock Equivalents, without premium for control or discount for
minority interests, illiquidity, or restrictions on transfer. The costs of
the Appraiser (other than the cost of an Appraiser selected by the Holders
for purposes of selecting an independent appraiser) will be borne by the
Company. In no event will the Appraised Value of the Common Stock or Other
Securities be less than the per share consideration received or receivable
with respect to any class of the Common Stock or securities or property of
the same class as the Other Securities, as the case may be, in connection
with a pending transaction involving a sale, merger, recapitalization,
reorganization, consolidation, or share exchange, dissolution of the
Company, sale or transfer of all or a majority of its assets or revenue or
income generating capacity, or similar transaction. The prevailing
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market prices for any security or property will not be dispositive of the
Appraised Value thereof.
APPRAISER. This term is defined in the definition of Appraised Value.
ASSET ACQUISITION. (i) Any capital contribution (by means of transfer of
cash or other property to others or payments for property or services for
the account or use of others, or otherwise), or purchase or acquisition of
Capital Stock by the Company or any of its Subsidiaries in any other
Person, in either case pursuant to which such Person shall become a
Subsidiary of the Company or any of its Subsidiaries or shall be merged
with or into the Company or any of its Subsidiaries or (ii) any
acquisition by the Company or any of its Subsidiaries of the assets of any
Person which constitute substantially all of an operating unit or business
of such Person.
ASSET SALE. Any direct or indirect sale, conveyance, transfer, lease or
other disposition to any Person other than the Company, a Non-Recourse
Subsidiary or a Wholly-Owned Recourse Subsidiary of the Company, one
transaction or a series of related transactions, of (i) any Capital Stock
of any Recourse Subsidiary of the Company or (ii) any other property or
asset of the Company or a Recourse Subsidiary of the Company, in each
case, other than in the ordinary course of business.
AVERAGE MARKET VALUE. The average of the Closing Prices for the security
in question for the thirty (30) trading days immediately preceding the
date of determination.
BSPL. This term shall mean Bayou Steel Properties Limited, a Delaware
corporation.
BAYOU STEEL CORPORATION (TENNESSEE). This term shall mean Bayou Steel
Corporation (Tennessee), a Delaware corporation and wholly-owned
Subsidiary of the Company.
BUSINESS DAY. Each day of the week, except Saturdays and Sundays, and days
that banking institutions are authorized by law to close in the states of
Texas and Louisiana.
BUYER. This term is defined in SECTION 4.02(A)(II) of the Shareholder
Agreement.
CAPITAL STOCK. As to any Person, its common stock and any other capital
stock of such Person authorized from time to time, and any other shares,
options, interests, participations, or other equivalents (however
designated) of or in such Person, whether voting or nonvoting, including,
without limitation, options, warrants, preferred stock, phantom stock,
stock appreciation rights, convertible notes or debentures, stock purchase
rights, and all agreements, instruments, documents, and securities
convertible, exercisable, or exchangeable, in whole or in part, into any
one or more of the foregoing.
CAPITALIZATION. For any Person shall mean the sum of (i) such Person's
Funded Indebtedness plus (ii) such person's Tangible Net Worth.
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CERTIFICATE. The Certificate of Designations, Preferences, Limitations and
Relative Rights of Series A Preferred Stock and Series B Preferred Stock,
dated June 13, 1995, attached to this Agreement as ANNEX D.
CERTIFICATE OF INCORPORATION. The Second Restated Certificate of
Incorporation of the Company, dated August 3, 1988.
CLASS A COMMON STOCK. Shares of the Company's Class A Common Stock, $.01
par value, as more particularly defined in the Certificate of
Incorporation.
CLASS B COMMON STOCK. Shares of the Company's Class B Common Stock, $.01
par value, as more particularly defined in the Certificate of
Incorporation.
CLASS C COMMON STOCK. Shares of the Company's Class C Common Stock, $.01
par value, as more particularly defined in the Certificate of
Incorporation.
CLOSING DATE. June 13, 1995.
CLOSING PRICE.
(a) If the primary market for the security in question is a national
securities exchange registered under the Exchange Act, the NASDAQ(R) --
National Market, or other market or quotation system in which last sale
transactions are reported on a contemporaneous basis, the last reported
sales price, regular way, of such security for such day, or, if there has
not been a sale on such trading day, the highest closing or last bid
quotation therefor on such trading day (excluding, in any case, any price
that is not the result of bona fide arm's length trading); or
(b) If the primary market for such security is not an exchange or
quotation system in which last sale transactions are contemporaneously
reported, the highest closing or last bona fide bid or asked quotation by
disinterested Persons in the over-the-counter market on such trading day
as reported by the National Association of Securities Dealers through
NASDAQ(R) or its successor or such other generally accepted source of
publicly reported bid quotations as the Holders designate from time to
time.
CODE. The Internal Revenue Code of 1986, as amended and in effect from
time to time, and the regulations promulgated thereunder.
COMMON STOCK. The Class A Common Stock, the Class B Common Stock, the
Class C Common Stock and any class of Capital Stock of the Company now or
later authorized having the right to share without limit in distribution
either of earnings or assets of the Company subject to the rights of any
preferred stock.
COMMON STOCK EQUIVALENT. Any option, warrant, right, or similar security
exercisable into, exchangeable for, or convertible into Common Stock.
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COMMISSION. The Securities and Exchange Commission and any successor
federal agency having similar powers.
COMPANY. Bayou Steel Corporation, a Delaware corporation and any successor
or assign, and, unless the context requires otherwise, the term Company
includes any Subsidiary.
CONSOLIDATED INTEREST EXPENSE. For any period means the sum of (a) the
aggregate interest expense (including amortization of original issue
discount and non-cash interest payments or accruals) of such Person and
its Consolidated Recourse Subsidiaries for such period and (b) to the
extent not included in clause (a), all commissions, discounts and other
fees and charges owed with respect to letters of credit and banker's
acceptance financing, the net cost associated with Interest Rate
Agreements and Currency Agreements, amortization of other financing fees
and expenses and the interest portion of any deferred payment obligation.
CONSOLIDATED RECOURSE SUBSIDIARY. A Recourse Subsidiary which for
financial reporting purposes is or, in accordance with GAAP, should be,
accounted for by such Person as a consolidated Subsidiary.
CONTROLLED GROUP. Any group of organizations within the meaning of section
414(b), (c), (m), or (o) of the Code of which the Company is a member.
CO-SELL SHARES. This term is defined in SECTION 4.02(C) of the Shareholder
Agreement.
CO-SELLERS. This term is defined in SECTION 4.02(C) of the Shareholder
Agreement.
CREDIT AGREEMENT. The Credit Agreement between the Company and the Senior
Lender, dated as of June 28, 1989, as amended and restated through June
13, 1995, and all documents and instruments delivered pursuant thereto in
connection with the loans and advances made, and letters of credit issued,
thereunder.
CURRENCY AGREEMENT. Any foreign exchange contract, currency swap agreement
or other similar agreement or arrangement designed to protect the Company
or any of its Subsidiaries against fluctuations in currency values.
DEBT SERVICE. For any period of determination, this term shall mean Net
Interest Expense for such period PLUS dividends on the Preferred Shares
paid during such period (or which should have been paid per Annex D of
this Agreement) PLUS Annualized Principal Amortization.
DEBT SERVICE COVERAGE RATIO (ACTUAL). At any date, this term shall mean
the ratio of (a) EBITDA for the twelve-month period ending on such date
MINUS income taxes paid; to (b) Debt Service for the twelve-month period
ending on such date.
EBITDA. For any period of determination, this term shall mean Net Income
for such period PLUS the sum of the following amounts deducted in arriving
at such Net Income:
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(a) Net Interest Expense; (b) depreciation, amortization and other
non-cash charges; and (c) income taxes.
EBITDA RATIO. The ratio, on a pro forma basis, of (a) EBITDA of Person for
the Reference Period immediately prior to the date of the transaction
giving rise to the need to calculate the EBITDA Ratio (the "Transaction
Date") to (b) the Net Interest Expense of such Person during such
Reference Period; provided, that in making such computation, (i) the
incurrence of the Indebtedness giving rise to the need to calculate the
EBITDA Ratio and the application of the proceeds therefrom shall be
assumed to have occurred on the first day of the Reference Period; (ii)
Asset Sales and Asset Acquisitions which occur during the Reference Period
or subsequent to the Reference Period but prior to the incurrence of the
Indebtedness in question (but including any Asset Acquisition to be made
with such Indebtedness) shall be assumed to occur on the first day of the
Reference Period; (iii) the issuance of any Indebtedness during the
Reference Period or subsequent to the Reference Period but prior to the
Transaction Date and the application of the proceeds therefrom shall be
assumed to have occurred on the first day of the Reference Period; (iv)
the Consolidated Interest Expense attributable to interest on any
Indebtedness (whether existing or being incurred) computed on a pro forma
basis and bearing a floating interest rate shall be computed as if the
rate in effect on the date of computation had been the applicable rate for
the entire period, unless such Person or any of its Recourse Subsidiaries
is a party to an Interest Rate Agreement which has the effect of reducing
the interest rate below the rate on the date of computation, in which case
such lower rate shall be used; and (v) there shall be excluded from
Consolidated Interest Expense any Consolidated Interest Expense related to
any Indebtedness which was outstanding during and subsequent to the
Reference Period but is not outstanding on the Transaction Date, except
for Consolidated Interest Expense actually incurred with respect to
Indebtedness borrowed under a revolving credit or similar arrangement to
the extent the commitment thereunder remains in effect on the Transaction
Date. For the purpose of making the computation referred to in the
preceding sentence, Asset Sales and Asset Acquisitions which have been
made by any Person which has become a Recourse Subsidiary of the Company
or been merged with or into the Company or any Recourse Subsidiary of the
Company during the Reference Period or subsequent to the Reference Period
and prior to the Transaction Date shall be calculated on a pro forma basis
(including all of the calculations referred to in numbers (i) through (v)
of the preceding sentence) assuming such Asset Sales or Asset Acquisitions
occurred on the first day of the Reference Period.
ELECTION NOTICE. This term is defined in SECTION 4.02(B) of the
Shareholder Agreement.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan, as defined in section
3(3) of ERISA that is, previously has been, or will be established or
maintained by any member of a Controlled Group.
ENVIRONMENTAL LAWS. This term is defined in SECTION 3.01(J).
ERISA. The Employee Retirement Income Security Act of 1974, as amended and
in effect from time to time, and the regulations promulgated under ERISA.
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EVENT OF BANKRUPTCY. Any of (a) the filing by a Person of a voluntary
petition in bankruptcy under any provision of any bankruptcy law or a
petition to take advantage of any insolvency act, (b) the admission in
writing by the Company of its inability to pay its debts generally as they
become due, (c) the appointment of a receiver or receivers for all or a
material part of a Person's assets with the consent of such Person, (d)
the filing of any bankruptcy, arrangement, or reorganization petition by,
or with the consent of, a Person, or against such Person under any
provision of any bankruptcy law (which in the case of such a filing
against a Person, remains unstayed for a period of sixty (60) days), (e) a
receiver, liquidator or trustee of a Person or a substantial part of its
assets is appointed pursuant to the Federal Bankruptcy Code by the order
of a court of competent jurisdiction that is not dismissed or stayed
within 30 days, or (f) an involuntary petition to reorganize or liquidate
a Person pursuant to the Federal Bankruptcy Code will be filed against
such Person and remains unstayed for a period of sixty (60) days.
EXCHANGE ACT. The Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
EXERCISE PRICE. The price per share specified in SECTION 2.04 as adjusted
from time to time pursuant to the provisions of this Agreement.
FAIR MARKET VALUE.
(a) As to securities regularly traded in the organized securities
markets, the Average Market Value; and
(b) As to all securities not regularly traded in the securities
markets and other property, the fair market value of such securities or
property as determined in good faith by the Board of Directors of the
Company at the time it authorizes the transaction (a "VALUATION EVENT")
requiring a determination of Fair Market Value under this Agreement;
PROVIDED, HOWEVER, that, at the election of the applicable Holder or a
majority-in interest of the Holders of Registrable Securities, the Fair
Market Value of such securities and other property will be the Appraised
Value of the Registrable Securities.
FIRST MORTGAGE INDENTURE. This term means (i) the Indenture, dated March
2, 1994, between the Company and First National Bank of Commerce, as
trustee thereunder, (ii) the notes issued pursuant thereto and (iii) any
mortgage, security agreement, guarantee or other document in connection
therewith, as such may hereafter, be modified, renewed, substituted,
replaced or reissued.
FIRST WARRANT. This term is defined in SECTION 2.01.
FUNDED INDEBTEDNESS. As to any Person, the indebtedness, excluding
guaranties and letters of credit, of such Person which by its terms or by
the terms of any instrument or agreement relating thereto matures one year
or more from the date of the initial creation thereof; provided that
Funded Indebtedness shall include any Indebtedness which does not
otherwise come within the foregoing definition but which is directly or
indirectly renewable or extendible at the option of such Person to a date
of one year or more
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(including an option of such Person under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period
of one year or more) from the date of the initial creation of such
Indebtedness or which may be payable out of the proceeds of a similar
obligation pursuant to the terms of such obligation or any such agreement;
provided, further, Funded Indebtedness shall include the then current
maturities thereof.
GAAP. Generally accepted accounting principles, applied on a consistent
basis, as set forth in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective
successors and that are applicable in the circumstances as of the date in
question. Accounting principles are applied on a "consistent basis" when
the accounting principles observed in a current period are comparable in
all material respects to those accounting principles applied in a
preceding period.
HOLDERS. The Purchaser, and all Persons holding Registrable Securities or
Preferred Shares, except that neither the Company nor any Shareholder nor
any Affiliate of the Company or any Shareholder will at any time be a
Holder.
IMPOSITIONS. This term is defined in SECTION 4.06.
INDEBTEDNESS. For any Person: (a) all indebtedness, whether or not
represented by bonds, debentures, notes, securities, or other evidences of
indebtedness, for the repayment of money borrowed, (b) all indebtedness
representing deferred payment of the purchase price of property or assets,
(c) all indebtedness under any lease that, in conformity with GAAP, is
required to be capitalized for balance sheet purposes and leases of
property or assets made as a part of any sale and lease-back transaction
if required to be capitalized, (d) all indebtedness under guaranties,
endorsements, assumptions, or other contractual obligations, including any
letters of credit, or the obligations in respect of, or to purchase or
otherwise acquire, indebtedness of others, (e) all indebtedness secured by
a Lien existing on property owned, subject to such Lien, whether or not
the indebtedness secured by such Lien has been assumed by the owner of,
such property, (f) trade accounts payable more than 120 days past due, and
(g) all amendments, renewals, extensions, modifications and refundings of
any indebtedness or obligations referred to above in (a), (b), (c), (d),
or (e), excluding trade accounts payable in the ordinary course of
business and less than 120 days past due.
INDEMNIFIED PARTY. This term is defined in SECTION 7.01.
INDEPENDENT DIRECTORS. Members of the Company's Board of Directors who are
not employees of the Company.
INITIAL HOLDERS. The Purchaser and any other Person purchasing Warrants or
any part of or interest in the Warrants on the Closing Date.
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INTELLECTUAL PROPERTY. All patents, patent rights, patent applications,
licenses, inventions, trade secrets, know-how, proprietary techniques
(including processes and substances), trademarks, service marks, trade
names and copyrights.
INTEREST RATE AGREEMENT. Any interest rate protection agreement, interest
rate future, interest rate option, interest rate swap, interest rate cap
or other interest rate hedge agreement, to or under which the Company or
any of its Subsidiaries is a party or a beneficiary on the date of the
First Mortgage Indenture or becomes a party or a beneficiary thereafter.
INVESTMENT. All investments in other Persons in the form of loans,
advances or capital contributions (excluding commission, travel and
similar advances to officers and employees made in the ordinary course of
business), purchase (or other acquisitions for consideration) of
Indebtedness, Capital Stock or other securities issued by any other
Person.
ISSUABLE WARRANT SHARES. Shares of Common Stock or Other Securities
issuable on exercise of the Warrants.
ISSUANCE EVENT. This term is defined in SECTION 6.01.
ISSUED WARRANT SHARES. Shares of Common Stock or Other Securities issued
on exercise of the Warrants.
LIEN. Any lien, mortgage, security interest, tax lien, pledge,
encumbrance, financing statement, or conditional sale or title retention
agreement, or any other interest in property designed to secure the
repayment of Indebtedness or any other obligation, whether arising by
agreement, operation of law, or otherwise.
MATERIAL ADVERSE EFFECT. A material adverse effect upon the business,
operations, properties, assets or condition (financial or otherwise) of
the Company. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not of
itself have such effect, a Material Adverse Effect will be deemed to have
occurred if the cumulative effect of such event and all other then
existing events would result in a Material Adverse Effect.
NET INCOME. With respect to the Company and its Recourse Subsidiaries for
any period, (a) net revenues and other proper income for such period minus
(b) the aggregate for such period of, without duplication, (i) cost of
goods sold, (ii) Net Interest Expense, (iii) operating expenses, (iv)
selling, general, and administrative expenses, (v) taxes, (vi)
depreciation and amortization, (vii) any other items that are treated as
expenses under GAAP, but excluding from the definition of Net Income any
extraordinary gains or losses (including the effect of the adoption of
Financial Accounting Standards No. 106 and 109) and (viii) payments made
with respect to any premium upon the prepayment of Indebtedness
outstanding under the First Mortgage Indenture, all computed on a
consolidated basis in accordance with GAAP consistently applied.
- 9 -
NET INTEREST EXPENSE. This term shall mean, for any period, the aggregate
interest expense (including capitalized interest accrued during such
period) of the Company and its Recourse Subsidiaries for such period
including, without limitation, the portion of any capitalized lease
obligation allocable to Net Interest Expense in accordance with GAAP, LESS
the aggregate interest income for such period.
NON-RECOURSE SUBSIDIARY. A special purpose Subsidiary of the Company or
any of its Subsidiaries formed to acquire securities or assets of a third
party and which (i) has no Indebtedness other than Permitted Indebtedness
and (ii) does not, directly or indirectly, own any Indebtedness, stock or
securities of, and has no Investment in, the Company or any Recourse
Subsidiary.
NOTICE OF SALE. This term is defined in SECTION 4.02(A) of the Shareholder
Agreement.
OBLIGATIONS. This term means and includes any and all Indebtedness and/or
liabilities of the Company to Purchaser of every kind, nature and
description, direct or indirect, secured or unsecured, joint, several,
joint and several, absolute or contingent, due or to become due, now
existing or hereafter arising, under this Agreement or any Other Agreement
(regardless of how such Indebtedness or liabilities arise or by what
agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument) and all obligations of the Company to Purchaser
to perform acts or refrain from taking any action under any of the
aforementioned documents, together with all renewals, modifications,
extensions, increases, substitutions or replacements of any of such
Indebtedness.
OPTION PLAN. The 1991 Employee Stock Option Plan.
OTHER AGREEMENTS. The Shareholder Agreement and all other agreements,
instruments, and documents, and all renewals, modifications and extensions
thereof, executed by or on behalf of the Company and delivered to and for
the benefit of Purchaser with respect to this Agreement or any of the
transactions contemplated by this Agreement.
OTHER SECURITIES. Any stock, other securities, property, or other property
or rights (other than Common Stock) that the Holders become entitled to
receive upon exercise of the Warrants.
PERMITTED INDEBTEDNESS. (a) Any Indebtedness in favor of the Senior Lender
under the Senior Loan Agreements and created pursuant to the Senior Loan
Agreements and such indebtedness as is expressly permitted thereunder, (b)
any Indebtedness under the First Mortgage Indenture and created pursuant
thereto and such indebtedness as is expressly permitted thereunder, (c)
any Indebtedness in favor of Purchaser under this Agreement and/or the
Other Agreements and created pursuant thereto, and (d) the other
Indebtedness set forth on SCHEDULE 3.01(M).
PERMITTED LIENS. (a) Liens in favor of the Senior Lender under the Senior
Loan Agreements or created pursuant thereto or permitted thereunder, (b)
Liens pursuant to the
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First Mortgage Indenture or permitted thereunder, and (c) deposits to
secure payment of worker's compensation, unemployment insurance, or other
social security benefits.
PERSON. This term will be interpreted broadly to include any individual,
sole proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, company, institution, entity,
party, or government (whether national, federal, state, county, city,
municipal, or otherwise, including, without limitation, any
instrumentality, division, agency, body, or department of any of the
foregoing).
POLLUTING SUBSTANCES. All pollutants, contaminants, chemicals, or
industrial, toxic, or hazardous substances or wastes. This term includes,
without limitation, any flammable explosives, radioactive materials, oil,
hazardous materials, hazardous or solid wastes, hazardous or toxic
substances, or related materials defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act of 1976, the Hazardous and Solid Waste
Amendments of 1984, and the Hazardous Materials Transportation Act, as
amended, and in the regulations adopted and publications promulgated
thereto; PROVIDED, in the event any of the foregoing Environmental Laws is
amended so as to broaden the meaning of any term defined thereby, such
broader meaning will apply subsequent to the effective date of such
amendment and, PROVIDED, FURTHER, to the extent that the applicable laws
of any state establish a meaning for "hazardous substance," "hazardous
waste," "hazardous material," "solid waste," or "toxic substance" that is
broader than that specified in any of the foregoing Environmental Laws,
such broader meaning will apply.
PREFERRED SHARES. All Series A Preferred Shares and Series B Preferred
Shares.
PREFERRED STOCK. Shares of the Company's Preferred Stock, $.01 par value,
as more particularly defined in the Certificate of Incorporation.
PRIVATE PLACEMENT MEMORANDUM. The Private Placement Memorandum, dated
March 1995, for the issuance of $20,000,000 shares of senior cumulative
exchangeable preferred stock.
PROPERTY. All real property owned, leased or operated by the Company.
PUBLIC OFFERING. Each primary public offering of shares of any class of
Capital Stock pursuant to a registration statement filed with the
Commission.
PURCHASER. This term is defined in the preamble.
RECOURSE SUBSIDIARY. Any Subsidiary other than a Non-Recourse Subsidiary.
REFERENCE PERIOD. The four fiscal quarters for which financial information
is available preceding the date of a transaction giving rise to the need
to make a financial calculation.
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REGISTER, REGISTERED, and REGISTRATION. These terms refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
REGISTRABLE SECURITIES. (a) The Issuable Warrant Shares and (b) the Issued
Warrant Shares that have not been previously sold to the public (whether
pursuant to a registration or Rule 144 under the Securities Act).
RELATED PARTY. (a) An entity wholly owned by a Selling Shareholder and/or
one or more Related Parties, (b) a trust all of the beneficiaries of which
are a parent, sibling, spouse or lineal issue of a Selling Shareholder
that is an individual, (c) a parent, sibling, spouse, or lineal issue, as
well as, the heirs, devisees, executors, administrators and testamentary
trustees of a Selling Shareholder that is an individual, (d) in the case
of a Selling Shareholder that is an entity, a Subsidiary of such Selling
Shareholder and (e) with respect to shares of the Company's Class B Common
Stock held by BSPL, shareholders of BSPL.
REPORTABLE EVENT. (a) Any of the events set forth in sections 4043(b)
(other than a merger, consolidation or transfer of assets in that no
Pension Plan involved has any unfunded benefit liabilities), 4068(f) or
4063(a) of ERISA, (b) any event requiring any member of the Controlled
Group to provide security under section 401(a)(29) of the Code, or (c) any
failure to make payments required by section 412(m) of the Code.
SEC FILING. This term is defined in SECTION 3.01(Y).
SECOND WARRANT. This term is defined in SECTION 2.01.
SECURITIES ACT. The Securities Act of 1933, as amended, and the rules and
regulations thereunder.
SELLING SHAREHOLDER. This term is defined in SECTION 4.02 of the
Shareholder Agreement.
SENIOR DEBT. At any given time, the Indebtedness (whether now outstanding
or hereafter incurred) of the Company and Bayou Steel Corporation
(Tennessee) in respect of the Senior Loan Agreements, in a principal
amount not to exceed $45,000,000 in revolving loans made to and letters of
credit issued for the benefit of, the Company and $10,000,000 in term
loans made to Bayou Steel Corporation (Tennessee), plus interest, fees,
expenses, indemnities and all other amounts payable under the Senior Loan
Agreements and any notes, security documents, guaranties or other loan
documents referred to therein or pursuant thereto.
SENIOR LENDER. Individually and collectively Chemical Bank, as agent, for
the Lenders named on the signature pages of the Senior Loan Agreements or
parties thereto from time to time, their respective successors and
assigns, and any Person or Persons who replaces or refinances the Senior
Debt.
SENIOR LOAN AGREEMENTS. (a) The Credit Agreement and (b) the Term Loan
Agreement.
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SENIOR LOAN DOCUMENTS. The Senior Loan Agreements and the agreements,
documents and instruments executed in connection therewith or contemplated
thereby, and all amendments thereto.
SENIOR LOANS. Revolving loans and letters of credit in the maximum
principal amount of $45,000,000 made to, or issued in favor of, as
applicable, the Company and terms loans in the maximum principal amount of
$10,000,000 made to Bayou Steel Corporation (Tennessee) by the Senior
Lender under the Senior Loan Agreements and any replacements,
modifications, extensions, amendments and refinancings thereof permitted
under this Agreement.
SERIES A PREFERRED SHARES. The Series A redeemable preferred stock, $.01
par value, having the rights, restrictions, privileges and preferences set
forth in the Certificate.
SERIES B PREFERRED SHARES. The Series B redeemable preferred stock, $.01
par value, having the rights, restrictions, privileges and preferences set
forth in the Certificate.
SHAREHOLDER. This term is defined in the preamble.
SHAREHOLDER AGREEMENT. This term is defined in the preamble and includes
the Shareholder Agreement dated as of the Closing Date between the
Company, the Shareholder, and the Purchaser in substantially the form
attached to this Agreement as ANNEX A and incorporated in this Agreement
by reference.
SUBSIDIARY. Each Person of which or in which a Person or its other
Subsidiaries own directly or indirectly fifty-one percent (51%) or more of
(i) the combined voting power of all classes of stock having general
voting power under ordinary circumstances to elect a majority of the board
of directors or equivalent body of such Person, if it is a corporation or
similar person; (ii) the capital interest or profits interest of such
Person, if it is a partnership, joint venture, or similar entity; or (iii)
the beneficial interest of such Person, if it is a trust, association, or
other unincorporated organization.
TANGIBLE NET WORTH. With respect to any Person at any time, (i) the sum of
such Person's Capital Stock, capital in excess of par or stated value of
shares of its Capital Stock, retained earnings, the amount of any write up
in the value of any asset of a Recourse Subsidiary above the cost or
depreciated cost thereof and any other account principles which, in
accordance with GAAP, constitutes stockholders' equity (such sum otherwise
including, without duplication, the Preferred Shares), less (ii) treasury
stock and any minority interest in Subsidiaries, less (iii) the amount of
all assets reflected as goodwill, patents, research and development and
all other assets required to be classified as intangible in accordance
with GAAP and less (iv) the amount of any write up in the value of any
asset in conjunction with an acquisition of such asset above the cost or
depreciated cost thereof to such Person other than a Recourse Subsidiary.
TERM LOAN AGREEMENT. The Term Loan Agreement between Bayou Steel
Corporation (Tennessee) and the Senior Lender, dated as of June 13, 1995,
and all documents and
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instruments delivered pursuant thereto in connection with the loans and
advances made thereunder.
TERMINATION EVENT. (a) A Reportable Event, (b) the termination of a
Pension Plan that has unfunded benefit liabilities (including an
involuntary termination under Section 4042 of ERISA), (c) the filing of a
Notice of Intent to Terminate a Pension Plan, (d) the initiation of
proceedings to terminate a Pension Plan under Section 4042 of ERISA, or
(e) the appointment of a trustee to administer a Pension Plan under
Section 4042 of ERISA.
TRANSACTION DATE. This term is defined in the definition of "EBITDA
Ratio".
UNENCUMBERED CASH. Unencumbered cash owned and held by or on behalf of the
Company, other than any such cash subject to any depository bank set-off
rights under the Credit Agreement or the Term Loan Agreement or any
depository agreements with such bank (such cash being deemed
"unencumbered" for purposes of the Credit Agreement and the Term Loan
Agreement).
VALUATION EVENT. This term is defined in the definition of Fair Market
Value.
VOTING CONTROL. The ability to elect the number of members of the board of
directors or similar governing body of any entity necessary to effect all
corporate or similar actions within the authority of such board of
directors or similar governing body without giving effect to any
supermajority provisions in effect on the date hereof.
WARRANT AGREEMENT. This term is defined in the preamble to the Shareholder
Agreement and includes this Agreement and all documents related to this
Agreement as this Agreement may be amended from time to time.
WARRANTS. The Warrants to purchase shares of Class A Common Stock,
referred to in SECTION 2.01, being (i) the First Warrant, dated as of the
Closing Date, issued to the Initial Holders, (ii) the Second Warrant and
(iii) all Warrants issued upon the transfer or the division of, or in
substitution for, the First Warrant and/or the Second Warrants.
WARRANT SHARES. The Issued Warrant Shares and the Issuable Warrant Shares.
WHOLLY-OWNED RECOURSE SUBSIDIARY. A Wholly-Owned Subsidiary that is a
Recourse Subsidiary.
WHOLLY-OWNED SUBSIDIARY. With respect to any Person, a Subsidiary of which
at least 95% of the Capital Stock (other than any director's qualifying
stock) or, in the case of a non-corporate Subsidiary, other equity
interests having ordinary voting power for the election of directors or
other governing body of such Subsidiary, is owned by such Person or
another Wholly-Owned Subsidiary of such Person.
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ARTICLE II
THE WARRANT
2.01 THE WARRANTS AND THE PREFERRED SHARES. On the Closing Date, the
Purchaser agrees to purchase from the Company at the purchase price of
$15,000,000 and the Company agrees to issue to the Purchaser, (a) Warrants in
substantially the forms attached to this Agreement as ANNEXES B (the "FIRST
WARRANT") and C (the "SECOND WARRANT"), respectively, and incorporated in this
Agreement by reference to purchase, in the case of the First Warrant, the number
of shares of Class A Common Stock set forth beneath the name of the Purchaser on
the signature page of this Agreement, and, in the case of the Second Warrant,
the number of shares of Class A Common Stock calculated in accordance with
SECTION 2.02 and (b) 15,000 Series A Preferred Shares, having the rights,
restrictions, privileges, and preferences set forth in the Certificate, all in
accordance with the terms and conditions of this Agreement. The Company has, on
or before the Closing Date, duly authorized the Preferred Shares being purchased
and sold pursuant to the terms of this Agreement and pursuant to the terms of
the Series A Preferred Shares by duly filing the Certificate with the Secretary
of State of the State of Delaware.
2.02 VESTING OF SECOND WARRANTS. Notwithstanding any other provision of
this Agreement, the Second Warrant will be exerciseable to purchase the Warrant
Shares covered by the Second Warrant only as specified below:
(a) No more than once per fiscal quarter, on each occasion that (i)
the Company for any reason (including, without limitation, the
insufficiency of legally available funds) fails to redeem any shares of
Series B Preferred Shares at the end of any two consecutive fiscal
quarters, (ii) an event or series of events causes an Issuance Event set
forth in SECTION 6.01(A) or (E) and such Issuance Event continues to exist
at the end of the fiscal quarter immediately succeeding the fiscal quarter
during which such Issuance Event occurred, (iii) an event or series of
events causes an Issuance Event set forth in SECTION 6.01(C) or (D) or
(iv) the Company fails to perform or observe any of the covenants set
forth in SECTION 4.14 of this Agreement at the end of any fiscal quarter
and such failure continues to exist at the end of the next succeeding
fiscal quarter, then the Second Warrant will become immediately and
permanently exerciseable for a number of shares of Class A Common Stock
equal to .5625% of the Common Stock on a fully diluted basis as of the
Closing Date; PROVIDED, HOWEVER, that the continuance of any event,
referred to in either clause (ii) or (iii) of this SUBSECTION (A)
(excluding any event pursuant to SECTION 6.01(D) for which the exercise of
the Second Warrant will occur no more than one (1) time) for any two
fiscal quarters will constitute an additional Issuance Event, and the
Second Warrant will become immediately and permanently exercisable for a
number of shares of Class A Common Stock equal to .5625% of the Common
Stock on a fully diluted basis as of the Closing Date, PROVIDED, FURTHER,
that with respect to SECTION 6.01(C), this SUBSECTION (A) will only apply
to the failure to comply with this SECTION 2.02, SECTION 7.01 of this
Agreement and any provisions of the Shareholder Agreement.
(b) No more than once per fiscal quarter (excluding any event
pursuant to SECTION 6.01(F) for which the exercise of the Second Warrant
will occur no more than one (1) time), upon the occurrence of an Issuance
Event set forth set forth in SECTION 6.01(B) or (F), then the Second
Warrant will become immediately and permanently exerciseable
- 15 -
for a number of shares of Class A Common Stock equal to .5625% of the
Common Stock on a fully diluted basis as of the Closing Date; PROVIDED,
HOWEVER, that the continuance of such Issuance Event (excluding any event
pursuant to SECTION 6.01(F) for which the exercise of the Second Warrant
will occur no more than one (1) time) for any two fiscal quarters will
constitute an additional Issuance Event, and the Second Warrant will
become immediately and permanently exercisable for a number of shares of
Class A Common Stock equal to .5625% of the Common Stock on a fully
diluted basis as of the Closing Date.
(c) If, for any reason, the designees of the Purchaser are not duly
elected to the Board of Directors of the Company within seven (7) Business
Days after the written request of the Purchaser pursuant to SECTION 4.16,
then for each calendar quarter during which any such failure occurs or
continues to exist, the Second Warrant will become immediately and
permanently exerciseable for a number of shares of Class A Common Stock
equal to .2815% of the Common Stock on a fully diluted basis as of the
date of the Closing Date.
THE EXERCISE OF THE RIGHTS REFERRED TO IN THIS SECTION 2.02 ARE INTENDED
TO BE CUMULATIVE, NOT EXCLUSIVE.
2.03 LEGEND. The Company will deliver to the Purchaser on the Closing Date
one or more certificates representing the Warrants, and one or more certificates
representing the Series A Preferred Shares, purchased by the Purchaser in such
denominations as the Purchaser requests. Such certificates will be issued in the
Purchaser's name or in the names of its designees. It is understood and agreed
that the certificates evidencing the Warrants will bear the following legends:
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN
CONNECTION WITH THE DISTRIBUTION HEREOF. THIS WARRANT AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY
NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL
APPLICABLE STATE SECURITIES LAWS."
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE
SUBJECT TO THE TERMS AND PROVISIONS OF A PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT DATED AS OF JUNE 13, 1995, BETWEEN BAYOU STEEL
CORPORATION (THE "COMPANY"), AND RICE PARTNERS II, L.P. (THE "PURCHASER"),
AND A SHAREHOLDER AGREEMENT, DATED AS OF JUNE 13, 1995, BETWEEN THE
COMPANY, THE PURCHASER AND THE SHAREHOLDERS OF THE COMPANY LISTED ON THE
SIGNATURE PAGE THERETO, (AS SUCH AGREEMENTS MAY BE SUPPLEMENTED, MODIFIED,
AMENDED, OR RESTATED FROM TIME TO TIME, THE
- 16 -
"AGREEMENTS"). COPIES OF THE AGREEMENTS ARE AVAILABLE AT THE
EXECUTIVE OFFICES OF THE COMPANY."
2.04 EXERCISE PRICE. The Exercise Price per share will be $.01 for each
share of Common Stock covered by the Warrants; PROVIDED, HOWEVER, that in no
event will the aggregate Exercise Price for all of the shares of Common Stock
covered by all Warrants exceed $100.00, whether as a result of any change in the
par value of the Common Stock or Other Securities, as a result of any change in
the number of shares purchasable as provided in this ARTICLE II, or otherwise;
PROVIDED, FURTHER, that such limitation of the aggregate Exercise Price will
have no effect whatsoever upon the amount or number of Warrant Shares for which
the Warrants may be exercised.
2.05 EXERCISE.
(a) Each of the Warrants may be exercised at any time or from time
to time on or after the Closing Date until the seventh (7th) anniversary
of the date of this Agreement, on any day that is a Business Day, for all
or any part of the number of Issuable Warrant Shares purchasable upon its
exercise. In order to exercise any Warrant, in whole or in part, the
Holder will deliver to the Company at the address designated by the
Company pursuant to SECTION 7.06, (i) a written notice of such Holder's
election to exercise its Warrant, which notice will specify the number of
Issuable Warrant Shares to be purchased pursuant to such exercise, (ii)
payment of the Exercise Price, in an amount equal to the aggregate
purchase price for all Issuable Warrant Shares to be purchased pursuant to
such exercise, and (iii) the Warrant being exercised. Such notice will be
substantially in the form of the Subscription Form appearing at the end of
the Warrants. Upon receipt of such notice, the Company will, as promptly
as practicable, and in any event within three (3) Business Days, execute,
or cause to be executed, and deliver to such Holder a certificate or
certificates representing the aggregate number of full shares of Common
Stock and Other Securities issuable upon such exercise, as provided in
this Agreement. The stock certificate or certificates so delivered will be
in such denominations as may be specified in such notice and will be
registered in the name of such Holder, or such other name as designated in
such notice. A Warrant will be deemed to have been exercised, such
certificate or certificates will be deemed to have been issued, and such
Holder or any other Person so designated or named in such notice will be
deemed to have become a holder of record of such shares for all purposes,
as of the date that such notice, together with payment of the Exercise
Price and the Warrant, is received by the Company. If the Warrant has been
exercised in part, the Company will, at the time of delivery of such
certificate of certificates, deliver to such Holder a new Warrant
evidencing the rights of such Holder to purchase a number of Issuable
Warrant Shares with respect to which the Warrant has not been exercised,
which new Warrant will, in all other respects, be identical with the
Warrants, or, at the request of such Holder, appropriate notation may be
made on the Warrant and the Warrant returned to such Holder.
(b) Payment of the Exercise Price will be made, at the option of the
Holder, by (i) company or individual check, certified or official bank
check, or (ii) cancellation of Warrants or Preferred Shares, valued at
Fair Market Value. If the Holder surrenders
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a combination of cash or securities of the Company to the Holder or
Warrants, the Holder will specify the respective number of shares of
Common Stock to be purchased with each form of consideration, and the
foregoing provisions will be applied to each form of consideration with
the same effect as if the Warrant were being separately exercised with
respect to each form of consideration.
2.06 TAXES. The issuance of any Common Stock or Other Securities upon the
exercise of any Warrant will be made without charge to any Holder for any tax,
other than income taxes assessed on such Holder, in respect of such issuance.
2.07 REGISTER. The Company will, at all times while any of the Warrants
remain outstanding and exercisable or Preferred Shares remain outstanding, keep
and maintain at its principal office a register in which the registration,
transfer, and exchange of the Warrants and the Preferred Shares will be provided
for. The Company will not at any time, except upon the dissolution, liquidation,
or winding up of the Company, close such register so as to result in preventing
or delaying the exercise or transfer, as the case may be, of any Warrant or any
of the Preferred Shares.
2.08 TRANSFER AND EXCHANGE. The Warrants, all options and rights under the
Warrants, and the Preferred Shares are transferable, in whole or in part, by the
Holders of the Warrants and Preferred Shares, in person or by duly authorized
attorney, on the books of the Company upon surrender of the Warrants or the
Preferred Shares, as the case may be, at the principal offices of the Company,
together with the form of transfer authorization attached to the Warrants duly
executed or by endorsement of the certificates representing the Preferred
Shares; PROVIDED, HOWEVER, that there will be no more than five (5) Holders at
any one time; and PROVIDED FURTHER, that such transfers will be made only to
Persons that the transferor in good faith believes to be an "accredited
investor" as such term is defined in Regulation D of the Securities Act. Absent
any such transfer and subject to the Shareholder Agreement, the Company may deem
and treat the registered Holders of the Warrants or the Preferred Shares, as the
case may be, at any time as the absolute owners of the Warrants or the Preferred
Shares, as the case may be, for all purposes and will not be affected by any
notice to the contrary. If any Warrant or any of the Preferred Shares is
transferred in part, the Company will, at the time of surrender of such Warrant
or any of the Preferred Shares, issue to the transferee a Warrant or a
certificate for Preferred Shares, as the case may be, covering the number of
shares transferred and to the transferor a Warrant or the Preferred Shares, as
the case may be, covering the number of shares not transferred. Notwithstanding
the foregoing, the Purchaser agrees that it will not effect a transfer to any
Person or Affiliate of such Person, engaged in the manufacture of steel or steel
products.
2.09 ADJUSTMENTS TO NUMBER OF SHARES PURCHASABLE.
(a) The Warrants will be exercisable for the number of shares of
Class A Common Stock in such manner that, following the complete and full
exercise of the Warrant of each Holder, the amount of Class A Common Stock
issued to all Holders will equal, in the case of the First Warrant, the
aggregate number of shares of Class A Common Stock set forth beneath the
names of the Purchaser on the signature pages of this Agreement and, in
the case of the Second Warrant, the number of shares of Class A
- 18 -
Common Stock computed in accordance with its terms, in each case, as
adjusted, to the extent necessary, to give effect to the following events:
(i) In case at any time or from time to time, the holders of
any class of Common Stock or Common Stock Equivalent have received,
or (on or after the record date fixed for the determination of
shareholders eligible to receive) have become entitled to receive,
without payment therefor:
(A) securities or property (other than cash) by way of
dividend or distribution; or
(B) securities or property (including cash) by way of
spin-off, split-up, reclassification (including any
reclassification in connection with a consolidation or merger
in which the Company is the surviving corporation),
recapitalization, combination of shares into a smaller number
of shares, or similar corporate restructuring;
other than additional shares of Common Stock issued as a stock
dividend or in a stock-split (adjustments in respect of which are
provided for in SECTIONS 2.09(A)(II) and (III)), then, and in each
such case, the Holders, on the exercise of the Warrants, will be
entitled to receive for each share of Class A Common Stock issuable
under the Warrants as of the record date fixed for such
distribution, the greatest per share amount of securities or
property received by any holder of any class of Common Stock or
Common Stock Equivalent or to which such holder is entitled.
(ii) If at any time there occurs any stock split, stock
dividend or distribution, reverse stock split, or other subdivision
of the Common Stock, then the number of shares of Class A Common
Stock to be received by the Holder of the Warrant and the Exercise
Price, subject to the limitations set forth in this Agreement, will
be proportionately adjusted.
(iii) In case of any reclassification or change of outstanding
shares of any class of Common Stock or Common Stock Equivalent
(other than a change in par value, or from par value to no par
value, or from no par value to par value), or in the case of any
consolidation of the Company with, or merger or share exchange of
the Company with or into, another Person, or in case of any sale of
fifty percent (50%) or more of the assets, income or revenue
generating capacity of the Company, the Company, or such successor
or other Person, as the case may be, will provide that the Holder of
the Warrant will thereafter be entitled to receive the highest per
share kind and amount of securities or property received or
receivable (including cash) upon such reclassification, change,
consolidation, merger, share exchange, or sale by any holder of any
class of Common Stock or Common Stock Equivalent that the Warrant
entitles the Holder to receive immediately prior to such
reclassification, change, consolidation, merger, share exchange, or
sale (as adjusted pursuant to SECTION 2.09(A)(I) and otherwise in
this Agreement). Any such successor Person, that thereafter will be
deemed to be the
- 19 -
Company for purposes of the Warrants, will provide for adjustments
that are as nearly equivalent as may be possible to the adjustments
provided for by this SECTION 2.09.
(iv) If at any time the Company issues or sells any shares of
any Common Stock or any Common Stock Equivalent (other than
Preferred Shares, Warrants or shares of Class A Common Stock issued
upon the exercise of such Warrants, as contemplated by this
Agreement) at a per unit or share consideration (including customary
and reasonable underwriter discounts and commissions) (which
consideration will include the price paid upon issuance plus the
minimum amount of any exercise, conversion, or similar payment made
upon exercise or conversion of any Common Stock Equivalent) less
than either the Exercise Price or ninety-five percent (95%) of the
then current Fair Market Value per share of Common Stock immediately
prior to the time such Common Stock or Common Stock Equivalent is
issued or sold (the "ADDITIONAL SECURITIES"), then:
(A) the Exercise Price will be reduced to the lower of
the prices calculated by:
(I) dividing (x) an amount equal to the sum of (1)
the number of shares of Common Stock outstanding on a
fully diluted basis immediately prior to such issuance
or sale multiplied by the then existing Exercise Price
plus (2) the aggregate consideration, if any, received
by the Company upon such issuance or sale, by (y) the
total number of shares of Common Stock outstanding
immediately after such issuance or sale on a fully
diluted basis; and
(II) multiplying the then existing Exercise Price
by a fraction, (A) the numerator of which is (x) the sum
of (1) the number of shares of Common Stock outstanding
on a fully diluted basis immediately prior to such
issuance or sale, multiplied by the Fair Market Value
per share of Common Stock immediately prior to such
issuance or sale, plus (2) the aggregate consideration
received by the Company upon such issuance or sale,
divided by (y) the total number of shares of Common
Stock outstanding on a fully diluted basis immediately
after such issuance or sale, and (B) the denominator of
which is the Fair Market Value per share of Common Stock
immediately prior to such issuance or sale (for purposes
of this SUBSECTION (II), the date as of which the Fair
Market Value per share of Common Stock will be computed
will be the earlier of the date upon which the Company
will (aa) enters into a firm contract for the issuance
of such shares, or (bb) issues such shares); and
(B) the number of shares of Class A Common Stock for
which any of the Warrants may be exercised at the Exercise
Price resulting from the adjustment described in SUBSECTION
(A) above will be equal to the
- 20 -
product of the number of shares of Class A Common Stock
purchasable under such Warrants immediately prior to such
adjustment multiplied by a fraction, the numerator of which is
the Exercise Price in effect immediately prior to such
adjustment and the denominator of which is the Exercise Price
resulting from such adjustment.
(v) the issuance of a Common Stock Equivalent shall be deemed
to be the issuance of the Common Stock underlying such Common Stock
Equivalent and no adjustment shall be made upon the issuance of
Common Stock underlying such Common Stock Equivalent.
(vi) In case any event occurs as to which the preceding
SECTIONS 2.09(A)(I) through (IV) are not strictly applicable, but as
to which the failure to make any adjustment would not fairly protect
the purchase rights represented by the Warrants in accordance with
the essential intent and principles of this Agreement, then, in each
such case, the Holder may appoint an independent investment bank or
firm of independent public accountants, that will give its opinion
as to the adjustment, if any, on a basis consistent with the
essential intent and principles established in this Agreement,
necessary to preserve the purchase rights represented by the
Warrants. Upon receipt of such opinion, the Company will promptly
deliver a copy of such opinion to the Holder and will make the
adjustments described in such opinion. The fees and expenses of such
investment bank or independent public accountants will be borne by
the Company.
(b) The Company will not by any action including, without
limitation, amending, or permitting the amendment of, the charter
documents, bylaws, or similar instruments of the Company or through any
reorganization, reclassification, transfer of assets, consolidation,
merger, share exchange, dissolution, issue or sale of securities, or any
other similar voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Agreement or the Warrants, but
will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holders against impairment or
dilution. Without limiting the generality of the foregoing, the Company
will (i) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock and Other Securities, free and clear
of all liens, encumbrances, equities, and claims and (ii) use its best
efforts to obtain all such authorizations, exemptions, or consents from
any public regulatory body having jurisdiction as may be necessary to
enable the Company to perform its obligations under the Warrants. Without
limiting the generality of the foregoing, the Company represents and
warrants that the board of directors of the Company has determined the
Exercise Price to be adequate and the issuance of the Warrants to be in
the best interests of the Company.
(c) Any calculation under this SECTION 2.09 will be made to the
nearest one ten-thousandth of a share and the number of Issuable Warrant
Shares resulting from such calculation will be rounded up to the next
whole share of Class A Common Stock or Other Securities comprising
Issuable Warrant Shares.
- 21 -
(d) Any adjustment made pursuant to this SECTION 2.09 will take into
account all prior adjustments made hereunder.
2.10 LOST, STOLEN, MUTILATED, OR DESTROYED INSTRUMENTS. If any Warrant or
certificate for Preferred Shares is lost, stolen, mutilated, or destroyed, the
Company will issue a new Warrant or certificate for Preferred Shares, as the
case may be, of like denomination, tenor, and date as the Warrant or certificate
for Preferred Shares so lost, stolen, mutilated, or destroyed. Any such new
Warrant or certificate for Preferred Shares will constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated, or destroyed Warrant or certificate for Preferred Shares is
at any time enforceable by any Person.
2.11 STOCK LEGEND. The Warrants, Warrant Shares, and Preferred Shares have
not been registered under the Securities Act or qualified under applicable state
securities laws. Accordingly, unless there is an effective registration
statement and qualification respecting the Warrants, Warrant Shares, or the
Preferred Shares, as the case may be, under the Securities Act or under
applicable state securities laws, the Preferred Shares and, at the time of
exercise of a Warrant, any stock certificate issued pursuant to the exercise of
a Warrant will bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE (A) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE,
TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER
OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS AND
(B) ARE SUBJECT TO THE TERMS OF AND PROVISIONS OF A PREFERRED STOCK AND
WARRANT PURCHASE AGREEMENT DATED AS OF JUNE 13, 1995 BETWEEN BAYOU STEEL
CORPORATION (THE "COMPANY") AND RICE PARTNERS II, L.P. (THE "PURCHASER")
AND A SHAREHOLDER AGREEMENT, DATED AS OF JUNE 13, 1995 BETWEEN THE
COMPANY, THE PURCHASER AND THE SHAREHOLDERS OF THE COMPANY LISTED ON THE
SIGNATURE PAGES THERETO, (AS SUCH AGREEMENTS MAY BE SUPPLEMENTED,
MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE "AGREEMENTS").
COPIES OF THE AGREEMENTS ARE AVAILABLE AT THE OFFICES OF THE COMPANY."
All shares of Capital Stock of the Company will be subject to the
Shareholder Agreement and will bear a legend to such effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Purchaser that:
(a) CORPORATE EXISTENCE. The Company is a corporation duly
organized, validly existing and in good standing under the laws of its
state of incorporation, has all requisite corporate power and authority to
own its assets and carry on its business as now
- 22 -
conducted, and is qualified or licensed to do business in all other
countries, states, and jurisdictions the laws of which require it to be so
qualified or licensed (other than in countries, states and jurisdictions
where the failure to be so qualified or licensed would not have a Material
Adverse Effect). The Company has no Subsidiaries or debt or equity
investment (other than investments permitted under the Senior Loan
Agreements) in any Person, other than as set forth on SCHEDULE 3.01(A).
Each Shareholder owns the equity interest of the Company set forth on
SCHEDULE 1, free and clear of all liens, claims, and encumbrances, and,
except for the Option Plan, no Person has any rights, whether granted by
the Company or any other Person, to acquire, directly from the Company or
any of the Shareholders, any portion of the equity interest of the Company
or the assets of the Company.
(b) CORPORATE AUTHORITY. The Company has (and did have with respect
to the First Mortgage Indenture and the Acquisition Documents), and at all
times that this Agreement is in force will have, the right and power, and
is (or was with respect to the First Mortgage Indenture and Acquisition
Documents) duly authorized, to enter into, execute, deliver, and perform
this Agreement, the Acquisition Documents, the Senior Loan Documents, the
First Mortgage Indenture, the Other Agreements, the Warrants, and the
Preferred Shares and the officers of Company executing and delivering this
Agreement, the Acquisition Documents, the Senior Loan Documents, the Other
Agreements, the Warrants and the Preferred Shares are (or were with
respect to the First Mortgage Indenture and the Acquisition Documents)
duly authorized to do so. This Agreement, the Shareholder Agreement, the
Acquisition Documents, the Senior Loan Documents, the First Mortgage
Indenture, the Other Agreements and the Warrants have been duly and
validly authorized, executed, issued, and delivered and constitute the
legal, valid, and binding obligations of Company enforceable in accordance
with their respective terms; PROVIDED, HOWEVER, that (i) the enforcement
thereof may be limited by principles of equity or debtor relief laws and
(ii) the Company's Certificate of Incorporation will be amended to provide
the Holders with the rights provided in the fifth sentence of SECTION
4.16.
(c) DOCUMENT VALIDITY. The execution, delivery, and performance of
this Agreement, the Acquisition Documents, the Senior Loan Documents, the
First Mortgage Indenture and the Other Agreements, the Warrants, and the
Preferred Shares will not, by the lapse of time, the giving of notice, or
otherwise, constitute a violation of any applicable provision contained in
the charter or bylaws of the Company.
(d) AUTHORIZED STOCK. As of the Closing Date, the authorized capital
stock of the Company consists of (i) 24,271,127 shares of Class A Common
Stock, $.01 par value, of which 10,613,380 shares are issued and
outstanding, (ii) 4,302,347 shares of Class B Common Stock, $.01 par
value, of which 2,271,127 shares and issued and outstanding, (iii) 100
shares of Class C Common Stock, $.01 par value, of which 100 shares are
issued and outstanding, and (iv) 10,000,000 shares of Preferred Stock,
$.01 per value, of which, after giving effect to the issuance of the
Preferred Shares, 15,000 shares are issued and outstanding. 822,422 shares
of Common Stock are reserved for issuance on exercise of the First
Warrant. All such issued and outstanding shares have been duly authorized
and validly issued, are fully paid and nonassessable, and have been
offered, issued, sold, and
- 23 -
delivered by the Company free from preemptive rights, rights of first
refusal, or similar rights, except as set forth on SCHEDULE 3.01(D), and
in compliance with applicable federal and state securities laws. Except
pursuant to this Agreement and the Option Plan, the Company is not
obligated to issue or sell any Capital Stock, and the Company is not party
to, or otherwise bound by, any agreement affecting the voting of any
Capital Stock. Except for the Shareholder Agreement, the Company is not a
party to, or otherwise bound by, any agreement obligating it to register
any of its Capital Stock.
(e) COMMON STOCK AND PREFERRED SHARES AUTHORIZATION. The shares of
Class A Common Stock and Other Securities issuable on exercise of the
Warrants have been duly and validly authorized and reserved for issuance
and, when issued in accordance with the terms of this Agreement or the
Warrants, as the case may be, will be validly issued, fully paid, and
nonassessable and free of preemptive rights, rights of first refusal, or
similar rights. The Series A Preferred Shares have been duly and validly
authorized and reserved for issuance, and when issued in accordance with
the terms of this Agreement, will be validly issued, fully paid, and
nonassessable and free of preemptive rights, rights of first refusal, or
similar rights. The Series B Preferred Shares have been duly and validly
authorized and reserved for issuance, and when issued in accordance with
the terms of the Certificate, will be validly issued, fully paid, and
nonassessable and free of preemptive rights, rights of first refusal, or
similar rights.
(f) NO OTHER AGREEMENTS. There is not now, and at no time during the
term of this Agreement or the Shareholder Agreement will there be, any
agreement, arrangement, or understanding to which the Company is a party
or by which it is otherwise bound, other than this Agreement, the
Shareholder Agreement, and the documents contemplated hereby and thereby,
modifying, restricting, or in any way affecting the rights of any security
holder to vote securities of the Company.
(g) MISREPRESENTATIONS. Subject to the next succeeding sentence,
after giving effect to the notations appearing therein, none of the
documents, instruments, or other information furnished to the Purchaser by
the Company, to the best of the Company's knowledge, contain any untrue
statement of a material fact or omits to state any material fact necessary
in order to make any statements made therein not misleading. After giving
effect to the notations appearing therein, any forward looking statement
(as defined in Rule 175(c) under the Securities Act of 1933, as amended)
made in any SEC Filing filed with the Commission, or otherwise furnished
to the Purchaser, was made with a reasonable basis and was disclosed in
good faith. No representation, warranty, or statement made by the Company
in this Agreement, or the Shareholder Agreement, in any document,
certificate, exhibit or schedule attached hereto or thereto or delivered
in connection herewith or therewith, or the Company's Private Placement
Memorandum, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make any
statements made herein or therein not misleading. To the best of the
Company's knowledge, there is no fact that materially and adversely
affects the condition (financial or otherwise), results of operations,
business, properties, or prospects of the Company and its Subsidiaries,
taken as a whole, that has not been disclosed in the documents provided to
the Purchaser.
- 24 -
(h) DEFAULT. The Company is not in default under any loan agreement,
indenture, mortgage, security agreement, lease, franchise, permit, license
or other agreement or obligation to that it is a party or by that any of
its properties may be bound which could reasonably be expected to have a
Material Adverse Effect. The Company is paying its debts as they become
due.
(i) AUTHORIZATION AND COMPLIANCE WITH LAWS AND MATERIAL AGREEMENTS.
Except as set forth on Schedule 3.01(i), the execution, delivery and
performance by the Company of this Agreement, the Acquisition Documents,
the Senior Loan Documents, the First Mortgage Indenture and the Other
Agreements to which it is or may in connection with the transactions
contemplated hereby become a party, do not and will not violate any law or
any order of any court, governmental authority or arbitrator applicable to
the Company as of the date hereof, and do not and will not upon the
consummation of the transactions contemplated hereby conflict with, result
in a breach of, or constitute a default under, or result in the imposition
of any Lien (except Permitted Liens) upon any assets of the Company
pursuant to the provisions of any material loan agreement, indenture,
mortgage, security agreement, franchise, permit, license or other
instrument or agreement by the Company or any of its properties is bound.
Except as set forth on SCHEDULE 3.01(I), no authorization, approval or
consent of, and no filing or registration with, any court, governmental
authority or third Person is or will be necessary for the execution,
delivery or performance by the Company of this Agreement, the Acquisition
Documents, the Senior Loan Agreements, and the Other Agreements to which
it is a party or the validity or enforceability thereof. Except as
otherwise noted on SCHEDULE 3.01(I), all such authorizations, approvals,
consents, filings and registrations described in SCHEDULE 3.01(I) have
been obtained. The Company is not in violation of any term of its
Certificate of Incorporation or Bylaws or any material judgment or decree
and is in compliance, in all material respects, with all applicable laws,
regulations and rules.
(j) ENVIRONMENTAL CONDITION OF THE PROPERTY. Except with respect to
such matters that gave rise to those actions, suits, proceedings or
investigations set forth in SCHEDULE 3.01(J), the Company and each
Subsidiary complies, and has complied, in all material respects, with all
applicable foreign, federal, state, local and other statutes, ordinances,
orders, judgments, rulings and regulations relating to environmental
pollution or to environmental regulation or control or to employee health
or safety (collectively, ("ENVIRONMENTAL LAWS"). Neither the Company nor
any Subsidiary has received notice of any failure to so comply which alone
or together with any other such notice could reasonably be expected to
result in a Material Adverse Effect. The Company and its Subsidiaries
reasonably believe that they will be able to continue to comply with all
applicable Environmental Laws, and renew or obtain all permits necessary
under the Environmental Laws, except for such compliance or permits the
absence of which, individually, or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. The Company, and the
Subsidiaries' plants do not manage any hazardous wastes, hazardous
substances, hazardous materials, toxic substances or toxic pollutants, as
those terms are used in the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Toxic Substance Control Act,
the Clean Air Act, the Clean Water Act or any other Environmental Law in a
manner that could reasonable be
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expected to result, individually or together with other such management,
in a Material Adverse Effect. Neither the Company nor any Subsidiary has
assumed, by contract or, to the best of its knowledge, by operation of
law, any liability, including contingent liability, under any
Environmental Law, except as set forth on SCHEDULE 3.01(J). The Company is
aware of no events, conditions or circumstances involving environmental
pollution or contamination or employee health or safety that could
reasonably be expected to result in a Material Adverse Effect.
(k) LITIGATION AND JUDGMENTS. Except as otherwise disclosed on
SCHEDULE 3.01(K), there is no action, suit, proceeding or investigation
before any court, governmental authority or arbitrator pending, or to the
knowledge of the Company threatened, against or affecting (other than
actions, suits, proceedings or investigations generally affecting the
steel industry) the Company, or challenging the validity of this
Agreement, the Acquisition Documents, the Senior Loan Documents, the First
Mortgage Indenture and/or the Other Agreements which, if decided adversely
to the Company, could reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect. Except as disclosed on
SCHEDULE 3.01(K), there are no outstanding judgments against the Company.
(l) RIGHTS IN PROPERTIES; LIENS. The Company has good title to all
Property owned by it, and owns the assets reflected on its balance sheets,
and none of such Properties or assets is subject to any Liens, except
Permitted Liens. There exists no default under any provision of any lease
that would permit the lessor to terminate any such lease or to exercise
any rights under such lease that, individually or together with all other
such defaults, would have a Material Adverse Effect. The Company has the
exclusive right to use all of the Intellectual Property necessary or
desirable to its business as presently conducted, and the Company's use of
the Intellectual Property does not infringe the rights of any other
Person. To the best of the Company's knowledge, no other Person is
infringing the rights of the Company in any of the Intellectual Property.
The Company owes no royalties, honoraria, or fees to any Person by reason
of its use of the Intellectual Property.
(m) INDEBTEDNESS. The Company has no Indebtedness, except Permitted
Indebtedness. All Indebtedness owed by the Company to any Affiliate (other
than Subsidiaries) is set forth on SCHEDULE 3.01(M).
(n) TAXES. The Company has duly and timely filed all tax returns
(federal, state, and local) required to be filed, including, without
limitation, all income, franchise, employment, property, and sales taxes
(other than such tax returns where, individually or in the aggregate, the
failure to file will not result in the imposition of any material amount
of taxes, interest or penalties) and has paid all of its tax liabilities,
other than immaterial amounts and taxes that are being contested by the
Company in good faith by appropriate proceedings and with respect to which
adequate reserves in accordance with GAAP have been provided for on the
Company's books. The Company knows of no pending investigation of the
Company by any taxing authority or pending but unassessed tax liability of
the Company. The Company has made no presently effective waiver of any
applicable statute of limitations or request for an extension of time to
file a tax return
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(other than extensions of time to file income tax returns), and the
Company is not a party to any tax-sharing agreement.
(o) USE OF PROCEEDS; MARGIN SECURITIES. The Company is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulations G, T, U or X of the Board of Governors
of the Federal Reserve System), and no part of the proceeds under this
Agreement will be used to purchase or carry any such margin stock or to
extend credit to others for the purpose of purchasing or carrying margin
stock. Neither the Company nor any Person acting on its behalf has taken
any action that might cause the transactions contemplated by this
Agreement, the Acquisition Documents, the Senior Loan Documents, the First
Mortgage Indenture or any Other Agreements to violate Regulations G, T, U
or X or to violate the Securities Exchange Act of 1934, as amended.
(p) ERISA. Except as disclosed on SCHEDULE 3.01(P), all members of
any Controlled Group have complied with all applicable minimum funding
requirements and all other applicable and material requirements of ERISA,
the Code, and applicable to the Employee Benefit Plans it or they sponsor
or maintain, and there are no existing conditions that would give rise to
material liability thereunder. With respect to any Employee Benefit Plan,
all members of any Controlled Group have made all contributions or
payments to or under each Employee Benefit Plan required by law, by the
terms of such Employee Benefit Plan, or by the terms of any contract or
agreement. Except as disclosed on SCHEDULE 3.01(P), no Termination Event
has occurred in connection with any Pension Plan, and there are no
unfunded benefit liabilities, as defined in section 4001(a)(18) of ERISA,
with respect to any Pension Plan that pose a risk of causing a Lien to be
created on the assets of the Company or that will result in the occurrence
of a Reportable Event. No member of any Controlled Group has been required
to contribute to a multiemployer plan, as defined in section 4001(a)(3) of
ERISA, since September 2, 1974. No material liability to the Pension
Benefit Guaranty Corporation has been, or is expected to be, incurred by
any member of a Controlled Group. The term "liability," as referred to in
this SECTION 3.01(P), includes any joint and several liability. No
prohibited transaction under ERISA or the Code has occurred with respect
to any Employee Benefit Plan that could have a Material Adverse Effect or
a material adverse effect on the condition, financial or otherwise, of an
Employee Benefit Plan.
(q) DELIVERY OF ACQUISITION DOCUMENTS. The Purchaser has received
complete copies of the Acquisition Documents and all documents executed in
connection with the Acquisition (including all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant thereto, if
any) and all amendments thereto, waivers relating thereto and other side
letters or agreements affecting the terms thereof. None of such documents
and agreements has been amended or supplemented, nor have any of the
provisions thereof been waived, except pursuant to a written agreement or
instrument that has heretofore been delivered to Purchaser.
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(r) INVESTMENT COMPANY ACT. The Company is not an "investment
company" or a company controlled by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(s) PUBLIC UTILITY HOLDING COMPANY ACT. The Company is not a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(t) NO BURDENSOME RESTRICTIONS. The Company is not a party to, or
bound by any agreement, condition, contract or arrangement that has, or
that the Company reasonably expects in the future will have, a Material
Adverse Effect.
(u) NO LABOR DISPUTES. Except as set forth on SCHEDULE 3.01(U), the
Company is not involved in any labor dispute. There are no strikes or
walkouts or union organization of any of the Company's employees in
existence or, to the Company's knowledge, threatened, and no labor
contract is scheduled to expire during the term of this Agreement, except
as set forth on SCHEDULE 3.01(U).
(v) BROKERS. Neither the Company nor any of its shareholders is
under any obligation to pay any broker's fee or commission in connection
with the transactions contemplated by this Agreement or the Acquisition,
except as set forth on SCHEDULE 3.01(V).
(w) INSURANCE. The amount and types of insurance carried by the
Company, and the terms and conditions thereof, are substantially similar
to the coverage maintained by companies in the same or similar business as
the Company and similarly situated.
(x) CONDUCT OF BUSINESS. On the Closing Date, the Company is engaged
only in businesses of the type described in SCHEDULE 3.01(X).
(y) DISCLOSURE. The Company has delivered to the Purchaser copies of
(a) the Company's annual report on Form 10-K for the fiscal years ended
September 30, 1993 and 1994, (b) the Company's quarterly reports on Form
10-Q for the period ended December 31, 1994, and (c) the Company's proxy
statement dated December 16, 1994, ((a), (b) and (c) are collectively
referred to herein as the "SEC FILINGS"). All reports and filings required
to be filed by the Company with the Commission during the last twelve (12)
months have been timely filed with the Commission. The SEC Filings (a)
were prepared in all material respects in accordance with the requirements
of the Exchange Act, and the rules and regulations thereunder, (b) do not
contain any untrue statement of material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements contained in the Company's
SEC Filings present fairly in all material respects the consolidated
financial position and results of operations and changes in shareholders'
equity and changes in cash flow of the Company and its subsidiaries as of
the dates and for the periods indicated therein in accordance with GAAP
throughout the periods indicated, except (a) as may be otherwise
specifically indicated in such financial statements and (b) the unaudited
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financial statements may not contain all footnotes required by generally
accepted accounting principles and may be subject to year-end adjustments.
The Company has no outstanding liabilities or indebtedness not reflected
on the balance sheet (known or unknown, absolute, accrued, contingent or
otherwise) which are material to the financial condition or operating
results of the Company on a consolidated basis.
(z) FINANCIAL STATEMENTS. The Company has delivered to the Purchaser
audited financial statements of the Company as at and for the fiscal year
ended September 30, 1994 and unaudited financial statements of the Company
for the six-month period ended March 31, 1995. Such financial statements
have been prepared in accordance with GAAP (subject to year end
adjustments made in the normal course of business, none of which the
Company expects to be material) and fairly present the financial condition
of the Company as of the respective dates indicated therein and the
results of operations for the respective periods indicated therein. As of
March 31, 1995, the Company has no liabilities or obligations (absolute,
accrued, contingent or otherwise) of a nature required by GAAP to be
reflected in such financial statements which are, individually or in the
aggregate, material to the condition, financial or otherwise, or
operations of the Company as of that date and which are not reflected on
such financial statements. There has been no material adverse change in
the condition, financial or otherwise, or operations of the Company since
the effective date of the most recent financial statements referenced
above.
3.02 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Company:
(a) EXISTENCE. It is a limited partnership duly organized and
existing and in good standing under the laws of the state of its
organization.
(b) AUTHORITY. It has the right and power and is duly authorized to
enter into, execute, deliver, and perform this Agreement and the
Shareholder Agreement, and its officers or agents executing and delivering
this Agreement and the Shareholder Agreement are duly authorized to do so.
This Agreement and the Shareholder Agreement have been duly and validly
executed, issued, and delivered and constitute the legal, valid, and
binding obligation of the Purchaser, enforceable in accordance with its
terms.
(c) INVESTOR STATUS. It (i) is an "accredited investor," as that
term is defined in Regulation D under the Securities Act; and (ii) has
such knowledge, skill, and experience in business and financial matters,
based on actual participation, that it is capable of evaluating the merits
and risks of an investment in the Company and the suitability thereof as
an investment for the Purchaser.
(d) INVESTMENT FOR OWN ACCOUNT. Except as otherwise contemplated by
this Agreement and the Shareholder Agreement, the Purchaser is acquiring
the Preferred Shares, its Warrants, and any securities issuable upon
exercise of the Warrants for investment for its own account and not with a
view to any distribution thereof in violation of applicable securities
laws.
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(e) LEGENDS. It agrees that the certificates representing its
Preferred Shares, the Warrants, and any Issued Warrant Shares will bear
the legends referenced in this Agreement, and such Preferred Shares,
Warrants, or securities issuable upon exercise of the Warrants and
pursuant to the Shareholder Agreement, as the case may be, will not be
offered, sold, or transferred in the absence of registration or exemption
under applicable securities laws.
ARTICLE IV
COVENANTS
The Company covenants and agrees as follows:
4.01 FINANCIAL STATEMENTS. The Company will keep books of account and
prepare financial statements and will cause to be furnished to the Purchaser and
each other Holder (subject to the Purchaser and each other Holder entering into
a confidentiality agreement in substantially the form of ANNEX E):
(a) As soon as available, and in any event within ninety (90) days
after the end of each fiscal year of the Company, beginning with the
fiscal year ending September 30, 1995, (i) a copy of the financial
statements of the Company for such fiscal year containing an audited
consolidated, and unaudited consolidating, balance sheet, statement of
income, statement of shareholders' equity, and statement of cash flows,
each as at the end of such fiscal year and for the period then ended and
in each case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and audited and certified
(or unaudited and uncertified in the case of consolidating financial
statements) by a "big six" accounting firm, or other independent certified
public accountants of recognized standing selected by the Company and
consented to by the Holders, to the effect that such report has been
prepared in accordance with GAAP and (ii) a comparison of the actual
results during such fiscal year to those originally budgeted by the
Company prior to the beginning of such fiscal year and a narrative
description and explanation of any budget variances. The annual audit
report required by this Agreement will not be qualified by or make
reference to any disclosure that the Company may not continue as a going
concern or otherwise qualified or limited because of restricted or limited
examination by the accountant of any portion of any of the records of the
Company.
(b) As soon as available, and in any event within thirty (30) days
after the end of each calendar month, a copy of unaudited consolidated and
consolidating financial statements of the Company as of the end of such
calendar month and for the portion of the fiscal year then ended,
containing a balance sheet, statement of income, and statement of cash
flows, in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year and all in reasonable
detail, including, without limitation, a comparison of the actual results
during such month to those originally budgeted by the Company prior to the
beginning of the fiscal year.
(c) As soon as available, and in any event within forty-five (45)
days after the end of each calendar quarter, a copy of unaudited
consolidated and consolidating financial
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statements of the Company as of the end of such calendar quarter and for
the portion of the fiscal year then ended, containing a balance sheet,
statement of income, and statement of cash flows, in each case setting
forth in comparative form the figures for the corresponding period of the
preceding fiscal year and all in reasonable detail.
(d) On or before the beginning of each fiscal year, an annual budget
or business plan for such fiscal year, including a projected consolidated
and consolidating balance sheet, income statement, and cash flow statement
for such year, and, promptly during each fiscal year, all revisions
thereto approved by the board of directors of the Company.
(e) Concurrently with the delivery of each of the financial
statements referred to in SECTION 4.01(A) and within forty-five (45) days
after the end of each calendar quarter, a certificate of an authorized
officer of the Company in form and substance satisfactory to the Holders
(i) with respect to the financial statements referred to in SECTION
4.01(C), certifying that the financial statements attached have been
prepared in accordance with GAAP and fairly and accurately present
(subject to year-end audit adjustments) the consolidated and consolidating
financial condition and results of operations of the Company at the date
and for the period indicated therein, and (ii) containing a narrative
report in form and substance substantially the same as the Company's
management's discussion and analysis included in the Company's Form 10-Q
filed with the Commission for such quarter.
(f) As soon as available, a copy of each (i) financial statement,
report, notice, or proxy statement sent by the Company to its
shareholders; (ii) regular, periodic, or special report, registration
statement, or prospectus filed by the Company with any securities
exchange, state securities regulator, or the Commission; (iii) material
order issued by any court, governmental authority, or arbitrator in any
material proceeding to which the Company is a party or to which any of its
assets is subject; (iv) press release or other statement made available
generally by the Company to the public generally concerning material
developments in the business of the Company; and (v) a copy of all
material correspondence, reports, and other information sent by the
Company to any holder of any indebtedness, including, without limitation
the Senior Lender and First Mortgage Bank of Commerce.
(g) Promptly, such additional information concerning the Company as
any Holder may reasonably request, including, without limitation, after
review by the Company's Board of Directors, auditor management reports.
4.02 BOOKS AND RECORDS. The Company will keep (a) proper books of record
and account in which full, true and correct entries will be made of all dealings
or transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books from its
earnings allowances against doubtful receivables, advances and investments and
all other proper accruals (including, without limitation, by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), that
should be set aside from such earnings in connection with its business. All
- 31 -
determinations pursuant to this subsection will be made in accordance with, or
as required by, GAAP consistently applied.
4.03 DISCLOSURE OF MATERIAL MATTERS. The Company will, immediately upon
learning thereof, report to the Purchaser (a) all matters materially affecting
the value, enforceability or collectibility of any material portion of its
assets including, without limitation, the Company's reclamation or repossession
of, or the return to the Company of, a material amount of goods and material
claims or disputes asserted by any customer or other obligor, and (b) any
material adverse change in the relationship between the Company and any of its
material suppliers or customers.
4.04 PRESERVATION OF EXISTENCE AND CONDUCT OF BUSINESS. Except as
otherwise provided in this Agreement, the Company will preserve and maintain its
corporate existence and all of its leases, privileges, franchises,
qualifications and rights that are necessary or desirable in the ordinary
conduct of its business, and conduct its business as presently conducted in an
orderly and efficient manner in accordance with good business practices.
4.05 MAINTENANCE OF PROPERTIES. The Company will operate and maintain in
good condition and repair (ordinary wear and tear excepted) and, subject to
sound business judgment, replace as necessary, all of its assets and properties
that are necessary or useful in accordance with sound business practices in the
judgment of the Company in the proper conduct of its business. The Company will
at all times maintain the Intellectual Property used by the Company in its
business in full force and effect, and will defend and protect such Intellectual
Property against all adverse claims.
4.06 PAYMENT OF TAXES AND CLAIMS. The Company will pay or discharge, at or
before maturity or before becoming delinquent, (a) all taxes, levies,
assessments, vault, water and sewer rents, rates, charges, levies, permits,
inspection and license fees and other governmental and quasi-governmental
charges and any penalties or interest for nonpayment thereof, heretofore or
hereafter imposed or that may become a Lien upon any property owned by the
Company or arising with respect to the occupancy, use, possession or leasing
thereof other than taxes and other governmental and quasi-governmental charges
that are being contested by the Company in good faith by appropriate proceedings
and with respect to which adequate reserves in accordance with GAAP have been
provided for on the Company's books (collectively the "IMPOSITIONS") and (b) all
lawful claims for labor, material, and supplies, that, if unpaid, might become a
Lien upon any of its property.
4.07 PAYMENT OF EXPENSES. All costs and expenses, including, without
limitation, reasonable attorneys' fees incurred by the Purchaser in efforts made
to enforce the Obligations, as well as all reasonable out-of-pocket costs and
expenses, including reasonable attorneys' fees and legal expenses, incurred in
connection with entering into, modifying, administering and/or enforcing this
Agreement and all Other Agreements and/or, in defending or prosecuting any
actions or proceedings arising out of or relating to the Purchaser's
transactions with the Company, or any advice given to Purchaser with respect to
its rights and obligations under this Agreement or any Other Agreements will be
payable to the Purchaser, on demand, and will become part of the Obligations.
- 32 -
4.08 INSURANCE. The Company will maintain, with financially sound,
reputable and solvent companies, insurance policies (a) insuring its assets
against loss by fire, explosion, theft, and other risks and casualties as are
customarily insured against by companies engaged in the same or a similar
business, (b) insuring it against liability for personal injury and property
damages relating to its assets, such policies to be in such amounts and covering
such risks as are usually insured against by companies engaged in the same or a
similar business, and insuring such other matters as may from time to time be
reasonably requested by Purchaser. The Company will maintain, with financially
sound, reputable and solvent companies, insurance policies insuring its officers
and directors against liability for actions taken in the capacity as officers
and directors, such policies in an amount and in substance satisfactory in the
good faith judgment of the Company's board of directors.
4.09 NOTICES. The Company will promptly, but in any event within five (5)
Business Days after first becoming aware thereof, notify the Purchaser of:
(a) the commencement of any action, suit, or proceeding against the
Company that might have a Material Adverse Effect;
(b) the occurrence of a default, or an event that with the passage
of time or giving of notice or both constitutes a default or event of
default under the Acquisition Documents, the Senior Loan Documents, the
First Mortgage Indenture, this Agreement or under any instrument or
agreement evidencing any other material Indebtedness of the Company;
(c) any other matter that might have a Material Adverse Effect; and
(d) The occurrence of an Issuance Event.
Any notification required by this SECTION 4.09 will be accompanied by a
certificate of the Chief Executive Officer or Chief Financial Officer setting
forth the details of the specified events and the action that the Company
proposes to take with respect thereto.
Immediately upon receipt by the Company, the Company will provide the
Purchaser with copies of all notices (including notices of default), statements
and financial information, including notices of default, received from the
Senior Lender under the Senior Loan Agreements and any other creditor or lessor
with respect to the acceleration of the maturity of any item of Indebtedness for
borrowed money or the repossession of property from the Company.
4.10 AMENDMENTS TO OTHER DOCUMENTS. The Company will promptly provide the
Purchaser with copies of all proposed amendments to the Acquisition Documents,
Senior Loan Documents, the First Mortgage Indenture and of all other loan
agreements to which the Company is a party.
4.11 FURTHER ASSURANCES. The Company will execute and deliver to Purchaser
from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents as Purchaser may
request, in order that the full intent of this Agreement and the Other
Agreements may be carried into effect.
- 33 -
4.12 COMPLIANCE WITH ERISA AND THE CODE. The Company will comply, and will
cause each other member of any Controlled Group to comply, with all minimum
funding requirements, and all other material requirements, of ERISA and the
Code, if applicable, to any Employee Benefit Plan it or they sponsor or
maintain, so as not to give rise to any liability thereunder. The Company will
pay and will cause each other member of any Controlled Group to pay when due any
amount payable by it to the Pension Benefit Guaranty Corporation.
4.13 COMPLIANCE WITH REGULATIONS G, T, U AND X. Neither the Company nor
any Person acting on its behalf will take any action that might cause this
Agreement, the Senior Loan Agreements, the First Mortgage Indenture or the Other
Documents to violate, and the Company will take all actions necessary to cause
compliance with, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System and the Securities Exchange Act of 1934, in each case as
now in effect or as the same may hereafter be in effect.
4.14 FINANCIAL COVENANTS.
(a) DEBT SERVICE COVERAGE RATIO (ACTUAL). The Company will not permit the
Debt Service Coverage Ratio (Actual) to be less than 1.00:1.00; PROVIDED,
HOWEVER, that in the event the ratio required under Section 7.14 of the Credit
Agreement is deleted (whether by amendment of the existing Senior Debt or
through a refinancing), then the Debt Service Coverage Ratio will remain at the
ratio in effect on the date of such deletion; PROVIDED, FURTHER, that in the
event the ratio required under Section 7.14 of the Credit Agreement shall be
replaced, whether by amendment of the existing Senior Debt or through a
refinancing, then the Debt Service Coverage Ratio (Actual) covenant shall be
replaced with the following covenant:
The Company will not permit the Debt Service Coverage Ratio (Actual) to be
less than 1.00 to 1:00, PROVIDED, HOWEVER, that if, with respect to the Company
and its Recourse Subsidiaries, the EBITDA Ratio is amended to provide for a
maximum EBITDA Ratio greater than 2.00 to 1.00, then the Debt Service Coverage
Ratio (Actual) required under this Section 4.14(a) shall be adjusted so as to be
higher than the Debt Service Coverage Ratio (Actual) set forth above by fifty
percent (50%) of the increase in the EBITDA Ratio. If the EBITDA Ratio is
amended to provide for a maximum EBITDA Ratio less than 2.00 to 1.00, then the
Debt Service Coverage Ratio (Actual) required under this Section 4.14(a) shall
be adjusted so as to be lower than the Debt Service Coverage Ratio (Actual) set
forth above by fifty percent (50%) of the decrease in the EBITDA Ratio.
- 34 -
(b) ADDITIONAL INDEBTEDNESS. The Company shall not, and shall not permit
any of its Recourse Subsidiaries, directly or indirectly, to incur, create,
assume, suffer to exist, guarantee, become liable, contingently or otherwise,
with respect to, or otherwise become responsible for the payment of (each event,
an "incurrence") any Indebtedness unless the pro forma EBITDA Ratio of the
Company and its Recourse Subsidiaries for the Reference Period prior to the
incurrence of such Indebtedness (taken as a whole and calculated on the
assumptions that such Indebtedness had been incurred and the proceeds thereof
had been applied on the first day of the Reference Period) would have been
greater than 1.80 to 1.00; PROVIDED, HOWEVER, that (i) for purposes of this
SECTION 4.14(B), if the "EBITDA Ratio" shall at any time be amended (including,
without limitation, after giving effect to any amendments or refinancings or
modifications under this Agreement or the First Mortgage Indenture), then the
EBITDA Ratio required under this SECTION 4.14(B) shall be adjusted so as to be
lower than the EBITDA Ratio required in the First Mortgage Indenture at the date
of determination thereof by the same percentage as on the date hereof; and (ii)
nothing contained herein shall be deemed to restrict in any manner the ability
of the Company or any of its Subsidiaries to incur Indebtedness otherwise
permitted under the First Mortgage Indenture, including, without limitation,
Sections 6.9(b) and 6.9(c) thereof, or under the Credit Agreement, including,
without limitation, Section 7.01 thereof.
(c) DEBT TO CAPITALIZATION RATIO. In the case of the Company and its
Recourse Subsidiaries, permit the ratio of (a) amounts outstanding under the
Credit Agreement PLUS amounts outstanding under the Term Loan Agreement PLUS,
without duplication, total Funded Indebtedness of the Company and its Recourse
Subsidiaries, computed on a consolidated basis, less Unencumbered Cash owned and
held by or on behalf of the Company to (b) Capitalization, computed in each case
on a consolidated basis, at any time to exceed .70 to 1.00; PROVIDED, HOWEVER,
that if the Debt to Capitalization Ratio required in the Credit Agreement shall
at any time be amended (including, without limitation, after giving effect to
any amendments or refinancings or modifications under this Agreement or the
Credit Agreement), then the Debt to Capitalization Ratio required under this
SECTION 4.14(C) shall be adjusted so as to be higher than the Debt to
Capitalization Ratio set forth in the Credit Agreement by the same percentage as
immediately prior to such amendment.
(d) ADJUSTMENTS. Notwithstanding anything to the contrary set forth in
clauses (a), (b) or (c) above, it is hereby agreed that in the event of an
amendment, modification or refinancing of Senior Debt, if (i) pursuant to the
adjustment provisions of clause (a) above, the Debt Service Coverage Ratio
(Actual) required herein would be less than 1.00:1:00, or (ii) pursuant to the
adjustment provisions in clause (ii) of the proviso in clause (b) above, the
EBITDA Ratio required herein would be less than 1.50:1.00 or (iii) pursuant to
the adjustment provisions in the proviso to clause (c) above, the Debt to
Capitalization Ratio required herein would be greater than .75:1.00 (the ratios
set forth in clauses (i), (ii) and (iii) being referred to herein as the
"LIMITATION RATIOS"), then
(A) with the written consent of the Holders, the Debt Service
Coverage Ratio (Actual), EBITDA Ratio or Debt to Capitalization Ratio, as the
case may be, shall be adjusted in accordance with clause (a), (b) or (c) above,
or
(B) if the Holders do not consent to any or all of the adjustments
specified in clause (A) above and request in writing that any or all of the Debt
Service Coverage Ratio
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(Actual), EBITDA Ratio or Debt to Capitalization Ratio be re-set at the
applicable Limitation Ratio, then, at the Company's option, either (i) the
Company shall consent to the re-setting of the covenants at the applicable
Limitation Ratios or (ii) the Company shall redeem the Preferred Stock without
premium or penalty.
4.15 FISCAL YEAR. The Company will cause its fiscal year to be the twelve
month period ending on the last day of September of each year.
4.16 BOARD OBSERVATION AND MEMBERSHIP. The Company will deliver to the
Purchaser a certified copy of the minutes of and all materials distributed at or
prior to all meetings of the board of directors of the Company, certified as
true and accurate by the Secretary of the Company, promptly following each such
meeting. The Company will (a) permit the Purchaser, so long as the Purchaser
owns any Preferred Shares or not less than 25,000 shares of Registrable
Securities in the Company, to designate one person to attend all meetings of the
Company's board of directors, (b) provide such designee notice of all meetings
of the Company's board of directors contemporaneously with notice being given to
all directors, (c) permit such designee to attend such meetings as an observer,
and (d) provide to such designee a copy of all materials distributed at such
meetings. Regular board of director meetings will be held (i) at least four (4)
times during each calendar year, with at least two of such meetings to be held
in person, and (ii) at intervals of not less than one hundred twenty (120) days
between any two (2) such regular board meetings. The Company will reimburse each
such observer for all reasonable expenses incurred in traveling to and from such
meetings and attending such meetings. In addition, for so long as the Purchaser
owns any Preferred Shares or not less than 25,000 shares of Registrable
Securities, at all times the board of directors will consist of no more than
thirteen (13) members, including (i) one (1) individual designated by the
Purchaser, (ii) one (1) additional individual designated by the Purchaser if
either (A) the quarterly dividends required by the Series B Preferred Stock are
not paid by the Company for two (2) consecutive calendar quarters or (B) an
Issuance Event exists hereunder, and (iii) one (1) additional individual
designated by the Purchaser if either any quarterly dividend required by the
Series B Preferred Stock is not paid or an Issuance Event occurs and continues
for, in either case, 270 consecutive days at any time subsequent to the
nonpayment or occurrence of an Issuance Event referred to in SUBSECTION (II)
above; PROVIDED, HOWEVER, that the Purchaser will not have any obligation to
designate or cause such individuals to serve on the board of directors of the
Company; and PROVIDED FURTHER, that upon the occurrence of any of (x) the
payment in full of the dividends owing as a result of the occurrence of the
nonpayment event referred to in SUBSECTION (II) or SUBSECTION (III) above or (y)
the cure of the occurrence of an Issuance Event referred to in SUBSECTION (II)
or SUBSECTION (III) above, so long as all other dividends have been paid and no
other Issuance Event has occurred, the individual designated by the Purchaser
pursuant to such SUBSECTION (II) or SUBSECTION (III) above, as the case may be,
will cease to serve on the board of directors of the Company upon written notice
by the Company provided within ten (10) business days following such cure or
payment in full. Any failure by the Purchaser to designate such individuals will
not constitute failure to comply with this Agreement or result in any liability
to the Purchaser. The Company agrees to compensate such individuals referred to
in SUBSECTIONS (I), (II) and (III) in the same manner as each of the other
members of the board of directors is compensated and agrees to reimburse such
individuals and the Purchaser for all reasonable expenses incurred by such
individuals and the Purchaser in connection with the meetings and activities of
the board of directors. The Company agrees to take all necessary action to
effectuate this provision. Notwithstanding anything to the contrary
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in this SECTION 4.16, the Purchaser agrees that any Person designated by the
Purchaser pursuant to this SECTION 4.16 will not be a Person or an Affiliate of
a Person that is engaged in the manufacture of steel or steel products.
4.17 ENVIRONMENTAL COSTS. The Company hereby indemnifies and holds the
Purchaser harmless from and against any liability, loss, damage, suit, action or
proceeding by any federal, state or municipal government or quasi-governmental
agency or any third person pertaining to solid or hazardous waste materials or
other toxic substances, whether arising under any federal, state or municipal
law or regulation, or tort, contract or common law.
4.18 LAWS. The Company will comply in all material respects with all
applicable statutes, regulations, and orders of the United States, domestic and
foreign states, and municipalities, agencies, and instrumentalities of the
foregoing applicable to the Company.
4.19 INSPECTION. At any time during the normal business hours of the
Company and upon prior notice of not less than one (1) Business Day, the Company
will permit any representative designated by the Holders to (a) visit and
inspect any of the Properties of the Company, so long as, such inspection rights
are limited to (i) one (1) on-site inspection in the absence of an Issuance
Event and (ii) five (5) on-site inspections not otherwise consented to by the
Company when an Issuance Event is continuing; (b) examine the corporate and
financial records of Company and make reasonable copies thereof or extracts
therefrom; and (c) discuss the affairs, finances, and accounts of the Company
with the directors, officers, key employees, and independent accountants of the
Company. The Company will promptly reimburse Purchaser for all expenses incurred
in connection with the one (1) on-site inspection in the absence of an Issuance
Event and the five (5) on-site inspections not otherwise consented to by the
Company where an Issuance Event is continuing.
4.20 NEGATIVE COVENANTS. Without the prior written consent of the Holders,
which consent may be withheld in the sole discretion of the Holders (except as
otherwise provided in SECTION 4.20(A) below), the Company will not:
(a) agree or consent to any modification, amendment or waiver of any
of the terms and provisions of the Senior Loan Agreement or First Mortgage
Indenture if the effect thereof would be to make the restrictions on the
ability of the Company to pay dividends on or redeem the Preferred Shares
more onerous than the restrictions in effect on the date hereof; PROVIDED,
HOWEVER, that it is understood that modifications and amendments
(including, without limitation, modifications and amendments which involve
the addition of new covenants, the revision of financial covenants or the
modification of the specific section restricting the payment of dividends
or payments to be received upon redemption of the Purchaser's Preferred
Shares) shall not be more onerous if the Company is not more likely to
breach the modified and/or amended terms and conditions than it was to
breach the terms and conditions as in effect on the date hereof; PROVIDED,
FURTHER, that any requested consent to a waiver of this SECTION 4.20(A)
shall not be unreasonably withheld (it being understood that the
determination of whether any such requested consent has been unreasonably
withheld shall take into account current credit market conditions for
companies similarly situated with the Company);
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(b) issue any class of equity ranking senior or PARI PASSU to the
Preferred Shares as to dividends or distribution of assets of the Company
on the liquidation, dissolution or winding up of the Company;
(c) become a party to a merger or consolidation, or purchase or
otherwise acquire all or a substantial part of the assets of any Person or
any shares or other evidence of beneficial ownership of any Person unless
(i) the surviving entity is a corporation that is incorporated under the
laws of the United States of America, (ii) no Issuance Event has occurred
or will occur as a result of such transaction, and (ii) Howard M. Meyers
retains Voting Control of the Company, or dissolve or liquidate;
(d) except as contemplated by this Agreement and the Other
Agreements, enter into any transaction with any director, officer,
employee, shareholder, or Affiliate of the Company except transactions
upon terms that are fair and reasonable and that are at least as favorable
as would result in a comparable arm's-length transaction with a Person not
a director, officer, employee, shareholder or Affiliate of the Company; it
being acknowledged by the Purchaser, for itself and for the Holders, that
the transactions set forth on SCHEDULE 4.20 comply with this SUBSECTION
(D);
(e) permit to occur any amendment, alteration, or modification of
the Certificate of Incorporation or Bylaws of the Company, as constituted
on the date of this Agreement, the effect of which would be to materially
adversely affect either the rights and benefits of the Holders or the
duties and obligations of the Company under this Agreement, the Warrants,
or the Shareholder Agreement;
(f) unless all accrued dividends to the Holders of the Preferred
Shares are at such time paid in full, declare or make any dividends or
distributions of its cash, property, or assets or redeem, retire,
purchase, or otherwise acquire, directly or indirectly, any of the Capital
Stock or capital stock or securities of any Affiliate of the Company, or
any securities convertible or exchangeable into Capital Stock or capital
stock or securities of any Affiliate of the Company; PROVIDED, HOWEVER,
such dividends, distributions, redemptions, retirements, purchases or
acquisitions will not in the aggregate for any given fiscal year exceed
the amount permitted under the First Mortgage Indenture;
(g) effect any material sale, lease, assignment, transfer, or other
conveyance of more than twenty-five percent (25%) of the assets or
operations or the revenue or income generating capacity of the Company
(other than inventory in the ordinary course of business and other assets
reasonably and in good faith determined by the Company to be obsolete or
no longer necessary to the business of the Company) (excluding such sales,
leases, assignments, transfers, or other conveyances by Non-Recourse
Subsidiaries) or to take any such action that has the effect of any of the
foregoing;
(h) enter into any business not materially related to the business
of the Company;
(i) unless otherwise approved by a committee consisting solely of
Independent Directors, increase the amount of benefits payable under any
benefit plan in the aggregate,
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or permit the aggregate amount of salary and any other direct and indirect
remuneration (including, but not limited to, employee benefits,
professional, management, and consulting fees and expenses, and bonuses
under any plans) paid orthecrued by Company during any fiscal year to or
for the direct or indirect benefit of any of its executive officers,
directors, or Affiliates of the foregoing;
(j) allow the aggregate par value of the Capital Stock subject to
the Warrants from time to time to exceed the price payable on exercise of
the Warrants, as adjusted from time to time;
(k) enter into a Rule 13e-3 transaction within the meaning of
SECTION 13E- 3(A)(3) of the Exchange Act; or
(l) obligate itself or otherwise agree to take, permit or enter into
any of the events described in SUBSECTIONS (A) through (K) above.
4.21 ACCOUNTANTS. The Company will retain independent public accountants
who will certify the consolidated financial statements of the Company at the end
of each fiscal year.
4.22 NOTICE.
(a) In the event of (i) any setting by the Company of a record date
with respect to the holders of any class of Capital Stock of the Company
for the purpose of determining which of such holders are entitled to
dividends, repurchases of securities or other distributions, or any right
to subscribe for, purchase or otherwise acquire any shares of Capital
Stock of the Company or other property or to receive any other right; or
(ii) any capital reorganization of the Company, or reclassification or
recapitalization of the Capital Stock of the Company or any transfer of
all or a majority of the assets, business, or revenue or income generating
capacity of the Company, or consolidation, merger, share exchange,
reorganization, or similar transaction involving the Company; or (iii) any
voluntary or involuntary dissolution, liquidation, or winding up of the
Company; or (iv) any proposed issue or grant by the Company of any Capital
Stock of the Company, or any right or option to subscribe for, purchase,
or otherwise acquire any Capital Stock (other than the issue of Issuable
Warrant Shares upon exercise of the Warrants and the issue of options and
shares of Class A Common Stock upon the exercise thereof pursuant to the
Option Plan), then, in each such event, the Company will deliver or cause
to be delivered to the Holders a notice specifying, as the case may be,
(A) the date on which any such record is to be set for the purpose of such
dividend, distribution, or right, and stating the amount and character of
such dividend, distribution, or right; (B) the date as of which the
holders of record will be entitled to vote on any reorganization,
reclassification, recapitalization, transfer, consolidation, merger, share
exchange, conveyance, dissolution, liquidation, or winding-up; (C) the
date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, share exchange, conveyance, dissolution,
liquidation, or winding-up is to take place and the time, if any is to be
fixed, as of which the holders of record of any class of Capital Stock of
the Company will be entitled to exchange their shares of Capital Stock of
the Company for securities or other property deliverable upon such event;
(D) the amount and character of any Capital Stock of the
- 39 -
Company, property, or rights proposed to be issued or granted, the
consideration to be received therefor, and, in the case of rights or
options, the exercise price thereof, and the date of such proposed issue
or grant and the Persons or class of Persons to whom such proposed issue
or grant will be offered or made; and (E) such other information as the
Holders may reasonably request. Any such notice will be deposited in the
United States mail, postage prepaid, at least thirty (30) days prior to
the date therein specified, and notwithstanding anything in this Agreement
or the Warrants to the contrary the Holders may exercise the Warrants
within thirty (30) days from the receipt of such notice.
(b) If there is any adjustment as provided above in ARTICLE II, or
if any Other Securities become issuable in lieu of shares of such Common
Stock upon exercise of the Warrants, the Company will immediately cause
written notice thereof to be sent to each Holder, which notice will be
accompanied by a certificate of the independent public accountants of the
Company setting forth in reasonable detail the basis for the Holders'
becoming entitled to receive such Other Securities, the facts requiring
any such adjustment in the number of shares receivable after such
adjustment, or the kind and amount of any Other Securities so purchasable
upon the exercise of the Warrants, as the case may be. At the request of
any Holder and upon surrender of the Warrant of such Holder, the Company
will reissue the Warrant of such Holder in a form conforming to such
adjustments.
4.23 WARRANT RIGHTS. The Company covenants and agrees that during the term
of this Agreement and so long as any Warrant is outstanding, (a) the Company
will at all times have authorized and reserved a sufficient number of shares of
Class A Common Stock and Other Securities, to provide for the exercise in full
of the rights represented by the Warrants and the exercise in full of the rights
of the Holders under the Shareholder Agreement; (b) the Company will not
increase or permit to be increased the par value per share or stated capital of
the Issuable Warrant Shares or the consideration receivable upon issuance of its
Issuable Warrant Shares; and (c) in the event that the exercise of the Warrant
would require the payment by the Holder of consideration for the Class A Common
Stock or Other Securities receivable upon such exercise of less than the par or
stated value of such Issuable Warrant Shares, the Company will promptly take
such action as may be necessary to change the par or stated value of such
Issuable Warrant Shares to an amount less than or equal to such consideration.
ARTICLE V
CONDITIONS
The obligations of the Purchaser to effect the transactions contemplated
by this Agreement are subject to the following conditions precedent:
5.01 EFFECTIVENESS OF SENIOR LOAN DOCUMENTS. The Senior Loan Documents
will have been duly executed and delivered by the parties thereto and will be on
terms and conditions satisfactory to Purchaser. All conditions precedent to the
making of the Senior Loans will have been satisfied or waived.
5.02 SERIES A PREFERRED SHARES AND WARRANTS. The Company will have
received not less than $15,000,000 in cash in exchange for issuance of Series A
Preferred Shares and the Warrants,
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and Purchaser will have received certificates evidencing such Series A Preferred
Shares and Warrants, such certificates being satisfactory to Purchaser.
5.03 ACQUISITION. The Acquisition Documents will have been duly executed
and delivered by the parties thereto, all conditions to the consummation of the
Acquisition will have been satisfied or waived.
5.04 DUE DILIGENCE. The results of Purchaser's due diligence regarding the
Company and the Acquisition will be satisfactory to Purchaser, and Purchaser
will be satisfied with the assets and books and records and the business and
financial condition of the Company, after giving effect to the Acquisition.
5.05 APPROVAL. The Purchaser's investment committee will have approved the
purchase of the Series A Preferred Shares and the Warrants on terms set forth
herein and in the Other Agreements.
5.06 NO LITIGATION; CONSUMMATION OF TRANSACTIONS. No injunction,
preliminary injunction, or temporary restraining order will be threatened or
will exist that prohibits or may prohibit the transactions contemplated herein
or any other related transaction, and no litigation or similar proceeding
(including, without limitation, any litigation or other proceeding seeking
injunctive or similar relief) will be threatened or will exist with respect to
the transactions contemplated herein, that, if adversely determined, would in
the judgment of the Purchaser have a Material Adverse Effect.
5.07 CLOSING DELIVERIES. The Purchaser will have received the following,
each in form and substance satisfactory to the Purchaser:
(a) WARRANTS, CERTIFICATE EVIDENCING SERIES A PREFERRED
SHARES, THIS AGREEMENT AND THE OTHER AGREEMENTS. The Warrants and
stock certificate evidencing the Series A Preferred Shares, each of
which will have been duly issued by the Company to the Purchaser in
the denominations specified on ANNEXES A, B, C and D hereto, along
with the fully executed original of this Agreement and the
Shareholder Agreement and all other documents and instruments
required pursuant thereto;
(b) OTHER AGREEMENTS. All Other Agreements, duly executed by
the parties thereto;
(c) APPROVALS AND CONSENTS. Copies, certified by the Company
of all consents, authorizations, filings, licenses and approvals, if
any, required in connection with the consummation of the
Acquisition, the execution, delivery and performance by the Company,
or the validity and enforceability of, this Agreement, the Senior
Loan Documents, the Acquisition Documents, the First Mortgage
Indenture or the Other Agreements to which the Company is a party;
- 41 -
(d) OPINION OF COUNSEL. The written legal opinion of Kaye,
Scholer, Fierman, Hays & Handler, legal counsel to the Company, such
opinion to be substantially in the form of EXHIBIT A-1 hereto;
(e) OPINION OF LOCAL COUNSEL. The written legal opinion of
Jones Walker Waechter Poitevent Carrere & Denegre, the local
Louisiana legal counsel to the Company, such opinion to be
substantially in the form of EXHIBIT A-2 hereto;
(f) GENERAL CERTIFICATE OF THE COMPANY'S SECRETARY. A
certificate of the Secretary of the Company together with true and
correct copies of the following:
(i) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Company, including all amendments thereto,
certified by the Secretary of State of the state of its
incorporation and dated within 30 days prior to the Closing Date;
(ii) BYLAWS. The Bylaws of the Company, including all
amendments thereto;
(iii) RESOLUTIONS. The resolutions of the Board of
Directors of the Company authorizing the execution, delivery and
performance of this Agreement, the Senior Loan Documents, and the
Other Agreements to which the Company is a party and authorizing the
issuance of the Preferred Shares;
(iv) EXISTENCE AND GOOD STANDING CERTIFICATES.
Certificates of the appropriate government officials of the state of
incorporation of the Company as to its existence and good standing,
and certificates of the appropriate government officials in each
state where the Company does business and where failure to qualify
as a foreign corporation would have a Material Adverse Effect, as to
its good standing and due qualification to do business in such
state, each dated within 30 days prior to the Closing Date; and
(v) INCUMBENCY. The names of the officers of the Company
authorized to sign this Agreement and the Other Agreements to be
executed by the Company, together with a sample of the true
signature of each such officer;
(g) SENIOR LOAN DOCUMENTS. Copies of the Senior Loan Documents
and each document relating thereto, and a certificate of the Chief
Executive Officer or Chief Financial Officer of the Company
certifying that the attached documents are a true, correct and
complete set of the Senior Loan Documents, that all conditions
precedent to funding of the Senior Loans have been met or waived,
and that those transactions are being consummated simultaneously
with the sale of the Series A Preferred Shares;
(h) TRANSACTION CERTIFICATE. A certificate of the Chief
Executive Officer or the Chief Financial Officer of the Company
that, to the best of their knowledge
- 42 -
after due investigation, all conditions precedent to the
effectiveness of this Agreement have been satisfied or waived;
(i) ENVIRONMENTAL REPORTS. Environmental reports of an
independent environmental review satisfactory to the Purchaser with
respect to the Property and all improvements, fixtures and equipment
located thereon, which reports will be addressed to the Purchaser
and which will evidence no violation of Environmental Laws or
presence of Polluting Substances that is unacceptable to Purchaser
in its sole discretion; and
(j) ADDITIONAL INFORMATION, OTHER DOCUMENTS AND AGREEMENTS.
Such other information, documents, agreements, commitments and
undertakings as Purchaser will reasonably request.
5.08 MATERIAL ADVERSE CHANGE. For the period from the date hereof to the
Closing Date, and except for the transactions contemplated by this Agreement and
the Senior Loan Agreements, there will have been no occurrence or event that, in
Purchaser's opinion, has or could reasonably be expected to have a Material
Adverse Effect.
5.09 FEES. All fees payable pursuant to this Agreement (including the
fees, expenses and disbursements of the Purchaser's counsel) will have been paid
to Purchaser (or such counsel, as applicable).
5.10 REPRESENTATIONS AND AGREEMENTS. Each representation and warranty of
the Company set forth in this Agreement will be true and correct in all material
respects when made and as of the Closing Date, and the Company will have
performed in all material respects all their covenants and agreements set forth
in this Agreement that are required to be performed prior to closing.
5.11 PROCEEDINGS; CONSENTS. All proceedings taken in connection with the
transactions contemplated by this Agreement, and all documents necessary to the
consummation of this Agreement, will be satisfactory in form and substance to
the Purchaser and its counsel, and the Purchaser and its counsel will have
received certificates of compliance and copies (executed or certified as may be
appropriate) of all documents, instruments, and agreements that the Purchaser or
such counsel may request in connection with the consummation of such
transactions. All consents of any Person necessary to the consummation of the
transactions contemplated by this Agreement and the Shareholder Agreement will
have been received, be in full force and effect, and not be subject to any
onerous condition.
ARTICLE VI
ISSUANCE EVENTS
6.01. ISSUANCE EVENTS. The occurrence of any one of more of the following
will constitute an Issuance Event.
(a) The Company fails to pay when due and after passage of any
applicable notice and cure periods, whether upon acceleration or
otherwise, any Indebtedness in excess of $2,500,000.00;
- 43 -
(b) The Company fails to perform or observe any agreement, covenant,
term or condition contained in SECTIONS 4.09, 4.20 or 4.22(A) of this
Agreement;
(c) The Company fails to comply with any provision of any agreement,
indenture, mortgage, deed of trust, or other agreement binding on it or
affecting its properties or business (other than the failure to pay when
due Indebtedness referred to in PARAGRAPH (A) above), including, without
limitation, this Agreement, the Senior Loan Documents and the Other
Agreements to which the Company is a party, and such failure to comply
could reasonably be expected to have a Material Adverse Effect;
(d) The Company becomes subject to an Event of Bankruptcy.
(e) Any judgment or order for payment of money is rendered against
the Company that exceeds $2,500,000 in excess of the Company's insurance
coverage therefor and either (i) enforcement proceedings will have been
commenced by any creditor upon such judgment or order, or (ii) there will
be a period of sixty (60) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, will not be in effect;
(f) The occurrence of a change in ownership such that Howard M.
Meyers ceases to maintain Voting Control of the Company; PROVIDED,
HOWEVER, that the death of Howard M. Meyers shall not result in an
Issuance Event solely for purposes of SECTION 2.02 of this Agreement.
6.02 REMEDIES OF HOLDERS UPON OCCURRENCE OF AN ISSUANCE EVENT. When any
Issuance Event described in SECTION 6.01 has occurred and is continuing,
Purchaser will (in addition to any other right, power or remedy permitted to
Purchaser by law) be entitled to the rights and remedies set forth in SECTION
2.02.
6.03 NOTICE OF ISSUANCE EVENT. The Company will immediately furnish to
Purchaser notice in writing of the occurrence of an Issuance Event, or any
condition or event that, after notice or lapse of time, or both, would
constitute such an Issuance Event. Such notice will specify the nature of such
event or condition and what action the Company has taken or is taking or
proposes to take with respect thereto.
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ARTICLE VII
MISCELLANEOUS
7.01 INDEMNIFICATION. In addition to any other rights or remedies to which
the Purchaser and the Holders may be entitled, the Company agrees to and will
indemnify and hold harmless the Purchaser, the Holders, and their Affiliates and
their respective successors, assigns, officers, directors, employees, attorneys,
and agents (individually and collectively, an "INDEMNIFIED PARTY") from and
against any and all losses, claims, obligations, liabilities, deficiencies,
penalties, causes of action, damages, costs, and expenses (including, without
limitation, costs of investigation and defense, attorneys' fees, and expenses),
including, without limitation, those arising out of the sole or contributory
negligence of any Indemnified Party, that the Indemnified Party may suffer,
incur, or be responsible for, arising or resulting from any misrepresentation,
breach of warranty, or nonfulfillment of any covenant or agreement on the part
of the Company or the Shareholders under this Agreement, the Shareholder
Agreement, or under any other agreement to which the Company or the Shareholder
is a party in connection with this transaction, or from any misrepresentation in
or omission from any certificate or other instrument furnished or to be
furnished to the Purchaser or the Holders under this Agreement.
7.02 DEFAULT. It is agreed that a violation by any party of the terms of
this Agreement cannot be adequately measured or compensated in money damages,
and that any breach or threatened breach of this Agreement by a party to this
Agreement would do irreparable injury to the nondefaulting party. It is,
therefore, agreed that in the event of any breach or threatened breach by a
party to this Agreement of the terms and conditions set forth in this Agreement,
the nondefaulting party will be entitled, in addition to any and all other
rights and remedies that it may have in law or in equity, to apply for and
obtain injunctive relief requiring the defaulting party to be restrained from
any such breach or threatened breach or to refrain from a continuation of any
actual breach.
7.03 INTEGRATION. This Agreement and the Shareholder Agreement constitute
the entire agreement between the parties with respect to the subject matter
hereof and thereof and supersede all previous written, and all previous or
contemporaneous oral, negotiations, understandings, arrangements, and
agreements. This Agreement may not be amended or supplemented except by a
writing signed by Company, the Shareholder, and each Holder.
7.04 HEADINGS. The headings in this Agreement are for convenience and
reference only and are not part of the substance of this Agreement. References
in this Agreement to Sections and Articles are references to the Sections and
Articles of this Agreement unless otherwise specified.
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7.05 SEVERABILITY. The parties to this Agreement expressly agree that it
is not the intention of any of them to violate any public policy, statutory or
common law rules, regulations, or decisions of any governmental or regulatory
body. If any provision of this Agreement is judicially or administratively
interpreted or construed as being in violation of any such policy, rule,
regulation, or decision, the provision, section, sentence, word, clause, or
combination thereof causing such violation will be inoperative (and in lieu
thereof there will be inserted such provision, sentence, word, clause, or
combination thereof as may be valid and consistent with the intent of the
parties under this Agreement) and the remainder of this Agreement, as amended,
will remain binding upon the parties, unless the inoperative provision would
cause enforcement of the remainder of this Agreement to be inequitable under the
circumstances.
7.06 NOTICES. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration, or other communication be given to or
served upon any of the parties by another, such notice, demand, request,
consent, approval, declaration, or other communication will be in writing and
will be deemed to have been validly served, given or delivered (and "the date of
such notice" or words of similar effect will mean the date) five (5) days after
deposit in the United States mails, certified mail, return receipt requested,
with proper postage prepaid, or upon receipt thereof (whether by non-certified
mail, telecopy, telegram, express delivery, or otherwise), whichever is earlier,
and addressed to the party to be notified as follows:
If to the Purchaser, at: Address of such Purchaser beneath the name
of such Purchaser on the signature pages
of this Agreement
with courtesy copies to: Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Attn: Larry A. Makel, Esq.
Fax: 214-939-6100
If to the Company, at: Bayou Steel Corporation
River Road
La Place, Louisiana 70068
Attn: Mr. Richard J. Gonzalez
Fax: (504) 652-0472
with courtesy copies to: Howard M. Meyers
2777 Stemmons Freeway, Suite 1800
Dallas, Texas 75207
Fax: (214) 631-6146
Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York, New York 10022-3598
Attn: Rory A. Greiss, Esq.
Fax: (212) 836-8689
- 46 -
or to such other address as each party may designate for itself by like notice.
Notice to any Holder other than the Purchaser will be delivered as set forth
above to the address shown on the stock transfer books of the Company or the
Warrant Register unless such Holder has advised the Company in writing of a
different address to which notices are to be sent under this Agreement.
Failure or delay in delivering courtesy copies of any notice, demand,
request, consent, approval, declaration, or other communication to the persons
designated above to receive copies of the actual notice will in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration, or other communication.
No notice, demand, request, consent, approval, declaration or other
communication will be deemed to have been given or received unless and until it
sets forth all items of information required to be set forth therein pursuant to
the terms of this Agreement.
7.07 SUCCESSORS. This Agreement will be binding upon and inure to the
benefit of the parties and their respective successors and assigns.
7.08 REMEDIES. The failure of any party to enforce any right or remedy
under this Agreement, or promptly to enforce any such right or remedy, will not
constitute a waiver thereof, nor give rise to any estoppel against such party,
nor excuse any other party from its obligations under this Agreement. Any waiver
of any such right or remedy by any party must be in writing and signed by the
party against which such waiver is sought to be enforced.
7.09 SURVIVAL. All warranties, representations, and covenants made by any
party in this Agreement or in any certificate or other instrument delivered by
such party or on its behalf under this Agreement will be considered to have been
relied upon by the party to which it is delivered and will survive the Closing
Date and expire seven (7) years from the Closing Date (the "TERMINATION DATE"),
regardless of any investigation made by such party or on its behalf. Other than
this ARTICLE VII, all provisions of this Agreement shall terminate on the
Termination Date. All statements in any such certificate or other instrument
will constitute warranties and representations under this Agreement.
Notwithstanding anything to the contrary in this SECTION 7.09, when the
Purchaser ceases to hold any Preferred Shares of the Company, SECTIONS 4.14,
4.20(G), (H), (I) and (L) and 6.01(A), (D) and (E) shall terminate and be of no
further force or effect.
7.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, which will individually and collectively constitute one agreement.
7.11 OTHER BUSINESS. It is understood and accepted that the Purchaser, the
Holders, and their Affiliates have interests in other business ventures that may
be in conflict with the activities of the Company and that nothing in this
Agreement will limit the current or future business activities of such parties
whether or not such activities are competitive with those of the Company. The
Company agrees that all business opportunities in any field substantially
related to the business of the Company will be pursued exclusively through the
Company.
7.12 CHOICE OF LAW. THIS AGREEMENT HAS BEEN EXECUTED, DELIVERED, AND
ACCEPTED BY THE PARTIES IN THE STATE OF LOUISIANA, WILL BE DEEMED TO HAVE BEEN
MADE IN THE STATE OF LOUISIANA, AND WILL BE
- 47 -
INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS
OF THE UNITED STATES APPLICABLE THERETO AND THE INTERNAL LAWS OF THE STATE OF
LOUISIANA APPLICABLE TO AN AGREEMENT EXECUTED, DELIVERED AND PERFORMED THEREIN
WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW RULES THEREOF OR ANY OTHER PRINCIPLE
THAT COULD REQUIRE THE APPLICATION OF THE SUBSTANTIVE LAW OF ANY OTHER
JURISDICTION.
7.13 WAIVERS; MODIFICATION. NO PROVISION OF THIS AGREEMENT MAY BE WAIVED,
CHANGED OR MODIFIED, OR THE DISCHARGE THEREOF ACKNOWLEDGED, ORALLY, BUT ONLY BY
AN AGREEMENT IN WRITING SIGNED BY THE COMPANY AND THE HOLDERS.
7.14 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE COMPANY AND PURCHASER HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT
TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
WARRANTS, THE PREFERRED SHARES OR ANY DOCUMENTS ENTERED INTO IN CONNECTION
THEREWITH OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF PURCHASER
IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
7.15 DUTIES AMONG HOLDERS. Each Holder agrees that no other Holder will by
virtue of this Agreement be under any fiduciary or other duty to give or
withhold any consent or approval under this Agreement or to take any other
action or omit to take any action under this Agreement, and that each other
Holder may act or refrain from acting under this Agreement as such other Holder
may, in its discretion, elect.
7.16 ACTIONS BY HOLDERS. Unless otherwise provided in this Agreement or
the Other Agreements, in each instance that the Holders are required or entitled
to request or consent in concert to any action in this Agreement or the Other
Agreements, the Holders will be deemed to have requested or consented to such
action if the Holders of a majority-in-interest of the Registrable Securities or
Preferred Shares so request or consent. With respect to any such request or
consent, the Company shall be entitled to rely without further investigation on
a written statement signed by the Purchaser (or such other party as the
Purchaser may designate by written notice to the Company) that a
majority-in-interest of the Holders of (i) Registrable Securities or (ii)
Preferred Shares have so requested or consented, as applicable. A
majority-in-interest of Holders of Registrable Securities shall consist of
Holders of a majority of the Registrable Securities. A majority-in-interest of
Holders of Preferred Shares shall consist of Holders of a majority of the
aggregate liquidation preference of all issued and outstanding Preferred Shares.
- 48 -
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
COMPANY:
BAYOU STEEL CORPORATION
By: _____________________________________
Name: _____________________________________
Its: _____________________________________
PURCHASER:
RICE PARTNERS II, L.P.
By: Rice Capital Group IV, L.P.
Its: General Partner
By: RMC Fund Management, L.P.
Its: General Partner
By: Rice Mezzanine
Corporation,
Its: General Partner
By: ______________________
Name: Jeffrey P. Sangalis
Title: Managing Director
5847 San Felipe
Suite 4350
Houston, Texas 77057
Attn: Jeffrey P. Sangalis
Fax: (713) 783-9750
Number of Warrant Shares: 822,422
Purchase Price: $100.00
- 49 -
ANNEXES
ANNEX A Form of Shareholder Agreement
ANNEX B Form of First Warrant
ANNEX C Form of Second Warrant
ANNEX D Statement of Designations, Preferences, Limitations and Relative
Rights of Preferred Stock
ANNEX E Confidentiality Agreement
EXHIBITS
Exhibit A-1 Form of Legal Opinion
Exhibit A-2 Form of Local Counsel Legal Opinion
SCHEDULES
Schedule 1 Capitalization
Schedule 3.01(a) Subsidiaries
Schedule 3.01(d) Restrictions on Capital Stock
Schedule 3.01(g) Documents
Schedule 3.01(i) Authorizations, Approvals, Consents, Filings and Registrations
Schedule 3.01(j) Environmental Matters
Schedule 3.01(k) Litigation
Schedule 3.01(m) Subsidiary Indebtedness
Schedule 3.01(u) Labor Disputes
Schedule 3.01(v) Brokers
Schedule 3.01(x) Types of Business
Schedule 4.20 Permitted Transaction
- 50 -
SCHEDULES TO
PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT
Reference is made to the Preferred Stock and Warrant Purchase Agreement,
dated as of June 13, 1995, between Bayou Steel Corporation and Rice Partners
II, L.P. (the "Agreement") Capitalized terms used but not otherwise defined in
the attached Schedules have the meanings given to them in the Agreement.
The contents of the Schedules are qualified in their entirety by reference
to specific provisions of the Purchase Agreement. In that regard, certain of
the Schedules contain more information than is required by the Sections of the
Purchase Agreement to which such Schedules relate and such additional
disclosure shall not be deemed to mean that such information is required by
such related Sections of the Purchase Agreement (e.g., the fact that a Section
of the Purchase Agreement calls for a listing of material agreements does not
necessarily mean that each such agreement listed on the related Schedule is
material). Headings have been inserted on the Schedules for convenience of
reference only and shall to no extent have the effect of amending or changing
the express description of the Schedules as set forth in the Purchase
Agreement. The inclusion in the Schedules of any item in response to a
representation or warranty shall be deemed to be inclusion with respect to any
representation or warranty to which such item is responsive.
<PAGE>
SCHEDULE 1
SHAREHOLDERS EQUITY
1. Howard M. Meyers
60% of the outstanding common stock of Bayou Steel Properties Limited
(f/k/a RSR Steel Corporation ("BSPL")
300,000 shares of Class A Common Stock
The shares of BSPL and Common Stock of Mr. Meyers are held by Mr. Meyers
or limited partnerships or trusts, the sole partners and beneficiaries,
respectively, of which are Mr. Meyers and/or Related Parties of Mr. Meyers.
Mr. Meyers is subject to restrictions on transfer of the shares of BSPL
set forth in that certain Agreement dated July 26, 1988 among the Company,
BSPL and Mr. Meyers as described below:
The shares of common stock of BSPL owned by Mr. Howard M. Meyers may not
be sold, nor many shares of BSPL be issued, at a price which represents a
premium attributable to the underlying Class B Common Stock over the market
price of the Class A Common Stock, to any person or group if such sale, when
aggregate with all prior sales during the preceding four-year period, would
result in such person or group owning more than 50% of the common stock of
BSPL, unless such person or group agrees to make a tender offer within 30 days
for an equivalent percentage of Class A Common Stock at the highest price paid
by such person or group (expressed in equivalent shares of Class B Common
Stock) for the shares of common stock of BSPL, provided that the Directors
elected by the holders of the Class A Common Stock waive the charter
restriction prohibiting a purchaser from acquiring 5% or more of the aggregate
fair market value of the Class A Common Stock. The agreement terminates when
the holders of the Class B Common Stock no longer have the right to elect a
majority of the Board of Directors of the Company.
The Company's Certificate of Incorporation provides that the Class B
Common Stock, which Mr. Meyers controls through his ownership interest in
BSPL, loses its power to control the Company if Mr. Meyers resigns, retires or
is removed for cause as Chief Executive Officer of the Company.
2. Bayou Steel Properties Limited
100% of the outstanding shares of Class B Common Stock
<PAGE>
SCHEDULE 3.01(A)
SUBSIDIARIES; INVESTMENTS
1. Wholly-owned Subsidiaries
Bayou Steel Scrap Corporation
River Road Realty Corporation
Bayou Steel Corporation (Tennessee)
<PAGE>
SCHEDULE 3.01(D)
PREEMPTIVE RIGHTS; RIGHTS OF FIRST REFUSAL
None.
<PAGE>
SCHEDULE 3.01(I)
CONSENTS
1. The Certificate will be filed with the Secretary of State of the State
of Delaware on the Closing Date.
2. The Company's Certificate of Incorporation will need to be amended and
filed with the Secretary of the State of Delaware in order to provide the
Purchaser with the right, upon certain events set forth in the Agreement, to
designate up to two additional directors of the Board of Directors of the
Company as provided in clauses (ii) and (iii) of the fifth sentence of Section
4.16 of the Agreement.
3. Article VIII, clause (q) of the Credit Agreement provides that the
following shall constitute an Event of Default thereunder:
one or more Persons has demanded payment of amounts in excess of $500,000
in the aggregate under Section 7.01 of the Preferred Stock and Warrant
Purchase Agreement or Section 5.13 of the Shareholder Agreement and the
Borrower or any of its Subsidiaries shall have made such payments(s) or shall
have agreed that such amounts are due
<PAGE>
SCHEDULE 3.01(J)
ENVIRONMENTAL LITIGATION
Environmental Litigation/Liabilities:
Louisiana Department of Environmental Quality
Issuance of Order to Close OC-0214 (Storm Water Retention pond)
Recision of Order To Upgrade OU-0131 (Application to upgrade storm water
permit to solid waste management permit)
Occupational Safety and Health Review Commission
Docket No. 94-1740
Resolution of Settlement Agreement to OSHA Citation issued April 22, 1994
Re: Alleged failure to provide information to USWA on a timely basis.
Occupational Safety and Health Administration
Proposed Penalties From Inspection No. 107630428
Citation and Notification of Penalty Issued April 4, 1995
U.S. Environmental Protection Agency (Region 6)
Multi Media Compliance Inspection (June, 1994)
Case Development Inspection (February, 1995)
Consent Agreement and Order among
Tennessee Department of Environment and Conservation,
Tennessee Valley Steel Corporation and Southern Alloys and Metal
Corporation
<PAGE>
SCHEDULE 3.01(K)
LITIGATION AND JUDGMENTS
See attached litigation schedule.
<PAGE>
SCHEDULE 3.01(M)
INDEBTEDNESS TO AFFILIATES (OTHER THAN SUBSIDIARIES)
None.
<PAGE>
SCHEDULE 3.10(P)
ERISA
1. The Company has not filed Form 5500's with respect to the following
Welfare Benefit Plans for the years 1990-1993: life insurance, accident, death
and dismemberment, dental, medical, accident and sickness and educational
reimbursement.
2. The "Bayou Steel Defined Benefit Plan" was voluntarily terminated in
1985.
<PAGE>
SCHEDULE 3.01(U)
LABOR DISPUTES
1. On March 21, 1993, the United Steel Workers of America ("USWA")
initiated a strike by its 337 bargaining unit employees against the Company.
The strike remains unresolved.
2. The USWA has asserted that it is the certified collective bargaining
representative of the bargaining unit of production and maintenance employees
of Tennessee Valley Steel Corporation ("TVS"), and that the Company is a
successor employer to TVS under the National Labor Relations Act. The USWA has
made a continuing request that the Company recognize its status as the
certified collective bargaining representative and negotiate a new collective
bargaining agreement applicable to the bargaining unit.
<PAGE>
SCHEDULE 3.01(V)
BROKER
1. The Company has agreed to pay Chemical Securities, Inc., BT Securities
Corporation and Allen & Company Incorporated a fee for investment banking
services rendered in connection with the transactions contemplated by the
Agreement and the Other Agreements.
<PAGE>
SCHEDULE 3.01(X)
CONDUCT OF BUSINESS
The Company is engaged in the business of manufacturing steel and steel
products.
<PAGE>
SCHEDULE 4.09
BAYOU STEEL CORPORATION
CURRENT LITIGATION REPORT
*7. File No. 90137
LMN
MICHAEL MCCOY V. BAYOU STEEL CORPORATION (OF LA PLACE) NO. 85-246 "G"
(7/23/85): Claim for $2,000,000 pursuant to the Federal Employers Liability
Act ("FELA") by former employee of Bayou for injuries sustained in the course
of operating railway system. Bayou's insurance company has taken over Bayou's
defense. The FELA claim was dismissed and Bayou is paying Workmen's
Compensation benefits to the plaintiff which, are fully covered by insurance.
On 3/4/94 BSC was served with claim for compensation in the Louisiana Office
of Workers Compensation, District 7, Docket 94-00334, claiming that the
insurer was "refusing to pay necessary medical expenses" arising out of an
accident on 12/14/84. Matter referred to the insurance carrier. Answer filed
in Office of Workers Comp 4/19/94. Pretrial conference 8/9/94. Hearing on
default 5/27/94. In discovery.
*18. File No. 86135
LMN
JOHN E. FRIAR, ET AL. VS. CATERPILLAR, ET AL. (1986) 40th Judicial
District, St. John the Baptist Parish, Louisiana, Cause No. 17,062, Div. "A".
The lawsuit arises out of an accident on or about 9/22/83 in which John
Friar, a BSC employee, suffered a knee injury in a forklift accident, and is
suing Caterpillar and others. Bayou's insurer has intervened: In pretrial
appeal. Not come to trial. On 10/28/88, the Louisiana Supreme Court denied a
Writ of Certiorari removing Caterpillar from the matter. Friar has not yet
moved to proceed further against BSC. Summary Judgment motion by Boyce
Machinery, seller of the forklift, heard 2/26/93. Opposition filed 3/8/93.
Denied 4/7/93. Request for Notice of Trial and other matters filed 7/29/93; no
action since. Friar's lawyer expects to reset matter for trial "in future".
Supplemental earnings benefits being paid from 3/14/86 to date @ $404.50 every
two weeks and will continue for 84 weeks from August 1994. Friar seems to be
"Vanishing" (10/94). Status conference to be rescheduled. Pretrial order
03/01/95 SETS TRIAL AT 10/16/95; discovery completed by 9/1 and 9/15
(defendants) among other discovery and pleading matters.
-1-
*25. File No. 88008
LMN -- NONE
SEVERA JOSEPH V. BSC AND ABC INSURANCE COMPANY (1988) 40th Judicial
District, Parish of St. John the Baptist, Louisiana, Case No. 22457.
The lawsuit seeks $750,000 in damages for personal injuries to Joseph, an
employee of A-3M Vacuum Service, Inc., who allegedly was injured assisting in
the load of steel into a barge on the Mississippi River. A jury trial is
requested. In discovery. Being defended by insurance carrier. Summary Judgment
Motion filed by BSC. Opposed by Joseph and continued and still continues. A
valid "Statutory Employee Defense" appears to exist. Travelers Insurance moves
to intervene on behalf of longshoremen, granted 9/23/91. Settlement offer of
$1,500 rejected. Waiting for prescriptive period to run; hen, insurers will
file motion to dismiss for want of prosecution (3/25/94).
*50. File No.
LMN NONE
GLEN MATTHEWS VS. BSC
Lawyer"s letter dated January 30, 1990, regarding March 23, 1989 accident
received and forwarded to our insurance carrier. Settlement discussions.
*63. File No. 91159
LMN Insurance Carrier
ROBERT L. TATUM V. BSC (1991)
40th Judicial District Court, St. John the Baptist (LA) Parish.
Summons and Complaint served on statutory agent on 12/13/91. Tatum, an
employee of E&N Contractors Inc., claims injury on 12/14/90 when a truck he
was operating was struck by railroad car operated by remote control by an
unknown Bayou employee. Unspecified injuries in excess of $20,000 are claimed
as result of claimed negligence. Referred to and being defended by insurance
carrier. Bastian & Wynn, New Orleans, assigned as counsel 1/6/92. Answer filed
3/4/92. Third party complaint 3/4/92 filed by BSC against E&N Contractors for
indemnification. Third party answer not yet filed. In discovery. No trial
setting expected before end of 1993. No corporate exposure beyond insurance
coverage expected. Tatum's deposition 3/11/93. Tatum has returned to work as
of 9/92 and except for the period between 12/90 and 9/92 has sustained no loss
of income and probably no future loss. Case on hold, awaiting settlement offer
from insurer.
-2-
*70. File No. 93007(a)
LMN
BSC VS. UNITED STEELWORKERS OF AMERICA, LOCAL 9121 AND RONALD FERRARO,
INDIVIDUALLY AND AS PRESIDENT OF LOCAL 9121 (1993) 40th Judicial District
Court, St. John the Baptist Parish (La), No. 30676, Division C.
Verified Petition, Rule to Show Cause, and Memorandum, seeking Temporary
Restraining Order and/or Preliminary Injunction restraining defendants and
members from engaging in seven general types of activity [(a) interfering with
persons attempting to enter or leave the La Place facility by threats of
violence, etc., (b) congregating or massing near entrances or exits so as to
obstruct and impede the free use of exits and entrances by vehicles or persons,
(c) engaging in picketing, patrolling, or congregating near the facility except
by not more than two persons at each entrance and or other peaceful activities,
(d) placing tacks, nails or other foreign objects in the roads leading to the
facility, (e) damaging vehicles or property maintained by BSC or its customers,
employees, etc., (f) causing injury or threatening to cause and, (g) trespassing
on private property.] during strike FILED 3/23/93; Stipulate Injunctive Order
signed by Court 3/24 permits five pickets at main gate, controls vehicle
approaches, etc., three pickets at other gates, standby pickets, etc.; prohibits
threatening intimidating conduct, damage to property and trespassing and other
matters. Violations of Order attended at status conference 3/26/93, hearing on
TRO 3/29/93. Injunctive Order (II) 3/30/93 further prohibits Union from stopping
vehicles or congregating in certain designated areas. Defendants Exceptions
filed 3/29/93. First Rule for Contempt and Memorandum in Support filed 4/22/93.
Hearing 5/7/93 per ORDER 4/39/93. Order 5/7/93 (or 5/10/93) expands prior
Order-orders picketers "to refrain from standing still in front of or within ten
feet of any vehicle entering or leaving plant; Second Order 5/7/93 (5/10/93)
orders three (Schobel, Roussel and Martin) and the Union to perform community
service. Contempt hearing 9/24; decision reserved. JUDGMENT 10/8/93 orders five
days jail time for three strikers; six days community service for 3 others; 60
hours community service for Union; 12 assorted warnings dismisses six
complaints; clarifies prior (3/23 and 3/30) Orders by limiting one pass in front
of vehicles in 90 seconds, prohibiting picketing of security guards and all
physical engagement between guards and strikers. Status conference 11/29/93
before Judge Daley. Second Rule (motion) for contempt to stop continuing
harassment and picket line misconduct between 10/6/93 and 1/31/94 filed 2/8/93;
hearing 3/9/94. Union files Motion for Contempt based on 1/19/94 incident.
Hearing 3/9 continued to 3/25/94. BSC filed exception to Union motion on
3/16/94. Hearing 3/25 didn't finish and will continue 4/15/94. Two picketers
off-line for 60 days; decision reserved on other matters. Decision judgment
5/6/93 orders jail time for 8 strikers, community service for 1; bars two
strikers from picket line and
-3-
prohibits picketing of pedestrians. Third Rule (motion) for contempt to stop
picket line misconduct, threats, maintenance of structures, etc. between 3/1/94
and 7/9/94. Status conference 8/8/94. Hearing on contempt order 9/6/94.
Preliminary motions filed by 8/19/94 will be heard 9/1/94. Amendment to contempt
(third rule) motion filed by BSC 8/18/94. Decision reserved by Judge Daley.
Motion to Modify Restraining Order to allow Schobel & Walker to return to line
9/18/94 to be heard 10/14/94. Motion to Continue 10/14 date filed by BC 10/7/94;
Judgment by Judge Daley 9/22 received 10/3; orders Hedricks of BSC to 40 hours
community service; decision also orders 208 hours community service for 13
strikers (from 8 to 48 hours). BSC files motion (11/2/94) to permit Hedricks to
perform community service by 9/22/95 a/c Haiti assignment. Order signed by Judge
Daley 11/2/94. Rule for contempt regarding Pat Sellars set for 04/05/95 is
continued without date and Judge Daley recesses himself 03/28/95. Picket line
accord regarding new gate reached before Judge Daley 05/04/95. Order entered
5/6/95.
*71.3 File No. 93007(b)
LMN PCM-112
U.S.W.A. VS. BSC (1993) National Labor Relations Board (NLRB), Case No.
15-CA-12133, 12441, 12528, 12431, 12609.
Filed 5/4/93; amended 5/20/93 and 7/15/93. Steelworkers charge failure to
bargain in good faith by (1) failing to submit a contract proposal, (2)
insisting on language rendering portions of contract unenforced, (3) insisting
on proposals unlawfully limiting Union activity on company time, (4) making
final offer on 3/20/93 stating a less favorable offer would be implemented in
three days, if not accepted, (5) falsely declaring an impasse, (6) threatening
to implement an offer absent an impasse, lawful or otherwise, (7) making
regressive proposals without lawful justification, (8) reneging on tentative
agreements by failing to include them in final proposals and altering their
terms, (9) refusing to provide info re bargaining, names of personnel to be
discharged, or disciplined for strike related misconduct, (10) insisting it
wouldn't provide (9) info unless new contract was ratified, (11) failing to
provide negotiators with authority to negotiate, (12) failing to timely
respond to Union requests for point by point response to Union proposals, (13)
refusing to enter into tentative agreements on noneconomic issues with
potential cost implications on the ground that agreement on such issues must
await economic bargaining and (14) continually being late or unprepared at
negotiating sessions, (15) making illusory contract concessions, (16)
insisting on contractual provisions enabling the Company to reopen the
contracting out clause while denying the Union the right to strike, (17)
raising new demands at advanced states of bargaining, (18) engaging in a per
se refusal to negotiate concerning an incentive plan, (19) claiming that the
filing of the initial ULP charge in this case constituted an obstacle to
-4-
negotiations, (20) refusing to bargain because the Union had filed such
charge, (21) offering regressive proposals in retaliation for the filing of
such charge, (22) attaching preconditions to the making of proposals. Meeting
with NLRB investigator 7/26. Decert petition filed (15-RD-715) by BSC employee
in abeyance. Withdrawn 8/31/93 with approval of Regional Director. Response
submitted 7/27/93. Decision awaited; not expected until end of year.
Supplemental materials submitted to NLRB 12/6/93. Oral argument 12/14/93.
Decision expected by 12/17/93 or shortly thereafter. (23) On 12/30/93 USWA
filed charge vs. BSC alleging violations of Sec. 8(a)(5) and 8(d) by refusing
to reduce to writing certain statements made by H. M. Meyers at a meeting with
Governor Edwards at an 8/25/93 meeting at the Governor's mansion.
(15-CA-12431) Response to NLRB made 1/7/94. (24) On 1/13/94 filed charge vs.
BSC alleging violations of Sec. 8(a)(1)(5) by refusing access to Union's
safety and health inspector on 8/16/93 and has refused to provide Union with
other representative information since 8/16/93. (15-CA-12441). On 12/20/93
allegation (10) and part of (9) dealing with names of bargaining unit
personnel are withdrawn with NLRB approval. Settlement agreement signed
2/10/94 settles charges (3), (4), (6), (7), (8), (16), (17) and (21).
(15-CA-12133) Letter received on 3/1/94 dated 2/28/94, corrected dated 3/2/94
dismissing charges (1), (2), (5), (9), (11), (12), (13), (14), (15), (18),
(19), (20) and (22). Appeal period expires 3/16/94. USWA moves to extend time
to appeal to 4/5/94. BSC opposes 3/9/94. NLRB grants extension to 4/5/94 on
3/8/94. On 3/3/94 received letter dated 3/2/94 which also dismisses charge
(23) (#15-CA-12431). (25) On 3/21/94 USW filed charge vs. BSC stating that on
3/18/94 BSC violated Sec. 8a(1)(3) and (5) by insisting on new bargaining
demands relating to return to work which violated a tentative agreement entered
into on 3/12/94. (15-CA-12528) USWA has appealed dismissal of charges (1), (2),
(5), (9), (11), (12), (13), (14), (15), (18), (19), (20) and (22) as of 4/6/94.
NLRB acknowledges receipt 4/11/94. BSC responds to charge (24) on 4/13/94. On
5/16/94 Union files charges (26) that since 4/94 BSC has refused to pay strikers
vacation benefits earned in 1992, immediately prior to going on strike, coercing
employees in the exercise of their Section 7 rights and violating Section
8(a)(3). (15-CA-12609). On 12/14/94 NLRB denies appeal of USWA substantially for
reasons stated in 3/2/94 letter. NLRB specifically finds no bad faith bargaining
re incentive plan by BSC (18) and that BSC did make a complete contract
proposal. Union petitions for reconsideration 12/28/94. BSC response to charges
(25) and (26) filed with NLRB on 1/20/95. On 2/14/95 NLRB refuses to proceed
further in respect of charge (26) and charge (25), also determines that (26) is
time barred. Posting of settlement agreement in (15-CA-12133), (3), (4), (6),
(7), (8), (16), (17), (21), 12441 (24) and 12528 (25). On 02/28/95 Union files
appeal with General Counsel NLRB of Regional Directors refusal to issue
Complaint on (26)-15-CA12609 regarding vacation benefits.
-5-
*72. File No. 93007(c)
LMN PCM-115
BSC VS. OFFICE OF EMPLOYMENT SECURITY (1993) Louisiana Department of Labor
Office of Employment Security, Docket No. H00550AT93 HARRY ABADIE, ET AL. VS.
BSC, 40th Judicial District Court, St. John the Baptist Parish, LA, No. 31262
(APPEAL). KERN T. ADAMS, ET AL. VS. BSC, 29th Judicial District Court, St.
Charles Parish, Louisiana, Case No. 41634-D (APPEAL). ANDREW EALY V. BSC, 23rd
Judicial District Court, Ascension Parish, Louisiana, Case No. 005206
(APPEAL). RUSSEL BOURGEOIS VS. BSC, 23rd Judicial District Court, St. James
Parish, Louisiana, Case No. 22195 (APPEAL). TODD CHASSION VS. BSC, et al. 24th
Judicial District Court, Jefferson Parish, Case No. 452-835 (APPEAL). TOMMY
FERGUSON VS. BSC, ET AL., 21st Judicial District Court, Livingston Parish,
Louisiana, Case No. 69436 (APPEAL). DANIEL C. BENNETT, ET AL. VS. BSC, ET AL.,
22nd Judicial District Court, St. Tammany Parish, Louisiana, Case No. 93-13263
(APPEAL). JOSEPH BROWNING VS. BSC, ET AL., 21st Judicial District Court,
Tangipahoa Parish, Louisiana, Case No. 9302565 (APPEAL). CHARLES KYZAR V. BSC,
21st Judicial District, Case No. 9302857 (APPEAL). Fifth Circuit Appeal
District Court No. 94-CA-00322.
Appeal and Petition, filed 5/11/93, for administrative review of Secretary
Gayle Truly ("Truly")'s decision awarding unemployment compensation to
approximately 250 strikers engaged in labor dispute at La Place. Hearing
before Administrative Law Judge Dennis Dykes, May 24, 1993, begun and
adjourned; resumed 6/18/93. Subpoenas requested, served on Hibernia Bank,
U.S.W.A. District 36 and Local 9121. Memorandum of Law submitted 7/2/93.
Decision expected by 7/9/93. Decision 7/9 disqualifies strikers for
unemployment compensation. Strikers, through Union attorney, appeal on
7/14/93. Union brief 7/16/93. BSC statement and memo 7/22. Board Review (OES)
Affirms Administrative Law Judge Decision 8/4/93. Appeal to 40th Judicial
District Court served on statutory agent (CT) 8/13/93. Answer and Request for
Notice filed 8/16/93. Appeal to 29th Judicial District Court served on
statutory agent 8/24/93. Motion for Extension of Time filed in KERN to allow
15 days from time State files administrative record to respond to pleading
(9/3/93). APPEAL to 23rd Judicial District Court EALY served on statutory
agent 9/8/93. APPEAL to 23rd Judicial District Court BOURGEOIS served on
statutory agent 9/1/93. APPEAL to 24th Judicial District Court Chaisson served
on statutory agent 9/1/93. Notice Letters from Department of Labor re appeals
in BOURGEOIS, EALY and CHAISSON received (9/9/93) and in FERGUSON, BROWNING,
BENNETT received 9/20/93. Motion For Extension of Time filed in CHIASSON,
EALY, BOURGEOIS, and FERGUSON, BROWNING, BENNETT, similar to KEARN 9/13/93,
appeal to 21st Judicial Court (Tangipahoa) filed by CHARLES KYZAR individually
on 9/16/93, received 10/15/93 by statutory agent. Period to file
administrative record by Department of Labor elapsed 10/12/93, but will be
filed shortly. Joint Motion to Stay All Proceedings except St. John the
Baptist
-6-
action (31-262) to be filed shortly. Motion to Dismiss Kyzar appeal
10/28/93 on basis of prescription and pending other action. Answer in ADAMS,
BENNETT, BOURGEOIS, BROWNING, CHIASSON, EALY, FERGUSON filed 11/24/93.
Administrative record filed. Request status conference with Daley in Abadie
31-262 11/23/93. Stay Orders entered on 11/18/93 in ADAMS, BENNETT, BOURGEOIS,
EALY, FERGUSON and CHIASSON on 11/19/93; BROWNING 11/23/93. State Answer
11/12/93 seeks reversal of Board of Review decision and a change in Louisiana
law re striker eligibility for compensation. Supreme Court of Louisiana
appoints retired Judge William V. Redman as judge ad hoc in the matter to
take, hear and dispose of it. Our brief is due 12/20/93, one week after
union's brief due. All briefs and rebuttals filed on 12/23/93, including brief
on behalf of Department of Labor. Motion to reseal documents filed 12/20/93
unopposed by Department of Labor. Decision of Board of Review affirmed by Judge
Redman of 40th Judicial District Court and filed on 12/28/93 and received
1/7/94. Administrator can appeal to Louisiana Court of Appeals or U.S. Court of
Appeals, 5th Circuit, or file motion for new trial. Must be filed by 3/14/94.
Motions filed to reseal materials originally filed under seal by 40th District
Court, filed in all district courts. Orders signed in ADAMS 1/5/94; BOURGEOIS
1/6/94; BROWNING 1/3/94; Chaisson 1/5/94; FERGUSON 1/14/94 and EALY 1/11/94.
Dept. of Labor files appeal notice 1/21/94 to 40th JDC, motion for devolutive
appeal; Union appeal petition received 1/28/94; Union opposition to motion to
reschedule and BSC reply filed with Judge Redman 2/2/94. Judge Redman signs
Order resealing documents 2/2/94. Order giving clerk 30 days more time to file
record on appeal entered 4/5/94. Fifth Circuit Order 5/4/94 notes filing of
transcript. DOL brief due 5/31/94; BSC brief due 6/20/94. Oral argument
requested by BSC 5/16/94. Appellants brief filed 5/31/94. Dept. of Labor brief
filed 5/28/94. Our brief filed 6/20/94. D of L reply brief 6/28/94. Oral
argument 9/29/94. Decision reserved. Decision reserved. Decision affirmed by 5th
Circuit 10/25/94. Union and Labor Dept. say they will appeal, or ask for cert.
Rehearing must be requested by 11/8/94; review petition to Louisiana Supreme
Court by 11/24/94. Union Writ Application filed 11/23. BSC response filed
12/30/94. Supreme Court denies both writs 2/3/95. Matter completed. Motion to
dismiss ADAMS, EALY, BENNETT, BROWNING, BOURGEOIS, CHIASSON and FERGUSON filed
May 5, 1995. On May 5, 1995 Louisiana Labor Department files Writ of Certiorari
with U.S. Supreme Court (received 5/8/95). AFL-CIO asks for permission to file
amicus brief in support of cert. petition. BSC declines 5/16/95. Labor
Department files motion to stay BSC motion to dismiss ADAMS, EALY, BENNETT,
BROWNING, BOURGEOIS, CHIASSON & FERGUSON on 5/8/95. BSC opposes 5/17/95 because
on 5/16/95 BSC filed motions to postpone motion to dismiss in related actions.
Abadie case stayed.
*74.1 File No. 93008(b)
LMN SAS-132
-7-
U.S. (DEPT. OF LABOR) OCCUPATIONAL SAFETY & HEALTH ADMINISTRATION (OSHA)
VS. BSC (1993) Citation Inspection 102281888; OSHRC Docket #94-0416, Region 6,
Case #940059
Citation and Notification issued 12/22/93 (received 12/27/93) arising out
of inspection of La Place facility 6/28/93 _ 11/24/93. Contains three (3)
serious and three other violations of OSHA regulations and seeks $5,625 (three
serious) in penalties. Serious violations claim lead dust exposures in
changehouse lavatory and melt shop break room. Abatement dates for serious
violations are 1/12/94 and 2/10/94. Other violations related to fire
prevention programs, area lead exposure and require abatement dates of 2/10/94
and 1/5/94. Notice of Contest 1/19/94. Complaint received 2/10/94. Answer
filed 2/23/94. Notice of Docketing and Assignment of review commission Judge
(Louis G. LaVeccia) dated 4/8/94, received 5/11/94 from Atty. Robert Goldberg.
Meeting 6/17/94. Hearing 11/17/94. Union elects party status 9/23/94. Motino
to shorten time to take discovery 11/9/94 returnable 11/14/94. Working on
resolution and Settlement Agreement to reflect more of three "serious" to
"other" violations, vacate one "other" violation, reduce penalties to $4,125.
Settlement agreement signed by BSC 1/2/95. Notice of Order and Report 02/10/95
docketed 02/17/95 approving Settlement Agreement will become final 03/20/95,
unless OSHRC directs otherwise. Petition for discretionary review has to be
filed by 03/09/95.
*74.3 File No. 93055
LMN SAS-129
U.S. (DEPT. OF LABOR) OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION (OSHA)
VS. BSC (1994) Citation Inspection 107631921; OSHRC Docket.
Citation and Notification issued 4/22/94; received 4/26/94 arising out of
an inspection at La Place facility between 1/19/94 and 4/6/94. Citation
charges one willful violation and seeks $35,000 in penalty and immediate
abatement; charges BSC did not provide access to exposure records within 15
working days nor inform Steelworkers Local 9121 of reason for delay. Notice of
contest 5/9/94. Answer and Affirmative Defenses filed 7/5/94. U.S. WA.
"elects" party status 9/20/94. Settlement Agreement March 15 and 24, 1994
deletes willful classification to a "Section 17", provides for $14,000 penalty
and withdrawal of notice of contest.
*74.4 File No. 94034
LMN SAS-134
BSC V. REICH (1994) Eastern District of Louisiana. In the matter of
Establishment Inspection of BSC. Misc. No. 94-2357.
OSHA inspection requested 7/21/94 per inspection warrant dated 7/18/94,
but not disclosed until 7/21/94. BSC files Motion to Stay or Quash warrant
7/21/94 and for expedited hearing 7/21/94. Hearing 7/29/94. Rescheduled. U.S.
Labor Dept. moves to judge BSC
-8-
in contempt of warrant 7/27/94. Hearing 8/18/94. BSC motion opposing contempt
and support of motion to quash 8/10/94. Working on resolution of matter.
Agreement reached 9/9/94 letter from DOL accepted by 9/12/94 letter from BSC.
Motion to quash warrant withdrawn; motion for contempt withdrawn. Inspection of
plant to be set. BSC moves to withdraw or dismiss motion to quash warrant
9/19/94. Settlement Agreement signed 9/27 and Inspection Protocol reached.
Wall-to-wall inspection completed resolution awaited. Proposal penalty $160,000
to be negotiated.
*77. File No. 93029
LMN
EVAN J. ROUSSEL, SR. VS. GAYLE F. TRULY, ADMINISTRATOR OF THE LOUISIANA
OFFICE OF EMPLOYMENT SECURITY AND BSC (1993), 24th Judicial District Court,
Jefferson Parish, Case No. 453-823
Attorneys letter and Petition were served on BSC's statutory agent by
regular mail (no postmark) on 9/28/93, and received at BSC Dallas, TX on
9/29/93. Plaintiff, former employee (separated on 5/13/93 and nonstriker has
appealed denial of unemployment compensation benefits rendered 8/13/93. Answer
filed 10/13/93. CT served 2/7/94 with administrative record an Dept. of
Labor's opposition to the Appellate Court. New Orleans Legal Assistance
Corporation requests notice of orders, hearings etc. Rule to show case 2/24/94
sets hearing on 4/6/94. Our brief due 3/31/94. Office of Employment Security
brief 3/29/94 favors our position. BSC memo of law filed 3/30/94. Judgment
affirmed 4/14/94.
*78. File No. 93052
LMN
SIMON VS. C&C MARINE, INC. AND BSC, Docket #31918, 40th Judicial District
Court, St. John the Baptist Parish, LA
Citation, Petition for Wrongful Death and Survival Action, Interrogatories
and Document Production Request were served on our statutory agent on 2/11/94.
The lawsuit arises out of an accident on 5/26/93, on a barge docked at BSC's
facility during which one Mark Simon, the plaintiff's son, was killed.
Unspecified damages are claimed. Answer due by 3/30/94. Rice Fowler, insurance
counsel, on board. First supplemental and amending petition per order 5/26/94.
Archer Daniels and America River Transport Co. (barge owners) file complaint
for exoneration 6/30/94 in Federal Court (EDist. Louisiana). Also, on 6/30/94
U.S.D.C. E. Dist. Louisiana issues stay of claims against barge owners.
Settlement discussions, BSC liability limited under Long Shoreman's Act to
$3,000. Settlement 03/14/95. ADM/AR&CO $11,000, C&C Marine $1,000 and BSC
$3,000. Case to be dismissed if payment made by 05/10/95. Mrs. Simon filed
claim on U.S. Department of Labor; settlement needs to be re-worked as of
03/24/95.
-9-
*80. File No. 94014
LMN
ESQUIVEL VS. SOUTHERN PACIFIC AND BSC, U.S. District Court, Central
District of California (Los Angeles), Cause No. CV-94-1079-SVW (EEX)
Summons, Complaint and Notice of Assignment papers were served on BSC's
statutory agent in Baton Rouge, Louisiana, by overnight courier on June 8, 1994.
A response is due by JUNE 29, 1994. The lawsuit is brought by Enedina Esquivel,
a citizen of Mexico, and mother and sole heir of Jose Octavio Esquivel. Jose was
found dead in a Southern Pacific gandola rail car on September 14, 1993 by an
employee of Johanessen Trading Co., Commerce, California. According to the
Complaint, the three men were crushed by a shifting load of steel beams. The
Complaint contends that although it is unknown where Jose boarded the rail car,
the train originated in La Place, and alleges that both Southern Pacific and BSC
were negligent in loading and transporting steel I beams in violation of federal
regulations, which negligence caused Jose's death. Damages of $1 million, costs
of suit and other proper relief are claimed. Insurance counsel is Schaffer & Lax
(Los Angeles), Clifford Schaffer and David Frishman. Answer filed 7/29/94. In
discovery. $175,000 settlement demand made. Settlement authority $50,000 given
by insurers; $30,000 offered. Trial 4/11/95. No reply. Settled for $40,000 per
B. Verette on 12/7/94. BSC will participate in discovery for background.
*81. File No.
LMN
STATE OF LOUISIANA (DEQ) V. BSC (1994) Department of Environmental Quality
Notice of Violation #AE-N-94-0098
On 6/9/94, BSC and BSC's statutory agent received a letter dated 6/3/94
from DEQ regarding compliance inspections conducted 2/23, 2/25 and 2/28, 3/2,
3/7 and 3/8/94 at the La Place minimill which revealed that (1) four fuel
storage tanks and six natural gas heaters were installed without applying for
permits from the Air Quality Division in violation of LAC 33:III.501.C.2., and
(2) airborne fugitive emissions were noted from "various places" in violation
of LA 33:III.1305. It was also noted that three fugitive emission sources and
the furnace disposal of filters and clothing had not been addressed in BSC's
12/93 revised permit application. Response is requested by 7/11/94. No
specific civil penalties are demanded, but Department reserves the right to
seek them.
-10-
*83. File No. 94048
LMN
JAMES L. STROUP V. BSC, Docket #94-08723, District 06, State of Louisiana,
Office of Workers' Compensation Programs, Sixth Compensation District.
Complaint filed 11/7/94 arising out of 5/14/94 injury for benefits under
the Longshore and Harbor Workers Compensation Act. Answer 1/27/95. Notice of
Pretrial 3/7/95 @2pm. Pretrial Statement rescheduled to 03/07/95. Defended by
carrier. In Discovery. Status conference 04/18/95.
-11-
<PAGE>
SCHEDULE 4.20
TRANSACTIONS WITH AFFILIATES
<PAGE>
EXHIBIT 10.2
SHAREHOLDER AGREEMENT
BAYOU STEEL CORPORATION
THE "COMPANY"
BAYOU STEEL PROPERTIES LIMITED
AND
HOWARD M. MEYERS
COLLECTIVELY, THE "SHAREHOLDER"
AND
RICE PARTNERS II, L.P.
THE "PURCHASER"
JUNE 13, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
----
Article I Definitions........................................ 1
Article II [INTENTIONALLY OMITTED]............................ 1
Article III [INTENTIONALLY OMITTED]............................ 1
Article IV Co-Sale Rights..................................... 1
4.01 Rights of Co-Sale.................................. 1
4.02 Method of Electing Sale; Allocation of Sales....... 2
4.03 Sales to Related Parties........................... 3
Article V Liquidity.......................................... 3
5.01 Required Registration.............................. 3
5.02 Incidental Registration............................ 3
5.03 Form S-3 Registrations............................. 4
5.04 Registration Procedures............................ 4
5.05 Allocation of Expenses............................. 6
5.06 Listing on Securities Exchange..................... 7
5.07 Holdback Agreements................................ 7
5.08 Rule 144........................................... 7
5.09 Rule 144A.......................................... 7
5.10 Limitations on Subsequent Registration Rights...... 8
5.11 Good Faith......................................... 8
5.12 Certain Limitations................................ 8
5.13 Indemnification; Contribution...................... 8
Article VI Directors..........................................11
6.01 Voting Agreement...................................11
6.02 Board of Directors.................................11
Article VII Conditions.........................................11
7.01 Warrant Agreement Conditions.......................11
7.02 Proceedings........................................11
Article VIII Miscellaneous......................................12
8.01 Default............................................12
8.02 Integration........................................12
8.03 Headings...........................................12
(i)
8.04 Severability.......................................12
8.05 Notices............................................12
8.06 Successors.........................................14
8.07 Remedies...........................................14
8.08 Payment of Expenses................................14
8.09 Counterparts.......................................14
8.10 Other Business.....................................14
8.11 Choice of Law......................................15
8.12 Nominees for Beneficial Owners.....................15
8.13 Fiduciary Duties...................................15
8.14 Duties Among Holders...............................15
8.15 Actions by Holders.................................15
(ii)
<PAGE>
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT (the "AGREEMENT") made as of June 13, 1995, by and
between BAYOU STEEL CORPORATION, a Delaware corporation (the "COMPANY"), HOWARD
M. MEYERS, and BAYOU STEEL PROPERTIES LIMITED, a Delaware corporation
(individually and collectively, the "SHAREHOLDER"), and RICE PARTNERS II, L.P.,
a Delaware limited partnership (the "PURCHASER").
W I T N E S S E T H:
The Company has entered into a Preferred Stock and Warrant Purchase
Agreement (the "WARRANT AGREEMENT") dated of even date with this Agreement with
the Purchaser.
The Purchaser is willing to enter into and consummate the transactions
contemplated by the Warrant Agreement only if, among other things, (i) the
Company enters into, and performs under, this Agreement and (ii) the
Shareholders enter into, and perform under, this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser, the
Shareholder, and the Company, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
All terms used in this Agreement will have the meanings ascribed to them
in the Warrant Agreement unless otherwise specifically defined in this
Agreement.
ARTICLE II
[INTENTIONALLY OMITTED]
ARTICLE III
[INTENTIONALLY OMITTED]
ARTICLE IV
CO-SALE RIGHTS
4.01 RIGHTS OF CO-SALE. In the event that any Shareholder intends to sell
or transfer, directly or indirectly, any shares of any class of Capital Stock
held by it to any Person other than a Related Party, each Holder will have the
right to participate in such sale or transfer on the terms set forth in this
ARTICLE IV; PROVIDED, HOWEVER, none of the provisions of this Agreement will
apply to any sale by a Shareholder of shares of Capital Stock in a bona fide
public offering under the Securities Act or sold to the public pursuant to Rule
144 under the Securities Act.
4.02 METHOD OF ELECTING SALE; ALLOCATION OF SALES. Subject to SECTION
4.03, no sale or transfer by any Shareholder of any shares of Capital Stock of
the Company will be valid unless
- 1 -
the transferee of such Capital Stock first agrees in writing to be bound by the
same terms and conditions that apply to the Shareholder under this Agreement and
the Warrant Agreement. In addition, before any shares of Capital Stock held,
directly or indirectly, by any Shareholder may be sold or transferred to a
Person other than a Related Party, the Shareholder (as such, the "SELLING
SHAREHOLDER") will comply with the following provisions:
(a) The Selling Shareholder will deliver or cause to be delivered a
written notice (the "NOTICE OF SALE") to each Holder at least thirty (30)
days prior to making any such sale or transfer. The Company agrees to
provide the Selling Shareholder with a list of the names and addresses of
each such Holder for such purpose. The Notice of Sale will include (i) a
statement of the Selling Shareholder's bona fide intention to sell or
transfer; (ii) the name and address of the prospective transferee (the
"BUYER"); (iii) the number of shares of Capital Stock of the Company to be
sold or transferred; (iv) the terms and conditions of the contemplated
sale or transfer; (v) the purchase price in cash that the Buyer will pay
for such shares of Capital Stock (including the Fair Market Value of any
noncash consideration); (vi) the expected closing date of the transaction;
and (vii) such other information as the Holders may reasonably request to
facilitate their decision as to whether or not to exercise the rights
granted by this ARTICLE IV.
(b) Any Holder receiving the Notice of Sale may elect to participate
in the contemplated sale or transfer by exercising its right to co-sell
its Capital Stock pursuant to SECTION 4.02(C). Such right may be exercised
in the sole discretion of the Holder by delivering a written notice (an
"ELECTION NOTICE") to the Company and the Selling Shareholder within
thirty (30) days after receipt of such Notice of Sale stating the election
of the Holder to exercise its right of co-sale pursuant to SECTION
4.02(C).
(c) Each Holder may elect to sell or transfer in the contemplated
transaction up to the total of the number of shares of Capital Stock of
the type specified in the Notice of Sale then held by it (including, if
applicable, the Issuable Warrant Shares). Promptly after the receipt of an
Election Notice exercising such right, the Selling Shareholder will use
its best efforts to cause the Buyer to amend its offer so as to provide
for the Buyer's purchase, upon the same terms and conditions as those
contained in the Notice of Sale, of all of the shares of Capital Stock
(including the Issuable Warrant Shares) elected to be sold (the "CO-SELL
SHARES") in such Election Notices. In the event that the Buyer is
unwilling to amend its offer to purchase all of the Co-Sell Shares in
addition to the shares of Capital Stock described in the related Notice of
Sale, if the Selling Shareholder desires to proceed with the sale, the
total number of shares that such Buyer is willing to purchase will be
allocated to the Selling Shareholder and each Holder having given an
Election Notice exercising its right pursuant to this SECTION 4.02(C) (the
"CO-SELLERS") in proportion to the aggregate number of shares of Capital
Stock (including, if applicable, Issuable Warrant Shares) of the type
specified in the Notice of Sale held by each such Person; PROVIDED,
HOWEVER, that no such Person will be so allocated a number of shares
greater than the number of shares that it has sought to sell to such Buyer
in the related Notice of Sale or Election Notice. All Capital Stock sold
or transferred by the Selling Shareholder and the Co-Sellers with respect
to a single Notice of Sale under this SECTION 4.02(C) will be sold or
transferred to the Buyer in a single closing on the terms described in
such Notice of Sale, and each such share will receive the same per share
consideration. In the
- 2 -
event that the Buyer for whatever reason, declines to purchase any shares
from any Holder delivering an Election Notice, then the Selling
Shareholder will not be permitted to sell or transfer any shares of
Capital Stock to such Buyer.
4.03 SALES TO RELATED PARTIES. No sale or transfer of shares of Capital
Stock by the Shareholder to a Related Party will be subject to the provisions of
SECTION 4.02.
ARTICLE V
LIQUIDITY
5.01 REQUIRED REGISTRATION. At any time after the date of this Agreement,
the Holders may, upon not more than two (2) occasions make a written request to
the Company requesting that the Company effect the registration of Registrable
Securities; provided, that the first such registration request will not be made
prior to January 1, 1996 and that, if so requested, the Company will use its
reasonable best efforts to cause the first such registration to be effective as
soon as possible after March 31, 1996. After receipt of such a request, the
Company will, as soon as practicable, notify all Holders of such request and use
its best efforts to effect the registration of all Registrable Securities that
the Company has been so requested to register by any Holder for sale, all to the
extent required to permit the disposition (in accordance with the intended
method or methods thereof) of the Registrable Securities so registered.
5.02 INCIDENTAL REGISTRATION. If the Company at any time proposes to file
on its behalf or on behalf of any of its security holders a registration
statement under the Securities Act on any form (other than a registration
statement on Form S-4 or S-8 or any successor form unless such forms are being
used in lieu of or as the functional equivalent of, registration rights) for any
class that is the same or similar to Registrable Securities, it will give
written notice setting forth the terms of the proposed offering and such other
information as the Holders may reasonably request to all holders of Registrable
Securities at least thirty (30) days before the initial filing with the
Commission of such registration statement, and offer to include in such filing
such Registrable Securities as any Holder may request. Each Holder of any such
Registrable Securities desiring to have Registrable Securities registered under
this SECTION 5.02 will advise the Company in writing within thirty (30) days
after the date of receipt of such notice from the Company, setting forth the
amount of such Registrable Securities for which registration is requested. The
Company will thereupon include in such filing the number of Registrable
Securities for which registration is so requested, and will use its best efforts
to effect registration under the Securities Act of such Registrable Securities.
Notwithstanding the foregoing provisions of this SECTION 5.02, if the
managing underwriter or underwriters, if any, of such offering deliver a written
opinion to the Company (upon which each Holder of such Registrable Securities
will be entitled to rely) that the success of the offering would be materially
and adversely affected by the inclusion of the Registrable Securities requested
to be included, then the amount of securities to be offered for the accounts of
Holders will be reduced pro rata (according to the Registrable Securities
proposed for registration) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such
managing underwriter or underwriters; PROVIDED, HOWEVER, that if securities are
being offered for the account of other Persons as well as the Company, then the
proportion by which the amount of such class of Registrable Securities intended
to be offered by
- 3 -
Holders is reduced will not exceed the proportion by which the amount of such
class of securities intended to be offered by such other Persons is reduced.
5.03 FORM S-3 REGISTRATIONS. In addition to the registration rights
provided in SECTIONS 5.01 and 5.02 above, if at any time the Company is eligible
to use Form S-3 (or any successor form) for registration of secondary sales of
Registrable Securities, any Holder of Registrable Securities may request in
writing that the Company register shares of Registrable Securities on such form.
Upon receipt of such request, the Company will promptly notify all holders of
Registrable Securities in writing of the receipt of such request and each such
Holder may elect (by written notice sent to the Company within thirty (30) days
of receipt of the Company's notice) to have its Registrable Securities included
in such registration pursuant to this SECTION 5.03. Thereupon, the Company will,
as soon as practicable, effect the registration on Form S-3 of all Registrable
Securities that the Company has so been requested to register by such Holder for
sale. The Company will use its best efforts to qualify and maintain its
qualification for eligibility to use Form S-3 for such purposes.
5.04 REGISTRATION PROCEDURES. In connection with any registration of
Registrable Securities under this ARTICLE V, the Company will, as soon as
practicable:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to
cause such registration statement to become and remain effective until the
earlier of such time as all Registrable Securities subject to such
registration statement have been disposed of or the expiration of ninety
(90) days;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all Registrable
Securities covered by such registration statement until the earlier of
such time as all of such Registrable Securities have been disposed of or
the expiration of ninety (90) days (except with respect to registrations
effected on Form S-3 or any successor form, as to which no such period
shall apply);
(c) furnish to each Holder such number of copies of the registration
statement and prospectus (including, without limitation, a preliminary
prospectus) in conformity with the requirements of the Securities Act (in
each case including all exhibits) and each amendment or supplement
thereto, together with such other documents as any Holder may reasonably
request;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions within the United States
and Puerto Rico as each Holder reasonably requests, and do such other acts
and things as may be reasonably required of it to enable such holder to
consummate the disposition in such jurisdiction of the securities covered
by such registration statement, except that the Company will not be
required to qualify to do
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business as a foreign corporation, subject itself to general taxation, or
consent to general jurisdiction of the courts of any such jurisdiction;
(e) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
securities holders, as soon as practicable, an earnings statement covering
the period of at least twelve months beginning with the first month after
the effective date of such registration statement, which earnings
statement will satisfy the provisions of Section 11(a) of the Securities
Act;
(f) provide and cause to be maintained a transfer agent and
registrar for Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement;
(g) if requested by the underwriters for any underwritten offering
of Registrable Securities on behalf of a Holder of Registrable Securities
pursuant to a registration requested under SECTION 5.01, the Company will
enter into an underwriting agreement with such underwriters for such
offering, such agreement to contain such representations and warranties by
the Company and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary
distributions, including, without limitation, provisions with respect to
indemnities and contribution as are reasonably satisfactory to such
underwriters and the Holders; the Holders on whose behalf Registrable
Securities are to be distributed by such underwriters will be parties to
any such underwriting agreement and the representations and warranties by,
and the other agreements on the part of, the Company to and for the
benefit of such underwriters, will also be made to and for the benefit of
such Holders of Registrable Securities; and no Holder of Registrable
Securities will be required by the Company to make any representations or
warranties to or agreements with the Company or the underwriters other
than reasonable and customary representations, warranties, or agreements
regarding such Holder, such Holder's Registrable Securities, such Holder's
intended method or methods of disposition, any other representation
required by law and except that the Holders will severally indemnify and
hold harmless (to the extent of their proceeds from the offering) the
Company and any underwriter for any loss, damage, or expense arising from
any misrepresentation of a material fact or omission contained in any
information provided to the Company in writing expressly for inclusion in
the registration statement relating to such Shareholder, its Registrable
Securities, and the intended means of distribution;
(h) furnish, at the written request of any Holder, on the date that
such Registrable Securities are delivered to the underwriters for sale
pursuant to such registration, or, if such Registrable Securities are not
being sold through underwriters, on the date that the registration
statement with respect to such Registrable Securities becomes effective,
(i) an opinion in form and substance reasonably satisfactory to such
Holders, and addressing matters customarily addressed in underwritten
public offerings, of the counsel representing the Company for the purposes
of such registration (who will not be an employee of the Company and who
will be reasonably satisfactory to such Holders), addressed to the
underwriters, if any, and to the selling Holders; and (ii) a letter (the
"comfort letter") in form and substance reasonably satisfactory to such
Holders, from the
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independent certified public accountants of the Company, addressed to the
underwriters, if any, and to the selling Holders making such request (and,
if such accountants refuse to deliver the comfort letter to such Holders,
then the comfort letter will be addressed to the Company and accompanied
by a letter from such accountants addressed to such Holders stating that
they may rely on the comfort letter addressed to the Company); and
(i) during the period when the registration statement is required to
be effective, notify each selling Holder of the happening of any event as
a result of which the prospectus included in the registration statement
contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and prepare a supplement or amendment
to such prospectus so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.
It will be a condition precedent to the obligation of the Company to take
any action pursuant to this ARTICLE V in respect of the Registrable Securities
that are to be registered at the request of any Holder of Registrable Securities
that such Holder furnish to the Company such information regarding the
Registrable Securities held by such Holder and the intended method of
disposition thereof as is legally required in connection with the action taken
by the Company. The managing underwriter or underwriters, if any, for any
offering of Registrable Securities to be registered pursuant to SECTION 5.01 or
5.03 will be selected by the Holders of a majority of the Registrable Securities
being so registered, subject to the consent of the Company, which will not be
unreasonably delayed or withheld.
5.05 ALLOCATION OF EXPENSES. Except as provided in the following sentence,
the Company will bear all expenses arising or incurred in connection with any of
the transactions contemplated by this ARTICLE V, including, without limitation,
(a) all expenses incident to filing with the National Association of Securities
Dealers, Inc.; (b) registration fees; (c) printing expenses; (d) reasonable
accounting and legal fees and expenses of one counsel for all Holders; (e)
expenses of any special audits or comfort letters incident to or required by any
such registration or qualification; and (f) expenses of complying with the
securities or blue sky laws of any jurisdictions in connection with such
registration or qualification. Each Holder will severally bear the expense of
its underwriting fees, discounts, or commissions relating to its sale of
Registrable Securities.
5.06 LISTING ON SECURITIES EXCHANGE. If the Company lists any shares of
Capital Stock on any securities exchange or on the National Association of
Securities Dealers, Inc. Automated Quotation System or similar system, it will,
at its expense, use commercially reasonable efforts to list thereon, maintain
and, when necessary, increase such listing of, all Registrable Securities.
5.07 HOLDBACK AGREEMENTS.
(a) If any registration pursuant to SECTION 5.02 is in connection
with an underwritten public offering in which the Company sells shares of
Capital Stock, each Holder of Registrable Securities agrees, if so
required by the managing underwriter, not
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to effect any public sale or distribution of Registrable Securities (other
than as part of such underwritten public offering) during the period
beginning seven (7) days prior to the effective date of such registration
statement and ending on the one hundred twentieth (120th) day after the
effective date of such registration statement; PROVIDED, HOWEVER, that
each Shareholder and each Person that is an officer, director, or
beneficial owner of five percent (5%) or more of the outstanding shares of
any class of Capital Stock enters into such an agreement.
(b) The Company and each Shareholder agree (i) not to effect any
public sale or distribution during the period seven (7) days (or such
longer period as may be prescribed by Rule 10b-6 under the Exchange Act)
prior to the effective date of the registration statement employed in any
underwritten public offering and ending on the one hundred twentieth
(120th) day after any such registration statement contemplated by SECTION
5.01 has become effective, except as part of such underwritten public
offering pursuant to such registration statement and except pursuant to
securities registered on Forms S-4 or S-8 of the Commission or any
successor forms, and (ii) use their commercially reasonable efforts to
cause each beneficial owner of more than five percent (5%) of any class of
its equity securities or any securities convertible into or exchangeable
or exercisable for any of such securities, in each case purchased from the
Company at any time after the date of this Agreement (other than in a
public offering), to agree not to effect any such public sale or
distribution of such securities during such period.
5.08 RULE 144. At all times following completion by the Company of a
Public Offering, the Company will take such action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder to
sell shares of Registrable Securities without registration pursuant to and in
accordance with (a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation adopted by the
Commission. Upon the request of any Holder of Registrable Securities, the
Company will deliver to such Holder a written statement as to whether it is in
compliance with such requirements.
5.09 RULE 144A. The Company agrees that, upon the request of any Holder or
any prospective purchaser of a Warrant or Warrant Shares designated by a Holder,
the Company will promptly provide (but in any case within fifteen (15) days of a
request) to such Holder or potential purchaser, the following information:
(a) a brief statement of the nature of the business of the Company
and any Subsidiaries and the products and services they offer;
(b) the most recent consolidated balance sheets and profit and
losses and retained earnings statements, and similar financial statements
of the Company for such part of the two preceding fiscal years prior to
such request as the Company has been in operation (such financial
information will be audited, to the extent reasonably available); and
(c) such other information about the Company, any Subsidiaries, and
their business, financial condition, and results of operations as the
requesting Holder or
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purchaser of such Warrants requests in order to comply with Rule 144A, as
amended, and the antifraud provisions of the federal and state securities
laws.
The Company hereby represents and warrants to any such requesting Holder and any
prospective purchaser of Warrants or Warrant Shares from such Holder that the
information provided by the Company pursuant to this SECTION 5.09 will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
5.10 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, the Company will not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company that would allow such holder or prospective holder (a) to include
such securities in any registration filed under SECTION 5.01, unless under the
terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of its
securities will not reduce the amount of the Registrable Securities of the
Holders that is included or (b) to make a demand registration that could result
in such registration statement being declared effective prior to the
effectiveness of the first registration statement effected under SECTION 5.01 or
within one hundred twenty (120) days of the effective date of any registration
effected pursuant to SECTION 5.01.
5.11 GOOD FAITH. The Company will not at any time take any action to avoid
the performance in good faith of its obligations under this ARTICLE V.
5.12 CERTAIN LIMITATIONS. Notwithstanding any other provision of this
ARTICLE V: (a) the Company may on one occasion in any twelve (12) month period
postpone any registration under SECTION 5.01 or 5.03 for a period not to exceed
90 days if, in the good faith judgment of the board of directors of the Company,
the effect of such registration would be to materially and adversely affect any
pending or contemplated transaction or financing by the Company; and (b) the
Company will not be required to effect any registration under SECTION 5.01 or
5.03 until the expiration of one hundred twenty (120) days after the completion
of a registered public offering (other than an offering registered on Form S-4
or S-8 or a similar form).
5.13 INDEMNIFICATION; CONTRIBUTION
(a) INDEMNIFICATION BY THE COMPANY. In the event of any registration of
Registrable Securities pursuant to this ARTICLE V, the Company agrees to
indemnify each Holder participating in such registration (a "PARTICIPATING
HOLDER"), its officers and directors and each Person that controls each such
Participating Holder (within the meaning of section 15 of the Securities Act),
against all losses, claims, damages, liabilities, and expenses (including any
expenses reasonably incurred in investigating or defending any such loss, claim,
damage, or liability) incurred by such Persons and arising out of or based on
any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus, or any amendment
thereof or supplement thereto (if used during the period the Company is required
to keep such registration statement current), or arising out of or based on any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were
- 8 -
made) not misleading; provided, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon any untrue or alleged untrue statement or
omission or alleged omission made in such registration statement, such
prospectus or preliminary prospectus or such post-effective amendment or
supplement in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of such Participating Holder, officers,
directors or controlling Persons (or any underwriters acting on behalf of such
Participating Holder) specifically for inclusion therein. In connection with an
underwritten offering, the Company will indemnify the underwriters thereof,
their officers and directors and each Person that controls such underwriters
(within the meaning of section 15 of the Securities Act) to the same extent as
provided above. The foregoing indemnification with respect to any preliminary
prospectus will not inure to the benefit of any Participating Holder or
underwriter (or to the benefit of any Person controlling such Participating
Holder or underwriter) from whom the Person asserting any such losses, claims,
damages, liabilities or expenses purchased Registrable Securities if a copy of
the final prospectus had not been sent or given to such Person at or prior to
the written confirmation of the sale of such Registrable Securities to such
Person and the untrue statement or omission of a material fact contained in such
preliminary prospectus was corrected in the final prospectus and the Company has
furnished such Participating Holder or underwriter (or Person controlling such
Participating Holder or underwriter) with a sufficient number of copies of such
final prospectus. This indemnity will be in addition to, and not in lieu of, any
liability that the Company otherwise may have.
(b) INDEMNIFICATION BY PARTICIPATING HOLDERS. Each Participating Holder
will furnish to the Company in writing such information with respect to such
Participating Holder as the Company reasonably requests with respect to such
Participating Holder, the Registrable Securities, and the proposed means of
distribution for use in connection with any registration statement or prospectus
and in the event of any registration of Registrable Securities pursuant to this
ARTICLE V agrees to indemnify the Company, its directors and officers and each
Person that controls the Company (within the meaning of section 15 of the
Securities Act) against any losses, claims, damages, liabilities and expenses
(including any expenses reasonably incurred in investigating or defending any
such loss, claim, damage or liability) incurred by such Persons and arising out
of or based on any untrue or alleged untrue statement of a material fact or any
omission or alleged omission of a material fact required to be stated in the
registration statement or prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that any such loss, claim,
damage, liability or expense arises out of or is based upon any untrue or
alleged untrue statement or omission or alleged omission made in such
registration statement, such prospectus or preliminary prospectus or such
post-effective amendment or supplement in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such
Participating Holder, officers, directors or controlling Persons (or any
underwriters acting on behalf of such Participating Holder) specifically for
inclusion therein. This indemnity shall be in addition to, and not in lieu of,
any liability which the Participating Holder may otherwise have. The
indemnification obligation of each Participating Holder will be several and not
joint, and will be limited to the proceeds actually received by such
Participating Holder in such registration.
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(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification under this Agreement agrees to give prompt written notice to the
indemnifying party after the receipt by such Person of any written notice of the
commencement of any action, suit, proceeding, or investigation or threat thereof
made in writing for which such Person will claim indemnification or contribution
pursuant to this Agreement and to permit the indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to such indemnified
party. If the indemnifying party assumes the defense of a claim, it will not be
obligated to pay the fees and expenses of counsel to the indemnified party with
respect to such claim, unless the indemnifying and indemnified parties are both
named parties to any such action (including any impleaded parties) and the
indemnified party has been advised that there may be one or more legal defenses
available to it which are different from or in addition to those available to
the indemnifying party (in which case such indemnified Person will promptly
notify the indemnifying party in writing that it intends to employ separate
counsel at the expense of the indemnifying party). In the event that the
indemnified party so notifies the indemnifying party that the indemnified party
intends to employ separate counsel, the indemnifying party will be obligated to
pay the fees and expenses of such additional counsel, provided that the
indemnifying party will not be responsible for more than one separate firm of
attorneys for all the Participating Holders. The indemnifying party will not be
subject to any liability for any settlement made without its consent, which
consent will not unreasonably be withheld.
(d) CONTRIBUTION. If the indemnification provided for in this ARTICLE V
from the indemnifying party is unavailable to an indemnified party in respect of
any losses, claims, damages, liabilities, or expenses, then the indemnifying
party, in lieu of indemnifying such indemnified party, will contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities, or expenses in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and indemnified parties
in connection with the actions that resulted in such losses, claims, damages,
liabilities, or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties will be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above will be deemed to include any legal or other fees
or expenses reasonably incurred by such party in connection with any
investigation or proceeding. The parties hereto agree that it would not be just
and equitable if such contribution were determined by pro rata allocation or by
any other method of allocation that does not take into account the equitable
considerations referred to above. No Person guilty of fraudulent
misrepresentation (within the meaning of section 11(f) of the Securities Act)
will be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
ARTICLE VI
DIRECTORS
6.01 VOTING AGREEMENT. To ensure compliance with this ARTICLE VI, the
Shareholder hereby irrevocably covenants and agrees to vote, or give or withhold
consent with respect to, all
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shares of Capital Stock now owned or later acquired by it, all in accordance
with the terms of this ARTICLE VI. The agreement to vote contained in this
ARTICLE VI will expire on the earlier to occur of (a) the day prior to the
maximum period permitted under applicable law or (b) the Purchaser and its
Affiliates ceasing to hold the Warrants, the Preferred Shares or any Warrant
Shares. A counterpart of this Agreement will be deposited with the Company at
its principal place of business or registered office and will be subject to the
same right of examination by a shareholder of the Company, in Person or by agent
or attorney, as are the books and records of the Company.
6.02 BOARD OF DIRECTORS. So long as the Purchaser owns any Preferred
Shares or not less than 25,000 shares of Registrable Securities and so long as
the provisions of this ARTICLE VI remain in effect, each party to this Agreement
other than the Purchaser will, at the request of the Purchaser, vote, or give or
withhold consent with respect to, all shares of Capital Stock now owned or later
acquired by such party in order to effectuate the terms of the fifth sentence of
Section 4.16 of the Warrant Agreement; PROVIDED, HOWEVER, that the Purchaser
will not have any obligation to designate or cause any individual to serve on
the board of directors of the Company. No director designated by the Purchaser
or its designee may be removed without the consent of the Purchaser. The
Purchaser may, at any time, terminate its rights under this ARTICLE VI by
providing written notice of such termination to the Company.
ARTICLE VII
CONDITIONS
The obligations of the Purchaser to effect the transactions contemplated
by this Agreement will be subject to the following conditions:
7.01 WARRANT AGREEMENT CONDITIONS. All of the conditions precedent to the
obligations of the Purchaser under the Warrant Agreement will have been
satisfied in full or waived.
7.02 PROCEEDINGS. All proceedings taken in connection with the
transactions contemplated by this Agreement, and all documents necessary to the
consummation thereof, will be reasonably satisfactory in form and substance to
the Purchaser and its counsel, and the Purchaser and its counsel will have
received copies (executed or certified as may be appropriate) of all documents,
instruments, and agreements that the Purchaser or its counsel may request in
connection with the consummation of such transactions.
ARTICLE VIII
MISCELLANEOUS
8.01 DEFAULT. It is agreed that a violation by any party of the terms of
this Agreement cannot be adequately measured or compensated in money damages,
and that any breach or threatened breach of this Agreement by a party to this
Agreement would do irreparable injury to the nonbreaching party. It is,
therefore, agreed that in the event of any breach or threatened breach by a
party to this Agreement of the terms and conditions set forth in this Agreement,
the nondefaulting party will be entitled, in addition to any and all other
rights and remedies that it may have in law or in equity, to apply for and
obtain injunctive relief requiring the defaulting
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party to be restrained from any such breach, or threatened breach or to refrain
from a continuation of any actual breach.
8.02 INTEGRATION. This Agreement and the Warrant Agreement constitute the
entire agreement among the parties with respect to the subject matter hereof and
thereof and supersede all previous written, and all previous or contemporaneous
oral, negotiations, understandings, arrangements, and agreements. This Agreement
may not be amended or supplemented except by a writing signed by Company, the
Shareholder, and each Holder.
8.03 HEADINGS. The headings in this Agreement are for convenience and
reference only and are not part of the substance of this Agreement. References
in this Agreement to Sections and Articles are references to the Sections and
Articles of this Agreement unless otherwise specified.
8.04 SEVERABILITY. The parties to this Agreement expressly agree that it
is not their intention to violate any public policy, statutory or common law
rules, regulations, or decisions of any governmental or regulatory body. If any
provision of this Agreement is judicially or administratively interpreted or
construed as being in violation of any such policy, rule, regulation, or
decision, the provision, section, sentence, word, clause, or combination thereof
causing such violation will be inoperative (and in lieu thereof there will be
inserted such provision, sentence, word, clause, or combination thereof as may
be valid and consistent with the intent of the parties under this Agreement) and
the remainder of this Agreement, as amended, will remain binding upon the
parties to this Agreement, unless the inoperative provision would cause
enforcement of the remainder of this Agreement to be inequitable under the
circumstances.
8.05 NOTICES. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration, or other communication be given to or
served upon any of the parties by another, such notice, demand, request,
consent, approval, declaration, or other communication will be in writing and
will be deemed to have been validly served, given, or delivered (and "the date
of such notice" or words of similar effect will mean the date) five (5) days
after deposit in the United States mails, certified mail, return receipt
requested, with proper postage prepaid, or upon receipt thereof (whether by
non-certified mail, telecopy, telegram, express delivery, or otherwise),
whichever is earlier, and addressed to the party to be notified as follows:
If to the
Purchaser, at: Address of the Purchaser beneath the name of the
Purchaser on the signature pages of this Agreement
with courtesy Hughes & Luce, L.L.P.
copies to: 1717 Main Street
Suite 2800
Dallas, Texas 75201
Attn: Larry A. Makel, Esq.
FAX: 214-939-6100
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If to the
Company, at: Bayou Steel Corporation
River Road
LaPlace, Louisiana 70068
Attn: Mr. Richard J. Gonzalez
Fax: 504-652-0472
with a courtesy
copy to: Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York, New York 10022-3598
Attention: Rory A. Greiss, Esq.
Fax: (212) 836-8689
If to
the Shareholder, at: Howard M. Meyers
2777 Stemmons Freeway, Suite 1800
Dallas, Texas 75207
Fax: (214) 631-6146
Bayou Steel Properties Limited
2777 Stemmons Freeway, Suite 1800
Dallas, Texas 75207
Attention: Howard M. Meyers
Fax: (214) 631-6146
with courtesy
copies to: Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York, New York 10022-3598
Attn: Rory A. Greiss, Esq.
Fax: (212) 836-8689
or to such other address as each party may designate for itself by like notice.
Notice to any Holder other than the Purchaser will be delivered as set forth
above to the address shown on the stock transfer books of the Company or the
Warrant Register unless such Holder has advised the Company in writing of a
different address to which notices are to be sent under this Agreement.
Failure or delay in delivering the courtesy copies of any notice, demand,
request, consent, approval, declaration, or other communication to the Persons
designated above to receive copies of the actual notice will in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration, or other communication.
No notice, demand, request, consent, approval, declaration, or other
communication will be deemed to have been given or received unless and until it
sets forth all items of information required to be set forth therein pursuant to
the terms of this Agreement.
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8.06 SUCCESSORS. This Agreement will be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns.
8.07 REMEDIES. The failure of any party to enforce any right or remedy
under this agreement, or to enforce any such right or remedy promptly, will not
constitute a waiver thereof, nor give rise to any estoppel against such party,
nor excuse any other party from its obligations under this Agreement. Any waiver
of any such right or remedy by any party must be in writing and signed by the
party against which such waiver is sought to be enforced.
8.08 PAYMENT OF EXPENSES. All costs and expenses, including, without
limitation, reasonable attorneys' fees incurred by the Purchaser in efforts made
to enforce the Obligations, as well as all reasonable out-of-pocket costs and
expenses, including reasonable attorneys' fees and legal expenses, incurred in
connection with entering into, modifying, administering and/or enforcing this
Agreement and all Other Agreements and/or, in defending or prosecuting any
actions or proceedings arising out of or relating to the Purchaser's
transactions with the Company, or any advice given to Purchaser with respect to
its rights and obligations under this Agreement or any Other Agreements will be
payable to the Purchaser, on demand, and will become part of the Obligations.
8.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, which will individually and collectively constitute one agreement.
8.10 OTHER BUSINESS. It is understood and accepted that the Purchaser, the
Holders, and their Affiliates have interests in other business ventures that may
be in conflict with the activities of the Company and that nothing in this
Agreement will limit the current or future business activities of such parties
whether or not such activities are competitive with those of the Company. The
Company and the Shareholder agree that all business opportunities in any field
substantially related to the business of the Company will be pursued exclusively
through the Company.
8.11 CHOICE OF LAW. THIS AGREEMENT HAS BEEN EXECUTED, DELIVERED, AND
ACCEPTED BY THE PARTIES IN WILL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF
LOUISIANA AND WILL BE INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE UNITED STATES APPLICABLE THERETO AND THE
INTERNAL LAWS OF THE STATE OF LOUISIANA APPLICABLE TO AN AGREEMENT EXECUTED,
DELIVERED AND PERFORMED THEREIN WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW RULES
THEREOF OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE APPLICATION OF THE
SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.
8.12 NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner of such Registrable
Securities, the beneficial owner of Registrable Securities may, at its election,
be treated as the Holder of such Registrable Securities for purposes of any
request or other action by any Holder or Holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any Holder or Holders of Registrable
Securities contemplated
- 14 -
by this Agreement. If the beneficial owner of any Registrable Securities so
elects, the Company may require assurances reasonably satisfactory to it of such
owner's beneficial ownership of such Registrable Securities. In no event will a
Holder be required to exercise the Warrant as a condition to the registration of
such Warrant or Registrable Securities thereunder.
8.13 FIDUCIARY DUTIES. The Company acknowledges and agrees that, for so
long as any Warrant is outstanding and regardless of whether the Holder has
exercised any portion of its Warrant, the Holder will be entitled to all rights
and remedies that are otherwise available to a stockholder of the Company under
the Delaware General Corporation Law, as amended from time to time.
8.14 DUTIES AMONG HOLDERS. Each Holder agrees that no other Holder will by
virtue of this Agreement be under any fiduciary or other duty to give or
withhold any consent or approval under this Agreement or to take any other
action or omit to take any action under this Agreement, and that each other
Holder may act or refrain from acting under this Agreement as such other Holder
may, in its discretion, elect.
8.15 ACTIONS BY HOLDERS. Unless otherwise provided in this Agreement, in
each instance that the Holders are required or entitled to request or consent in
concert to any action in this Agreement, the Holders will be deemed to have
requested or consented to such action if the Holders of a majority-in-interest
of the Registrable Securities or Preferred Shares so request or consent. With
respect to any such request or consent the Company shall be entitled to rely
without further investigation on a written statement signed by the Purchaser (or
such other party as the Purchaser may designate by written notice to the
Company) that a majority-in-interest of the Holders of (i) Registrable
Securities or (ii) Preferred Shares have so requested or consented, as
applicable. A majority-in-interest of Holders of Registrable Securities shall
consist of Holders of a majority of the Registrable Securities. A
majority-in-interest of Holders of Preferred Shares shall consist of Holders of
a majority of the aggregate liquidation preference of all issued and outstanding
Preferred Shares.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
COMPANY:
BAYOU STEEL CORPORATION
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
- 15 -
SHAREHOLDER:
BAYOU STEEL PROPERTIES LIMITED
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
___________________________________________
HOWARD M. MEYERS
PURCHASER:
RICE PARTNERS II, L.P.
By: Rice Capital Group IV, L.P., its
general partner
By: RMC Fund Management, L.P., its
general partner
By: Rice Mezzanine Corporation,
its general partner
By: _____________________
Name: Jeffrey P. Sangalis
Its: Managing Director
5847 San Felipe, Suite 4350
Houston, Texas 77057
Attn: Jeffrey P. Sangalis
Fax: (713) 783-9750
- 16 -
EXHIBIT 10.3
EXECUTION COPY
CREDIT AGREEMENT
Among
BAYOU STEEL CORPORATION
The Lenders Named Herein
And
CHEMICAL BANK,
as Agent
Dated as of June 28, 1989, as amended
and restated through June 1, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I. DEFINITIONS.............................................. 1
SECTION 1.01. DEFINED TERMS................................... 1
SECTION 1.02. TERMS GENERALLY................................. 26
ARTICLE II. THE CREDITS............................................. 27
SECTION 2.01. COMMITMENTS..................................... 27
SECTION 2.02. LOANS........................................... 28
SECTION 2.03. NOTICE OF BORROWINGS............................ 29
SECTION 2.04. NOTES; REPAYMENT OF LOANS....................... 30
SECTION 2.05. FEES............................................ 30
SECTION 2.06. INTEREST ON LOANS............................... 31
SECTION 2.07. DEFAULT INTEREST................................ 31
SECTION 2.08. ALTERNATE RATE OF INTEREST...................... 32
SECTION 2.09. TERMINATION AND REDUCTION OF
COMMITMENTS.............................................. 32
SECTION 2.10. PREPAYMENT...................................... 32
SECTION 2.11. RESERVE REQUIREMENTS; CHANGE IN
CIRCUMSTANCES............................................ 33
SECTION 2.12. CHANGE IN LEGALITY.............................. 35
SECTION 2.13. INDEMNITY....................................... 36
SECTION 2.14. PRO RATA TREATMENT.............................. 36
SECTION 2.15. SHARING OF SETOFFS.............................. 37
SECTION 2.16. PAYMENTS........................................ 37
SECTION 2.17. TAXES........................................... 38
ARTICLE III. LETTERS OF CREDIT...................................... 40
SECTION 3.01. ISSUANCE OF LETTERS OF CREDIT;
LENDER PARTICIPANTS...................................... 40
SECTION 3.02. REQUEST FOR ISSUANCE............................ 42
SECTION 3.03. PAYMENT; REIMBURSEMENT.......................... 42
SECTION 3.04. PAYMENTS IN RESPECT OF INCREASED
COSTS.................................................... 44
SECTION 3.05. FEES............................................ 46
ARTICLE IV. REPRESENTATIONS AND WARRANTIES.......................... 47
SECTION 4.01. ORGANIZATION; POWERS............................ 47
SECTION 4.02. AUTHORIZATION................................... 47
SECTION 4.03. ENFORCEABILITY.................................. 47
SECTION 4.04. GOVERNMENTAL APPROVALS.......................... 47
SECTION 4.05. FINANCIAL STATEMENTS............................ 48
SECTION 4.06. NO MATERIAL ADVERSE CHANGE...................... 48
SECTION 4.07. TITLE TO PROPERTIES; POSSESSION
UNDER LEASES............................................. 48
SECTION 4.08. SUBSIDIARIES.................................... 49
SECTION 4.09. LITIGATION; COMPLIANCE WITH LAWS................ 49
SECTION 4.10. AGREEMENTS...................................... 50
SECTION 4.11. FEDERAL RESERVE REGULATIONS..................... 50
SECTION 4.12. INVESTMENT COMPANY ACT; PUBLIC
UTILITY HOLDING COMPANY ACT.............................. 50
SECTION 4.13. USE OF PROCEEDS................................. 50
SECTION 4.14. TAX RETURNS..................................... 51
(i)
SECTION 4.15. NO MATERIAL MISSTATEMENTS....................... 51
SECTION 4.16. EMPLOYEE BENEFIT PLANS.......................... 51
SECTION 4.17. ENVIRONMENTAL AND SAFETY MATTERS................ 51
SECTION 4.18. SECURITY AGREEMENT.............................. 52
ARTICLE V. CONDITIONS OF LENDING.................................... 52
SECTION 5.01. ALL BORROWINGS.................................. 52
SECTION 5.02. FIRST BORROWING................................. 53
ARTICLE VI. AFFIRMATIVE COVENANTS................................... 56
SECTION 6.01. EXISTENCE; BUSINESSES AND
PROPERTIES............................................... 56
SECTION 6.02. INSURANCE....................................... 56
SECTION 6.03. OBLIGATIONS AND TAXES........................... 57
SECTION 6.04. FINANCIAL STATEMENTS, REPORTS,
ETC...................................................... 57
SECTION 6.05. LITIGATION AND OTHER NOTICES.................... 59
SECTION 6.06. ERISA........................................... 60
SECTION 6.07. MAINTAINING RECORDS; ACCESS TO
PROPERTIES AND INSPECTIONS............................... 60
SECTION 6.08. USE OF PROCEEDS................................. 61
SECTION 6.09. FISCAL YEAR-END................................. 61
SECTION 6.10. FURTHER ASSURANCES.............................. 61
SECTION 6.11. BAYOU (TENNESSEE) INDEBTEDNESS TO
CASH FLOW................................................ 61
SECTION 6.12. BAYOU (TENNESSEE) CASH FLOW TO
PRINCIPAL DUE............................................ 61
SECTION 6.13. MAINTENANCE OF BAYOU (TENNESSEE)
BORROWING BASE........................................... 62
SECTION 6.14. LANDLORD'S WAIVER AND CONSENT................... 62
SECTION 6.15. LITIGATION SCHEDULE............................. 62
ARTICLE VII. NEGATIVE COVENANTS..................................... 62
SECTION 7.01. INDEBTEDNESS.................................... 62
SECTION 7.02. LIENS........................................... 63
SECTION 7.03. SALE AND LEASE-BACK TRANSACTIONS................ 65
SECTION 7.04. INVESTMENTS, LOANS AND ADVANCES................. 65
SECTION 7.05. MERGERS, CONSOLIDATIONS AND SALES
OF ASSETS................................................ 66
SECTION 7.06. DIVIDENDS AND DISTRIBUTIONS..................... 66
SECTION 7.07. TRANSACTIONS WITH AFFILIATES.................... 67
SECTION 7.08. BUSINESS OF BORROWER AND RECOURSE
SUBSIDIARIES............................................. 67
SECTION 7.09. RESTRICTED EXPENDITURES......................... 68
SECTION 7.10. ACQUISITION EXPENDITURES........................ 68
SECTION 7.11. CURRENT RATIO................................... 68
SECTION 7.12. TANGIBLE NET WORTH.............................. 68
SECTION 7.13. DEBT TO CAPITALIZATION.......................... 68
SECTION 7.14. INTEREST EXPENSE COVERAGE RATIO................. 69
SECTION 7.15. AMENDMENTS...................................... 69
SECTION 7.16. INDEMNITY....................................... 70
ARTICLE VIII. EVENTS OF DEFAULT..................................... 70
ARTICLE IX. THE AGENT............................................... 75
(ii)
ARTICLE X. MISCELLANEOUS............................................ 78
SECTION 10.01. NOTICES........................................ 78
SECTION 10.02. SURVIVAL OF AGREEMENT.......................... 79
SECTION 10.03. BINDING EFFECT................................. 79
SECTION 10.04. SUCCESSORS AND ASSIGNS......................... 80
SECTION 10.05. EXPENSES; INDEMNITY............................ 83
SECTION 10.06. RIGHT OF SETOFF................................ 84
SECTION 10.07. APPLICABLE LAW................................. 85
SECTION 10.08. WAIVERS; AMENDMENT............................. 85
SECTION 10.09. INTEREST RATE LIMITATION....................... 86
SECTION 10.10. ENTIRE AGREEMENT............................... 86
SECTION 10.11. WAIVER OF JURY TRIAL........................... 86
SECTION 10.12. SEVERABILITY................................... 87
SECTION 10.13. COUNTERPARTS................................... 87
SECTION 10.14. HEADINGS....................................... 87
SECTION 10.15. JURISDICTION; CONSENT TO SERVICE
OF PROCESS............................................... 87
SECTION 10.16. CONFIDENTIALITY................................ 88
(iii)
References
Schedule 2.01 Lenders and Commitments
Schedule 4.04 Government Approvals
Schedule 4.09 Litigation
Schedule 4.16 Employee Benefit Plans
Schedule 4.17(a) Environmental Litigation
Schedule 4.17(b) Environmental Liabilities
Schedule 5.01(d) Form of Borrowing Base Certificate
Schedule 7.01 Indebtedness
Schedule 7.02 Liens
Schedule 7.09 Budgeted Capital Expenditures
Exhibit A Form of Promissory Note
Exhibit B Form of Revolving Credit Guarantee
Exhibit C Form of Security Agreement
Exhibit D Form of Opinion
Exhibit E Form of Opinion
Exhibit F Form of Opinion
Exhibit G-1 Form of First Mortgage Indenture
Intercreditor Agreement
Exhibit G-2 Form of Hibernia Facility Intercreditor
Agreement
Exhibit H Form of Subordination Provisions
Exhibit I Form of Landlord Waiver and Consent
Exhibit J Assignment and Acceptance
(iv)
<PAGE>
CREDIT AGREEMENT dated as of June 28, 1989, as amended and restated
through June 1, 1995, among BAYOU STEEL CORPORATION, a Delaware corporation (the
"BORROWER"), the several banks and other financial institutions from time to
time parties to this Agreement (the "LENDERS") and CHEMICAL BANK, a New York
banking corporation, as agent for the Lenders hereunder (in such capacity, the
"AGENT").
WHEREAS, the Borrower, the Lenders (the "ORIGINAL LENDERS") party to
this Agreement on June 1, 1995 and the Agent are parties to the Credit Agreement
dated as of June 28, 1989, as amended and restated through November 23, 1993 and
as in effect immediately prior to the effectiveness of this Agreement (the
"ORIGINAL CREDIT AGREEMENT");
WHEREAS, the parties to the Original Credit Agreement wish to amend
and restate the Original Credit Agreement pursuant to this Agreement in order,
INTER ALIA, to increase the aggregate Commitments to $45,000,000, to extend the
Maturity Date and to amend certain covenants; and
WHEREAS, the parties hereto have elected to amend and restate the
Original Credit Agreement pursuant to this Agreement rather than amend the
Original Credit Agreement or enter into a new credit agreement for their
convenience and intend that all indebtedness, obligations and liens created
under the Original Credit Agreement and the other Loan Documents be continued
hereunder and thereunder and remain in full force and effect and not be
discharged, paid, satisfied or cancelled;
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any Loan bearing interest at a rate determined
by reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"ACCOUNT DEBTOR" shall mean any Person who is obligated to the
Borrower under, with respect to or on account of an Account.
"ACCOUNTS" shall mean any and all rights of the Borrower to payment
for goods and services sold, leased or otherwise provided by the Borrower,
including any such right evidenced by chattel paper, whether due or to become
due,
1
whether or not it has been earned by performance, and whether now or hereafter
acquired or arising in the future, including, without limitation, accounts
receivable from Affiliates or employees of the Borrower.
"ACCOUNTS RECEIVABLE" shall mean all Accounts and all rights in any
returned goods, together with all rights, titles, securities and guarantees with
respect thereto, including any rights to stoppage in transit, replevin,
reclamation and resales, and all related security interests, liens and pledges,
whether voluntary or involuntary.
"ACQUISITION" shall mean the acquisition by the Borrower of
substantially all of the assets of Tennessee Valley Steel Corporation, a
Tennessee corporation, pursuant to the TVS Asset Purchase Agreement.
"ACQUISITION EXPENDITURES" shall mean, for the Borrower in respect
of any period, the aggregate of all expenditures by the Borrower during such
period to acquire, by purchase or otherwise, either (a) the assets of any Person
other than any Subsidiary which constitute substantially all of an operating
unit or business of such Person or (b) all the capital stock of or other
beneficial ownership interests in another Person other than any Subsidiary.
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves. For purposes
hereof, the term "LIBO Rate" shall mean the rate (rounded upwards, if necessary,
to the next 1/16 of 1%) at which dollar deposits approximately equal in
principal amount to Chemical's portion of such Eurodollar Borrowing and for a
maturity comparable to such Interest Period are offered to the principal London
office of the Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"AFFILIATE" shall mean, with respect to a corporation, any person
(including any member of the immediate family of any natural person) which
directly or indirectly beneficially owns or controls 5% or more of the total
voting power of shares of capital stock of such corporation having the right to
vote for directors under ordinary circumstances, any person controlling,
controlled by or under common control with any such corporation (within the
meaning of Rule 405 under the Securities Act of 1933), and any director or
executive officer of any such corporation.
2
"AGGREGATE AMOUNT" shall be as defined in Section 5.01(d).
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1-1/8% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. For purposes hereof, "PRIME RATE" shall mean the rate of
interest per annum publicly announced from time to time by Chemical as its prime
rate in effect at its principal office in New York City; each change in the
Prime Rate shall be effective on the date such change is publicly announced.
"BASE CD RATE" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate.
"THREE-MONTH SECONDARY CD RATE" shall mean, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it. "FEDERAL FUNDS EFFECTIVE
RATE" shall mean, for any day, 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 on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day of
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate
or both for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms thereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds
3
Effective Rate shall be effective on the effective date of such change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.
"APPLICABLE MARGIN": for each Type of Loan at any time, the Leverage
Ratio as set forth under the relevant column heading below:
EURODOLLAR
LEVERAGE RATIO LOANS ABR LOANS
- -------------- ---------- ---------
Less than 2.0 1.50% 0.25%
2.0 and above but less than 3.0 1.75% 0.50%
3.0 and above but less than 4.0 2.00% 0.75%
4.0 and above but less than 5.0 2.25% 1.00%
5.0 and above but less than 6.0 2.50% 1.25%
6.0 and above 3.00% 1.75%
The Applicable Margin for any date shall be determined by reference to the
Leverage Ratio as of the last day of the fiscal quarter most recently ended, and
any change in the Applicable Margin shall become effective upon the delivery to
the Agent of a certificate of a Responsible Officer of the Borrower (which
certificate may be delivered prior to delivery of the relevant financial
statements) with respect to the financial statements to be delivered pursuant to
Section 6.04 for the most recently ended fiscal quarter (a) setting forth in
reasonable detail the calculation of the Leverage Ratio at the end of such
fiscal quarter and (b) stating that the signer has reviewed the terms of this
Agreement and other Loan Documents and has made, or caused to be made under his
or her supervision, a review in reasonable detail of the transactions and
condition of the Borrower and its Subsidiaries during the applicable fiscal
quarter, and that the signer does not have knowledge of the existence as of the
date of such officers' certificate of any Event of Default or Default and any
such change in the Applicable Margin shall apply (i) in the case of the ABR
Loans, to ABR Loans outstanding on such delivery date or made on and after such
delivery date and (ii) in the case of the Eurodollar Loans, to Eurodollar Loans
outstanding on such delivery date or made on and after such delivery date. It is
understood that the foregoing certificate of a Responsible Officer shall be
permitted to be delivered prior to, but in no event later than, the time of the
actual delivery of the financial statements required to be delivered pursuant to
Section 6.04. Notwithstanding the foregoing, (i) at all times from the Closing
Date to the date on which the first certificate required under Section 6.04(d)
is delivered, the Applicable Margin shall be (x) for
4
Eurodollar Loans, 2.25% and (y) for ABR Loans, 1.00% and (ii) if the Borrower
fails to deliver the certificate required under Section 6.04(d) with respect to
a fiscal quarter, then at all times from and including the date the delivery
thereof is due until such certificate is delivered, the Leverage Ratio shall be
deemed, solely for the purposes of this definition, to be greater than 6.0 to
1.0.
"ASSESSMENT RATE" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Agent (in good faith, but in no event in excess of statutory or regulatory
maximums) as the then current net annual assessment rate that will be employed
in determining amounts payable by Chemical to the Federal Deposit Insurance
Corporation (or any successor) for insurance by such Corporation (or such
successor) of time deposits made in dollars at the Agent's domestic offices.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Agent, in the form
of Exhibit J or such other form as shall be approved by the Agent.
"BAYOU SCRAP" shall mean Bayou Steel Scrap Corporation, a Delaware
corporation and a subsidiary of the Borrower.
"BAYOU (TENNESSEE)" shall mean Bayou Steel Corporation (Tennessee),
a Delaware corporation.
"BOARD" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"BORROWING" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"BORROWING BASE" shall mean (x) the sum of 80% of the Eligible
Accounts Receivable and 55% of the Eligible Inventory (excluding any Eligible
Inventory located in Tennessee (unless there shall have been created in favor of
the Collateral Agent for the benefit of the Lenders a first priority perfected
security interest in such Eligible Inventory)) MINUS (y) the sum of (i) the
aggregate principal amount of the Term Loans outstanding at any time PLUS (ii)
interest payable on such Term Loans for the next fiscal quarter.
"BORROWING BASE CERTIFICATE" shall mean a certificate in the form of
Schedule 5.01(d), duly completed and executed by a Financial Officer.
5
"BUDGETED CAPITAL EXPENDITURES" shall mean the Capital Expenditures
set forth on Schedule 7.09 hereto.
"BUSINESS DAY" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which lenders are
open for business in New York City; PROVIDED, HOWEVER, that, when used in
connection with a Eurodollar Loan, the term "BUSINESS DAY" shall also exclude
any day on which lenders are not open for dealings in dollar deposits in the
London interbank market.
"CAPITAL EXPENDITURES" shall mean, for the Borrower and its Recourse
Subsidiaries in respect of any period, the aggregate of all expenditures by the
Borrower and its Recourse Subsidiaries during such period that, in accordance
with GAAP, are or should be included in "additions to property, plant or
equipment" or similar items reflected in the consolidated statement of cash
flows of the Borrower, excluding therefrom any such expenditures constituting
Acquisition Expenditures.
"CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations
of such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"CAPITALIZATION" for any person shall mean the sum of (i) such
person's Funded Indebtedness plus (ii) such person's Tangible Net Worth.
"CASH FLOW" for Bayou (Tennessee) shall mean, for any period, (i)
EBITDA of Bayou (Tennessee) for such period PLUS (ii) cash equity contributed by
the Borrower to Bayou (Tennessee) during such period (excluding cash equity used
to repay, on the Closing Date, amounts outstanding under all loans from the
Borrower to Bayou (Tennessee) as of the Closing Date (such amounts not to be
reborrowed by Bayou (Tennessee)) PLUS (iii) without duplication, cash on hand of
Bayou (Tennessee) on the last day of such period.
A "CHANGE IN CONTROL" shall be deemed to have occurred if the Owners
shall cease to beneficially own securities of the Borrower representing in the
aggregate at least 51% of the combined voting power of the Borrower's then
outstanding securities. For purposes of this definition, a person shall be
deemed to "beneficially own" a security if such person, directly or indirectly,
has the power to vote, or to direct the voting of, such security.
6
"CHEMICAL" shall mean Chemical Bank.
"CLOSING DATE" shall mean the date on which the conditions precedent
set forth in Section 5.02 shall be satisfied.
"CODE" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
"COLLATERAL" shall mean all Collateral as defined in the Security
Agreement.
"COLLATERAL AGENT" shall mean the Agent, as collateral agent for the
Lenders and the Term Loan Lenders under the Security Agreement.
"COMMITMENT" shall mean, with respect to each Lender, the commitment
of such Lender to make Loans hereunder as set forth in Section 2.01, as the same
may be reduced from time to time pursuant to Section 2.09.
"COMMITMENT FEE" shall have the meaning assigned to such term in
Section 2.05(a).
"COMMITMENT PERCENTAGE" shall mean, with respect to any Lender, the
ratio (expressed as a percentage) of such Lender's Commitment to the Total
Commitment.
"CONSOLIDATED" shall mean, as to any Person, as applied to any
financial or accounting term, such term determined on a consolidated basis for
such Person and its recourse subsidiaries in accordance with GAAP (except as
otherwise required herein). When used in connection with the Borrower,
"Consolidated" shall mean, as applied to any financial or accounting term, such
term determined on a consolidated basis for the Borrower and its Recourse
Subsidiaries in accordance with GAAP (except as otherwise required herein).
"CONSOLIDATED EBITDA" shall mean, with respect to the Borrower and
its Recourse Subsidiaries, computed on a Consolidated basis for any period, the
sum of (i) Net Income for such period, (ii) Interest Expense for such period,
(iii) Federal, state and local income and franchise taxes deducted from revenue
in determining such Net Income and (iv) depreciation and amortization deducted
from revenue in determining such Net Income.
"CONSOLIDATED FIXED CHARGES" shall mean, with respect to the
Borrower and its Recourse Subsidiaries, computed on a Consolidated basis for any
period, the Interest Expense incurred in such period.
7
"CURRENT ASSETS" shall mean, with respect to any person at any date,
the aggregate amount of all assets of such person which would be classified as
current assets at such date, computed and calculated in accordance with GAAP.
"CURRENT LIABILITIES" shall mean, with respect to any person at any
date, the aggregate amount of all liabilities of such person (including tax and
other proper accruals) which would be classified as current liabilities at such
date, computed and calculated in accordance with GAAP, but, for purposes of this
Agreement, excluding the current portion of long-term Indebtedness.
"DEFAULT" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
"DETERMINATION DATE" shall have the meaning assigned such term in
Section 6.04(c).
"DOLLARS" or "$" shall mean lawful money of the United States of
America.
"DUE DATE" shall mean the date on which payment is due with respect
to an Account.
"EBITDA" shall mean, for any Person, for any period, the sum of (i)
Net Income for such period, (ii) Interest Expense for such period, (iii)
Federal, state and local income and franchise taxes deducted from revenue in
determining such Net Income and (iv) depreciation and amortization deducted from
revenue in determining such Net Income.
"ELIGIBLE ACCOUNTS RECEIVABLE" shall mean Accounts of the Borrower
payable in United States Dollars reduced by the aggregate amount of all limits
and deductions provided for in this definition and elsewhere in this Agreement.
Unless otherwise approved in writing by the Agent, no Account shall be deemed to
be an Eligible Account Receivable if and to the extent:
(a) it arises out of a sale made by the Borrower to an Affiliate or
an administrative charge to an Affiliate; or
(b) the Account is unpaid more than 90 days after the original
invoice date; PROVIDED, HOWEVER, that Accounts may remain unpaid up to 180 days
after the original invoice date if (i) such Accounts are supported and secured
by an irrevocable letter of credit or other credit insurance, in a form or
forms, and issued or confirmed by a financial institution, meeting criteria
reasonably specified from time to time by the Agent after consultation with the
Borrower
8
(together with sufficient documentation to permit direct draws by the Agent) and
(ii) such Accounts do not exceed in the aggregate 15% of all Eligible Accounts
Receivable in the then current Borrowing Base; or
(c) it is from an Account Debtor (or any Affiliate thereof) and 25%
or more, in face amount, of all Accounts from such Account Debtor (or any
Affiliate thereof) are ineligible pursuant to (b) above; or
(d) the Account does not satisfy the Borrower's credit and
collection policies or has been or should have been charged off in conformity
with such credit and collection policies; or
(e) the Account from such Account Debtor arises subsequent to a
decree or order for relief with respect to such Account Debtor under the federal
bankruptcy laws, as now or hereafter in effect, unless the Agent shall have
determined that the timely payment and collection of such Account will not be
impaired; or
(f) the Account, when aggregated with all other Accounts of the
Account Debtor and its Affiliates, exceeds 15% or, in the event that the Account
Debtor is Trinity Industries, Inc., 25%, in face value of all Eligible Accounts
Receivable of the Borrower then outstanding; PROVIDED, HOWEVER, that Accounts
which (i) have terms not exceeding 30 days and/or are payable within 30 days (or
in the event that the Account Debtor is Trinity Industries, Inc., have terms not
exceeding 60 days and/or are payable within 60 days) and (ii) are supported or
secured by an irrevocable letter of credit or other credit insurance, in a form
or forms, and issued or confirmed by a financial institution, meeting criteria
reasonably specified from time to time by the Agent after consultation with the
Borrower (together with sufficient documentation to permit direct draws by the
Agent) shall be excluded to the extent of the face amount of such letter of
credit or credit insurance for the purposes of such calculation; or
(g) (i) the Account Debtor is also a creditor of the Borrower, (ii)
the Account Debtor has disputed its liability on, or the Account Debtor has made
any claim or defense with respect to, such Account or any other Account due from
such Account Debtor to the Borrower, which has not been resolved or (iii) the
Account otherwise is or may become subject to any right of setoff by the Account
Debtor; PROVIDED, THAT any Account deemed ineligible pursuant to this clause (g)
shall only be ineligible to the extent of the amount owed by the Borrower to the
Account Debtor, the amount of such dispute, claim or defense, or the amount of
such setoff, as applicable; PROVIDED, FURTHER, that routine adjustments to an
Account common in the industry in which
9
the Borrower engages and common to the Borrower's business, such as for volume
or quantity differences, will be deemed not to constitute a dispute, claim,
defense to setoff; or
(h) any bankruptcy, insolvency or similar event or proceeding has
occurred or commenced and is continuing with respect to the Account Debtor,
unless the payment of Accounts from such Account Debtor is secured in a manner
satisfactory to the Agent or, if the Account from such Account Debtor arises
subsequent to a decree or order for relief with respect to such Account Debtor
under the federal bankruptcy laws, as now or hereafter in effect, the Agent
shall have determined that the timely payment and collection of such Account
will not be impaired; or
(i) the sale is to an Account Debtor outside the continental United
States or Canada, unless the Account Debtor thereon has supplied the Borrower
with an irrevocable letter of credit or other credit insurance, in a form or
forms, and issued or confirmed by a financial institution, meeting criteria
reasonably specified from time to time by the Agent after consultation with the
Borrower (together with sufficient documentation to permit direct draws by, or
payment to, the Agent, as the case may be); PROVIDED, HOWEVER, that
notwithstanding the foregoing, not more than $1,000,000 of Accounts resulting
from such sales to Account Debtors located in Mexico shall be included as
Eligible Accounts Receivable; or
(j) the sale to the Account Debtor is on a bill-and-hold (except
where the Account represents a final sale or transfer of title to the Account
Debtor pursuant to appropriate bill-and-hold acknowledgements, on terms and
conditions reasonably approved by the Agent), guaranteed sale, sale-and-return,
sale on approval or consignment basis or made pursuant to any other written
agreement providing for repurchase or return, PROVIDED, HOWEVER, that no Account
shall be excluded pursuant to this clause (j) solely as a result of the
Borrower's customary quality warranties that it provides to its customers; or
(k) the Account is the result of a charge-back or re-invoice of a
disputed or defaulted Account; or
(l) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower duly assigns its
rights to payment of such Account to the Collateral Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. ss. 3727 ET SEQ.); or
(m) the goods giving rise to such Account have not been shipped and
delivered to the Account Debtor or the services giving rise to such Account have
not been performed
10
or the Account otherwise does not represent a final sale or transfer of title to
the Account Debtor pursuant to appropriate bill and hold acknowledgements, on
terms and conditions reasonably approved by the Agent; or
(n) the Account does not comply with all applicable legal
requirements, including, where applicable, the Federal Consumer Credit
Protection Act, the Federal Truth in Lending Act and Regulation Z of the Board
of Governors of the Federal Reserve System, in each case as amended; or
(o) the Account is subject to any restrictions on the transfer,
assignability or sale thereof, enforceable against the assignee, except as
described in clause (l) above; or
(p) the Agent does not have a valid and perfected first priority
security interest in such Account or the Account does not otherwise conform to
the representations and warranties contained in the Loan Documents; or
(q) it is an Account which may be set-off or charged against any
adverse security deposit, progress payment or other similar advance or deposit
made by or for the benefit of the applicable Account Debtor; PROVIDED that any
Account deemed ineligible pursuant to this clause (q) shall only be ineligible
to the extent of the applicable security deposit, progress payment or other
advance or deposit.
"ELIGIBLE INVENTORY" shall mean Inventory of the Borrower that
consists of raw materials, billets and finished goods, valued at the lower of
cost (prior to the LIFO reserve) or market on a basis consistent with the
Borrower's current and historical accounting practice, LESS (i) any goods
returned or rejected by the Borrower's customers for reasons relating to the
quality of such goods and (ii) any goods in transit to third parties. The
valuation of Eligible Inventory shall also be reduced by the amount of
transportation costs. Unless otherwise approved in writing by the Agent, no
Inventory shall be deemed Eligible Inventory if:
(a) the Inventory is not owned solely by the Borrower or is leased
or on consignment or the Borrower does not have good, valid and marketable title
thereto; or
(b) the Inventory is not located at or is not in transit to property
that is either owned or leased by the Borrower; PROVIDED, HOWEVER, that where
such item of Inventory is located on a leasehold, such Inventory shall not be
deemed Eligible Inventory unless (i) the applicable lessor has been notified of
the Lien granted under the
11
Security Agreement and has entered into a written agreement, satisfactory in
form and substance to the Collateral Agent, acknowledging that such item of
Inventory is subject to the Lien granted under the Security Agreement and
waiving and releasing any applicable Lien held by it with respect to such item
of Inventory at any time upon the occurrence or during the continuance of a
Default or Event of Default and such other rights as may be reasonably required
by the Collateral Agent or (ii) the Collateral Agent shall have received (A) an
opinion, in form and substance acceptable to and from local counsel approved by
the Collateral Agent, and addressed to the Agent, the Issuing Bank, the Lenders,
the Term Loan Lenders and the Collateral Agent, to the effect that there is no
law in the jurisdiction where such Inventory is located that would allow
Inventory located on such leasehold to be subjected to any Lien in favor of the
applicable lessor and (B) a certificate of a Responsible Officer or the General
Counsel of the Borrower certifying that there is no term or condition of any
agreement or other document governing the relationship between the Borrower and
the applicable lessor that provides for any such Lien; PROVIDED FURTHER that
Inventory shall not be excluded which is consigned by the Borrower pursuant to
agreements which, among other things, (i) provide for such Inventory to be
segregated and clearly identified as the property of the Borrower, (ii) grant to
the Borrower a first priority Lien on and security interest in such consigned
Inventory (and as to which Uniform Commercial Code financing statements have
been filed in the appropriate locations by the Borrower) and (iii) permit the
Borrower reasonable access to the premises on which such Inventory is located
for the purpose of inspecting such Inventory, such agreements and copies of such
financing statements to be provided to the Agent; or
(c) the Inventory is not subject to a perfected first priority Lien
in favor of the Collateral Agent except, with respect to Eligible Inventory in
transit to sites described in clause (b) above, for liens for transportation and
processing charges; or
(d) the Inventory is not located in the United States of America; or
(e) the Inventory is more than 24 months old or is otherwise aged
according to the Borrower's accounting policies (other than Inventory that is
raw materials or semi-finished Inventory that, in accordance with such
accounting policies, is not aged) or the Inventory does not otherwise conform to
the representations and warranties contained in the Loan Documents; PROVIDED,
HOWEVER, that (i) the Borrower shall not be required to test the Inventory for
aging in accordance with such accounting policies more often than once in any
period of 12 consecutive months and (ii) if the results of such test reveal that
less than 2.5%
12
of the Borrower's Inventory is so aged, then all of such Inventory shall,
subject to the other provisions of this definition, be deemed Eligible
Inventory; or
(f) the Inventory is classified under the heading "miscellaneous" in
accordance with the accounting policies of the Borrower.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"EURODOLLAR BORROWING" shall mean a Borrowing comprised of
Eurodollar Loans.
"EURODOLLAR LOAN" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VIII and in Article VII of the Term Loan Agreement.
"EXCESS CASH FLOW" of the Borrower shall mean, for any period, the
excess of (a) the sum, without duplication, of (i) Consolidated EBITDA for such
period, (ii) the amount of returned surplus assets of any pension plan during
such fiscal year to the extent not included in Consolidated Net Income to
determine Consolidated EBITDA for such period, (iii) extraordinary cash gains to
the extent subtracted or otherwise not included in Consolidated Net Income to
determine Consolidated EBITDA for such period and (iv) extraordinary non-cash
losses during such period subtracted in the determination of Consolidated Net
Income for such period, OVER (b) the sum, without duplication, of (i) the
aggregate amount of permitted cash Capital Expenditures made by the Borrower and
its Recourse Subsidiaries during such period, (ii) the aggregate amount of
payments of principal in respect of any Indebtedness (excluding Indebtedness
under this Agreement) not prohibited herein during such period, (iii) Interest
Expense of the Borrower determined on a Consolidated basis for such period, (iv)
taxes actually paid in such period or to be paid subsequently on account of such
period to the extent added to Consolidated Net Income to determine Consolidated
EBITDA for such period, (v) extraordinary cash losses to the extent added to
Consolidated Net Income to determine Consolidated EBITDA for such period, (vi)
non-cash currency exchange gains during such period included in Consolidated Net
Income of the
13
Borrower for such period, (vii) all expenses, costs and fees incurred for such
period in connection with the Acquisition (such expenses, costs and fees not to
exceed $1,200,000 for each of fiscal years 1995, 1996 and 1997) and (viii)
dividends actually paid by the Borrower in accordance with Section 7.06.
"FEES" shall mean the Letter of Credit Fees as defined in Section
3.05, and the Commitment Fees as defined in Section 2.05.
"FINANCIAL OFFICER" of the Borrower or any Subsidiary shall mean the
chairman, chief executive officer, president, vice-president, the chief
financial officer, principal accounting manager, treasurer or controller.
"FIRST MORTGAGE FINANCING" means Indebtedness in an aggregate
principal amount equal to $75,000,000 incurred by the Borrower under the First
Mortgage Indenture.
"FIRST MORTGAGE INDENTURE" means (i) the Indenture, dated April 2,
1994, between the Borrower and First National Bank of Commerce, as trustee
thereunder, relating to the First Mortgage Financing, (ii) the Notes issued
pursuant thereto and (iii) any mortgage, security agreement, guarantee or other
document securing or guaranteeing the First Mortgage Financing, as such may
hereafter be modified, renewed, substituted, replaced or reissued.
"FIRST MORTGAGE INDENTURE INTERCREDITOR AGREEMENT" shall mean the
Intercreditor Agreement dated as of November 23, 1993, as amended and restated
through June 1, 1995 between First National Bank of Commerce, as trustee, and
Chemical, as Agent and as Collateral Agent, on behalf of the Lenders, in the
form of Exhibit G-1 hereto.
"FUNDED INDEBTEDNESS" shall mean, as to any Person, the Indebtedness
of such Person other than Guarantees and Letters of Credit which by its terms or
by the terms of any instrument or agreement relating thereto matures one year or
more from the date of the initial creation thereof; PROVIDED that Funded
Indebtedness shall include any Indebtedness which does not otherwise come within
the foregoing definition but which is directly or indirectly renewable or
extendible at the option of such Person to a date of one year or more (including
an option of such Person under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more) from the date of the initial creation of such Indebtedness or which may be
payable out of the proceeds of a similar obligation pursuant to the terms of
such obligation or any such agreement; PROVIDED, FURTHER,
14
Funded Indebtedness shall include the then current maturities thereof.
"GAAP" shall mean generally accepted accounting principles.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"GUARANTEE" of or by any person shall mean any obligation,
contingent or otherwise, of such person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital,
available cash or other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Indebtedness;
PROVIDED, HOWEVER, that the term Guarantee shall not include endorsements for
collection or deposit, in either case in the ordinary course of business.
"HIBERNIA FACILITY INTERCREDITOR AGREEMENT" shall mean the
Intercreditor Agreement, dated as of November 23, 1993, as amended and restated
through June 1, 1995, between Hibernia National Bank and Chemical, as Agent and
as Collateral Agent, for the benefit of the Lenders and the Term Loan Lenders,
in the form of Exhibit G-2 hereto.
"INDEBTEDNESS" of any person shall mean, without duplication, (a)
all obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property or assets purchased by such person, (e) all obligations of such person
issued or assumed as the deferred purchase price of property or services (except
current accounts payable arising in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such person, whether or not the obligations
secured thereby have been assumed, (g) all
15
Guarantees by such person of Indebtedness of others, (h) all Capital Lease
Obligations of such person, (i) all obligations of such person in respect of
interest rate protection agreements, foreign currency exchange agreements or
other interest or exchange rate hedging arrangements and (j) all obligations of
such person as an account party in respect of letters of credit and bankers'
acceptances. The Indebtedness of any person shall include the Indebtedness of
any partnership in which such person is a general partner.
"INTERCREDITOR AGREEMENTS" shall mean the First Mortgage Indenture
Intercreditor Agreement and the Hibernia Facility Intercreditor Agreement.
"INTEREST EXPENSE" shall mean, with respect to any Person and its
recourse subsidiaries, computed on a Consolidated basis for any period, the sum
(net of all Interest Income) of (a) gross interest expense for such period
determined in accordance with GAAP consistently applied, including (i) the
amortization of debt discounts, (ii) the amortization of all fees payable in
connection with the incurrence of Indebtedness to the extent included in
interest expense and (iii) the portion of any payments or accruals with respect
to Capital Lease Obligations allocable to interest expense and (b) Consolidated
capitalized interest of such Person and its recourse subsidiaries.
"INTEREST INCOME" of any Person shall mean all amounts that would be
included under interest income on a consolidated income statement of such Person
determined in accordance with GAAP, less accreted amounts attributable to
original issue discount securities prior to the receipt thereof and other
non-cash interest payments or accruals.
"INTEREST PAYMENT DATE" shall mean, with respect to any Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing with an Interest Period of
more than three months' duration, each day that would have been an Interest
Payment Date had successive Interest Periods of three months duration been
applicable to such Borrowing, and, in addition, the date of any refinancing or
conversion of such Borrowing with or to a Borrowing of a different type.
"INTEREST PERIOD" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2, 3 or 6 months thereafter, as the Borrower may elect and (b) as to any ABR
Borrowing, the period commencing on the date of such
16
Borrowing or on the last day of the immediately preceding Interest Period
applicable to such Borrowing, as the case may be, and ending on the earliest of
(i) the next succeeding March 31, June 30, September 30 or December 31, (ii) the
Maturity Date and (iii) the date such Borrowing is converted to a Borrowing of a
different Type in accordance with Section 2.10 or repaid or prepaid in
accordance with Section 2.11 or 2.12; PROVIDED, HOWEVER, that if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
"INVENTORY" shall mean all merchandise intended for sale by the
Borrower, or consumed in the Borrower's business, together with all raw
materials, including, without limitation, scrap, billets, shapes, additives,
alloys, fluxes, electrodes and refractories, whether now owned or hereafter
acquired or arising, and all such property the sale or other disposition of
which has given rise to Accounts and which has been returned to, repossessed or
stopped in transit by or on behalf of the Borrower; PROVIDED, HOWEVER, that
Inventory shall not include (i) all bearings, rolls, guides and stores that
relate to machinery and equipment mortgaged to First National Bank of Commerce,
as Trustee (the "Trustee"), pursuant to the First Mortgage Indenture, (ii) all
licenses, franchises, permits, patents, patent rights, formulae, processes,
compounds, drawings, designs, blueprints, surveys, reports, manuals and
operating standards relating to or used in the operation of the Borrower's
business and all trade secret rights, rights in works of authorship and contract
rights relating to computer software programs in whatever form created or
maintained, (iii) all proceeds of the properties, rights and interests referred
to in clauses (i) and (ii) above and (iv) any other properties, rights or
interests granted to the Trustee pursuant to the First Mortgage Indenture, and
thereafter assumed by the Borrower.
"INVESTMENT" in any person shall mean any loan or advance to, any
acquisition of capital stock, equity interest, obligation or other security of,
or capital contribution to, or other investment in such person PROVIDED that
"Investments" shall exclude Acquisition Expenditures.
"ISSUING BANK" shall mean Chemical.
"ISSUING BANK PAYMENT AMOUNT" shall mean, with respect to a Letter
of Credit Disbursement, an amount equal
17
to the amount of such Letter of Credit Disbursement less the amount of any
payment from the Borrower in partial satisfaction of the reimbursement
obligation of the Borrower with respect to such Letter of Credit Disbursement
received by the Issuing Bank by 12:00 Noon New York time, on the date of such
Letter of Credit Disbursement pursuant to Section 3.03.
"LETTERS OF CREDIT" shall mean the letters of credit issued by the
Issuing Bank pursuant to Article III, including any Scheduled Letters of Credit
deemed to have been issued hereunder pursuant to Section 3.01(b).
"LETTER OF CREDIT DISBURSEMENT" shall mean a disbursement by the
Issuing Bank to the beneficiary of a Letter of Credit in connection with a
drawing thereunder.
"LETTER OF CREDIT EXPOSURE" shall mean at any time the sum of (a)
the aggregate undrawn amount of Letters of Credit issued for the account of the
Borrower and outstanding and (b) the aggregate amount of all drawings under
Letters of Credit for which the Lenders shall not have been reimbursed as
provided in Section 3.03.
"LEVERAGE RATIO" shall mean, at any date, the ratio of Consolidated
Indebtedness of the Borrower and its Subsidiaries as of the last day of the
fiscal quarter most recently ended prior to such date to Consolidated EBITDA for
the four consecutive fiscal quarters ended as of such date.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.
"LOANS" shall mean the revolving loans made by the Lenders to the
Borrower pursuant to Section 2.01. Each Loan shall be a Eurodollar Loan or an
ABR Loan.
"LOAN DOCUMENTS" shall mean this Agreement, the Security Agreement,
the Notes, the Term Loan Agreement, the Term Notes, the Revolving Credit
Guarantee and the Term Loan Guarantee.
"LOAN PARTIES" shall mean the Borrower and Bayou (Tennessee).
"MARGIN STOCK" shall have the meaning given such term under
Regulation U.
18
"MATERIAL ADVERSE EFFECT" shall mean (a) a materially adverse effect
on the business, assets, operations or financial condition of the Borrower and
its Recourse Subsidiaries taken as a whole, (b) a material impairment of the
ability of the Borrower or any Subsidiary to perform any of its obligations
under any Loan Document to which it is or will be a party or (c) a material
impairment of the rights of or benefits available to the Lenders or Term Loan
Lenders under any Loan Document.
"MATURITY DATE" shall mean the fifth anniversary of the Closing Date
(or if such day is not a Business Day, the immediately preceding Business Day).
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing any obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"MEYERS" means Howard M. Meyers, an individual with a business
address on the Closing Date at 1111 W. Mockingbird Lane, Dallas, Texas 75247.
"NET INCOME" shall mean, with respect to any Person and its recourse
subsidiaries for any period, (a) net revenues and other proper income for such
period minus to the extent not counted in calculating net revenue (b) the
aggregate for such period of, without duplication, (i) cost of goods sold, (ii)
Interest Expense, (iii) operating expenses, (iv) selling, general and
administrative expenses, (v) taxes, (vi) depreciation and amortization, (vii)
any other items that are treated as expenses under GAAP, but excluding from the
definition of Net Income any non-cash extraordinary gains or losses (including
the effect of the adoption of Financial Accounting Standards No. 106 and 109)
and (viii) in the case of the Borrower, payments made with respect to any
premium upon the prepayment of Indebtedness outstanding under the First Mortgage
Indenture, all computed on a Consolidated basis in accordance with GAAP
consistently applied.
"NOTE" shall mean a promissory note of the Borrower, substantially
in the form of Exhibit A, evidencing Loans.
"NON-RECOURSE INDEBTEDNESS" means Indebtedness of a non-recourse
subsidiary of a Person or any of its subsidiaries where (a) neither such Person
nor any subsidiary of such Person (other than such non-recourse subsidiary): (i)
provides any Guarantee or credit support
19
for such Indebtedness (including any undertaking, guaranty, indemnity, agreement
or instrument which would constitute Indebtedness); or (ii) is directly or
indirectly liable for such Indebtedness, (b) the holders of such Indebtedness
expressly waive any recourse which they may have, in law, equity or otherwise,
whether based on misrepresentation, control, ownership or otherwise, to such
Person and any subsidiary of such Person (other than such non-recourse
subsidiary) and (c) no default with respect to such Indebtedness (including any
rights which the holder thereof may have to take enforcement action against such
non-recourse subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of such Person or any subsidiary of such Person
(other than such non-recourse subsidiary) to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"NON-RECOURSE INDEBTEDNESS" means Indebtedness of a Non-Recourse
Subsidiary of the Borrower or any of its Subsidiaries where (a) neither the
Borrower nor any Subsidiary (other than such Non-Recourse Subsidiary): (i)
provides any Guarantee or credit support for such Indebtedness (including any
undertaking, guaranty, indemnity, agreement or instrument which would constitute
Indebtedness); or (ii) is directly or indirectly liable for such Indebtedness,
(b) the holders of such Indebtedness expressly waive any recourse which they may
have, in law, equity or otherwise, whether based on misrepresentation, control,
ownership or otherwise, to the Borrower and any Subsidiary (other than such
Non-Recourse Subsidiary) and (c) no default with respect to such Indebtedness
(including any rights which the holder thereof may have to take enforcement
action against such Non-Recourse Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness of the Borrower or any
Subsidiary of such Person (other than such Non-Recourse Subsidiary) to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
"NON-RECOURSE SUBSIDIARY" of any Person means a special purpose
subsidiary of such Person or any of its subsidiaries formed to acquire
securities or assets of a third party and which (i) has no Indebtedness other
than Non-Recourse Indebtedness and (ii) does not, directly or indirectly, own
any Indebtedness, stock or securities of, and has no Investment in, such Person
or any recourse subsidiary of such Person.
"NON-RECOURSE SUBSIDIARY" shall mean any non- recourse subsidiary of
the Borrower or any of its Subsidiaries.
20
"ORIGINAL CREDIT AGREEMENT" shall have the meaning specified in the
recitals to this Agreement.
"OWNERS" means any or all of (i) Meyers, (ii) any son, daughter,
stepson, stepdaughter or spouse of Meyers, (iii) any lineal descendant of an
individual referred to in clause (i) or clause (ii), and (iv) any trust in which
one or more of the persons referred to in clause (i), (ii) or (iii) are
principal beneficiaries.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA.
"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within 365 days from the date of acquisition thereof;
(b) Investments in commercial paper maturing within 365 days from
the date of acquisition thereof and having, at such date of acquisition, a
rating of A- 1 or better from Standard & Poor's Ratings Group or P-1 or
better from Moody's Investors Service, Inc. or any successor to either of
such rating services;
(c) Investments in certificates of deposit, banker's acceptances and
time deposits maturing within 365 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial
lender organized under the laws of the United States of America or any
State thereof which has a combined capital and surplus and undivided
profits of not less than $250,000,000;
(d) Investments pursuant to repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States of America or pursuant to repurchase agreements with nationally
recognized securities dealers having total capital funds in excess of
$200,000,000;
(e) other Investment instruments approved in writing by the Required
Lenders and offered by financial institutions which have a combined
capital and
21
surplus and undivided profits of not less than $250,000,000;
(f) loans or advances to employees in an aggregate
amount not to exceed $100,000;
(g) loans to, or Investments in, any Person, other than Non-Recourse
Subsidiaries, not to exceed at any time outstanding an aggregate amount
equal to $250,000 with respect to loans to, and Investments in, all such
Persons (the value of any such loans and Investments to be the original
amount of the loan or Investment less the amount repaid or otherwise
returned in cash);
(h) Investments of the Borrower in Bayou (Tennessee) pursuant to
Sections 6.11, 6.12 and 6.13;
(i) Cash equity investments of the Borrower in Bayou (Tennessee) not
to exceed at any time outstanding an aggregate amount equal to
$15,000,000, the proceeds of which shall be used by Bayou (Tennessee) for
working capital purposes only;
(j) Cash equity investments of the Borrower in Bayou (Tennessee)
from proceeds of the Preferred Stock, the proceeds of which investments
shall be used by Bayou (Tennessee) to repay, on the Closing Date, all
amounts outstanding under all loans from the Borrower to Bayou (Tennessee)
as of the Closing Date, such amounts not to be reborrowed by Bayou
(Tennessee), and for general corporate purposes;
(k) Cash equity investments of the Borrower in Bayou (Tennessee) the
proceeds of which shall be used by Bayou (Tennessee) to prepay the Term
Loans in accordance with subsection 2.5(b) of the Term Loan Agreement; and
(l) Cash equity investments of the Borrower in Non-Recourse
Subsidiaries of the Borrower PROVIDED that (i) at the time any such
Investment is made, there shall be (x) no Loans outstanding and (y) no
Letter of Credit Exposure in excess of $2,000,000, (ii) such Investments
shall be made solely with Unencumbered Cash of the Borrower, (iii) after
giving effect to such Investments, Unencumbered Cash owned and held by or
for the benefit of the Borrower shall be not less than $2,500,000 and (iv)
such Investments shall not exceed $15,000,000 in the aggregate at any
time.
"PERSON" OR "PERSON" shall mean any natural person, corporation,
business trust, joint venture, association, company, partnership or government,
or any agency or political subdivision thereof.
22
"PLAN" shall mean any pension plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code which
is maintained for employees of the Borrower or any ERISA Affiliate.
"PREFERRED STOCK" shall mean the fixed-rate preferred stock of the
Borrower to be issued on or before the Closing Date having an aggregate
liquidation value of $15,000,000.
"PREFERRED STOCK DOCUMENTS" shall mean (i) the Preferred Stock and
Warrant Purchase Agreement and (ii) the Shareholder Agreement.
"PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT" shall mean the
Preferred Stock and Warrant Purchase Agreement, made as of June , 1995, by and
between the Borrower and Rice.
"RECOURSE SUBSIDIARY" of a Person means any subsidiary of such
Person that is not a non-recourse subsidiary of such Person.
"RECOURSE SUBSIDIARY" shall mean any recourse subsidiary of the
Borrower.
"REGISTER" shall have the meaning given such term in Section
10.04(d).
"REGULATION G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REPORTABLE EVENT" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate which is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the
Code).
"REQUIRED LENDERS" shall mean, at any time, Lenders and Term Loan
Lenders holding Loans and Term Loans, respectively, representing at least
66-2/3% of the aggregate principal amount of the aggregate Loans and Term Loans
outstanding or, if no Loans or Term Loans are outstanding,
23
Lenders having Commitments representing at least 66-2/3% of the aggregate
Commitments.
"RESPONSIBLE OFFICER" of the Borrower or any Subsidiary shall mean
any executive officer or Financial Officer of such corporation and any other
officer or similar representative thereof responsible for the administration of
the obligations of such corporation in respect of this Agreement.
"REVOLVING CREDIT GUARANTEE" shall mean the Guarantee, dated as of
June 1, 1995, made by Bayou (Tennessee) in favor of the Agent, for the ratable
benefit of the Lenders, in substantially the form of Exhibit B.
"RICE" shall mean Rice Partners II, L.P., a Delaware limited
partnership.
"RIVER ROAD REALTY" shall mean River Road Realty Corporation, a
Louisiana corporation and a subsidiary of the Borrower.
"SCHEDULED LETTERS OF CREDIT" shall mean the letters of credit, if
any, issued under the Original Credit Agreement that are outstanding on the
Closing Date.
"SECURITY AGREEMENT" shall mean the Security Agreement, dated as of
June 28, 1989, as amended and restated through June 1, 1995, between the
Borrower and the Collateral Agent, on behalf of the Lenders and the Term Loan
Lenders, in substantially the form of Exhibit C hereto.
"SECURITY DOCUMENTS" shall mean the Security Agreement, the
Revolving Credit Guarantee and the Term Loan Guarantee.
"SHAREHOLDER AGREEMENT" shall mean the Shareholder Agreement, made
as of June , 1995, by and between the Borrower, Howard M. Meyers, Bayou Steel
Properties Limited, a Delaware corporation, and Rice.
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which Chemical is
subject (a) with respect to the Base CD Rate (as such term is used in the
definition of "Alternate Base Rate"), for new negotiable nonpersonal time
deposits in dollars of over $100,000 with maturities approximately equal to
three months and (b) with respect to the Adjusted LIBO Rate, for Eurocurrency
Liabilities (as defined in Regulation D of the
24
Board). Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
which may be available from time to time to any Lender under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"SUBORDINATED INDEBTEDNESS" shall mean, with respect to the
Borrower, Indebtedness subordinated in right of payment to the monetary
obligations of the Borrower under this Agreement and the Term Loan Guarantee
upon the terms set forth in Exhibit H hereto or upon other terms reasonably
satisfactory to and approved in writing by the Agent with the consent of the
Required Lenders, which by its terms shall not mature or be subject to any
prepayment, repurchase or any amortization of principal prior to the Maturity
Date.
"SUBSIDIARY" shall mean, with respect to any person (herein referred
to as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) which is, at the time any
determination is made, otherwise controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"SUBSIDIARY" shall mean any subsidiary of the Borrower.
"TANGIBLE NET WORTH" shall mean, with respect to any person at any
time, (i) the sum of such person's capital stock, capital in excess of par or
stated value of shares of its capital stock, retained earnings and any other
account principles which, in accordance with GAAP, constitutes stockholders'
equity (such sum otherwise including, without duplication, the Preferred Stock),
less (ii) treasury stock and any minority interest in Subsidiaries, less (iii)
the amount of all assets reflected as goodwill, patents, research and
development and all other assets required to be classified as intangibles in
accordance with GAAP and less (iv) the amount of any write up in the value of
any asset above the cost or depreciated cost thereof to such person.
"TERM LOAN AGREEMENT" shall mean the Term Loan Agreement, dated as
of June 1, 1995, among Bayou (Tennessee), the Term Loan Lenders and the Agent,
as the same may be amended, modified or otherwise supplemented for time to time.
25
"TERM LOAN GUARANTEE" shall mean the Guarantee, dated as of June 1,
1995, made by the Borrower in favor of the Agent, for the ratable benefit of the
Term Loan Lenders, in substantially the form of Exhibit B to the Term Loan
Agreement.
"TERM LOANS" shall mean the term loans made to Bayou (Tennessee)
under the Term Loan Agreement.
"TERM LOAN LENDERS" shall mean the lenders from time to time holding
Term Loans under the Term Loan Agreement.
"TERM NOTES" shall mean the promissory notes executed and delivered
by Bayou (Tennessee) pursuant to subsection 2.2 of the Term Loan Agreement.
"TOTAL COMMITMENT" shall mean the sum of the Lenders' Commitments,
as the same may be reduced from time to time pursuant to Section 2.09.
"TRANSACTIONS" shall have the meaning assigned to such term in
Section 4.02.
"TVS ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement
dated as of January 30, 1995 among the Borrower, Bayou (Tennessee), Tennessee
Valley Steel Corporation, BT Commercial Corporation and NationsBank N.A.
(Carolinas), as the same may be amended, modified or supplemented from time to
time in accordance with Section 7.15.
"TYPE", when used in respect of any Loan or Borrowing, shall refer
to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "RATE" shall
include the Adjusted LIBO Rate and the Alternate Base Rate.
"UNENCUMBERED CASH" shall mean cash owned and held by or on behalf
of the Borrower which is not subject to the Lien of another Person, it being
agreed that any such cash subject to any depositary bank set-off rights or any
depositary agreements with such bank shall be deemed "unencumbered" for purposes
of this Agreement and the Term Loan Agreement.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. TERMS GENERALLY. (a) The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
Whenever
26
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; PROVIDED
that, if the Borrower notifies the Agent that the Borrower wishes to amend any
covenant in Article VII or any related definition to eliminate the effect of any
change in GAAP on the operation of such covenant (or if the Agent notifies the
Borrower that the Required Lenders wish to amend Article VII or any related
definition for such purpose), then the Borrower's compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Borrower and the
Required Lenders.
(b) For purposes of the calculation of the Borrowing Base, the
determination of compliance with this Agreement and the other Loan Documents,
including the financial covenants contained herein, the interpretation of the
defined terms used in such financial covenants and the preparation of the
financial statements of the Borrower and its Subsidiaries delivered to the
Lenders pursuant to this Agreement, Inventory of the Borrower and its
Subsidiaries shall be valued on a FIFO basis, computed and consolidated in
accordance with GAAP, as consistently applied.
ARTICLE II. THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Loans to the Borrower, at any time
and from time to time on or after the Closing Date and until the earlier of the
Maturity Date and the termination of the Commitment of such Lender in accordance
with the terms hereof, in an aggregate principal amount at any time outstanding
not to exceed, when added to such Lender's pro rata percentage, based upon its
Commitment, of the Letter of Credit Exposure at such time, the lesser of (a) the
Commitment set forth opposite its name in Schedule 2.01 hereto, as the same may
be reduced from time to time pursuant to Section 2.09 and (b) such Lender's pro
rata percentage, based upon its Commitment, of the Borrowing Base in effect at
such time.
27
Within the limits set forth in the preceding sentence, the Borrower
may borrow, pay or prepay and reborrow Loans on or after the Closing Date and
prior to the Maturity Date, subject to the terms, conditions and limitations set
forth herein.
SECTION 2.02. LOANS. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Commit- ments; PROVIDED, HOWEVER, that the failure of any
Lender to make any Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender shall
be responsible for the failure of any other Lender to make any Loan required to
be made by such other Lender). The Loans comprising each Borrowing shall be in
an aggregate principal amount which is (a) if an ABR Loan, an integral multiple
of $100,000 and not less than $200,000 and (b) if a Eurodollar Loan, an integral
multiple of $250,000 and not less than $1,000,000 (or an aggregate principal
amount equal to the remaining balance of the Commitments); PROVIDED, HOWEVER,
that unless otherwise agreed in writing by all the Lenders, the Eurodollar Loans
made on any date must be in a minimum aggregate principal amount of $1,000,000.
(b) Each Borrowing shall be comprised entirely of ABR Loans or
Eurodollar Loans, as the Borrower may request pursuant to Section 2.03. Each
Lender may at its option fulfill its Commitment with respect to any Eurodollar
Loan by causing any domestic or foreign branch or Affiliate of such Lender to
make such Loan; PROVIDED that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement and the applicable Note. Borrowings of more than one Type may be
outstanding at the same time; PROVIDED, HOWEVER, that the Borrower shall not be
entitled to request any Borrowing which, if made, would result in an aggregate
of more than five separate Eurodollar Loans of any Lender being outstanding
hereunder at any one time. For purposes of the foregoing, Loans having different
Interest Periods, regardless of whether they commence on the same date, shall be
considered separate Loans.
(c) Subject to paragraph (e) below, each Lender shall make a Loan in
the amount of its pro rata portion, as determined under Section 2.14, of each
Borrowing hereunder on the proposed date thereof by wire transfer of immediately
available funds to the Agent in New York, New York, not later than 2:00 P.M.,
New York City time, and the Agent shall by 3:00 p.m., New York City time, credit
the amounts so received to the general deposit account of the Borrower with the
Agent or, if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, return the amounts so
received to the
28
respective Lenders. Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Agent such Lender's portion of such Borrowing, the Agent may assume that
such Lender has made such portion available to the Agent on the date of such
Borrowing in accordance with this paragraph (c) and the Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have made
such portion available to the Agent, such Lender and the Borrower severally
agree to repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the Agent at
(i) in the case of the Borrower the interest rate applicable at the time to the
Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal
Funds Effective Rate. If such Lender shall repay to the Agent such corresponding
amount, such amount shall constitute such Lender's Loan as part of such
Borrowing for purposes of this Agreement.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
(e) The Borrower may refinance all or any part of any Borrowing with
a Borrowing of the same or a different Type, subject to the conditions and
limitations set forth in this Agreement. Any Borrowing or part thereof so
refinanced shall be deemed to be repaid or prepaid in accordance with Section
2.04 or 2.10, as applicable, with the proceeds of a new Borrowing, and the
proceeds of the new Borrowing, to the extent they do not exceed the principal
amount of the Borrowing being refinanced, shall not be paid by the Lenders to
the Agent or by the Agent to the Borrower pursuant to paragraph (c) above.
SECTION 2.03. NOTICE OF BORROWINGS. The Borrower shall give the
Agent written or by telecopy notice (or telephone notice promptly confirmed in
writing or by telecopy) (a) in the case of a Eurodollar Borrowing, not later
than 12:00 noon, New York City time, three Business Days before a proposed
borrowing, and (b) in the case of an ABR Borrowing, not later than 12:00 noon,
New York City time, on the day of a proposed borrowing. Such notice shall be
irrevocable and shall in each case refer to this Agreement and specify
(i) whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing;
(ii) the date of such Borrowing (which shall be a Business Day) and the amount
thereof; and (iii) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto. If no election as to the Type of Borrowing
is
29
specified in any such notice, then the requested Borrowing shall be an ABR
Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is
specified in any such notice, then the Borrower shall be deemed to have selected
an Interest Period of one month's duration. If the Borrower shall not have given
notice in accordance with this Section 2.03 of its election to refinance a
Borrowing prior to the end of the Interest Period in effect for such Borrowing,
then the Borrower shall (unless such Borrowing is repaid at the end of such
Interest Period) be deemed to have given notice of an election to refinance such
Borrowing with an ABR Borrowing. In order that each Lender may make a Loan
pursuant to the terms set forth in Section 2.02(c), the Agent shall promptly
advise the Lenders of any notice given pursuant to this Section 2.03 and of each
Lender's portion of the requested Borrowing.
SECTION 2.04. NOTES; REPAYMENT OF LOANS. The Loans made by each
Lender shall be evidenced by a Note, duly executed on behalf of the Borrower,
dated the Closing Date, in substantially the form attached hereto as Exhibit A,
with the blanks appropriately filled, payable to the order of such Lender in a
principal amount equal to such Lender's Commitment. The outstanding principal
balance of each Loan, as evidenced by such a Note, shall be payable on the last
day of the Interest Period applicable to such Loan and on the Maturity Date.
Each Note shall bear interest from the date of the first borrowing hereunder on
the outstanding principal balance thereof as set forth in Section 2.06. Each
Lender shall, and is hereby authorized by the Borrower to, endorse on the
schedule attached to each Note delivered to such Lender (or on a continuation of
such schedule attached to such Note and made a part thereof), or otherwise to
record in such Lender's internal records, an appropriate notation evidencing the
date and amount of each Loan from such Lender, each payment and prepayment of
principal of any such Loan, each payment of interest on any such Loan and the
other information provided for on such schedule; PROVIDED, HOWEVER, that the
failure of any Lender to make such a notation or any error therein shall not
affect the obligation of the Borrower to repay the Loans made by such Lender in
accordance with the terms of this Agreement and the applicable Notes.
SECTION 2.05. FEES. (a) The Borrower agrees to pay to each Lender,
through the Agent, on the last day of March, June, September and December in
each year, and on the date on which the Commitment (including amounts available
for Letters of Credit) of such Lender shall be terminated as provided herein, a
commitment fee (a "Commitment Fee") of 1/2 of 1% per annum on the average daily
unused amount of the Commitment (including unused available amounts for Letters
of Credit) of such Lender during the preceding quarter (or shorter period
commencing with the Closing Date
30
or ending with the Maturity Date or the date on which the Commitment of such
Lender shall be terminated). All Commitment Fees shall be computed on the basis
of the actual number of days elapsed in a year of 365 days. The Commitment Fee
due to each Lender shall commence to accrue on the date of this Agreement and
shall cease to accrue on the date on which the Commitment of such Lender shall
be terminated as provided herein.
(b) All Fees shall be paid on the dates due, in immediately
available funds, to the Agent for distribution, if and as appropriate, among the
Lenders. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of (i)
365 or 366 days, as the case may be, during any period in which the Alternate
Base Rate is based on the Prime Rate and (ii) 360 days during any period in
which the Alternate Base Rate is based on the Base CD Rate or the Federal Funds
Effective Rate) at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Margin.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.07. DEFAULT INTEREST. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, the Borrower shall on demand from
time to time pay interest, to the extent permitted by law, on such defaulted
amount up to (but not including) the date of actual payment (after as well as
before judgment) at a rate per annum (computed on the basis of the actual number
of days elapsed over a year of (i) 365 or 366 days, as the case may be, during
any period in which the Alternate Base Rate is based on the Prime Rate and (ii)
360 days, during any period in which the Alternate base rate is based on the
Base CD rate or the Federal Funds Effective Rate) equal to the rate at the time
applicable to ABR Borrowings plus 2%.
31
SECTION 2.08. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Agent shall have determined that
dollar deposits in the principal amounts of the Loans comprising such Borrowing
are not generally available in the London interbank market, or that the rates at
which such dollar deposits are being offered will not adequately and fairly
reflect the cost to any Lender of making or maintaining its Eurodollar Loan
during such Interest Period, or that reasonable means do not exist for
ascertaining the Adjusted LIBO Rate, the Agent shall, as soon as practicable
thereafter, give written or telecopy notice of such determination to the
Borrower and the Lenders. In the event of any such determination, any request by
the Borrower for a Eurodollar Borrowing pursuant to Section 2.03 shall, until
the Agent shall have advised the Borrower and the Lenders that the circumstances
giving rise to such notice no longer exist, be deemed to be a request for an ABR
Borrowing. Each determination by the Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS. (a) The
Commitments shall be automatically terminated on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Commitments;
PROVIDED, HOWEVER, that each partial reduction of the Commitments shall be in an
integral multiple of $500,000 and in a minimum principal amount of $1,000,000;
PROVIDED, FURTHER, that any prepayment pursuant to this Section 2.09 shall be
applied FIRST to prepay the Loans then outstanding and then to cash
collateralize any Letter of Credit Exposure on terms reasonably satisfactory to
the Agent.
(c) Each reduction in the Commitments hereunder shall be made
ratably among the Lenders in accordance with their respective applicable
Commitments. The Borrower shall pay to the Agent for the account of the Lenders,
on the date of each termination or reduction, the Commitment Fees on the amount
of the Commitments so terminated or reduced and accrued through the date of such
termination or reduction.
SECTION 2.10. PREPAYMENT. (a) The Borrower shall have the right at
any time and from time to time to prepay any Borrowing, in whole or in part,
upon written (including by telecopy) notice (or telephone notice promptly
confirmed by written notice) to the Agent, which notice, in the case of a
prepayment of a Eurodollar Loan, shall be received by the Agent one Business Day
prior to such
32
prepayment; PROVIDED, HOWEVER, that each partial prepayment shall be in an
amount which is, if (a) an ABR Loan, an integral multiple of $100,000 and not
less than $200,000 and (b) if a Eurodollar Loan, an integral multiple of
$250,000 and not less than $1,000,000.
(b) On the date of any termination or reduction of the Commitments
pursuant to Section 2.09, the Borrower shall pay or prepay so much of the
Borrowings as shall be necessary in order that the aggregate principal amount of
the Loans outstanding will not exceed the aggregate Commitments after giving
effect to such termination or reduction.
(c) Not later than the Business Day next succeeding any date on
which the sum of the aggregate principal amount of the outstanding Borrowings
and the aggregate Letter of Credit Exposure exceeds the then current Borrowing
Base, the Borrower shall prepay the Borrowings in such amount as shall be
necessary so that after giving effect to such prepayment there shall be no such
excess.
(d) Each notice of prepayment shall specify the prepayment date, the
principal amount of each Borrowing (or portion thereof) to be prepaid, and the
Borrowing to be repaid, shall be irrevocable and shall commit the Borrower to
prepay such Borrowing by the amount stated therein on the date stated therein.
All prepayments under this Section 2.10 shall be subject to Section 2.13 but
otherwise without premium or penalty. All prepayments under this Section 2.10
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment. Any prepayment pursuant to this Section 2.10 shall be
applied FIRST to prepay the Loans then outstanding and then to cash
collateralize any Letter of Credit Exposure (such cash to be held in an
interest-bearing account) on terms reasonably satisfactory to the Agent.
SECTION 2.11. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after November 23, 1993 any
change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or any fees
or other amounts payable hereunder (other than changes in respect of taxes
imposed on the overall net income of such Lender by the jurisdiction in which
such Lender has its principal office or by any political subdivision or taxing
authority therein), or shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of or credit
33
extended by such Lender (except any such reserve requirement which is reflected
in the Adjusted LIBO Rate) or shall impose on such Lender or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan or
to reduce the amount of any sum received or receivable by such Lender hereunder
or under the Notes (whether of principal, interest or otherwise) by an amount
deemed by such Lender to be material, then the Borrower will pay to such Lender
upon demand such additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered. The Agent and each Lender
agree to give notice to the Borrower of any such change in law, regulation,
interpretation or administration with reasonable promptness after becoming
actually aware thereof and of the applicability thereof to the Transactions.
(b) If any Lender shall have determined that the applicability of
any law, rule, regulation or guideline adopted pursuant to or arising out of the
July 1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards", or the adoption after the date hereof of any other law, rule,
regulation or guideline regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any governmental authority, central lender or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding company with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central lender or comparable agency, has or would have
the effect of reducing the rate of return on such Lender's capital or on the
capital of such Lender's holding company, if any, as a consequence of this
Agreement or the Loans made by such Lender pursuant hereto to a level below that
which such Lender or such Lender's holding company could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such Lender's holding company for any
such reduction suffered. The Agent and each Lender agree to give notice to the
Borrower of any such change in law, regulation, interpretation or administration
with reasonable promptness after becoming actually aware thereof and of the
applicability to the transactions.
34
(c) A certificate of each Lender setting forth such amount or
amounts, supported by calculations in reasonable detail, as shall be necessary
to compensate such Lender or its holding company as specified in paragraph (a)
or (b) above, as the case may be, shall be delivered to the Borrower and shall
be conclusive absent manifest error. The Borrower shall pay each Lender the
amount shown as due on any such certificate delivered by it within 10 days after
its receipt of the same.
(d) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand such compensation with respect to such period or
any other period. The protection of this Section shall be available to each
Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed.
SECTION 2.12. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision herein, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by
such Lender hereunder, whereupon any request by the Borrower for a
Eurodollar Borrowing shall, as to such Lender only, be deemed a request
for an ABR Loan unless such declaration shall be subsequently withdrawn;
and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
35
(b) For purposes of this Section 2.12, a notice to the Borrower by
any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last
day of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower.
SECTION 2.13. INDEMNITY. The Borrower shall indemnify each Lender
against any loss or reasonable expense which such Lender may sustain or incur as
a consequence of (a) any failure by the Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article V, (b) any
failure by the Borrower to borrow or to refinance, convert or continue any Loan
hereunder after irrevocable notice of such borrowing, refinancing, conversion or
continuation has been given pursuant to Section 2.03, (c) any payment,
prepayment or conversion of a Eurodollar Loan required by any other provision of
this Agreement or otherwise made on a date other than the last day of the
Interest Period applicable thereto, (d) any default in payment or prepayment of
the principal amount of any Loan or any part thereof or interest accrued
thereon, as and when due and payable (at the due date thereof, by irrevocable
notice of prepayment or otherwise) or (e) the occurrence of any Event of
Default, including, in each such case, any loss or reasonable expense sustained
or incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain such Loan or any part thereof
as a Eurodollar Loan. Such loss or reasonable expense shall include an amount
equal to the excess, if any, as reasonably determined by such Lender, of (i) its
cost of obtaining the funds for the Loan being paid, prepaid, converted or not
borrowed, converted or continued (based on the Adjusted LIBO Rate applicable
thereto) for the period from the date of such payment, prepayment, conversion or
failure to borrow, convert or continue to the last day of the Interest Period
for such Loan (or, in the case of a failure to borrow, convert or continue, the
Interest Period for such Loan which would have commenced on the date of such
failure) over (ii) the amount of interest (as reasonably determined by such
Lender) that would be realized by such Lender in reemploying the funds so paid,
prepaid, converted or not borrowed, converted or continued for such period or
Interest Period, as the case may be. A certificate of any Lender setting forth
any amount or amounts, supported by calculations in reasonable detail, which
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error.
SECTION 2.14. PRO RATA TREATMENT. Except as required under Section
2.12, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, each payment of the Commitment Fees,
36
each reduction of the Commitments and each refinancing of any Borrowing with,
conversion of any Borrowing to or continuation of any Borrowing as a Borrowing
of any Type shall be allocated pro rata among the Lenders in accordance with
their respective Commitments (or, if such Commitments shall have expired or been
terminated, in accordance with the respective principal amounts of their
outstanding Loans). Each Lender agrees that in computing such Lender's portion
of any Borrowing to be made hereunder, the Agent may, in its discretion, round
each Lender's percentage of such Borrowing, computed in accordance with Section
2.01, to the next higher or lower whole dollar amount.
SECTION 2.15. SHARING OF SETOFFS. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower, or pursuant to a secured claim under Section 506 of Title
11 of the United States Code or other security or interest arising from, or in
lieu of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other means,
obtain payment (voluntary or involuntary) in respect of any Loan or Loans as a
result of which the unpaid principal portion of its Loans shall be
proportionately less than the unpaid principal portion of the Loans of any other
Lender, it shall be deemed simultaneously to have purchased from such other
Lender at face value, and shall promptly pay to such other Lender the purchase
price for, a participation in the Loans of such other Lender, so that the
aggregate unpaid principal amount of the Loans and participation in Loans held
by each Lender shall be in the same proportion to the aggregate unpaid principal
amount of all Loans then outstanding as the principal amount of its Loans prior
to such exercise of banker's lien, setoff or counterclaim or other event
referred to above was to the principal amount of all Loans outstanding prior to
such exercise of banker's lien, setoff or counterclaim or other event; PROVIDED,
HOWEVER, that, if any such purchase or purchases or adjustments shall be made
pursuant to this Section and the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be rescinded to the
extent of such recovery and the purchase price or prices or adjustment restored
without interest. The Borrower expressly consents to the foregoing arrangements
and agrees that any Lender holding a participation in a Loan deemed to have been
so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower to such
Lender by reason thereof as fully as if such Lender had made a Loan directly to
the Borrower in the amount of such participation.
SECTION 2.16. PAYMENTS. (a) The Borrower shall make each payment
(including principal of or interest on any
37
Borrowing or any Fees or other amounts) hereunder and under any other Loan
Document not later than 12:00 (noon), New York City time, on the date when due
in dollars to the Agent at its offices at 270 Park Avenue, New York, New York,
in immediately available funds. Payments received by the Agent after such time
on such date shall be deemed to have been received on the next succeeding
Business Day (and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rates).
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts provided for in this Agreement) hereunder
or under any other Loan Document shall become due, or otherwise would occur, on
a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or Fees, if applicable.
SECTION 2.17. TAXES. (a) Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 2.16, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
EXCLUDING taxes imposed on the Agent's or any Lender's income and franchise
taxes imposed on the Agent or any Lender by the United States or any
jurisdiction under the laws of which the Agent or any such Lender is organized
or any political subdivision thereof (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to the Lenders or the
Agent (i) the sum payable shall be increased by the amount necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.17) such Lender or the Agent (as
the case may be) shall receive an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant taxing
authority or other Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "OTHER TAXES").
38
(c) The Borrower will indemnify each Lender and the Agent for the
full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 2.17) paid by such
Lender or the Agent, as the case may be, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Such
indemnification shall be made within 30 days after the date any Lender or the
Agent, as the case may be, makes written demand therefor. If a Lender or the
Agent shall become aware that it is entitled to receive a refund in respect of
Taxes or Other Taxes, it shall promptly notify the Borrower of the availability
of such refund and shall, within 30 days after receipt of a request by the
Borrower, apply for such refund at the Borrower's expense. If any Lender or the
Agent receives a refund in respect of any Taxes or Other Taxes for which such
Lender or the Agent has received payment from the Borrower hereunder it shall
promptly notify the Borrower of such refund and shall, within 30 days after
receipt of a request by the Borrower (or promptly upon receipt, if the Borrower
has requested application for such refund pursuant hereto), repay such refund to
the Borrower without interest; PROVIDED that the Borrower, upon the request of
such Lender or the Agent, agrees to return such refund (plus penalties, interest
or other charges) to such Lender or the Agent in the event such Lender or the
Agent is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Lender or the
Agent, the Borrower will furnish to the Agent, at its address referred to in
Section 2.01, the original or a certified copy of a receipt evidencing payment
thereof.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.17
shall survive the payment in full of principal and interest hereunder and the
termination of this Agreement and the Term Loan Agreement.
(f) Each Lender which is organized outside the United States shall
promptly notify the Borrower of any change in its funding office and upon
written request of the Borrower shall, prior to the immediately following due
date of any payment by the Borrower hereunder, deliver to the Borrower such
certificates, documents or other evidence, as required by the Code or Treasury
Regulations issued pursuant thereto, including Internal Revenue Service Form
4224 and 1001 and any other certificate or statement or exemption required by
Treasury Regulation Section 1.1441-1(a) or Section 1.1441-6(c) or any subsequent
version thereof, properly completed and duly executed by such Lender
39
establishing that such payment is (i) not subject to withholding under the Code
because such payment is effectively connected with the conduct by such Lender of
a trade or business in the United States or (ii) totally exempt from United
States tax under a provision of an applicable tax treaty. Unless the Borrower
and the Agent have received forms or other documents satisfactory to them
indicating that payments hereunder or under the Notes are not subject to United
States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower or the Agent shall withhold taxes from such
payments at the applicable statutory rate in the case of payments to or for any
Lender or assignee organized under the laws of a jurisdiction outside the United
States.
(g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.17 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document requested by the
Borrower or to change the jurisdiction of its applicable lending office if the
making of such a filing or change would avoid the need for or reduce the amount
of any such additional amounts which may thereafter accrue and would not, in the
sole determination of such Lender, be otherwise disadvantageous to such Lender.
ARTICLE III. LETTERS OF CREDIT
SECTION 3.01. ISSUANCE OF LETTERS OF CREDIT; LENDER PARTICIPANTS.
(a) Subject to the terms and conditions and relying upon the representations and
warranties herein set forth, the Issuing Bank agrees to issue and deliver to the
Borrower, at any time and from time to time, Letters of Credit in an aggregate
undrawn amount at any time outstanding not to exceed the lesser of $10,000,000
and the amount by which the lower of the Total Commitment and the then current
Borrowing Base exceeds the sum of (i) the aggregate principal amount of all
outstanding Loans and (ii) the Letter of Credit Exposure. Each Letter of Credit
shall be in a form mutually agreed upon by the Borrower and the Issuing Bank,
shall permit drawings upon the presentation of one or more sight drafts
(provided that no draft shall be payable prior to the second Business Day
following the date on which the Agent notifies the Lenders and the applicable
Borrower of the presentment thereof pursuant to Section 3.03) and such other
documents as shall be specified by such Borrower in the applicable notice
delivered pursuant to Section 3.02 and shall expire on a date not later than the
date one year from the date of issuance of such Letter of Credit less one day
(provided, that any such Letter of Credit may provide for automatic annual
renewals of one year unless a notice of non-renewal is given to the beneficiary
thereof); PROVIDED, HOWEVER,
40
that the Borrower shall not be entitled to request the issuance of a Letter of
Credit hereunder if after such issuance (x) such Letter of Credit would expire
after the Maturity Date, (y) an aggregate of more than fifteen Letters of Credit
would be outstanding at any one time or (z) the sum of (i) the aggregate amount
of all Loans to the Borrower, and (ii) the Letter of Credit Exposure would
exceed the lesser of the Total Commitments and the Borrowing Base.
(b) By the issuance of a Letter of Credit and without any further
action on the part of the Issuing Bank or any of the Lenders in respect thereof,
the Issuing Bank hereby grants to each Lender and each Lender hereby agrees to
acquire from the Issuing Bank a participation in such Letter of Credit,
effective upon the issuance thereof, equal to such Lender's Commitment
Percentage of the amount of such Letter of Credit. In furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Issuing Bank, as and when required by Section 3.03, such Lender's Commitment
Percentage of each Letter of Credit Disbursement. Each Lender acknowledges and
agrees that its obligation to acquire a participation pursuant to this Section
3.01 in respect of each Letter of Credit is absolute and unconditional and shall
not be affected by any circumstance whatsoever, including without limitation the
occurrence and continuance of an Event of Default or any event which with notice
or lapse of time, or both, would constitute an Event of Default, and that each
such payment shall be made without any offset, abatement, withholding or
reduction whatsoever. This agreement to grant and acquire a participation is an
agreement between the Issuing Bank and the Lenders, and neither the Borrower nor
any beneficiary of a Letter of Credit shall be entitled to rely thereon. The
Borrower agrees that each Lender purchasing a participation from an Issuing Bank
pursuant to this Section 3.01 may exercise all its rights to payment against the
Borrower, including the right of setoff, with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation.
The Issuing Bank agrees with each Lender that it shall transfer to
such Lender without any offset, abatement, withholding or reduction whatsoever,
such Lender's proportionate share of any payment of a reimbursement obligation
of the Borrower with respect to a Letter of Credit Disbursement including,
subject to the proviso below, interest payments made to the Issuing Bank
pursuant to Section 2.07 or Section 3.03 based upon the proportion that the
payment made by such Lender pursuant to Section 3.03 bears to the Issuing Bank
Payment Amount with respect to such Letter of Credit Disbursement; PROVIDED that
each Lender shall receive interest (as set forth in Section 2.07 and Section
3.03, as
41
applicable) on its participation in a Letter of Credit Disbursement from the
date on which the amount paid by such Lender pursuant to Section 3.03 is
received by the Issuing Bank and not from the date on which the Issuing Bank
makes such Letter of Credit Disbursement, unless such dates are the same.
On the Closing Date, all Scheduled Letters of Credit that satisfy
the requirements of Section 3.01(a) shall be deemed to have been issued
hereunder on such date for all purposes hereof, notwithstanding the requirements
of the following Sections of this Article III; PROVIDED, HOWEVER, that the
Borrower and the Issuing Bank shall prepare a schedule of all such Scheduled
Letters of Credit and deliver such schedule to the Agent and other Lenders
promptly following the Closing Date.
SECTION 3.02. REQUEST FOR ISSUANCE. The Borrower shall give the
Issuing Bank written or telex (or telephonic, promptly confirmed in writing)
notice not later than 12:00 noon, New York City time, two Business Days before
any proposed issuance of a Letter of Credit. Each such notice shall refer to
this Agreement and shall specify (a) the date on which such Letter of Credit is
to be issued (which shall be a Business Day) and the principal amount thereof,
(b) the name and address of the beneficiary, (c) whether such Letter of Credit
shall permit a single drawing or multiple drawings, (d) the form of the draft
and any other documents required to be presented at the time of any drawing
(including the exact wording of such documents or copies thereof) and (e) the
expiration date of such Letter of Credit. The Agent shall promptly notify each
Lender of any notice given by the Borrower pursuant to this Section 3.02 and of
each Lender's portion of the requested Letter of Credit.
SECTION 3.03. PAYMENT; REIMBURSEMENT. The Issuing Bank shall review
each draft and any accompanying documents presented under a Letter of Credit and
shall notify each Lender of any such presentment. Promptly after it shall have
ascertained that any draft and any accompanying documents presented under a
Letter of Credit appear on their face to be in substantial conformity with the
terms and conditions of such Letter of Credit, the Issuing Bank shall give
telephonic or telecopy notice to the Borrower of the receipt and amount of such
draft and the date on which payment thereon will be made, and the Lenders shall,
by 12:00 noon, New York City time on the date such payment is to be made, pay
the amounts required to the Issuing Bank in New York, New York in immediately
available funds, and the Issuing Bank, not later than 3:00 p.m., New York City
time on such day, shall make the appropriate payment to the beneficiary. If the
Lenders shall pay any draft presented under a Letter of Credit, then the Issuing
Bank, on behalf of the Lenders, shall charge the general deposit account of
42
the Borrower with the Issuing Bank for the amount thereof, together with the
Issuing Bank's customary overdraft fee in the event the funds available in such
account shall not be sufficient to reimburse the Lenders for such payment and
such Borrower shall not otherwise have discharged such reimbursement obligation
by 10:00 a.m., New York City time, on the date of such payment. The amount of
any drawing under a Letter of Credit for which the Lenders shall not have been
reimbursed as provided in the preceding sentence shall be paid by the Borrower
to the Issuing Bank, for the account of the Lenders, no later than 12:00 noon on
the date of such drawing. If the Lenders have not been reimbursed with respect
to such drawing as provided above, such Borrower shall pay to the Issuing Bank,
for the account of the Lenders, the amount of the drawing together with interest
on such amount at a rate per annum (computed on the basis of the actual number
of days elapsed over a year of 365 days) equal to the interest rate at the time
applicable to ABR Borrowings plus 2%. The obligations of the Borrower under this
Section 3.03 shall be absolute, unconditional and irrevocable and shall be
satisfied strictly in accordance with their terms, irrespective of:
(a) any lack of validity or enforceability of any Letter of Credit;
(b) the existence of any claim, setoff, defense or other right which
any Borrower or any other person may at any time have against the
beneficiary under any Letter of Credit, the Issuing Bank or any Lender or
any other person in connection with this Agreement or any other
transaction;
(c) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;
(d) payment by the Issuing Bank or any Lender under a Letter of
Credit against presentation of a draft or other document which does not
comply with the terms of such Letter of Credit; and
(e) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing.
Without limiting the generality of the foregoing, but subject to the
next sentence, it is expressly understood and agreed that the absolute and
unconditional obligation of the Borrower hereunder to reimburse Letter of Credit
disbursements will not be excused by the gross negligence or wilful misconduct
of the Issuing Bank. However, the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any direct
43
damages (as opposed to consequential damages, claims in respect of which are
hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by the Issuing Bank's gross negligence
or wilful misconduct in determining whether drafts or other documents presented
under a Letter of Credit comply with the terms thereof. It is understood that in
making any payment under a Letter of Credit (i) the Issuing Bank's and any
Lender's exclusive reliance on the documents presented to it under such Letter
of Credit as to any and all matters set forth therein, including, without
limitation, reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary equals the amount of
such draft and whether or not any document presented pursuant to such Letter of
Credit proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (ii) any noncompliance in any immaterial respect of the
documents presented under a Letter of Credit with the terms thereof shall, in
each case, not be deemed willful misconduct or gross negligence of the Issuing
Bank or any Lender. The Issuing Bank shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of Credit,
except for errors or omissions caused by the Issuing Bank's gross negligence or
willful misconduct.
SECTION 3.04. PAYMENTS IN RESPECT OF INCREASED COSTS. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) or any change in generally accepted accounting principles or regulatory
accounting principles applicable to the Issuing Bank or any Lender shall (a)
impose, modify or make applicable to the Issuing Bank or any Lender any reserve,
special deposit or similar requirement with respect to its obligations under
this Article III or the Letters of Credit, (b) impose on the Issuing Bank or any
Lender any other condition with respect to its obligations under this Article
III or the Letters of Credit, or (c) subject the Issuing Bank or any Lender to
any tax (other than (x) taxes imposed on the overall net income of the Issuing
Bank or such Lender and (y) franchise taxes imposed on the Issuing Bank or such
Lender, in either case by the country or other jurisdiction in which the Issuing
Bank or such Lender has its principal office or lending office or by any
political subdivision or taxing authority of either thereof), charge, fee,
deduction or withholding of any kind
44
whatsoever, and the result of any of the foregoing shall be to increase the cost
to the Issuing Bank or such Lender of maintaining any Letter of Credit or making
any payment under a Letter of Credit or this Article III or to reduce the amount
of principal, interest or any fee or compensation receivable by the Issuing Bank
or such Lender in respect of this Article III or any Letter of Credit, then such
additional amount or amounts as will compensate the Issuing Bank or such Lender
for such additional costs or reduction shall be paid to the Issuing Bank or such
Lender by the Borrowers upon demand. Each Lender agrees to give notice to the
Borrower of any such change in law, regulation, interpretation or administration
with reasonable promptness after becoming actually aware thereof and of the
applicability thereof to the Transactions.
(b) If, after the date of this Agreement, any Lender shall have
determined that the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central lender or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its lending office) with
any request or directive regarding capital adequacy (whether or not having the
force of law) or any such authority, central lender or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's capital as
a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) then
from time to time, each Borrower shall pay to such Lender such additional amount
or amounts as will compensate the Issuing Bank or such Lender for such
reduction. Each Lender agrees to give notice to the Borrower of any adoption of,
change in, or change in interpretation or administration of any such law, rule,
regulation or guideline with reasonable promptness after becoming actually aware
thereof and of the applicability thereof to the Transactions.
(c) A certificate of the Issuing Bank or a Lender setting forth such
amount or amounts, supported by calculations in reasonable detail, as shall be
necessary to compensate the Issuing Bank or such Lender as specified in
paragraphs (a) and (b) above shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay the Issuing Bank or
such Lender the amount shown as due on any such certificate within 10 Business
Days after its receipt of the same. The protection of this Section 3.04 shall be
available to the Issuing Bank and each Lender regardless of any possible
contention of the invalidity or inapplicability of any law, regulation or other
45
condition which shall give rise to any demand by the Issuing Bank or any Lender
for compensation.
(d) Failure on the part of any Lender or the Issuing Bank to demand
compensation for any increased costs, reduction in amounts received or
receivable with respect to any Interest Period or reduction in the rate of
return earned on such Lender's capital, shall not constitute a waiver of the
Agent's or such Lender's rights to demand compensation for any increased costs
or reduction in amounts received or receivable or reduction in rate of return.
The protection under this Section 3.04 shall be available to each Lender or the
Issuing Bank regardless of any possible contention of the invalidity or
inapplicability of any law, regulation or other condition which shall give rise
to any demand by such Lender or the Issuing Bank for compensation.
SECTION 3.05. FEES. (a) At the time each Letter of Credit is issued,
the Borrower shall pay to the Issuing Bank, in immediately available funds, the
Issuing Bank's customary fees and expenses in respect of the issuance,
negotiation, transfer and payment of such Letter of Credit.
(b) The Borrower agrees to pay (i) each Lender, through the Issuing
Bank, on the last day of each March, June, September and December and on the
Maturity Date, a per annum fee equal to (x) with respect to Letter of Credit
Nos. H368846, T231728 and T245256 (the sum of the undrawn amount of which
Letters of Credit PLUS the amount of all unreimbursed drawings under which
Letter of Credit shall not exceed $1,800,000), 3/4 of 1% per annum on such
Lender's portion of the face amount of such Letter of Credit so long as it
remains outstanding, and (y) with respect to all other Letters of Credit, the
Applicable Margin in effect on each date for Eurodollar Loans on such Lender's
portion of the face amount of the aggregate outstanding Letters of Credit from
time to time during the quarter (or shorter period commencing with the Closing
Date or ending with the Maturity Date) ending on such date, and (ii) the Agent,
on the last day of each March, June, September and December and on the Maturity
Date a fee of 1/8 of 1% per annum on the face amount of each Letter of Credit
outstanding from time to time during the quarter (or shorter period commencing
with the Closing Date or ending with the Maturity Date) and ending on such date.
All fees under this paragraph (b) shall be computed on the basis of the actual
number of days elapsed in a year of 365 days.
46
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders and each
of the Term Loan Lenders that:
SECTION 4.01. ORGANIZATION; POWERS. The Borrower and each Subsidiary
(a) other than Bayou Scrap, is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite power and authority to own its property and assets and to
carry on its business as now conducted, (c) is qualified to do business in every
jurisdiction where such qualification is required, except where the failure so
to qualify would not result in a Material Adverse Effect, and (d) in the case of
each Loan Party, has the corporate power and authority to execute, deliver and
perform its obligations under each of the Loan Documents and each other
agreement or instrument contemplated thereby to which it is or will be a party
and to borrow hereunder.
SECTION 4.02. AUTHORIZATION. The execution, delivery and performance
by each Loan Party of each of the Loan Documents and the borrowings hereunder
(collectively, the "TRANSACTIONS") (a) have been duly authorized by all
requisite corporate and, if required, stockholder action and (b) will not (i)
violate (A) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of the Borrower or any Subsidiary, (B) any order of any Governmental
Authority which is binding upon the Borrower or any Subsidiary or (C) any
provision of the First Mortgage Indenture or any other indenture, agreement or
other instrument to which the Borrower or any Subsidiary is a party or by which
any of them or any of their property is or may be bound, (ii) be in conflict
with, result in a breach of or constitute (alone or with notice or lapse of time
or both) a default under any indenture, agreement or other instrument or (iii)
result in the creation or imposition of any Lien upon any property or assets of
the Borrower or any Subsidiary other than in favor of the Collateral Agent for
the benefit of the Lenders and/or the Term Loan Lenders.
SECTION 4.03. ENFORCEABILITY. This Agreement has been duly executed
and delivered by the Borrower and constitutes, and each other Loan Document when
executed and delivered by each Loan Party party thereto will constitute, a
legal, valid and binding obligation of such Loan Party enforceable against such
Loan Party in accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally.
SECTION 4.04. GOVERNMENTAL APPROVALS. No action, consent or approval
of, registration or filing with or any
47
other action by any Governmental Authority or any other person, including any
material permits, consents and filings required in connection with the
Borrower's construction and expansion plans (including start-up of the
Borrower's second furnace to 50% capacity, the increased production of billets
and the start-up and integration of the operations of Bayou (Tennessee)), other
than filings required to perfect the security interests of the Collateral Agent
on behalf of the Lenders and the Term Loan Lenders, is or will be required in
connection with the Transactions, except such as have been made or obtained and
are in full force and effect and except as listed on Schedule 4.04.
SECTION 4.05. FINANCIAL STATEMENTS. (a) The Borrower has heretofore
furnished to the Lenders and the Term Loan Lenders its consolidated and
consolidating balance sheets and statements of income and changes in cash flows
(a) as of and for the fiscal year ended September 30, 1994, audited by and
accompanied by the opinion of Arthur Anderson, independent public accountants,
and (b) as of and for the fiscal quarters and the portions of the fiscal year
ended December 31, 1994 and March 31, 1995, certified by a Financial Officer.
Such financial statements present fairly the financial condition and results of
operations of the Borrower and its consolidated subsidiaries as of such dates
and for such periods.
(b) The Borrower shall furnish not later than July 15, 1995 to the
Lenders and the Term Loan Lenders its PRO FORMA consolidated and consolidating
balance sheets as of April 30, 1995, giving PRO FORMA effect to the Acquisition,
the Term Loans and the other transactions contemplated to occur on or prior to
the Closing Date.
(c) Such balance sheets and the notes thereto disclose all material
liabilities, direct or contingent, of the Borrower and its consolidated
subsidiaries as of the dates thereof. Such financial statements were prepared in
accordance with GAAP applied on a consistent basis subject to normal year-end
adjustments.
SECTION 4.06. NO MATERIAL ADVERSE CHANGE. There has been no material
adverse change in the business, assets, operations or financial condition of the
Borrower and the Recourse Subsidiaries, taken as a whole, since March 31, 1995.
SECTION 4.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES. (a) The
Borrower and each of the Recourse Subsidiaries has good and marketable title to,
or valid leasehold interests in, all its material properties and assets, except
for minor defects in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties and assets
48
for their intended purposes and except for such properties as are no longer used
or useful in the conduct of their businesses or as have been disposed of in the
ordinary course of business. All such material properties and assets are free
and clear of Liens, other than Liens expressly permitted by Section 7.02.
(b) The Borrower and each of the Recourse Subsidiaries has complied
with all material obligations under all material leases to which it is a party
and all such leases are in full force and effect. The Borrower and each of the
Recourse Subsidiaries enjoys peaceful and undisturbed possession under all such
material leases.
SECTION 4.08. SUBSIDIARIES. (a) As of the Closing Date, the only
Subsidiaries are Bayou (Tennessee), Bayou Scrap and River Road Realty.
(b) On and as of the Closing Date, Bayou (Tennessee) has assets
consisting of the "Assets" as such term is defined in the TVS Asset Purchase
Agreement (other than certain of such Assets which have been transferred to the
Borrower).
(c) On and as of the Closing Date, Bayou Scrap has no assets and no
liabilities and does not engage in any business or conduct any operations. If at
any time Bayou Scrap does have assets or liabilities or engages in business or
conducts any operations other than as set forth in the preceding sentence, the
provisions of Section 4.01(a) hereof shall be true and correct without giving
effect to the provisions thereof excluding Bayou Scrap.
(d) On and as of the Closing Date, River Road Realty has assets
consisting of properties in Chicago, Illinois and Knoxville, Tennessee, a
natural gas pipeline and some undeveloped land in La Place, Louisiana.
SECTION 4.09. LITIGATION; COMPLIANCE WITH LAWS. (a) Except as set
forth in Schedule 4.09 (to be provided to the Agent pursuant to Section 6.15),
there are not any actions, suits, proceedings or investigations at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary or any business, property or rights of any such person (i) which
involve any Loan Document or the Transactions or the Acquisition or (ii) which,
if adversely determined, could, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect; none of the matters set forth
on Schedule 4.09, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect.
49
(b) Neither the Borrower nor any of the Subsidiaries is in violation
of any law, rule or regulation, or in default with respect to any judgment,
writ, injunction or decree of any Governmental Authority, where such violation
or default, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
SECTION 4.10. AGREEMENTS. (a) Neither the Borrower nor any of the
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restric- tion that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) Neither the Borrower nor any of its Subsidiaries is in default
in any manner under any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which it or any of its properties or
assets are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect.
SECTION 4.11. FEDERAL RESERVE REGULATIONS. (a) Neither the Borrower
nor any of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Term Loan will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or carry Margin Stock or to extend credit to others
for the purpose of purchasing or carrying Margin Stock or to refund indebtedness
originally incurred for such purpose, or (ii) for any purpose which entails a
violation of, or which is inconsistent with, the provisions of the Regulations
of the Board, including Regulation G, U or X.
SECTION 4.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. Neither the Borrower nor any Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 4.13. USE OF PROCEEDS. The Borrower will use (i) the
proceeds of the Loans and (ii) the Letters of Credit for general corporate
purposes, PROVIDED that no more than $15,000,000 of the proceeds of the Loans
and Letters of Credit shall be used to fund Acquisition Expenditures. Bayou
(Tennessee) will use the proceeds of the Term Loans to repay, on the Closing
Date, amounts outstanding under all
50
loans from the Borrower to Bayou (Tennessee) as of the Closing Date, such
amounts not be reborrowed.
SECTION 4.14. TAX RETURNS. The Borrower and each Subsidiary has
filed or caused to be filed all Federal, state and local tax returns required to
have been filed by it and has paid or caused to be paid all taxes, including
without limitation, franchise taxes, shown to be due and payable on such returns
or on any assessments received by it, except taxes that are being contested in
accordance with Section 6.03.
SECTION 4.15. NO MATERIAL MISSTATEMENTS. No written information,
report, financial statement, exhibit or schedule furnished by or on behalf of
the Borrower to the Agent or any Lender or Term Loan Lender in connection with
the negotiation of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain any material misstatement of fact or
omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are
or will be made, not misleading.
SECTION 4.16. EMPLOYEE BENEFIT PLANS. Except as set forth in
Schedule 4.16 (which failure to file would not result in liabilities in excess
of $250,000), the Borrower and each of its ERISA Affiliates is in compliance in
all material respects with the applicable provisions of ERISA and the
regulations and published interpretations thereunder. No Reportable Event has
occurred as to which the Borrower or any ERISA Affiliate was required to file a
report with the PBGC, and the present value of all benefit liabilities under
each Plan (based on those assumptions used to fund such Plan) did not, as of the
last annual valuation date applicable thereto, exceed by more than $1,000,000
the value of the assets of such Plan. Neither the Borrower nor any ERISA
Affiliate has incurred any Withdrawal Liability that could result in a Material
Adverse Effect. Neither the Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, and no Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated where such
reorganization or termination has resulted or could reasonably be expected to
result, through increases in the contributions required to be made to such Plan
or otherwise, in a Material Adverse Effect.
SECTION 4.17. ENVIRONMENTAL AND SAFETY MATTERS. The Borrower and
each Subsidiary complies, and, except with respect to such matters that gave
rise to those actions, suits, proceedings or investigations set forth in
Schedule 4.09 and that are also set forth on Schedule 4.17(a), has complied, in
all material respects, with all applicable
51
foreign, Federal, state, local and other statutes, ordinances, orders,
judgments, rulings and regulations relating to environmental pollution or to
environmental regulation or control or to employee health or safety
(collectively, "ENVIRONMENTAL LAWS"). Neither the Borrower nor any Subsidiary
has received notice of any failure so to comply which alone or together with any
other such notice could reasonably be expected to result in a Material Adverse
Effect. The Borrower and its Subsidiaries reasonably believe that they will be
able to continue to comply with all applicable Environmental Laws, and renew or
obtain all permits necessary under the Environmental Laws, except for such
compliance or permits the absence of which, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect. The
Borrower's and the Subsidiaries' plants do not manage any hazardous wastes,
hazardous substances, hazardous materials, toxic substances or toxic pollutants,
as those terms are used in the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Toxic Substance Control Act, the
Clean Air Act, the Clean Water Act or any other Environmental Law in a manner
that could reasonably be expected to result, individually or together with other
such management, in a Material Adverse Effect. Neither the Borrower nor any
Subsidiary has assumed, by contract or, to the best of its knowledge, by
operation of law, any liability, including contingent liability, under any
Environmental Law, except as set forth on Schedule 4.17(b). The Borrower is
aware of no events, conditions or circumstances involving environmental
pollution or contamination or employee health or safety that could reasonably be
expected to result in a Material Adverse Effect.
SECTION 4.18. SECURITY AGREEMENT. The security interests created in
favor of the Collateral Agent for the benefit of the Lenders and the Term Loan
Lenders under the Security Agreement constitute a first priority perfected
security interest in the Collateral (as defined in the Security Agreement).
ARTICLE V. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans and to issue Letters of
Credit hereunder are subject to the satisfaction of the following conditions:
SECTION 5.01. ALL BORROWINGS. On the date of each Borrowing,
including each Borrowing in which Loans are refinanced with new Loans as
contemplated by Section 2.02(e):
52
(a) The Agent shall have received a notice of such borrowing as
required by Section 2.03.
(b) The representations and warranties set forth in Article IV
hereof (except, in the case of a refinancing that does not increase the
aggregate principal amount of Loans outstanding, the representations set
forth in Sections 4.06 and 4.09) shall be true and correct in all material
respects on and as of the date of such Borrowing with the same effect as
though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) Each Loan Party shall be in compliance with all the terms and
provisions set forth herein and in each other Loan Document on its part to
be observed or performed, and at the time of and immediately after such
Borrowing no Event of Default or Default shall have occurred and be
continuing.
(d) At the time of such Borrowing the Borrower shall deliver to the
Agent (i) a certificate dated the date of such Borrowing and signed by a
Financial Officer of the Borrower, confirming (A) compliance with the
conditions precedent set forth in paragraphs (b) and (c) of this Section
5.01; and (B) to the best knowledge of the Borrower after due inquiry,
that the Borrowing Base on such date is equal to or greater than the sum
of (x) the amount of the Loans to be made on such date, (y) the aggregate
principal amount of Loans then outstanding and (z) the Letter of Credit
Exposure on such date (the sum of (x), (y) and (z) being herein referred
to as the "Aggregate Amount") and (ii) in the event that it shall not have
been delivered previously to the Agent, a Borrowing Base Certificate
computing the Borrowing Base as of the most recent Determination Date
(determined without regard to the first proviso in Section 6.04(c)) (and
the Borrowing Base as of such Determination Date shall be equal to or
greater than the Aggregate Amount).
SECTION 5.02. FIRST BORROWING. On the Closing Date:
(a) Each Lender shall have received a duly executed Note complying
with the provisions of Section 2.04.
(b) The Agent shall have received the favorable written opinions of
Kaye, Scholer, Fierman, Hays & Handler, counsel for the Borrower, Howard
B. Myers, Esq., General Counsel of the Borrower, and Jones, Walker and
Waechter, special Louisiana counsel, dated
53
the Closing Date and addressed to the Lenders and the Term Loan Lenders,
in the form of Exhibits D, E and F hereto.
(c) All legal matters incident to this Agreement and the borrowings
hereunder shall be satisfactory to the Lenders, the Term Loan Lenders and
their counsel.
(d) The Agent shall have received (i) a copy of the certificate or
articles of incorporation, including all amendments thereto, of each Loan
Party, certified as of a recent date by the Secretary of State of the
state of its organization, and a certificate as to the good standing of
each Loan Party as of a recent date, from such Secretary of State; (ii) a
certificate of the Secretary or Assistant Secretary of each Loan Party
dated the Closing Date and certifying (A) that attached thereto is a true
and complete copy of the by-laws of such Loan Party as in effect on the
Closing Date and at all times since a date prior to the date of the
resolutions described in clause (B) below, (B) that attached thereto is a
true and complete copy of resolutions duly adopted by the Board of
Directors of such Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which it is a party and the
borrowings under such Loan Documents, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect, (C)
that the certificate or articles of incorporation of such Loan Party have
not been amended since the date of the last amendment thereto shown on the
certificate of good standing furnished pursuant to clause (i) above, and
(D) as to the incumbency and specimen signature of each officer or
representative executing any Loan Document or any other document delivered
in connection herewith on behalf of such Loan Party; (iii) a certificate
of another officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate pursuant to
(ii) above; and (iv) such other documents as any Lender, any Term Loan
Lender or its respective counsel may reasonably request.
(e) The Agent shall have received a certificate, dated the Closing
Date and signed by a Financial Officer of the Borrower, confirming
compliance with the conditions precedent set forth in paragraphs (b) and
(c) of Section 5.01.
(f) All Loan Documents and the Intercreditor Agreements shall have
been duly executed and delivered by the parties thereto and shall be in
full force and effect.
54
(g) The Lenders and Term Loan Lenders shall have received from the
Borrower all financing statements and other filings necessary to create a
first priority perfected security interest in the Collateral, which
financing statements and other filings shall be fully executed by a duly
authorized representative of the Borrower and in a form immediately
acceptable to all necessary filing offices, and upon filing with such
offices, together with the payment of all fees and taxes in connection
therewith, shall create such a perfected security interest.
(h) Bayou (Tennessee) shall borrow the Term Loans concurrently with
or shall have borrowed the Term Loans under the Term Loan Agreement on or
prior to the time on which all the other conditions to the initial
Borrowing hereunder shall have been satisfied.
(i) On the Closing Date, all Loans outstanding under the Original
Credit Agreement shall be repaid and the Original Credit Agreement shall
be amended and restated hereby PROVIDED THAT Scheduled Letters of Credit
shall remain outstanding as contemplated by Section 3.01.
(j) The Lenders and Term Loan Lenders shall have received a Phase I
environmental assessment and an update thereto from Environmental
Strategies Corporation, satisfactory to the Lenders and Term Loan Lenders
with respect to any environmental hazards, conditions or liabilities
(contingent or otherwise) to which Bayou (Tennessee) and the assets
acquired in the Acquisition may be subject.
(k) The Borrower shall have received at least $15,000,000 in gross
cash proceeds from the issuance of the Preferred Stock. All documents,
instruments and other matters relating to the issuance of the Preferred
Stock (including amount, dividends, redemption rights and voting rights)
shall be satisfactory to the Lenders and Term Loan Lenders in all
respects.
(l) The Lenders shall be reasonably satisfied with each of the other
documents relating to the Transactions, and the Acquisition, and the
transactions contemplated hereby and thereby.
(m) The Lenders shall be satisfied with the availability to the
Borrower of the Borrower's net operating losses.
(n) The Agent shall have received evidence, satisfactory to the
Agent, that credit facilities of Bayou (Tennessee) provided by the
Borrower shall have
55
been terminated and there shall exist no intercompany Indebtedness.
(o) The Borrower shall have paid to the Agent all fees due on the
Closing Date to the Agent, the Lenders and the Term Loan Lenders hereunder
and under the Term Loan Agreement.
ARTICLE VI. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender that so long as
this Agreement shall remain in effect or the principal of or interest on any
Loan, any Term Loan, any Fees or any other expenses or amounts payable under any
Loan Document shall be unpaid, unless the Required Lenders shall otherwise
consent in writing, the Borrower will, and will cause each Recourse Subsidiary
(and where indicated, each Subsidiary) to:
SECTION 6.01. EXISTENCE; BUSINESSES AND PROPERTIES. (a) Do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 7.05.
(b) In the case of the Borrower and each of the Subsidiaries, do or
cause to be done all things necessary to obtain, preserve, renew, extend and
keep in full force and effect the rights, licenses, permits, franchises,
authorizations, patents, copyrights, trademarks and trade names material to the
conduct of its business; maintain and operate such business in substantially the
manner in which it is presently conducted and operated; comply, and to the
extent reasonably possible ensure that any tenants or subtenants comply, in all
material respects with all applicable laws, rules, regulations and orders of any
Governmental Authority, whether now in effect or hereafter enacted, the failure
to comply with which could reasonably be expected to have a Material Adverse
Effect; and at all times maintain and preserve all property material to the
conduct of such business and keep such property in good repair, working order
and condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times; and ensure to the extent reasonably possible
that any tenants or subtenants do not cause or contribute to any condition,
including environmental pollution or contamination or employee health or safety,
that alone or together with other such conditions could reasonably be expected
to result in a Material Adverse Effect.
56
SECTION 6.02. INSURANCE. Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; maintain such
other insurance, to such extent and against such risks, including fire and other
risks insured against by extended coverage, as is customary with companies in
the same or similar businesses, including public liability insurance against
claims for personal injury or death or property damage occurring upon, in, about
or in connection with the use of any properties owned, occupied or controlled by
it; and maintain such other insurance as may be required by law.
SECTION 6.03. OBLIGATIONS AND TAXES. In the case of each Loan Party
and, with respect to taxes, assessments and governmental charges or levies, each
of the other Subsidiaries, pay its Indebtedness and other obligations promptly
and in accordance with their terms and pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might give rise to a Lien upon such
properties or any part thereof; PROVIDED, HOWEVER, that such payment and
discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings or where the failure to pay
such tax, assessment, charge, levy or claim would not (a) have a material
adverse effect on the business, assets, operations or financial condition of the
Borrower and the Recourse Subsidiaries taken as a whole or (b) result in the
imposition of any Lien securing a material amount in favor of any party
entitling such party to priority of payment over the Lenders or the Term Loan
Lenders, and the Borrower shall have set aside on its books adequate reserves
with respect thereto.
SECTION 6.04. FINANCIAL STATEMENTS, REPORTS, ETC. In the case of the
Borrower, furnish to the Agent, each Lender and each Term Loan Lender:
(a) within 120 days after the end of each fiscal year, its
consolidated and consolidating (which shall include the Non-Recourse
Subsidiaries) balance sheets and related statements of income and changes
in cash flows, showing the financial condition of the Borrower and the
Subsidiaries as of the close of such fiscal year and the results of its
operations and the operations of such Subsidiaries during such year, all
audited by Arthur Andersen or other independent public accountants of
recognized national standing acceptable to the Required Lenders and
accompanied by an opinion of such accountants (which shall not be
qualified in
57
any material respect) to the effect that such consolidated financial
statements fairly present the financial condition and results of
operations of the Borrower on a consolidated basis in accordance with GAAP
consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, its consolidated and consolidating balance
sheets (which shall include the Non-Recourse Subsidiaries) and related
statements of income and changes in cash flows, showing the financial
condition of the Borrower and the Subsidiaries as of the close of such
fiscal quarter and the results of its operations and the operations of
such subsidiaries during such fiscal quarter and the then elapsed portion
of the fiscal year, all certified by one of its Financial Officers as
fairly presenting the financial condition and results of operations of the
Borrower on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end adjustments;
(c) within 15 Business Days after the last day of each fiscal month
(each such last day being called a "Determination Date"), (i) a Borrowing
Base Certificate setting forth the Borrowing Base as of such Determination
Date and (ii) a certificate of a Financial Officer setting forth in
reasonable detail the amounts and types of Inventory and Accounts of the
Borrower and its Subsidiaries as of such Determination Date and an aging
of the Accounts; PROVIDED, HOWEVER, that the Determination Date shall be
the last day of each fiscal quarter, and the foregoing certificates shall
be required only on a quarterly basis, as long as the aggregate amount of
all Loans or Letters of Credit outstanding on the date that would
otherwise be the Determination Date is less than $3,000,000; PROVIDED,
FURTHER, that, if the Borrower desires to request a Borrowing or the
issuance of a Letter of Credit at a time when the foregoing certificates
would have been required as of a more recent date but have not been
delivered because of the foregoing proviso, then the foregoing
certificates shall be delivered without regard to the foregoing proviso as
a condition to such Borrowing or issuance;
(d) concurrently with any delivery of financial statements under (a)
or (b) above, a certificate of the Financial Officer (i) certifying such
statements, (ii) certifying that no Event of Default or Default has
occurred or, if such an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action taken
or proposed to be taken with respect thereto and, (iii) setting forth
58
computations in reasonable detail satisfactory to the Agent (x)
demonstrating compliance with the covenants contained in Sections 6.11,
6.12, 6.13, 7.09, 7.10, 7.11, 7.12, 7.13 and 7.14 hereof and (y) setting
forth the Leverage Ratio as of the last day of such fiscal quarter or
fiscal year, as the case may be;
(e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
it with the Securities and Exchange Commission, or any governmental
authority succeeding to any of or all the functions of said Commission, or
with any national securities exchange, or distributed to its shareholders,
as the case may be;
(f) promptly, from time to time, such other information regarding
the operations, business affairs and financial condition of the Borrower
or any Subsidiary, or compliance with the terms of any Loan Document, as
the Agent or any Lender or any Term Loan Lender may reasonably request;
(g) prior to entering into any commitment to acquire any ownership
or leasehold interest with a fair market value not less than $5,000,000 in
real property, an assessment, in form and substance reasonably acceptable
to the Agent, of the environmental compliance and liability issues
associated with such real property; and
(h) within 30 days after the last day of each of the first eighteen
fiscal months of Bayou (Tennessee) commencing with fiscal June, 1995, its
consolidated and consolidating (if applicable) balance sheets (which shall
include its Non-Recourse Subsidiaries, if any) and related statements of
income and changes in cash flows, showing the financial condition of Bayou
(Tennessee) and its subsidiaries, if any, as of the close of such fiscal
month and the results of its operations and the operations of such
subsidiaries, if any, during such fiscal month and the then elapsed
portion of the fiscal year, all certified by one of its Financial Officers
as fairly presenting the financial condition and results of operations of
Bayou (Tennessee) on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end adjustments.
SECTION 6.05. LITIGATION AND OTHER NOTICES. Furnish to the Agent,
each Lender and each Term Loan Lender prompt written notice of the following:
59
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) proposed to be taken
with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against the Borrower or any Subsidiary thereof which, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect;
(c) any development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect; and
(d) 10 days prior to payment under any agreement by the Borrower or
any of its Subsidiaries to make any payment under Section 7.01 of the
Preferred Stock and Warrant Purchase Agreement or Section 5.13 of the
Shareholder Agreement.
SECTION 6.06. ERISA. (a) In the case of the Borrower and each
Subsidiary, comply in all material respects with the applicable provisions of
ERISA and (b) furnish to the Agent and each Lender and Term Loan Lender (i) as
soon as possible, and in any event within 30 days after any Responsible Officer
of the Borrower or any ERISA Affiliate either knows or has reason to know that
any Reportable Event has occurred that alone or together with any other
Reportable Event could reasonably be expected to result in liability of the
Borrower to the PBGC in an aggregate amount exceeding $1,000,000, a statement of
a Financial Officer setting forth details as to such Reportable Event and the
action proposed to be taken with respect thereto, together with a copy of the
notice, if any, of such Reportable Event given to the PBGC, (ii) promptly after
receipt thereof, a copy of any notice the Borrower or any ERISA Affiliate may
receive from the PBGC relating to the intention of the PBGC to terminate any
Plan or Plans (other than a Plan maintained by an ERISA Affiliate which is
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section
414 of the Code) or to appoint a trustee to administer any Plan or Plans, (iii)
within 10 days after the due date for filing with the PBGC pursuant to Section
412(n) of the Code of a notice of failure to make a required installment or
other payment with respect to a Plan, a statement of a Financial Officer setting
forth details as to such failure and the action proposed to be taken with
respect thereto, together with a copy of such notice given to the PBGC and (iv)
promptly and in any event within 30 days after receipt thereof by the Borrower
or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy of each
notice received by the
60
Borrower or any ERISA Affiliate concerning (A) the imposition of Withdrawal
Liability or (B) a determination that a Multiemployer Plan is, or is expected to
be, terminated or in reorganization, in each case within the meaning of Title IV
of ERISA.
SECTION 6.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS. In the case of the Borrower and each Subsidiary, maintain all
financial records in accordance with GAAP and permit any representatives
designated by any Lender or Term Loan Lender, upon reasonable prior notice and
at reasonable times, to visit and inspect the financial records and the
properties of the Borrower or any Subsidiary at reasonable times and as often as
requested and to make extracts from and copies of such financial records, and
permit any representatives designated by any Lender to discuss the affairs,
finances and condition of the Borrower or any Subsidiary with the officers
thereof and independent accountants therefor (with a representative of the
Borrower present if the Borrower is not in default), and permit the Agent, or
any representatives of the Agent, to conduct, not more than once during any
fiscal year, an audit of the Collateral and the Borrowing Base on behalf of the
Lenders and the Term Loan Lenders PROVIDED that such audit may be conducted more
frequently at the request of the Required Lenders.
SECTION 6.08. USE OF PROCEEDS. Use (i) the proceeds of the Loans and
the Term Loans and (ii) the Letters of Credit only for the purposes set forth in
Section 4.13.
SECTION 6.09. FISCAL YEAR-END. Cause its fiscal year-end to be
September 30, in each year.
SECTION 6.10. FURTHER ASSURANCES. Execute any and all further
documents and take all further actions which may be required under applicable
law, or which the Agent may reasonably request on behalf of the Required
Lenders, to grant, preserve, protect and perfect the first priority security
interest in the Collateral created by the Security Agreement.
SECTION 6.11. BAYOU (TENNESSEE) INDEBTEDNESS TO CASH FLOW. In the
case of the Borrower, within 5 days of the earlier of (a) the delivery of
quarterly financial statements under Section 6.04(b) hereof and (b) the date
such quarterly financial statements are required to be delivered, contribute
cash equity to Bayou (Tennessee) in an amount such that as of the last day of
the fiscal quarter just ended, the ratio of (x) Indebtedness of Bayou
(Tennessee) on such last day of the fiscal quarter just ended to (y) Cash Flow
of Bayou (Tennessee) for the four
61
fiscal quarters ended on the last day of the fiscal quarter just ended would
have been equal to 4.0 to 1.0.
SECTION 6.12. BAYOU (TENNESSEE) CASH FLOW TO PRINCIPAL DUE. In the
case of the Borrower, within 5 days of the earlier of (a) the delivery of
quarterly financial statements under Section 6.04(b) hereof and (b) the date
such quarterly financial statements are required to be delivered, contribute
cash equity to Bayou (Tennessee) in an amount such that the ratio as at the last
day of the fiscal quarter just ended of (i) Cash Flow of Bayou (Tennessee) for
the fiscal quarter just ended to (ii) the sum of (x) regularly scheduled
payments, if any, of principal of the Term Loans required during such fiscal
quarter under the Term Loan Agreement PLUS (y) interest on the Term Loans due
for such fiscal quarter under the Term Loan Agreement, would have been equal to
1.25 to 1.0.
SECTION 6.13. MAINTENANCE OF BAYOU (TENNESSEE) BORROWING BASE. In
the case of the Borrower, upon delivery of the Term Loan Borrowing Base
Certificate under subsection 6.1(b) of the Term Loan Agreement, contribute cash
equity and/or Eligible Inventory to Bayou (Tennessee) in an amount such that
Bayou (Tennessee) would have been in compliance with the provisions of
subsection 6.1 of the Term Loan Agreement as of the last day of the applicable
month.
SECTION 6.14. LANDLORD'S WAIVER AND CONSENT. (a) Obtain a Landlord's
Waiver and Consent in the form of Exhibit I (the "LANDLORD'S WAIVER AND
CONSENT") in respect of the Collateral (as defined in the Security Agreement)
located at properties of the Borrower or its Subsidiaries in which such persons
have a valid leasehold interest.
(b) Within 45 days of the Closing Date, obtain a Landlord's Waiver
and Consent in respect of the Collateral (as defined in the Security Agreement)
located at the Borrower's Leetsdale, Pennsylvania leasehold property and at the
public warehouse at Leetsdale, Pennsylvania in which Inventory of the Borrower
is stored.
SECTION 6.15. LITIGATION SCHEDULE. Within 20 days of the Closing
Date, the Borrower shall furnish to the Agent Schedule 4.09 ("Litigation"),
which shall be satisfactory to the Agent in all respects and which in any event
shall not disclose any litigation not set forth in the written schedule
previously delivered to the Lenders.
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ARTICLE VII. NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender and Term Loan
Lender that, so long as this Agreement shall remain in effect or the principal
of or interest on any Loan, any Term Loan, any Fees or any other expenses or
amounts payable under any Loan Document shall be unpaid, unless the Required
Lenders shall otherwise consent in writing, the Borrower will not, and will not
cause or permit any Recourse Subsidiary (and where indicated each Subsidiary)
to:
SECTION 7.01. INDEBTEDNESS. In the case of the Borrower and each
Subsidiary, incur, create, assume or permit to exist any Indebtedness, except:
(a) Indebtedness of the Borrower and its Recourse Subsidiaries for
borrowed money or otherwise existing on the date hereof and set forth in
Schedule 7.01, but not any extensions, renewals, refinancings or replacements of
such Indebtedness except as permitted under the First Mortgage Indenture as in
effect on the date hereof (and regardless of whether the First Mortgage
Indenture is amended or the Indebtedness thereunder is repaid in the future)
PROVIDED that all credit facilities of Bayou (Tennessee) provided by the
Borrower shall have been terminated on the Closing Date;
(b) Indebtedness represented by the Notes and all other Indebtedness
incurred hereunder;
(c) Indebtedness of the Borrower and its Recourse Subsidiaries
incurred pursuant to Capital Lease Obligations in an aggregate amount not to
exceed $5,000,000 outstanding at any time;
(d) Subordinated Indebtedness of the Borrower in an aggregate amount
not to exceed $15,000,000 outstanding at any time;
(e) Non-Recourse Indebtedness incurred by Non- Recourse
Subsidiaries;
(f) Indebtedness secured by purchase money security interests
permitted by Section 7.02(i) hereof;
(g) Indebtedness secured by Industrial Development Bonds permitted
by Section 7.02(n) hereof;
(h) Indebtedness of Bayou (Tennessee) under the Term Loan Agreement;
and
(i) Indebtedness of the Borrower under the Term Loan Guarantee and
of Bayou (Tennessee) under the Revolving Credit Guarantee; and
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(j) Indebtedness incurred pursuant to Section 7.04.
SECTION 7.02. LIENS. Create, incur, assume or permit to exist any
Lien on any property or assets (including stock or other securities of any
person, including any Subsidiary) now owned or hereafter acquired by it or on
any income or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and its Subsidiaries
existing on the date hereof and set forth in Schedule 7.02; PROVIDED that,
except as provided in clause (l) below, such Liens shall secure only those
obligations which they secure on the date hereof and may not be reinstated
if released at any time by the secured party;
(b) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Recourse Subsidiary; PROVIDED
that (i) such Lien is not created in contemplation of or in connection
with such acquisition and (ii) such Lien does not apply to any other
property or assets of the Borrower or any Subsidiary;
(c) Liens for taxes not yet due or which are being contested in
compliance with Section 6.03;
(d) carriers', warehousemen's, mechanic's, vendor's, lessor's,
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business and securing obligations which are not due or which are
being contested in connection with Section 6.03;
(e) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other
social security laws or regulations;
(f) deposits to secure the performance of bids, tenders, trade
contracts (other than for Indebtedness), leases (other than Capital Lease
Obligations which are not permitted by paragraph (k) of this Section
7.02), statutory obligations, surety, customs and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(g) zoning restrictions, servitudes, easements, licenses,
rights-of-way, restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and do not materially detract
from the value of the property subject thereto
64
or interfere with the ordinary conduct of the business of the Borrower or
any of its Subsidiaries;
(h) Liens created in favor of the Agent for the benefit of the
Lenders pursuant to the Security Agreement;
(i) Liens on property hereafter acquired existing at the time of
acquisition thereof or to secure the payment of all or any part of the
purchase price or construction cost thereof or to secure any Indebtedness
incurred prior to, at the time of or within six months after, the
acquisition of such property or completion of such construction for the
purpose of financing all or any part of the purchase price or the
construction cost thereof; PROVIDED, HOWEVER, that no such Lien shall
extend to or cover any property or asset other than the property so
acquired or constructed and fixed improvements thereon;
(j) Liens on any Inventory consigned to the Borrower by others;
(k) Liens securing Indebtedness incurred pursuant to Capital Lease
Obligations; PROVIDED that such security interest secures Indebtedness
permitted by Section 7.01(c) hereof;
(l) Liens securing Non-Recourse Indebtedness incurred by
Non-Recourse Subsidiaries;
(m) Liens securing Indebtedness that constitutes an extension,
rearrangement, renewal or refunding (or any successive extension,
rearrangement, renewal or refunding) in whole or in part of Indebtedness
secured by any Lien referred to in clauses (a) through (l) above
(hereinafter referred to as a "Prior Lien"), if limited to the same
property (plus additions, extensions, improvements, repairs, replacements
and rebuildings) subject to, and securing no more Indebtedness than the
amount secured by, the Prior Lien;
(n) Liens securing Indebtedness which (i) has an aggregate principal
amount not in excess of $10,000,000 and (ii) is incurred in connection
with Industrial Development Bonds (including Pollution Control Bonds) as
such terms are defined in the Internal Revenue Code of 1986, as amended;
(o) Liens on assets of Bayou (Tennessee) in favor of the holders of
First Mortgage Notes issued under the First Mortgage Indenture pursuant to
Section 12.1(a) thereof; and
65
(p) Liens on property or assets of the Borrower and its Subsidiaries
other than the Collateral to the extent such Liens are permitted under the
First Mortgage Indenture.
SECTION 7.03. SALE AND LEASE-BACK TRANSACTIONS. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred.
SECTION 7.04. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
Investment or any other interest in, any other person, except Permitted
Investments.
SECTION 7.05. MERGERS, CONSOLIDATIONS AND SALES OF ASSETS. Merge
into or consolidate with any other person, or permit any other person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of
(in one transaction or in a series of transactions) all or any substantial part
of its assets (whether now owned or hereafter acquired) or any capital stock of
any Recourse Subsidiary, or purchase, lease or otherwise acquire (in one
transaction or a series of transactions) all or any substantial part of the
assets of any other person, except that (a) the Borrower and any Recourse
Subsidiary may purchase and sell inventory, sell used and surplus equipment and
sell any one of the three warehouses it owns, in each case in the ordinary
course of business, (b) if at the time thereof and immediately after giving
effect thereto no Event of Default or Default shall have occurred and be
continuing (i) any wholly owned Recourse Subsidiary may merge into the Borrower
in a transaction in which the Borrower is the surviving corporation and (ii) any
wholly owned Recourse Subsidiary may merge into or consolidate with any other
wholly owned Recourse Subsidiary in a transaction in which the surviving entity
is a wholly owned Recourse Subsidiary and no person other than the Borrower or a
wholly owned Subsidiary receives any consideration, (c) another person may merge
into or consolidate with the Borrower if (i) the Borrower is the surviving
entity, (ii) 100% of the Lenders consent to such merger or consolidation, (iii)
at the time thereof and immediately after giving effect thereto, no Event of
Default or Default shall have occurred and be continuing and (iv) at the time
thereof and immediately after giving effect thereto the Borrower is in
compliance with the provisions of Articles IV, VI and VII hereof and two
Financial Officers of the Borrower provide certificates
66
of compliance therewith to the Lenders, (d) the Borrower may transfer Eligible
Inventory to Bayou (Tennessee) pursuant to Section 6.13 hereof and (e) the
Borrower may make Acquisition Expenditures in accordance with Section 7.10
hereof.
SECTION 7.06. DIVIDENDS AND DISTRIBUTIONS. (a) Declare or pay,
directly or indirectly, any dividend or make any other distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, with respect to any shares of its Preferred Stock or
directly or indirectly redeem, purchase, retire or otherwise acquire for value
(or permit any Subsidiary to purchase or acquire) any shares of the Preferred
Stock or set aside any amount for any such purpose unless, after giving effect
to such dividend or distribution, the Consolidated Tangible Net Worth of the
Borrower exceeds $63,000,000 and at the time thereof and immediately after
giving effect thereto, no Default or Event of Default shall have occurred and be
continuing; or
(b) Declare or pay, directly or indirectly, any dividend or make any
other distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, with respect to any shares of its
capital stock other than its Preferred Stock or directly or indirectly redeem,
purchase, retire or otherwise acquire for value (or permit any Subsidiary to
purchase or acquire) any shares of its capital stock other than its Preferred
Stock or set aside any amount for any such purpose unless, after giving effect
to such dividend or distribution, the Consolidated Tangible Net Worth of the
Borrower exceeds $63,000,000 PLUS 50% of the Borrower's Consolidated Net Income
from the Closing Date (but excluding any fiscal quarter (or portion thereby) for
which Consolidated Net Income is negative) and at the time thereof and
immediately after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing; PROVIDED, HOWEVER, such dividends,
distributions, redemptions, purchases, retirements, acquisitions or settings
aside shall not in the aggregate for any given fiscal year exceed 50% of the
Borrower's Consolidated Net Income for the immediately preceding fiscal year.
Notwithstanding the provisions set forth in this Section 7.06, any
Subsidiary may declare and pay dividends or make other distributions to the
Borrower.
SECTION 7.07. TRANSACTIONS WITH AFFILIATES. Sell or transfer any
property or assets to, or purchase or acquire any property or assets of, or
otherwise engage in any other transactions with, any of its Affiliates, except
that as long as no Default or Event of Default shall have occurred and be
continuing, the Borrower or any Recourse
67
Subsidiary may engage in any of the foregoing transactions with persons in the
ordinary course of business at prices and on terms and conditions materially not
less favorable to the Borrower or such Recourse Subsidiary than could be
obtained on an arm's-length basis from an unrelated third party; PROVIDED,
HOWEVER, that the foregoing shall not restrict Investments by the Borrower or a
Subsidiary in a Subsidiary of the Borrower to the extent permitted by Section
7.04 hereof; PROVIDED, FURTHER, that the foregoing shall not restrict the
performance of the Loan Documents.
SECTION 7.08. BUSINESS OF BORROWER AND RECOURSE SUBSIDIARIES. Engage
at any time in any business or business activity other than the business
currently conducted by it and business activities reasonably incidental thereto.
SECTION 7.09. RESTRICTED EXPENDITURES. Incur Capital Expenditures in
any fiscal year in an aggregate amount in excess of (i) 125% of Budgeted Capital
Expenditures for such year PLUS (ii) the excess, if any, of the aggregate amount
of Capital Expenditures that would have been permitted in the immediately
preceding two fiscal years based solely on clause (i) above over the amount of
Capital Expenditures actually incurred during such immediately preceding two
fiscal years, provided that the amount determined pursuant to this clause (ii)
for any fiscal year shall not exceed $15,000,000.
SECTION 7.10. ACQUISITION EXPENDITURES. Only the Borrower can make
Acquisition Expenditures, such Acquisition Expenditures to be funded with (a)
100% of the proceeds from equity offerings of the Borrower after the Closing
Date (except for proceeds from the issuance of the Preferred Stock), (b) 100% of
the Indebtedness permitted under Section 7.01(d) hereof, (c) up to $15,000,000
of the Loans at any one time and (d) up to and including 50% of cumulative
Consolidated Net Income from and including October 1, 1994 to and including the
last day of the most recently ended fiscal quarter of the Borrower.
SECTION 7.11. CURRENT RATIO. In the case of the Borrower and its
Recourse Subsidiaries, permit the ratio of Current Assets to Current
Liabilities, computed on a Consolidated basis, at any time to be less than 2.0
to 1.0.
SECTION 7.12. TANGIBLE NET WORTH. In the case of the Borrower and
its Recourse Subsidiaries, permit Tangible Net Worth, computed on a Consolidated
basis, at any time to be less than the sum of (i) $63,000,000 PLUS (ii) 50% of
Net Income from the Closing Date to the date of any computation of Tangible Net
Worth (but excluding any fiscal quarter (or portion thereof) for which Net
Income is negative).
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SECTION 7.13. DEBT TO CAPITALIZATION. In the case of the Borrower
and its Recourse Subsidiaries, permit the ratio of (a) amounts outstanding under
this Agreement PLUS amounts outstanding under the Term Loan Agreement PLUS total
long-term Funded Indebtedness of the Borrower and its Subsidiaries (including
Bayou (Tennessee)), computed on a Consolidated basis, less Unencumbered Cash
owned and held by or on behalf of the Borrower to (b) Capitalization, computed
in each case on a Consolidated basis, at any time during each of the periods
specified below to exceed the ratio specified below for such period:
FISCAL
YEAR RATIO
------ -----
1995 0.65 to 1.00
1996 0.63 to 1.00
1997 0.60 to 1.00
1998 0.55 to 1.00
1999 0.53 to 1.00
SECTION 7.14. INTEREST EXPENSE COVERAGE RATIO. In the case of the
Borrower and its Recourse Subsidiaries, fail to maintain a ratio of Consolidated
EBITDA to Consolidated Fixed Charges ("Interest Expense Coverage Ratio") for any
period of four fiscal quarters (or shorter period referred to below) ending
during one of the periods specified below equal to or greater than the Interest
Expense Coverage Ratio specified below for such period:
PERIOD RATIO
------ -----
Second Quarter, Fiscal Year 1995
(computed on a rolling 2 quarter basis) 1.60 to 1.00
Third Quarter, Fiscal Year 1995
(computed on a rolling 3 quarter basis) 1.60 to 1.00
Fourth Quarter, Fiscal Year 1995
(computed on a rolling 4 quarter basis) 1.60 to 1.00
Each Quarter in Fiscal Year 1996
(computed on a rolling 4 quarter basis) 1.60 to 1.00
Each Quarter in Fiscal Year 1997
(computed on a rolling 4 quarter basis) 1.70 to 1.00
Each Quarter in Fiscal Year 1998
(computed on a rolling 4 quarter basis) 1.80 to 1.00
Each Quarter in Fiscal Year 1999
(computed on a rolling 4 quarter basis) 2.00 to 1.00
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Thereafter (computed on a rolling
4 quarter basis) 2.00 to 1.00
SECTION 7.15. AMENDMENTS. (a) Amend or modify the First Mortgage
Indenture or the Notes issued pursuant thereto or the TVS Asset Purchase
Agreement without the prior written consent of the Required Lenders if such
amendment or modification would adversely affect the interests of the Lenders
and the Term Loan Lenders; or (b) amend or modify any term of the Preferred
Stock or the certificate of designation therefor or any other Preferred Stock
Documents.
ARTICLE VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in or in
connection with any Loan Document or the Borrowings hereunder or the
borrowing under the Term Loan Agreement or in any Borrowing Base
Certificate delivered pursuant to Section 6.04(c) or in any Term Loan
Borrowing Base Certificate delivered pursuant to subsection 6.1 of the
Term Loan Agreement, or any representation, warranty, statement or
information contained in any report, certificate, financial statement or
other instrument furnished in connection with or pursuant to any Loan
Document, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any
Loan or Term Loan when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment thereof
or by acceleration thereof or otherwise or default shall be made in the
due and punctual reimbursement of any drawing under any Letter of Credit,
when and as the same shall become due and payable and such default shall
continue unremedied for a period of three days;
(c) default shall be made in the payment of any interest on any Loan
or Term Loan or any Fee or any other amount (other than an amount referred
to in (b) above) due under any Loan Document, when and as the same shall
become due and payable, and such default shall continue unremedied for a
period of three days;
(d) default shall be made in the due observance or
performance by the Borrower or any Subsidiary of any
covenant, condition or agreement contained in
Section 6.01(a);
70
(e) default shall be made in the due observance or performance by
the Borrower or any Subsidiary of any covenant, condition or agreement
contained in Article VI or Section 6 of the Term Loan Agreement, other
than as specified in (d) above, and such default shall continue unremedied
for a period of 30 days; PROVIDED, HOWEVER, that if the Agent has actual
knowledge of the occurrence of a default specified in this paragraph (e)
and the Borrower does not have knowledge of such occurrence, the 30-day
period shall begin on the date on which the Agent sends notice of such
default to the Borrower;
(f) default shall be made in the due observance or performance by
the Borrower or any Subsidiary of any covenant, condition or agreement
contained in Article VII or Section 7 of the Term Loan Agreement, and such
default shall continue unremedied for a period of 30 days; PROVIDED,
HOWEVER, that if the Agent has actual knowledge of the occurrence of a
default specified in this paragraph (f) and the Borrower does not have
knowledge of such occurrence, the 30-day period shall begin on the date on
which the Agent sends notice of such default to the Borrower;
(g) default shall be made in the due observance or performance by
the Borrower or any Subsidiary of any covenant, condition or agreement
contained in any Loan Document (other than those specified in (b), (c),
(d), (e) or (f) above) and such default shall continue unremedied for a
period of 15 days after notice thereof from the Agent or any Lender to the
Borrower;
(h) the Borrower or any Recourse Subsidiary shall (i) fail to pay
any principal or interest, regardless of amount, due in respect of any
Indebtedness in any principal amount, when and as the same shall become
due and payable and after giving effect to applicable grace periods, or
(ii) fail to observe or perform any other term, covenant, condition or
agreement contained in any agreement or instrument evidencing or governing
any such Indebtedness if the effect of any failure referred to in this
clause (ii) is to cause, or to permit the holder or holders of such
Indebtedness or a trustee on its or their behalf (with or without the
giving of notice, the lapse of time or both) to cause, such Indebtedness
to become due prior to its stated maturity and after giving effect to
applicable grace periods;
(i) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of the Borrower or any Subsidiary, or of a substantial
part of the property or assets of the Borrower or a
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Subsidiary, under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower or any Subsidiary or for a substantial part of
the property or assets of the Borrower or a Subsidiary or (iii) the
winding-up or liquidation of the Borrower or any Subsidiary; and such
proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall continue
unstayed and in effect for 30 days; PROVIDED, HOWEVER, that this provision
shall not apply to a Non-Recourse Subsidiary unless such action or
proceeding materially adversely affects the interests of the Borrower or a
Recourse Subsidiary;
(j) the Borrower or any Subsidiary (other than a Non-Recourse
Subsidiary unless such action or proceeding materially adversely affects
the interests of the Borrower or a Recourse Subsidiary) shall (i)
voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or fail
to contest in a timely and appropriate manner, any proceeding or the
filing of any petition described in (i) above, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for
a substantial part of the property or assets of the Borrower or any
Subsidiary, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become
due or (vii) take any action for the purpose of effecting any of the
foregoing;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $1,500,000 (after giving effect to reimbursement by
insurance carriers) shall be rendered against the Borrower, any Recourse
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Borrower or any
Recourse Subsidiary to enforce any such judgment;
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(l) a Reportable Event or Reportable Events, or a failure to make a
required installment or other payment (within the meaning of Section
412(n)(l) of the Code), shall have occurred with respect to any Plan or
Plans that reasonably could be expected to result in liability of the
Borrower to the PBGC or to a Plan in an aggregate amount exceeding
$1,000,000 and, within 30 days after the reporting of any such Reportable
Event to the Agent or after the receipt by the Agent of the statement
required pursuant to Section 6.06, the Agent shall have notified the
Borrower in writing that (i) the Required Lenders have made a
determination that, on the basis of such Reportable Event or Reportable
Events or the failure to make a required payment, there are reasonable
grounds (A) for the termination of such Plan or Plans by the PBGC, (B) for
the appointment by the appropriate United States District Court of a
trustee to administer such Plan or Plans or (C) for the imposition of a
Lien in favor of a Plan and (ii) as a result thereof an Event of Default
exists hereunder; or a trustee shall be appointed by a United States
District Court to administer any such Plan or Plans; or the PBGC shall
institute proceedings to terminate any Plan or Plans;
(m) (i) the Borrower or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan, (ii) the Borrower or such ERISA
Affiliate does not have reasonable grounds for contesting such Withdrawal
Liability or is not in fact contesting such Withdrawal Liability in a
timely and appropriate manner and (iii) the amount of the Withdrawal
Liability specified in such notice, when aggregated with all other amounts
required to be paid to Multiemployer Plans in connection with Withdrawal
Liabilities (determined as of the date or dates of such notification),
exceeds $2,000,000 or requires payments exceeding $1,000,000 in any year;
(n) the Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of
ERISA, if solely as a result of such reorganization or termination the
aggregate annual contributions of the Borrower and its ERISA Affiliates to
all Multiemployer Plans that are then in reorganization or have been or
are being terminated have been or will be increased over the amounts
required to be contributed to such Multiemployer Plans for their most
recently completed plan years by an amount exceeding $1,000,000;
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(o) there shall have occurred a Change in Control;
(p) (i) Any of the Security Documents shall cease, for any reason,
to be in full force and effect, or the Borrower or any other Loan Party
which is a party to any of the Security Documents shall so assert in
writing or (ii) the Lien created by any of the Security Documents shall
cease to be enforceable and of the same effect and priority purported to
be created thereby;
or
(q) one or more Persons has demanded payment of amounts in excess of
$500,000 in the aggregate under Section 7.01 of the Preferred Stock and
Warrant Purchase Agreement or Section 5.13 of the Shareholder Agreement
and the Borrower or any of its Subsidiaries shall have made such
payment(s) or shall have agreed that such amounts are due;
then, and in every such event (other than an event with respect to any Loan
Party described in paragraph (i) or (j) above), and at any time thereafter
during the continuance of such event, the Agent may, and at the request of the
Required Lenders shall, by written notice to the Borrower, take any or all of
the following actions, at the same or different times: (i) terminate forthwith
the Commitments, (ii) demand that the Borrower provide to the Lenders, and the
Borrower upon such demand agrees to provide, cash collateral in an amount equal
to the aggregate Letter of Credit Exposure then existing, such cash collateral
to be deposited in a special cash collateral account to be held by the Agent for
the benefit of the Lenders and (iii) declare the Loans then outstanding to be
forthwith due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of the Borrower accrued
hereunder and under any other Loan Document, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrower, anything contained
herein or in any other Loan Document to the contrary notwithstanding; and in any
event with respect to the Borrower or any Recourse Subsidiary described in
paragraph (i) or (j) above, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrower
accrued hereunder and under any other Loan Document, shall automatically become
due and payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the
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Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Agent an amount equal to the aggregate
then undrawn and unexpired amount of such Letters of Credit. The Borrower shall
be deemed to grant at such time to the Agent, for the benefit of the Issuing
Bank and Lenders, a security interest in such cash collateral (such cash to be
held in an interest-bearing account) to secure all obligations of the Borrower
in respect of such Letters of Credit under this Agreement and the other Loan
Documents. The Borrower shall execute and deliver to the Agent, for the account
of the Issuing Bank and the Lenders, such further documents and instruments as
the Agent may request to evidence the creation and perfection of such security
interest in such cash collateral account. Amounts held in such cash collateral
account shall be applied by the Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the Notes. After all
such Letters of Credit shall have expired or been fully drawn upon and there
shall be no Letter of Credit Exposure and all other obligations of the Borrower
hereunder and under the Notes and the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account (including
interest thereon, if any) shall be returned to the Borrower.
ARTICLE IX. THE AGENT
In order to expedite the transactions contemplated by this
Agreement, Chemical is hereby appointed to act as Agent on behalf of the
Lenders. Each of the Lenders, and each subsequent holder of any Note by its
acceptance thereof, hereby irrevocably authorizes the Agent to take such actions
on behalf of such Lender or holder and to exercise such powers as are
specifically delegated to the Agent by the terms and provisions of the Loan
Documents, together with such actions and powers as are reasonably incidental
thereto. The Agent is hereby expressly authorized by the Lenders, without hereby
limiting any implied authority, (a) to receive on behalf of the Lenders all
payments of principal of and interest on the Loans and all other amounts due to
the Lenders hereunder and under the other Loan Documents, and promptly to
distribute to each Lender its proper share of each payment so received; (b) to
give notice on behalf of each of the Lenders to the Borrower of any
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Event of Default specified in this Agreement of which the Agent has actual
knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Lender copies of all notices, financial statements and other
materials delivered by the Borrower pursuant to this Agreement as received by
the Agent.
Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by the Borrower of
any of the terms, conditions, covenants or agreements contained in any Loan
Document. The Agent shall not be responsible to the Lenders or the holders of
the Notes for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement, the Notes or any other Loan Documents or other
instruments or agreements. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof until it shall have received from the
payee of such Note notice, given as provided herein, of the transfer thereof.
The Agent shall in all cases be fully protected in acting, or refraining from
acting, in accordance with written instructions signed by the Required Lenders
(or when expressly required hereby, all the Lenders) and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders and each subsequent holder
of any Note. The Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Agent nor any of its directors, officers, employees or
agents shall have any responsibility to the Borrower on account of the failure
of or delay in performance or breach by any Lender of any of its obligations
hereunder or to any Lender on account of the failure of or delay in performance
or breach by any other Lender or the Borrower of any of their respective
obligations hereunder or under any other Loan Document or in connection herewith
or therewith. The Agent may execute any and all duties hereunder by or through
agents or employees and shall be entitled to rely upon the advice of legal
counsel selected by it with respect to all matters arising hereunder and shall
not be liable for any action taken or suffered in good faith by it in accordance
with the advice of such counsel.
The Lenders hereby acknowledge that the Agent shall be under no duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of
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the Loan Documents unless it shall be requested in writing to do so by the
Required Lenders (or when expressly required hereby, all the Lenders).
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders, the
Term Loan Lenders and the Borrower. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor which successor Agent shall
be acceptable to the Borrower. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders and Term Loan Lenders, appoint a successor
Agent which shall be a lender with an office in New York, New York, having a
combined capital and surplus of at least $500,000,000 or an Affiliate of any
such lender. Upon the acceptance of any appointment as Agent hereunder by a
successor lender, such successor shall 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 hereunder. After the
Agent's resignation hereunder, the provisions of this Article and Section 10.05
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
With respect to the Loans made by it hereunder, the Notes issued to
it and any Letter of Credit issued by it, the Agent in its individual capacity
and not as Agent shall have the same rights and powers as any other Lender and
may exercise the same as though it were not the Agent, and the Agent and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any Subsidiary or other Affiliate thereof
as if it were not the Agent.
Each Lender agrees (i) to reimburse the Agent, on demand, in the
amount of its pro rata share (based on its Commitment hereunder) (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans and the Term Loans shall have been paid in full,
ratably in accordance with their Commitment Percentages immediately prior to
such date) of any expenses incurred for the benefit of the Lenders by the Agent,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, which shall not have been reimbursed
by the Borrower and (ii) to indemnify and hold harmless the Agent and any of its
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs,
77
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against it in its capacity as the Agent or any of
them in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by it or any of them under this
Agreement or any other Loan Document, to the extent the same shall not have been
reimbursed by the Borrower (including, without limitation, at any time following
the payment of the Notes and the Term Notes); PROVIDED that no Lender shall be
liable to the Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent or any of
its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement or any other Loan
Document, any related agreement or any document furnished hereunder or
thereunder. In acting as Agent under the Loan Documents, Chemical is acting for
both the Lenders and the Term Loan Lenders.
The terms and conditions set forth in this Article IX shall apply
MUTATIS MUTANDIS to the Agent in its capacity as Collateral Agent under the
Security Agreement.
ARTICLE X. MISCELLANEOUS
SECTION 10.01. NOTICES. Notices and other communications provided
for herein or in the Term Loan Agreement shall be in writing and shall be
delivered by telecopy, hand or overnight courier service, or mailed, as follows:
(a) if to the Borrower, to it at River Road, La Place, Louisiana
70068, Attention of Richard J. Gonzalez (Telecopy No. 504-652-0472), with
a copy to 2777 Stemmons Freeway, Suite 1800, Dallas, Texas 75207,
Attention of Howard M. Meyers (Telecopy No. 214-631- 6146);
(b) if to Bayou (Tennessee), to it at River Road, La Place,
Louisiana 70068, Attention of Richard J. Gonzalez (Telecopy No.
504-652-0472), with a copy to
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2777 Stemmons Freeway, Suite 1800, Dallas, Texas 75207, Attention of
Howard M. Meyers (Telecopy No. 214-631- 6146);;
(c) if to the Agent, to it at 140 E. 45th St. (29th Floor) New York,
NY 10017, Attention of Pamela Rivers (Telecopy No. 212-922-9695);
(d) if to the Issuing Bank, to it at 55 Water Street, New York, New
York 10041, Attention of Victor Marinaccio (Telecopy No. 212-363-5656);
and
(e) if to a Lender, to it at its address (or tele- copy number) set
forth in Schedule 2.01; and
(f) if a Term Loan Lender, to it at its address set forth in the
Term Loan Agreement.
All notices and other communications given to any party hereto or to the Term
Loan Lenders in accordance with the provisions of this Agreement and the other
Loan Documents shall be deemed to have been given on the date of receipt if
delivered by hand or overnight courier service or sent by telecopy equipment of
the sender, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 10.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 10.01 PROVIDED that any notice, request or demand to or upon the Agent
or the Lenders pursuant to Sections 2.03 and 3.02 shall not be effective until
received.
SECTION 10.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by each Loan Party in the Loan Documents and
in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and the Term Loan Lenders and
shall survive the making by the Lenders of the Loans and by the Term Loan
Lenders of the Term Loans, and the execution and delivery (i) to the Lenders of
the Notes evidencing such Loans and (ii) to the Term Loan Lenders of the Term
Notes evidencing such Term Loans, regardless of any investigation made by the
Lenders or Term Loan Lenders or on their behalf, and shall continue in full
force and effect as long as the principal of or any accrued interest on any Loan
or Term Loan or any Fee or any other amount payable under this Agreement, the
Term Loan Agreement or any other Loan Document is outstanding and unpaid and so
long as the Commitments have not been terminated.
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SECTION 10.03. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrower and the Agent and when the
Agent and the Borrower shall have received copies hereof which, when taken
together, bear the signatures of each Lender, and thereafter shall be binding
upon and inure to the benefit of the Borrower, the Agent and each Lender and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior consent of all the Lenders.
SECTION 10.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, the Agent or the
Lenders that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans at the time owing to it and the Notes
held by it); PROVIDED, HOWEVER, that (i) except in the case of an assignment to
a Lender or an Affiliate of a Lender, the Borrower and the Agent must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) each such assignment shall be of a constant, and
not a varying, percentage of all the assigning Lender's rights and obligations
under this Agreement, (iii) the parties to each such assignment shall execute
and deliver to the Agent an Assignment and Acceptance in the form of Exhibit J
hereto, together with the Note or Notes subject to such assignment and a
processing and recordation fee of $4,000 (which recordation fee shall be paid by
a person other than the Borrower), and (iv) no such assignment shall be
permitted or effective unless such Lender concurrently assigns a ratable
interest in the Term Loan Agreement to its assignee. Upon acceptance and
recording pursuant to paragraph (e) of this Section 10.04, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender under
this Agreement and (B) the assigning Lender thereunder shall, to the extent
provided in such assignment, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
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(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, any other Loan Document or any other instrument or document furnished
pursuant hereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or any Subsidiary or the performance or observance by the Borrower or
any Subsidiary of any of its obligations under this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the most recent financial statements delivered pursuant to
Section 6.04 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Agent shall maintain at one of its offices in The City of
New York a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the "Register"). The entries in the
Register shall be conclusive in the absence of manifest error and the Borrower,
the Agent and the Lenders may treat each person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and
81
from time to time upon reasonable prior notice and copies shall be made
available to the Borrower upon request.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with the Note or Notes
subject to such assignment, the processing and recordation fee referred to in
paragraph (b) above and, if required, the written consent of the Borrower to
such assignment, the Agent shall (subject to the consent of the Agent to such
assignment, if required), (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt notice
thereof to the Lenders. Within five Business Days after receipt of notice, the
Borrower, at its own expense, shall execute and deliver to the Agent, in
exchange for the surrendered Note or Notes, a new Note or Notes to the order of
such assignee in a principal amount equal to the applicable Commitment assumed
by it pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained a Commitment, a new Note to the order of such assigning Lender in a
principal amount equal to the applicable Commitment retained by it. Such new
Note or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note; such new Notes shall be dated the
date of the surrendered Notes which they replace and shall otherwise be in
substantially the form of Exhibit A hereto. Canceled Notes shall be returned to
the Borrower.
(f) Each Lender may without the consent of the Borrower or the Agent
sell participations to one or more Lenders or other financial institutions in
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans owing to it and the Notes held
by it); PROVIDED, HOWEVER, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participating lenders or other entities shall be entitled to the
benefit of the cost protection provisions contained in Sections 2.11 and 2.13 to
the same extent that the Lender from which such participating lender or other
entity acquired its participation would be entitled to the benefit of such cost
protection provisions, (iv) no such participation shall be permitted or
effective unless such Lender concurrently sells a ratable participating interest
in the Term Loan Agreement to its participant, and (v) the Borrower, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans and their right to approve any
amendment, modification or waiver of any provision of
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this Agreement (other than amendments, modifications or waivers with respect to
any Fees payable hereunder or the amount of principal of or the rate at which
interest is payable on the Loans, or the dates fixed for payments of principal
of or interest on the Loans).
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to either Loan Party furnished to such
Lender by or on behalf of such Loan Party; PROVIDED that, prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the confidentiality of
any confidential information relating to the Loan Parties received from such
Lender.
(h) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
(i) The Borrower shall not assign or delegate any of its rights or
duties hereunder.
SECTION 10.05. EXPENSES; INDEMNITY. (a) The Borrower agrees to pay
all reasonable out-of-pocket expenses incurred by the Agent in connection with
the preparation of this Agreement, the Letters of Credit, the Term Loan
Agreement and the other Loan Documents or in connection with any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions hereby contemplated shall be consummated) or incurred by the Agent
or any Lender or any Term Loan Lender in connection with the enforcement or
protection of their rights in connection with this Agreement, the Letters of
Credit, the Term Loan Agreement and the other Loan Documents or in connection
with the Loans and Term Loans made or the Notes and Term Notes issued hereunder,
including the reasonable fees and disbursements of Simpson Thacher & Bartlett,
counsel for the Agent, and, in connection with any such amendment, modification
or waiver or any such enforcement or protection, the reasonable fees and
disbursements of any other counsel for the Agent or any Lender or any Term Loan
Lender. The Borrower further agrees that it shall indemnify the Lenders and the
Term Loan Lenders from and hold them harmless against any documentary taxes,
assessments or charges made by any Governmental Authority by reason of the
execution and delivery of this Agreement, the Letters of Credit or any of the
other Loan Documents.
(b) The Borrower agrees to indemnify the Agent, each Lender each
Term Loan Lender and its respective
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directors, officers, employees and agents (each such person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities, obligations, actions, penalties,
judgments, suits, costs and related expenses or disbursements, including
reasonable counsel fees and expenses, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement, the Letters of Credit, the Term Loan
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the transactions contemplated thereby, (ii)
the use of the proceeds of the Loans or the Term Loans, (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, or (iv) the noncompliance or
asserted noncompliance with, or liability or asserted liability under, any
Environmental Law that is asserted to be applicable to the Borrower or any
Subsidiary, or to any property owned or operated by any of them; PROVIDED that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such indemnified party's losses are the result of any unexcused breach by an
indemnified party of its obligations under this Agreement or any other Loan
Document or the result of the gross negligence or willful misconduct of such
Indemnitee.
(c) The provisions of this Section 10.05 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement, the Letters of Credit, the Term Loan Agreement or
any other Loan Document, or any investigation made by or on behalf of the Agent
or any Lender. All amounts due under this Section 10.05 shall be payable on
written demand therefor.
SECTION 10.06. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing and any Lender shall have requested the Agent to
declare the Loans immediately due and payable pursuant to Article VIII, such
Lender is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any of and all the obligations of the Borrower
now or hereafter existing under this Agreement and other Loan Documents held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement or such other Loan Document
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and although such obligations may be unmatured. The rights of each Lender under
this Section are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
SECTION 10.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
SECTION 10.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Agent, any Lender or any Term Loan Lender in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Agent, the Term Loan Lenders and the Lenders hereunder and under the other
Loan Documents are cumulative and not exclusive of any rights or remedies which
they would otherwise have. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on either Loan
Party in any case shall entitle such Loan Party to any other or further notice
or demand in similar or other circumstances. Each holder of any of the Notes and
the Term Notes shall be bound by any amendment, modification, waiver or consent
authorized as provided herein, whether or not such Note or Term Note shall have
been marked to indicate such amendment, modification, waiver or consent.
(b) Neither this Agreement, any provision hereof nor any other Loan
Document may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the applicable Loan Party and the Required
Lenders; PROVIDED, HOWEVER, that no such agreement shall (i) change the
principal amount of, or extend or advance the maturity of or any date for the
payment of any principal of or interest on, any Loan or Term Loan, or waive or
excuse any such payment or any part thereof, or change the rate of interest on
any Loan or Term Loan, without the prior written consent of each Lender and each
Term Loan Lender, (ii) change the Commitment or Commitment Fees of any Lender
without the prior written consent of such Lender, or (iii) amend or modify the
provisions of Section 2.16 or subsection 2.15 of the Term Loan Agreement, the
provisions of this Section or the definitions of "Borrowing Base" or "Required
Lenders" or release at any time from the security interest created by the
Security Agreement any of the
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Collateral in excess of 10% in the aggregate of the book value of the Collateral
at such time (other than as permitted under Section 7.05), in any such case,
without the prior written consent of each Lender and each Term Loan Lender;
PROVIDED FURTHER that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Agent hereunder without the prior written consent of
the Agent. Each Lender, each Term Loan Lender and each holder of a Note or a
Term Note shall be bound by any modification or amendment authorized by this
Section regardless of whether its Note or Term Note shall have been marked to
make reference thereto, and any consent by any Lender, Term Loan Lender or
holder of a Note or Term Note pursuant to this Section shall bind any person
subsequently acquiring a Note or Term Note from it, whether or not such Note or
Term Note shall have been so marked.
SECTION 10.09. INTEREST RATE LIMITATION. Notwithstanding anything
herein or in the Notes or in the Term Notes to the contrary, if at any time the
applicable interest rate, together with all fees and charges which are treated
as interest under applicable law (collectively the "CHARGES"), as provided for
herein or in any Loan Document or in any other document executed in connection
herewith or therewith, or otherwise contracted for, charged, received, taken or
reserved by any Lender or Term Loan Lender, shall exceed the maximum lawful rate
(the "Maximum Rate") which may be contracted for, charged, taken, received or
reserved by such Lender in accordance with applicable law, the rate of interest
payable under the Note or the Term Note held by such Lender or Term Loan Lender,
as the case may be, together with all Charges payable to such Lender or Term
Loan Lender, shall be limited to the Maximum Rate.
SECTION 10.10. ENTIRE AGREEMENT. This Agreement and the other Loan
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any previous agreement among the parties with respect to
the subject matter hereof is superseded by this Agreement and the other Loan
Documents. Nothing in this Agreement or in the other Loan Documents, expressed
or implied, is intended to confer upon any party other than the parties hereto
any rights, remedies, obligations or liabilities under or by reason of this
Agreement or the other Loan Documents.
SECTION 10.11. WAIVER OF JURY TRIAL. Each party hereto hereby
waives, to the fullest extent permitted by applicable law, any right it may have
to a trial by jury in respect of any litigation directly or indirectly arising
out of, under or in connection with this Agreement or any of the other Loan
Documents. Each party hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the
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foregoing waiver and (b) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement and the other Loan Documents, as
applicable, by, among other things, the mutual waivers and certifications in
this Section 10.11.
SECTION 10.12. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 10.13. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective as provided in Section 10.03.
SECTION 10.14. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 10.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against the Borrower or its properties in
the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and
87
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this agreement or the other Loan Documents in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 10.16. CONFIDENTIALITY. The Agent and the Lenders agree to
keep confidential (and to cause their respective officers, directors, employees,
agents and representatives to keep confidential) all information, materials and
documents concerning the Loan Parties furnished to the Agent or any Lender (the
"Information"). Notwithstanding the foregoing, the Agent and each Lender shall
be permitted to disclose Information (i) to such of its officers, directors,
employees, agents and representatives as need to know such Information in
connection with its participation in any of the Transactions or the
administration of this Agreement; (ii) to the extent required by applicable laws
and regulations or by any subpoena or similar legal process, or requested by any
governmental agency or authority; (iii) to the extent such Information (A)
becomes publicly available other than as a breach of this Agreement, (B) becomes
available to the Agent or such Lender on a non-confidential basis from a source
other than the Borrower or Subsidiary or (C) was available to the Agent or such
Lender on a non-confidential basis prior to its disclosure to the Agent or such
Lender by the Borrower or a Subsidiary; (iv) to the extent the Borrower or a
Subsidiary shall have consented to such disclosure in writing, (v) in connection
with the sale of any Collateral pursuant to the provisions of the Security
Agreement or (vi) as necessary in connection with an assignment or participation
contemplated by Sections 10.04(b) and 10.04(f) hereof.
88
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have
caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
BAYOU STEEL CORPORATION
By: __________________________
Title:
CHEMICAL BANK, as Agent and as a
Lender
By: __________________________
Title:
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION
By: __________________________
Title:
THE DAIWA BANK, LIMITED
By: __________________________
Title:
By: __________________________
Title:
FIRST INTERSTATE BANK OF TEXAS,
N.A.
By: __________________________
Title:
HIBERNIA NATIONAL BANK
By: __________________________
Title:
89
<PAGE>
EXECUTION COPY
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of June 28, 1989, as amended and
restated through June 1, 1995, made by BAYOU STEEL CORPORATION, a Delaware
corporation (the "GRANTOR"), in favor of CHEMICAL BANK, a New York banking
corporation ("CHEMICAL"), as collateral agent (in such capacity, the "COLLATERAL
AGENT") for (i) the several banks and other financial institutions (the
"Lenders") from time to time parties to the Credit Agreement, dated as of June
28, 1989, as amended and restated through June 1, 1995 (as further amended,
supplemented or otherwise modified from time to time, the "REVOLVING CREDIT
AGREEMENT") among the Grantor, the Lenders and Chemical, as agent (in such
capacity, the "AGENT"), and (ii) the several banks and other financial
institutions (the "TERM LOAN LENDERS") from time to time parties to the Term
Loan Agreement, dated as of June 1, 1995 (as amended, supplemented or otherwise
modified from time to time, the "TERM LOAN AGREEMENT") among Bayou Steel
Corporation (Tennessee), a Delaware corporation ("BAYOU (TENNESSEE)"), the Term
Loan Lenders and the Agent.
W I T N E S S E T H:
WHEREAS, the Grantor and the Collateral Agent are parties to the
Security Agreement dated as of June 28, 1989, as amended and restated through
November 23, 1993 and as in effect immediately prior to the effectiveness of
this Agreement (the "ORIGINAL SECURITY AGREEMENT");
WHEREAS, the Grantor and the Collateral Agent wish to amend and
restate the Original Security Agreement pursuant to this Agreement in accordance
with the terms and subject to the conditions set forth herein;
WHEREAS, the Grantor and the Collateral Agent have elected to amend
and restate the Original Security Agreement pursuant to this Agreement rather
than amend the Original Security Agreement or enter into a new security
agreement for their convenience and intend that all indebtedness, obligations
and liens created under the Original Security Agreement be continued hereunder
and remain in full force and effect and not be discharged, paid, satisfied or
cancelled;
WHEREAS, pursuant to the Revolving Credit Agreement, the Lenders
have agreed to make their respective Loans to, and the Issuing Bank has agreed
to issue letters of credit for the account of, the Grantor upon the terms and
subject to the conditions set forth therein;
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective Loans to, and the Issuing
1
Bank to issue Letters of Credit for the account of, the Grantor under the
Revolving Credit Agreement that the Grantor shall have executed and delivered
this Agreement to the Collateral Agent for the ratable benefit of the Lenders;
WHEREAS, pursuant to the Term Loan Agreement, the Term Loan Lenders
have agreed to make their respective Term Loans (as defined in the Term Loan
Agreement) to Bayou (Tennessee) upon the terms and subject to the conditions set
forth therein;
WHEREAS, it is a condition precedent to the obligation of the Term
Loan Lenders to make their respective Term Loans to Bayou (Tennessee) under the
Term Loan Agreement that the Grantor guarantee payment and performance of the
obligations of Bayou (Tennessee) under the Term Loan Agreement and the Term
Notes (as defined in the Term Loan Agreement);
WHEREAS, in satisfaction of such condition, the Grantor has entered
into the Guarantee, dated as of June 1, 1995 (as amended, supplemented or
otherwise modified from time to time, the "TERM LOAN GUARANTEE"), for the
benefit of the Agent and the Term Loan Lenders; and
WHEREAS, it is a further condition precedent to the obligation of
the Term Loan Lenders to make their Term Loans to Bayou (Tennessee) under the
Term Loan Agreement that the Grantor shall have executed and delivered this
Agreement to the Collateral Agent to secure payment and performance of the
Grantor's obligations under the Term Loan Guarantee.
NOW, THEREFORE, in consideration of the premises and (i) to induce
the Agent and the Lenders to enter into the Revolving Credit Agreement and to
induce the Lenders to make their respective Loans to, and the Issuing Bank to
issue Letters of Credit for the account of, the Grantor thereunder and (ii) to
induce the Agent and the Term Loan Lenders to enter into the Term Loan Agreement
and to induce the Term Loan Lenders to make their respective Term Loans to Bayou
(Tennessee) thereunder, the Grantor hereby agrees with the Collateral Agent, for
the benefit of the Lenders and the Term Loan Lenders, as follows:
1. DEFINITION OF TERMS USED HEREIN. All capitalized terms used herein but
not defined herein shall have the meanings set forth in the Revolving Credit
Agreement. As used herein, the following terms shall have the following
meanings:
(a) "Accounts" shall mean any and all rights of the Grantor to
payment for goods and services sold, leased or otherwise provided, including any
such right evidenced by chattel paper, whether due or to become due, whether or
not it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including, without limitation, accounts receivable from
Affiliates or employees of the Grantor.
2
(b) "Accounts Receivable" shall mean all Accounts and all rights in
any returned goods, together with all rights, titles, securities and guarantees
with respect thereto, including any rights to stoppage in transit, replevin,
reclamation and resales, and all related security interests, liens and pledges,
whether voluntary or involuntary.
(c) "Collateral" shall mean all (i) Accounts Receivable, (ii)
Inventory and (iii) Proceeds.
(d) "Guarantee Collateral Amount" shall be as defined in Section
18(e).
(e) "Inventory" shall mean, subject to the provisions of Section 28,
all merchandise intended for sale by the Grantor, or consumed in the Grantor's
business, together with all raw materials, including, without limitation, scrap,
billets, shapes, additives, alloys, fluxes, electrodes and refractories, whether
now owned or hereafter acquired or arising, and all such property the sale or
other disposition of which has given rise to Accounts and which has been
returned to, repossessed or stopped in transit by or on behalf of the Grantor.
(f) "Obligations" shall mean the Revolving Credit Obligations and
the Term Loan Obligations.
(g) "Proceeds" shall mean any consideration received from the sale,
exchange, lease or other disposition of any asset or property that constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral.
(h) "Revolving Credit Obligations" shall mean (a) the collective
reference to the unpaid principal of and interest on the Notes and all other
obligations and liabilities of the Grantor to the Agent, the Collateral Agent or
the Lenders (including, without limitation, interest accruing at the then
applicable rate provided in the Revolving Credit Agreement after the maturity of
the Loans and interest accruing at the then applicable rate provided in the
Revolving Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to the Grantor, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter incurred, which may
arise under, out of, or in connection with, the Revolving Credit Agreement, the
Notes or any other document made, delivered or given in connection therewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and
3
disbursements of counsel to the Agent or to the Lenders that are required to be
paid by the Grantor pursuant to the terms of the Revolving Credit Agreement, and
(b) all obligations of the Grantor under this Agreement.
(i) "Term Loan Obligations" shall mean the collective reference to
obligations and liabilities of the Grantor to the Agent, the Collateral Agent
and the Term Loan Lenders (including, without limitation, interest accruing at
the then applicable rate provided in the Term Loan Agreement after the maturity
of the Term Loans and interest accruing at the then applicable rate provided in
the Term Loan Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Grantor, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Term Loan Guarantee (including, without
limitation, all fees and disbursements of counsel to the Agent or to the Term
Loan Lenders that are required to be paid by the Grantor, as guarantor, pursuant
to the terms of the Term Loan Guarantee.
2. SECURITY INTEREST. (a) As security for the payment or
performance, as the case may be, of the Revolving Credit Obligations, the
Grantor hereby creates and grants to the Collateral Agent, its successors and
its assigns, for the benefit of the Lenders, their successors and their assigns,
a security interest in the Collateral (the "REVOLVING CREDIT SECURITY
INTEREST").
(b) As security for the payment or performance, as the case may be,
of the Term Loan Obligations, the Grantor hereby creates and grants to the
Collateral Agent, its successors and its assigns, for the benefit of the Term
Loan Lenders, their successors and their assigns, a security interest in the
Accounts Receivable and Proceeds thereof and Proceeds of the Inventory
consisting of Accounts Receivable (the "TERM LOAN SECURITY INTEREST"; together
with the Revolving Credit Security Interest, the "SECURITY INTEREST").
(c) Without limiting the foregoing, the Collateral Agent is hereby
authorized to file one or more financing statements, continuation statements or
other documents for the purpose of perfecting, confirming, continuing, enforcing
or protecting the Security Interest without the signature of the Grantor, naming
the Grantor as debtor and the Collateral Agent as secured party; PROVIDED,
HOWEVER, that the Collateral Agent will attempt in each instance to obtain the
signature of the Grantor before filing any such document and, in the event that
the Collateral Agent is unable to obtain such signature, it shall promptly
deliver to the Grantor copies of any such documents filed without the signature
of the Grantor.
4
The Grantor agrees at all times to keep accurate and complete
accounting records with respect to the Collateral, including, but not limited
to, a record of all payments and Proceeds received.
3. FURTHER ASSURANCES. The Grantor agrees, at its expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Collateral Agent may
from time to time request for the better assuring and preserving of the Security
Interest and the rights and remedies created hereby, including, without
limitation, the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the security interests
created hereby and the filing of any financing statements or other documents in
connection herewith. If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged and delivered
to the Collateral Agent, duly endorsed in a manner satisfactory to the
Collateral Agent. The Grantor agrees promptly to notify the Collateral Agent of
any change (a) in its corporate name, (b) in the location of its chief executive
office, (c) in its chief place of business or (d) in the office where it keeps
its records relating to the Collateral owned by it. Grantor agrees not to change
its registered office in the State of Louisiana from 8550 United Plaza
Boulevard, Baton Rouge, Louisiana 70809 except following thirty days' prior
written notice to the Collateral Agent. The Grantor agrees promptly to notify
the Collateral Agent if any material portion of the Collateral is damaged or
destroyed.
4. INSPECTION AND VERIFICATION. The Collateral Agent and such
persons as the Collateral Agent may reasonably designate shall have the right,
at any reasonable time or times during the Grantor's usual business hours, to
inspect the Collateral, all records related thereto (and to make extracts and
copies from such records), and the premises upon which any of the Collateral is
located, to discuss the Grantor's affairs with the officers of the Grantor and
its independent accountants (with a representative of the Grantor present if the
Grantor is not in default) and to verify under reasonable procedures the
validity, amount, quality, quantity, value, and condition of, or any other
matter relating to, the Collateral, including, in the case of Accounts or
Collateral in the possession of a third person, upon not less than one business
day's notice to the Grantor contacting account debtors or a third person
possessing such Collateral for the purpose of making such a verification. The
Collateral Agent shall have the absolute right to share any information it gains
from such inspection or verification with any or all of the Lenders subject in
any event to the provisions of Section 10.16 of the Revolving Credit Agreement
and subsection 10.12 of the Term Loan Agreement.
5
5. TAXES; ENCUMBRANCES. At its option, the Collateral Agent, upon
one Business Day's notice to the Grantor, may discharge past due taxes, liens,
security interests or other encumbrances at any time levied or placed on the
Collateral and not permitted under the Revolving Credit Agreement, and may pay
for the maintenance and preservation of the Collateral to the extent the Grantor
fails to do so as required by the Revolving Credit Agreement, and the Grantor
agrees to reimburse the Collateral Agent on demand for any payment made or any
expense incurred by it pursuant to the foregoing authorization; PROVIDED,
HOWEVER, that nothing in this Section 5 shall be interpreted as excusing the
Grantor from the performance of any covenants or other promises with respect to
taxes, liens, security interests or other encumbrances and maintenance as set
forth herein or in the Revolving Credit Agreement.
6. ASSIGNMENT OF SECURITY INTEREST. If at any time the Grantor shall
take and perfect a security interest in any property of an account debtor or any
other person to secure payment and performance of an Account, the Grantor shall
promptly assign such security interest to the Collateral Agent. Such assignment
need not be filed of public record unless necessary to continue the perfected
status of the security interest against creditors of and transferees from the
account debtor or other person granting the security interest.
7. REPRESENTATIONS AND WARRANTIES. The Grantor represents and
warrants to the Collateral Agent that:
(a) TITLE AND AUTHORITY. The Grantor has rights in and good title to
the Collateral and has full corporate power and authority to grant to the
Collateral Agent the Security Interest in the Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval that has been obtained.
(b) FILINGS. Fully executed Uniform Commercial Code financing
statements containing a description of the Collateral have been filed of record
in every governmental, municipal or other office in every jurisdiction in which
any portion of the Collateral is located necessary to publish notice of and
protect the validity of and to establish a valid, legal and perfected security
interest in favor of the Collateral Agent in respect of the Collateral in which
a security interest may be perfected by filing in the United States and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
(c) VALIDITY OF SECURITY INTEREST. The Security Interest constitutes
a valid, legal and perfected security interest in all of the Collateral for
payment and performance of
6
the Obligations and the Collateral is subject to no liens, other than liens
permitted by Section 7.02 of the Revolving Credit Agreement.
(d) INFORMATION REGARDING NAMES AND LOCATIONS. The Grantor has
disclosed in writing to the Collateral Agent any trade names used to identify it
in its business or in the ownership of its properties and each location where it
maintains any Collateral.
(e) ABSENCE OF OTHER LIENS. The Grantor has not filed any Financing
Statement under the Uniform Commercial Code covering any Collateral other than
as contemplated by the Revolving Credit Agreement or hereby, other than
Financing Statements of which copies have been delivered to the Collateral
Agent, and the Grantor has not filed any notices of assignment of any of the
Accounts Receivable located in Louisiana other than in favor of the Collateral
Agent.
(f) SCHEDULE OF ACCOUNTS. Each schedule of Accounts will be an
accurate description of the Accounts in all material respects.
(g) SCHEDULES. The information contained on Schedules I and II
hereof is accurate and complete in all respects.
(h) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of the Grantor contained in this Agreement shall survive the
execution, delivery and performance of this Agreement until the termination of
this Agreement pursuant to Section 33.
8. RECORDS AND SCHEDULES OF ACCOUNTS. The Grantor shall keep or
cause to be kept records of Accounts that are accurate in all material respects.
9. DOCUMENTS OF TITLE. The Grantor agrees, upon written request of
the Collateral Agent, immediately to deliver all documents of title (as such
term is defined in the Uniform Commercial Code) to the Collateral Agent or its
designee upon the creation and issuance of such documents of title to maintain a
valid, legal and perfected security interest in favor of the Collateral Agent in
respect of any and all Inventory. The Collateral Agent agrees immediately to
deliver, or cause to be delivered, such documents of title to the Grantor or
their designees upon the creation of Accounts Receivable relating to the
Inventory covered by such documents of title.
10. SUPPLEMENTAL DOCUMENTATION. In connection with the execution and
delivery of this Agreement, the Grantor shall furnish or cause to be furnished
to the Collateral Agent, on or prior to the Term Loan Closing Date (as defined
in the Term Loan Agreement), a certificate signed by an officer of the Grantor
dated the Term Loan Closing Date, certifying that, as of the date
7
of such certificate, all representations and warranties of the Grantor in
Section 7 are true and correct, and that the Grantor is in compliance with all
conditions, agreements and covenants to be observed or performed hereunder.
11. PROTECTION OF SECURITY. The Grantor shall, at its own cost and
expense, take any and all actions necessary to defend title to the Collateral
against all persons and to defend the Security Interest of the Collateral Agent
in the Collateral and the priority thereof, against any adverse mortgage,
pledge, security interest, lien, charge or other encumbrance of any nature
whatsoever not permitted under the Revolving Credit Agreement.
12. INSURANCE. (a) The Grantor, at its own expense, shall maintain
insurance covering physical loss or damage to the Inventory in accordance with
the provisions of Section 6.02 of the Revolving Credit Agreement. All such
policies of insurance shall be endorsed or otherwise amended to include a
lender's loss payable endorsement, in form and substance satisfactory to the
Collateral Agent, which shall provide that from and after the date, if any, on
which the insurance carrier receives written notice from the Collateral Agent
that an Event of Default has occurred, all proceeds otherwise payable to the
Grantor under such policies shall be payable directly to the Collateral Agent.
Such endorsement or an independent instrument furnished to the Collateral Agent
shall provide that the insurance companies will give the Collateral Agent at
least 30 days' prior written notice before any such policy or policies of
insurance shall be materially altered or canceled and that no act or default of
the Grantor or any other person shall affect the right of the Collateral Agent
to recover under such policy or policies of insurance in case of loss or damage.
(b) Following the occurrence of and during the continuance of an
Event of Default, the Grantor irrevocably makes, constitutes, and appoints the
Collateral Agent (and all officers, employees, or agents designated by the
Collateral Agent) as the Grantor's true and lawful agent (and attorney-in-fact)
for the purpose of making, settling and adjusting claims under policies of
insurance, endorsing the name of the Grantor on any check, draft, instrument, or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
the Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Grantor hereunder or any Event of Default, in its
sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other action with respect thereto as the Collateral Agent
deems advisable. All such sums so disbursed by the Collateral Agent, including
reasonable attorney's fees, court costs, expenses and other charges
8
relating thereto, shall be payable, upon demand, by the Grantor to the
Collateral Agent and shall be additional obligations secured hereby.
13. CONTINUING OBLIGATIONS OF THE GRANTOR. The Grantor shall remain
liable to observe and perform in all material respects all the material
conditions and obligations to be observed and performed by it under each
contract, agreement, interest or obligation relating to the Collateral, all in
accordance with the terms and conditions thereof, and shall indemnify and hold
harmless the Collateral Agent and the Lenders and the Term Loan Lenders and each
of them severally, from any and all such liabilities.
14. USE AND DISPOSITION OF COLLATERAL. Except as permitted under
Sections 6.13 and 7.02 of the Revolving Credit Agreement, the Grantor (a) shall
not make or permit to be made an assignment, pledge or hypothecation of the
Collateral, and shall grant no other security interest in the Collateral, or (b)
shall not make or permit to be made any transfer of the Collateral, and shall
remain at all times in possession thereof other than transfers to the Collateral
Agent pursuant to the provisions hereof; except that so long as no Event of
Default shall have occurred and be continuing, the Grantor may use and dispose
of the Collateral in any lawful manner not inconsistent with the provisions of
this Agreement and of the Revolving Credit Agreement and in the event an Event
of Default has occurred and is continuing the Grantor may, unless it is
otherwise notified by the Collateral Agent, sell Inventory in the ordinary
course of business.
15. LIMITATION ON MODIFICATIONS OF ACCOUNTS. The Grantor will not,
without the Collateral Agent's prior written consent, grant any extension of the
time of payment of any of the Accounts Receivable, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partly, any person liable for the payment thereof, or allow any credit or
discount whatsoever thereon other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business.
16. COLLECTIONS. So long as no Event of Default shall have occurred,
the Grantor shall have the right to collect its Accounts Receivable in the
ordinary course of its business. Upon the occurrence and during the continuance
of any Event of Default, the Collateral Agent shall have the right, as the true
and lawful agent of the Grantor, with power of substitution for the Grantor and
in the Grantor's name, the Collateral Agent's name or otherwise, for the use and
benefit of the Collateral Agent and the Lenders and the Term Loan Lenders (a) to
receive, endorse, assign and/or deliver any and all notes, acceptances, checks,
drafts, money orders or other evidences of payment relating to the Collateral or
any part thereof; (b) to demand, collect, receive payment of, give receipt for
and give discharges
9
and releases of all or any of the Collateral; (c) to sign the name of the
Grantor on any invoice or bill of lading relating to any of the Collateral; (d)
to send verifications of Accounts Receivable to any account debtor; (e) to
commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize on
all or any of the Collateral or to enforce any rights in respect of any
Collateral; (f) to settle, compromise, compound, adjust or defend any actions,
suits or proceedings relating to or pertaining to all or any of the Collateral;
(g) to notify, or to require the Grantor to notify, the account debtors
obligated on any or all of the Accounts Receivable to make payment thereof
directly to the Collateral Agent; and (h) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Collateral
Agent were the absolute owner of the Collateral for all purposes; provided,
however, that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent to make any commitment or to make any inquiry as
to the nature or sufficiency of any payment received by the Collateral Agent, or
to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby, and no action taken by the Collateral
Agent or omitted to be taken with respect to the Collateral or any part thereof
shall give rise to any defense, counterclaim or offset in favor of the Grantor
or to any claim or action against the Collateral Agent except the gross
negligence or willful misconduct of the Collateral Agent. Upon taking of
possession of any Collateral hereunder, the Collateral Agent shall deal with
such Collateral in substantially the same manner as it deals with similar
property for its own account and shall account for property actually received by
it. It is understood and agreed that the appointment of the Collateral Agent as
the agent of the Grantor for the purposes set forth above in this Section 16 is
coupled with an interest and is irrevocable. The provisions of this Section 16
shall in no event relieve the Grantor of any of its obligations hereunder or
under the Revolving Credit Agreement with respect to the Collateral or any part
thereof or impose any obligation on the Collateral Agent or the Lenders or the
Term Loan Lenders to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by the
Collateral Agent or any Lender or Term Loan Lender of any other or further right
that it may have on the date of this Agreement or hereafter, whether hereunder,
under the Revolving Credit Agreement or the Term Loan Guarantee or by law or
otherwise.
17. REMEDIES UPON DEFAULT. (a) Upon the occurrence and during the
continuance of an Event of Default, the Grantor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have
10
the right to take any or all of the following actions at the same or different
times: with or without legal process and with or without previous notice or
demand for performance, to take possession of the Collateral and without
liability for trespass to enter any premises where the Collateral may be located
for the purpose of taking possession of or removing the Collateral and,
generally, to exercise any and all rights afforded to a secured party under the
Uniform Commercial Code or other applicable law. Without limiting the generality
of the foregoing, the Grantor agrees that the Collateral Agent shall have the
right, subject to the mandatory requirements of current law, to sell or
otherwise dispose of all or any part of the Collateral, at public or private
sale or at any broker's board or on any securities exchange, for cash, upon
credit or for future delivery as the Collateral Agent shall deem appropriate.
The Collateral Agent shall be authorized at any such sale (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to persons
who will represent and agree that they are purchasing the Collateral for their
own account for investment and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the Collateral Agent shall have
the right to assign, transfer and deliver to the purchaser or purchasers thereof
the Collateral so sold. Each such purchaser at any such sale shall hold the
property sold absolutely, free from any claim or right on the part of the
Grantor, and the Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal that the Grantor now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted.
The Collateral Agent shall give the Grantor 10 days' written notice
(which the Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Collateral Agent may fix and state in the notice (if any)
of such sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral Agent
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such
11
sale may, without further notice, be made at the time and place to which the
same was so adjourned. In case any sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be retained by
the Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public sale made pursuant to this Section 17, any Lender or Term
Loan Lender may bid for or purchase, free (to the extent permitted by law) from
any right of redemption, stay, valuation or appraisal on the part of the Grantor
(all said rights being also hereby waived and released to the extent permitted
by law), the Collateral or any part thereof offered for sale and may make
payment on account thereof by using any claim then due and payable to such
Lender or Term Loan Lender from the Grantor as a credit against the purchase
price, and such Lender or Term Loan Lender may, upon compliance with the terms
of sale, hold, retain and dispose of such property without further
accountability to the Grantor therefor. For purposes hereof, a written agreement
to purchase the Collateral or any portion thereof shall be treated as a sale
thereof; the Collateral Agent shall be free to carry out such sale pursuant to
such agreement, and the Grantor shall not be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact that
after the Collateral Agent shall have entered into such an agreement all Events
of Default shall have been remedied and the Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
this Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.
(b) For purposes of executory process under applicable Louisiana
law, the Grantor hereby acknowledges the indebtedness owed under the
Obligations, CONFESSES JUDGMENT thereon and consents that judgment be rendered
and signed, whether during the court's term or during vacation, in favor of the
Collateral Agent, for the benefit of the Lenders and Term Loan Lenders, for the
full amount of the Obligations in principal, interest, and attorneys' fees,
together with all charges and expenses whatsoever pursuant to this Agreement,
the Revolving Credit Agreement and the Term Loan Guarantee. Upon the occurrence
and during the continuance of an Event of Default, and in addition to all of its
rights, powers and remedies under this Agreement and applicable law, the
Collateral Agent may, at its option, cause all or any part of the Collateral to
be seized and sold under executory process or under writ of fieri facias issued
in execution of an ordinary judgment obtained upon the Obligations, without
appraisement to the highest bidder, for cash or under such terms as the
Collateral Agent deems acceptable. The Grantor
12
hereby waives all and every appraisement of the Collateral and waives and
renounces the benefit of appraisement and the benefit of all laws relative to
the appraisement of the Collateral seized and sold under executory or other
legal process. The Grantor agrees to waive, and does hereby specifically waive:
(i) the benefit of appraisement provided for in Articles 2332,
2336, 2723 and 2724, Louisiana Code of Civil Procedure, and
all other laws conferring such benefits;
(ii) the demand and three (3) days delay accorded by Articles 2639
and 2721, Louisiana Code of Civil Procedure;
(iii) the notice of seizure required by Articles 2293 and 2721,
Louisiana Code of Civil Procedure;
(iv) the three (3) days delivery provided by Articles 2331 and
2722, Louisiana Code of Civil Procedure;
(v) the benefit of the other provisions of Articles 2331, 2722 and
2723, Louisiana Code of Civil Procedure;
(vi) the benefit of the provisions of any other articles of the
Louisiana Code of Civil Procedure not specifically mentioned
above; and,
(vii) all rights of divisions and discussion with respect to the
Obligations.
In the event the Collateral Agent elects, at its option, to enter suit via
ordinaria on the Obligations, in addition to the foregoing confession of
judgment, the Grantor hereby waives citation, other legal process and legal
delays and hereby consents that judgment for the unpaid principal due on the
Obligations, together with interest, attorneys' fees, costs and other charges
that may be due on the Obligations, be rendered and signed immediately.
Pursuant to the authority contained in La.R.S. 9:5136 through
9:5140.1, the Grantor and the Collateral Agent do hereby expressly designate the
Collateral Agent or its designee to be keeper or receiver ("Keeper") for the
benefit of the Collateral Agent or any assignee of the Collateral Agent, such
designation to take effect immediately upon any seizure of any of the Collateral
under writ of executory process or under writ of sequestration or fieri facias
as an incident to an action brought by the Collateral Agent. The fees of the
Keeper are hereby fixed at 5% of the amount due or sued for or claimed or sought
to be protected, preserved or enforced in the proceeding for the
13
recognition of the Security Interest, and the payment of such fees shall be
secured by the Security Interest.
18. APPLICATION OF PROCEEDS. (a) The Collateral Agent shall apply
the proceeds of any collection or sale of the Accounts Receivable as follows:
FIRST, to the payment in full of the Term Loan Obligations, pro rata
as among the Term Loan Lenders in accordance with the amounts of the Term
Loans made by them and outstanding, to the extent that such proceeds equal
the then applicable Guarantee Collateral Amount.
SECOND, to the payment of all costs and reasonable expenses incurred
by the Collateral Agent in connection with such collection or sale or
otherwise in connection with this Agreement or any of the Revolving Credit
Obligations, including, but not limited to, all court costs and the
reasonable fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder on behalf
of the Grantor and any other costs or expenses incurred in connection with
the exercise of any right or remedy hereunder.
THIRD, to the payment in full of the Revolving Credit Obligations to
the extent such proceeds secure the Revolving Credit Obligations, pro rata
as among the Lenders in accordance with the amounts of the Loans made by
them and outstanding.
FOURTH, to the payment and discharge in full of the Revolving Credit
Obligations (other than those referred to above), pro rata as among the
Lenders in accordance with the amount of their respective Commitments.
FIFTH, to the Grantor, its successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
(b) The Collateral Agent shall apply the proceeds of any collection
or sale of the Inventory as follows:
FIRST, to the payment of all costs and reasonable expenses incurred
by the Collateral Agent in connection with such collection or sale or
otherwise in connection with this Agreement or any of the Revolving Credit
Obligations, including, but not limited to, all court costs and the
reasonable fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder on behalf
of the Grantor and any other costs or expenses incurred in connection with
the exercise of any right or remedy hereunder.
14
SECOND, to the payment in full of the Revolving Credit Obligations,
pro rata as among the Lenders in accordance with the amounts of the Loans
made by them and outstanding.
THIRD, to the payment and discharge in full of the Revolving Credit
Obligations (other than those referred to above), pro rata as among the
Lenders in accordance with the amount of their respective Commitments.
FOURTH, to the Grantor, its successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
(c) The Collateral Agent shall have absolute discretion as to the
time of application of any such proceeds, moneys or balances in accordance with
this Agreement. Upon any sale of the Collateral by the Collateral Agent
(including, without limitation, pursuant to a power of sale granted by statute
or under a judicial proceeding), the receipt of the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
(d) Each Lender and Term Loan Lender may apply any such proceeds to
the Obligations owed to it in any manner it determines in its sole discretion.
(e) As used herein, "Guarantee Collateral Amount" means a dollar
amount equal to 5% of the aggregate book value of the Grantor's Consolidated
total assets as shown on the most recent Consolidated balance sheet prepared
after the Closing Date. As an example, immediately after giving effect to the
Acquisition it is expected that the Guarantee Collateral Amount will be
approximately $9,000,000.
(f) The Lenders agree to subordinate their Lien on the proceeds of
Inventory to the Term Loan Security Interest in the Accounts Receivable and the
Proceeds thereby to the extent, but only to the extent, necessary to permit the
application of proceeds contemplated by clause FIRST of paragraph (a) above.
(g) Notwithstanding any other provision of this Agreement or any
other Loan Document to the contrary, the Term Loan Lenders may waive or alter
the priority of their right to proceeds contemplated by clause FIRST of
paragraph (a) above in their sole discretion and without the consent of the
Grantor.
19. LOCATIONS OF COLLATERAL; PLACE OF BUSINESS. (a) The Grantor
hereby represents and warrants that all the Collateral is located at the
locations listed on Schedule I hereto. The Grantor agrees not to establish, or
permit to be established, any other location for Collateral, unless all
15
filings under the Uniform Commercial Code or otherwise that are required by the
Revolving Credit Agreement to be made with respect to the Collateral have been
made and the Collateral Agent has a valid, legal and perfected security interest
in the Collateral subject to no liens, other than liens permitted by Section
7.02 of the Revolving Credit Agreement.
(b) The Grantor agrees, at such time or times as the Collateral
Agent may request, promptly to prepare and deliver to the Collateral Agent a
duly certified schedule or schedules in form satisfactory to the Collateral
Agent, showing the identity, amount and location of any and all material
Collateral.
(c) The Grantor agrees that its chief executive office and its
registered office in Louisiana are located as indicated on Schedule II hereto
and that its federal employer identification number is as set forth on Schedule
II. The Grantor agrees not to change, or permit to be changed, the location of
its chief executive office or of its registered office in Louisiana or its
federal employer identification number unless all filings under the Uniform
Commercial Code or otherwise that are required by the Revolving Credit Agreement
to be made have been made and the Collateral Agent has a valid, legal and
perfected security interest in the Collateral subject to no liens, other than
liens permitted by Section 7.02 of the Revolving Credit Agreement.
20. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent
hereunder, the Security Interest and all obligations of the Grantor hereunder,
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Revolving Credit Agreement or Term Loan Guarantee and any
other Loan Document, any other agreement with respect to any of the Obligations
or any other agreement or instrument relating to any of the foregoing, (b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Revolving Credit Agreement or Term Loan Guarantee and any
other Loan Document or any other agreement or instrument, (c) any exchange,
release or non-perfection of any other Collateral, or any release or amendment
or waiver of or consent to or departure from any guaranty, for all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Grantor in respect of the
Obligations or in respect of this Agreement.
21. NO WAIVER. No failure on the part of the Collateral Agent to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy by the Collateral Agent preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are
16
not exclusive of any other remedies provided by law. The Collateral Agent and
the Lenders and the Term Loan Lenders shall not be deemed to have waived any
rights hereunder or under any other agreement or instrument unless such waiver
shall be in writing and signed by such parties.
22. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Except as otherwise
provided herein, the Grantor hereby appoints the Collateral Agent the
attorney-in-fact of the Grantor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instrument that the
Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with an interest.
23. COLLATERAL AGENT'S FEES AND EXPENSES. The Grantor agrees to pay
upon demand to the Collateral Agent the amount of any and all reasonable
expenses, including the fees and expenses of its counsel and of any experts or
agents, that the Collateral Agent may incur in connection with (a) the
administration of this Agreement, (b) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral, (c)
the exercise or enforcement of any of the rights of the Collateral Agent
hereunder or (d) the failure by the Grantor to perform or observe any of the
provisions hereof. In addition, the Grantor will upon demand pay to the
Collateral Agent such reasonable fees (in addition to its expenses) for its
service as Collateral Agent as may be agreed from time to time between the
Collateral Agent and the Grantor. Any such amounts payable as provided hereunder
or thereunder shall be additional Obligations secured hereby.
24. Intentionally Omitted.
25. NEW SECURITY AGREEMENT. At the request of the Collateral Agent,
the Grantor shall enter into a separate security agreement pursuant to which the
Grantor shall create and grant a Term Loan Security Interest to the Collateral
Agent, for the benefit of the Term Loan Lenders, to secure the payment or
performance of the Term Loan Obligations.
26. BINDING AGREEMENT; ASSIGNMENTS. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Grantor shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or otherwise pledge, encumber
or grant any option with respect to the Collateral, or any part thereof, or any
cash or property held by the Collateral Agent as Collateral under this
Agreement, except as contemplated by this Agreement or the Revolving Credit
Agreement and the Term Loan Guarantee.
17
27. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW.
28. LIMITATIONS ON INVENTORY. The Grantor and the Collateral Agent
agree that the term, Inventory, as used herein, does not include, and shall
never be deemed or construed to include, any of the properties, rights or
interests (a) that have been mortgaged to First National Bank of Commerce, as
Trustee (the "Trustee"), pursuant to the First Mortgage Indenture, including (i)
all bearings, rolls, guides and stores that relate to machinery and equipment
mortgaged to the Trustee pursuant to the First Mortgage Indenture, (ii) all
licenses, franchises, permits, patents, patent rights, formulae, processes,
compounds, drawings, designs, blueprints, surveys, reports, manuals and
operating standards relating to or used in the operation of the Grantor's
business and all trade secret rights, rights in works of authorship and contract
rights relating to computer software programs in whatever form created or
maintained, and (iii) all proceeds of the properties, rights and interests
referred to in clauses (i) and (ii) above, or (b) that have been granted to the
Trustee pursuant to the First Mortgage Indenture.
29. NOTICES. All communications and notices hereunder shall be in
writing and given as provided in Section 10.01 of the Revolving Credit Agreement
and Section 11 of the Term Loan Guarantee.
30. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, no party hereto shall be required to comply with such provision for so
long as such provision is held to be invalid, illegal or unenforceable and the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
31. SECTION HEADINGS. Section headings used herein are for
convenience only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
32. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when a counterpart which bears the signature of the Grantor shall have
been delivered to the Collateral Agent.
33. TERMINATION. This Agreement and the Security Interest shall
terminate when all the Obligations have been indefeasibly paid in full, when the
Lenders have no further
18
commitment to lend under the Revolving Credit Agreement and the Term Loan
Guarantee is no longer in effect and all amounts payable under the Term Loan
Guarantee have been indefeasibly paid in full, at which time the Collateral
Agent shall execute and deliver to the Grantor all Uniform Commercial Code
termination statements and similar documents prepared by the Grantor which the
Grantor shall reasonably request to evidence such termination.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BAYOU STEEL CORPORATION
By: ____________________________
Name:
Title:
CHEMICAL BANK, as Collateral
Agent
By: ____________________________
Name:
Title:
<PAGE>
Schedule I
LOCATIONS OF COLLATERAL
River Road Receivables and
La Place, LA 70069 Inventory
108 & The Calumet River Inventory
Chicago, IL 60617
Leetsdale Industrial Park Inventory
Leetsdale, PA 15056
790 Ft.Gibson Road Inventory
Catoosa, OK 74015
Schedule II
CHIEF EXECUTIVE OFFICES
P.O. Box 5000
La Place, LA 70069-1156
River Road
La Place, LA 70069
REGISTERED OFFICE
8550 United Plaza Boulevard
Baton Rouge, Louisiana 70809
EXHIBIT 10.4
EXECUTION COPY
TERM LOAN AGREEMENT
among
BAYOU STEEL CORPORATION (TENNESSEE)
The Several Term Loan Lenders
from Time to Time Parties Hereto,
and
CHEMICAL BANK,
as Agent
Dated as of June 1, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS.................................................... 1
1.1 Defined Terms............................................... 1
1.2 Other Definitional Provisions............................... 6
SECTION 2. AMOUNT AND TERMS OF TERM LOANS................................. 6
2.1 Term Loan Commitments....................................... 6
2.2 Term Notes.................................................. 6
2.3 Procedure for Term Loan Borrowing........................... 7
2.4 Conversion and Continuation Options......................... 8
2.5 Prepayment.................................................. 9
2.6 Interest on Term Loans...................................... 9
2.7 Default Interest............................................ 10
2.8 Alternate Rate of Interest.................................. 10
2.9 Reserve Requirements; Change in Circumstances............... 10
2.10 Change in Legality.......................................... 12
2.11 Indemnity................................................... 13
2.12 Pro Rata Treatment.......................................... 13
2.13 Sharing of Setoffs.......................................... 14
2.14 Payments.................................................... 14
2.15 Taxes....................................................... 15
SECTION 3. [INTENTIONALLY OMITTED]........................................ 17
SECTION 4. REPRESENTATIONS AND WARRANTIES................................. 17
SECTION 5. CONDITIONS PRECEDENT........................................... 17
5.1 Conditions to Term Loans.................................... 17
SECTION 6. AFFIRMATIVE COVENANTS.......................................... 18
6.1 Term Loan Borrowing Base.................................... 18
6.2 Financial Statements, Reports, Etc.......................... 18
SECTION 7. NEGATIVE COVENANTS............................................. 19
SECTION 8. EVENTS OF DEFAULT.............................................. 19
SECTION 9. THE AGENT...................................................... 19
SECTION 10. MISCELLANEOUS................................................. 20
10.1 Incorporation............................................... 20
10.2 Survival of Agreement....................................... 20
10.3 Binding Effect.............................................. 20
10.4 Successors and Assigns...................................... 20
10.5 Expenses; Indemnity......................................... 23
10.6 Right of Setoff............................................. 24
10.7 Waiver of Jury Trial........................................ 25
10.8 Counterparts................................................ 25
10.9 Applicable Law.............................................. 25
10.10 Headings.................................................... 25
10.11 Jurisdiction; Consent to Service of Process................. 25
10.12 Confidentiality............................................. 26
- i -
References
Exhibit A Form of Term Note
Exhibit B Form of Term Loan Guarantee
Schedule 2.2 Term Loan Lenders and Term Loan Commitments
Schedule 6.1(a) Term Loan Borrowing Base Certificate
- ii -
<PAGE>
TERM LOAN AGREEMENT, dated as of June 1, 1995, among BAYOU STEEL
CORPORATION (TENNESSEE), a Delaware corporation (the "BORROWER"), the several
banks and other financial institutions from time to time parties to this
Agreement (the "TERM LOAN LENDERS"), and CHEMICAL BANK, a New York banking
corporation, as agent for the Term Loan Lenders hereunder (in such capacity, the
"AGENT").
NOW THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, capitalized terms
shall have the meanings given in the Revolving Credit Agreement unless the
context otherwise requires and the following terms shall have the following
meanings:
"ABR TERM LOAN BORROWING": a Term Loan Borrowing comprised of ABR
Term Loans.
"ABR TERM LOANS": that portion of the Term Loans the rate of
interest applicable to which is based upon the Alternate Base Rate.
"ADJUSTED LIBO RATE": with respect to any Eurodollar Term Loan for
any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO
Rate in effect for such Interest Period and (b) Statutory Reserves. For
purposes hereof, the term "LIBO RATE" shall mean the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits
approximately equal in principal amount to Chemical's portion of such
Eurodollar Term Loan and for a maturity comparable to such Interest Period
are offered to the principal London office of Chemical in immediately
available funds in the London interbank market at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"AGREEMENT": this Term Loan Agreement, as amended, supplemented or
otherwise modified from time to time.
"APPLICABLE BAYOU ACCOUNTS RECEIVABLE": at any time the product of
(a) 80% multiplied by (b) that portion of the Collateral consisting of
Accounts of Bayou listed on the most recent Borrowing Base Certificate the
book value of which equals 5% of the aggregate book value of Bayou's
Consolidated total assets after the Closing Date as shown on any
Consolidated balance sheet of Bayou prepared after the Closing Date.
1
"APPLICABLE MARGIN": the Applicable Margin, as defined in the
Revolving Credit Agreement. All references to "Eurodollar Loans" and "ABR
Loans", respectively, in such definition shall be interpreted as
references to "Eurodollar Term Loans" and "ABR Term Loans", respectively,
for purposes of this Agreement.
"BAYOU": Bayou Steel Corporation, a Delaware corporation and the
parent of the Borrower.
"BAYOU (TENNESSEE) ELIGIBLE INVENTORY": Bayou (Tennessee) Inventory
that consists of raw materials, billets and finished goods, valued at the
lower of cost (prior to the LIFO reserve) or market on a basis consistent
with the Borrower's current and historical accounting practice, LESS (i)
any goods returned or rejected by the Borrower's customers for reasons
relating to the quality of such goods and (ii) any goods in transit to
third parties. The valuation of Bayou (Tennessee) Eligible Inventory shall
also be reduced by the amount of transportation costs. Unless otherwise
approved in writing by the Agent, no Bayou (Tennessee) Inventory shall be
deemed Bayou (Tennessee) Eligible Inventory if:
(a) the Bayou (Tennessee) Inventory is not owned solely by the
Borrower or is leased or on consignment or the Borrower does not
have good, valid and marketable title thereto; or
(b) the Bayou (Tennessee) Inventory is not located at or is
not in transit to property that is owned by the Borrower;
(c) the Bayou (Tennessee) Inventory is not located in the
United States of America; or
(d) the Bayou (Tennessee) Inventory is more than 24 months old
or is otherwise aged according to the Borrower's accounting policies
(other than Bayou (Tennessee) Inventory that is raw materials or
semifinished Bayou (Tennessee) Inventory that, in accordance with
such accounting policies, is not aged) or the Inventory does not
otherwise conform to the representations and warranties contained in
the Loan Documents; PROVIDED, HOWEVER, that (i) the Borrower shall
not be required to test the Bayou (Tennessee) Inventory for aging in
accordance with such accounting policies more often than once in any
period of 12 consecutive months and (ii) if the results of such test
reveal that less than 2.5% of the Borrower's Bayou (Tennessee)
Inventory is so aged, then all of such Bayou (Tennessee) Inventory
shall, subject to the other provisions of this definition, be deemed
Bayou (Tennessee) Eligible Inventory; or
2
(e) the Bayou (Tennessee) Inventory is classified under the
heading "miscellaneous" in accordance with the accounting policies
of the Borrower.
"BAYOU (TENNESSEE) INVENTORY": all merchandise intended for sale by
the Borrower, or consumed in the Borrower's business, together with all
raw materials, including, without limitation, scrap, billets, shapes,
additives, alloys, fluxes, electrodes and refractories, whether now owned
or hereafter acquired or arising, and all such property the sale or other
disposition of which has given rise to Accounts and which has been
returned to, repossessed or stopped in transit by or on behalf of the
Borrower; PROVIDED, HOWEVER, that Bayou (Tennessee) Inventory shall not
include (i) all bearings, rolls, guides and stores that relate to
machinery and equipment mortgaged to First National Bank of Commerce, as
Trustee (the "Trustee"), pursuant to the First Mortgage Indenture, (ii)
all licenses, franchises, permits, patents, patent rights, formulae,
processes, compounds, drawings, designs, blueprints, surveys, reports,
manuals and operating standards relating to or used in the operation of
the Borrower's business and all trade secret rights, rights in works of
authorship and contract rights relating to computer software programs in
whatever form created or maintained, (iii) all proceeds of the properties,
rights and interests referred to in clauses (i) and (ii) above and (iv)
any other properties, rights or interests granted to the Trustee pursuant
to the First Mortgage Indenture, and thereafter assumed by the Borrower.
"CHEMICAL": Chemical Bank.
"EURODOLLAR TERM LOAN BORROWING": a Term Loan Borrowing Comprised of
Eurodollar Term Loans.
"EURODOLLAR TERM LOANS": that portion of the Term Loans the rate of
interest applicable to which is based upon the Adjusted LIBO Rate.
"EXCESS CASH FLOW": of Bayou, for any period, the excess of (a) the
sum, without duplication, of (i) Consolidated EBITDA for such period, (ii)
the amount of returned surplus assets of any pension plan during such
fiscal year to the extent not included in Consolidated Net Income to
determine Consolidated EBITDA for such period, (iii) extraordinary cash
gains to the extent subtracted or otherwise not included in Consolidated
Net Income to determine Consolidated EBITDA for such period and (iv)
extraordinary non-cash losses during such period subtracted in the
determination of Consolidated Net Income for such period, OVER (b) the
sum, without duplication, of (i) the aggregate amount of permitted cash
Capital Expenditures made by Bayou and its Recourse Subsidiaries during
such period,
3
(ii) the aggregate amount of payments of principal in respect of any
Indebtedness (excluding Indebtedness under the Revolving Credit Agreement)
not prohibited by the Revolving Credit Agreement during such period, (iii)
Interest Expense of Bayou determined on a Consolidated basis for such
period, (iv) taxes actually paid in such period or to be paid subsequently
on account of such period to the extent added to Consolidated Net Income
to determine Consolidated EBITDA for such period, (v) extraordinary cash
losses to the extent added to Consolidated Net Income to determine
Consolidated EBITDA for such period, (vi) non-cash currency exchange gains
during such period included in Consolidated Net Income of Bayou for such
period, (vii) all expenses, costs and fees incurred for such period in
connection with the Acquisition (such expenses, costs and fees not to
exceed $1,200,000 for each of fiscal years 1995, 1996 and 1997) and (viii)
dividends actually paid by Bayou in accordance with Section 7.06 of the
Revolving Credit Agreement.
"INTEREST PAYMENT DATE": with respect to any Term Loan, the last day
of each Interest Period and, in the case of Eurodollar Term Loans with an
Interest Period of more than three months' duration, each day that would
have been an Interest Payment Date had successive Interest Periods of
three months duration been applicable to such Term Loans, and, in
addition, the date of any refinancing or conversion of such Term Loans
with or to Term Loans of a different Type.
"INTEREST PERIOD": (a) as to any Eurodollar Term Loans, the period
commencing on the Term Loan Borrowing Date or on the last day of the
immediately preceding Interest Period applicable to such Term Loans, as
the case may be, and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the
calendar month that is 1, 2, 3 or 6 months thereafter, as the Borrower may
elect, and (b) as to any ABR Term Loans, the period commencing on the Term
Loan Borrowing Date or on the last day of the immediately preceding
Interest Period applicable to such Term Loans, as the case may be, and
ending on the earliest of (i) the next succeeding March 31, June 30,
September 30 or December 31, (ii) the Term Loan Final Maturity Date and
(iii) the date such Term Loans are converted to Term Loans of a different
Type in accordance with subsection 2.4 or repaid or prepaid in accordance
with subsection 2.5; PROVIDED, HOWEVER, that if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of
Eurodollar Term Loans only, such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end
on the next preceding Business Day. Interest shall accrue from and
including the
4
first day of an Interest Period to but excluding the last day of such
Interest Period.
"REGISTER": as defined in subsection 10.4(d).
"REVOLVING CREDIT AGREEMENT": the Credit Agreement, dated as of June
28, 1989, as amended and restated through June 1, 1995, among Bayou, the
lenders from time to time party thereto, and the Agent, as the same may be
amended, modified or supplemented from time to time.
"TERM LOAN BORROWING": a group of Term Loans of a single Type made
by the Term Loan Lenders on the Term Loan Closing Date and as to which a
single Interest Period is in effect.
"TERM LOAN BORROWING BASE": the sum of (i) Unencumbered Cash PLUS
(ii) Bayou (Tennessee) Eligible Inventory PLUS (iii) Applicable Bayou
Accounts Receivable. For purposes of the calculation of the Borrowing
Base, Inventory of the Borrower will be valued on a LIFO basis, computed
in accordance with GAAP, as consistently applied.
"TERM LOAN BORROWING BASE CERTIFICATE": a certificate in the form of
Schedule 6.1(a), duly completed and executed by a Financial Officer of the
Borrower.
"TERM LOAN BORROWING DATE": the Term Loan Closing Date.
"TERM LOAN CLOSING DATE": the date on which the conditions precedent
set forth in subsection 5.1 shall be satisfied and the Term Loan Lenders
shall make the Term Loans.
"TERM LOAN COMMITMENT": as to any Term Loan Lender, the obligation
of such Term Loan Lender to make Term Loans to the Borrower hereunder in a
principal amount not to exceed the amount set forth opposite such Term
Loan Lender's name on Schedule 2.2.
"TERM LOAN COMMITMENT PERCENTAGE": as to any Term Loan Lender at any
time, the percentage which such Term Loan Lender's Term Loan Commitment
then constitutes of the aggregate Term Loan Commitments (or, at any time
after the Term Loan Commitments shall have expired or terminated, the
percentage which the aggregate principal amount of such Term Loan Lender's
Term Loans then outstanding constitutes of the aggregate principal amount
of the Term Loans then outstanding).
"TERM LOAN FINAL MATURITY DATE": the fifth anniversary of the Term
Loan Closing Date (or if such date is not a Business Day, the immediately
preceding Business Day).
5
"TERM LOANS": as defined in subsection 2.1.
"TERM NOTE": as defined in subsection 2.2.
"TYPE": as to any Term Loan, its nature as an ABR Term Loan or a
Eurodollar Term Loan.
"UNENCUMBERED CASH": cash owned or held by or on behalf of the
Borrower which is not subject to the Lien of another Person, it being
agreed that any such cash subject to any depositary bank set-off rights or
any depositary agreements with such bank shall be deemed "unencumbered"
for purposes of this Agreement.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Term Notes.
(b) As used herein and in the Term Notes and the other Loan
Documents, and any certificate or other document made or delivered pursuant
hereto, accounting terms relating to the Borrower and its Subsidiaries not
defined in subsection 1.1 and accounting terms partly defined in subsection 1.1,
to the extent not defined, shall have the respective meanings given to them
under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF TERM LOANS
2.1 TERM LOAN COMMITMENTS. Subject to the terms and conditions
hereof, each Term Loan Lender severally agrees to make a term loan (a "TERM
LOAN") to the Borrower on the Term Loan Closing Date in an aggregate principal
amount not to exceed the amount of the Term Loan Commitment of such Term Loan
Lender. The Term Loans may from time to time be (a) Eurodollar Term Loans, (b)
ABR Term Loans or (c) a combination thereof, as determined by the Borrower and
notified to the Agent in accordance with subsections 2.3 and 2.4.
2.2 TERM NOTES. (a) The Term Loan made by each Term Loan Lender
shall be evidenced by a promissory note of the Borrower, substantially in the
form of Exhibit A (each, as amended, supplemented, replaced or otherwise
modified from time to time, a "TERM NOTE"), with appropriate insertions therein
as
6
to payee, date and principal amount, payable to the order of such Term Loan
Lender and in a principal amount equal to the amount set forth opposite such
Term Loan Lender's name on Schedule 2.2 under the heading "Term Loan
Commitment". Each Term Loan Lender is hereby authorized to record the date and
amount of each payment or prepayment of principal of its Term Loan, each
continuation thereof, each conversion of all or a portion thereof to another
Type and, in the case of Eurodollar Term Loans, the length of each Interest
Period and the Adjusted LIBO Rate plus the Applicable Margin with respect
thereto, on its internal books and records and/or on the schedule annexed to and
constituting a part of its Term Note, and any such recordation on such schedule
shall constitute PRIMA FACIE evidence of the accuracy of the information so
recorded, PROVIDED that the failure by any Term Loan Lender to make any such
recordation or any error in such recordation shall not affect the obligations of
the Borrower under this Agreement and the Term Notes. The Term Note of each Term
Loan Lender shall (i) be dated the Term Loan Closing Date, (ii) be payable as
provided in subsection 2.2(b) and (iii) provide for the payment of interest in
accordance with subsections 2.6 and 2.7.
(b) The Term Loans shall be payable on each date set forth below in
the amount set forth opposite such date (or, if less, the aggregate amount of
the Term Loans then outstanding) along with accrued interest on such amounts
repaid:
PRINCIPAL
DATES AMOUNT
----- ---------
June 30, 1997 $750,000
September 30, 1997 750,000
December 31, 1997 750,000
March 31, 1998 750,000
June 30, 1998 $750,000
September 30, 1998 750,000
December 31, 1998 750,000
March 31, 1999 750,000
June 30, 1999 $1,000,000
September 30, 1999 1,000,000
December 31, 1999 1,000,000
Term Loan Final
Maturity Date 1,000,000
2.3 PROCEDURE FOR TERM LOAN BORROWING. The Borrower shall give the
Agent irrevocable notice (which notice must be received by the Agent prior to
12:00 Noon, New York City time, at least (a) three Business Days prior to the
requested Term Loan Borrowing Date, if all or any part of the requested Term
Loans are to be initially Eurodollar Term Loans or (b) one Business Day prior to
the requested Term Loan Borrowing Date, otherwise) requesting that the Term Loan
Lenders make the requested Term
7
Loans on the Term Loan Closing Date and specifying (i) the amount to be
borrowed, (ii) whether the requested Term Loans are to be initially Eurodollar
Term Loans, ABR Term Loans or a combination thereof, and (iii) if the requested
Term Loans are to be entirely or partly Eurodollar Term Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Periods therefor. Upon receipt of such notice the Agent shall promptly
notify each Term Loan Lender thereof. Each Term Loan Lender will make the amount
of its pro rata share of the requested Term Loans available to the Agent for the
account of the Borrower at the office of the Agent specified in subsection 2.14
prior to 12:00 Noon, New York City time, on the requested Borrowing Date in
Dollars and in funds immediately available to the Agent. The Agent shall on such
date credit the account of the Borrower on the books of such office of the Agent
with the aggregate of the amounts made available to the Agent by the Term Loan
Lenders and in like funds as received by the Agent.
2.4 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower may elect
from time to time to convert outstanding Term Loans from Eurodollar Term Loans
to ABR Term Loans by giving the Agent at least two Business Days' prior
irrevocable notice of such election, PROVIDED that any such conversion of
Eurodollar Term Loans may only be made on the last day of an Interest Period
with respect thereto. The Borrower may elect from time to time to convert
outstanding Term Loans from ABR Term Loans to Eurodollar Term Loans by giving
the Agent at least three Business Days' prior irrevocable notice of such
election. Any such notice of conversion to Eurodollar Term Loans shall specify
the length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Agent shall promptly notify each affected Lender
thereof. All or any part of outstanding Eurodollar Term Loans and ABR Term Loans
may be converted as provided herein, PROVIDED that (i) no Term Loan may be
converted into a Eurodollar Loan when any Default or Event of Default has
occurred and is continuing and the Agent or the Required Lenders have given
notice to the Borrower that no such conversions may be made and (ii) no Term
Loan may be converted into a Eurodollar Term Loan after the date that is one
month prior to the date of the final installment of principal of the Term Loans.
(b) Any Eurodollar Term Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Agent of the length of the next Interest Period to
be applicable to such Term Loans, determined in accordance with the applicable
provisions of the term "Interest Period" set forth in subsection 1.1, PROVIDED
that no Eurodollar Term Loan may be continued as such (i) when any Default or
Event of Default has occurred and is continuing and the Agent or the Required
Lenders have given notice to the Borrower that no such continuations may be made
or (ii) after the date that is one month prior to the date of the final
installment of principal of the Term Loans, and PROVIDED, FURTHER, that if the
Borrower shall fail to give any required notice as described above in this
paragraph or if such continuation is not permitted pursuant to the preceding
proviso such Term Loans shall be
8
automatically converted to ABR Term Loans on the last day of such then expiring
Interest Period.
2.5 PREPAYMENT. (a) The Borrower shall have the right at any time
and from time to time to prepay the Term Loans, in whole or in part, upon
written (including by telecopy) notice (or telephone notice promptly confirmed
by written notice) to the Agent, which notice, in the case of a prepayment of a
Eurodollar Term Loan, shall be received by the Agent one Business Day prior to
such prepayment; PROVIDED, HOWEVER, that each partial prepayment shall be in an
amount which is, if (a) an ABR Term Loan, an integral multiple of $100,000 and
not less than $200,000 and (b) if a Eurodollar Term Loan, an integral multiple
of $250,000 and not less than $1,000,000. Partial prepayments of the Term Loans
pursuant to this paragraph 2.5(a) shall be applied to the remaining scheduled
installments of the Term Loans in the direct order of maturity.
(b) No later than 90 days after the end of the 1996 fiscal year of
the Borrower, the Borrower shall prepay the Term Loans in an amount equal to 50%
of the sum of (i) the Excess Cash Flow of Bayou and its Recourse Subsidiaries,
computed on a Consolidated basis, for that portion of fiscal year 1995 from and
including the Closing Date to the last day of fiscal year 1995 PLUS (ii) the
Excess Cash Flow of Bayou and its Recourse Subsidiaries, computed on a
Consolidated basis, for fiscal year 1996 of the Borrower. Commencing with the
1997 fiscal year of the Borrower, no later than 90 days after the end of each
fiscal year of the Borrower, the Borrower shall prepay the Term Loans in an
amount equal to 50% of the Excess Cash Flow of Bayou and its Recourse
Subsidiaries, computed on a Consolidated basis, for such fiscal year. Any
prepayment pursuant to this subsection 2.5(b) shall be applied to the remaining
scheduled installments of Term Loans in the inverse order of maturity.
(c) Each notice of prepayment shall specify the prepayment date, the
principal amount of the Term Loans to be prepaid, and the Type of Term Loans to
be prepaid, shall be irrevocable and shall commit the Borrower to prepay such
Term Loans in the amount stated therein on the date stated therein. All
prepayments under this subsection 2.5 shall be subject to subsection 2.11 but
otherwise without premium or penalty. All prepayments under this subsection 2.5
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.
(d) Amounts prepaid pursuant to this subsection 2.5 may not be
reborrowed.
2.6 INTEREST ON TERM LOANS. (a) Subject to the provisions of
subsection 2.7, the ABR Term Loans shall bear interest (computed on the basis of
the actual number of days elapsed over a year of (i) 365 or 366 days, as the
case may be, during any period in which the Alternate Base Rate is based on the
Prime Rate and (ii) 360 days during any period in which the Alternate Base Rate
is based on the Base CD Rate or the Federal
9
Funds Effective Rate) at a rate per annum equal to the Alternate Base Rate plus
the Applicable Margin.
(b) Subject to the provisions of subsection 2.7, the Eurodollar Term
Loans shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal to the Adjusted LIBO
Rate for the Interest Period in effect for such Term Loan Borrowing plus the
Applicable Margin.
(c) Interest on each Term Loan shall be payable on the Interest
Payment Dates applicable to such Term Loan except as otherwise provided in this
Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each
Interest Period or day within an Interest Period, as the case may be, shall be
determined by the Agent, and such determination shall be conclusive absent
manifest error.
2.7 DEFAULT INTEREST. If the Borrower shall default in the payment
of the principal of or interest on any Term Loan or any other amount becoming
due hereunder, by acceleration or otherwise, the Borrower shall on demand from
time to time pay interest, to the extent permitted by law, on such defaulted
amount up to (but not including) the date of actual payment (after as well as
before judgment) at a rate per annum (computed on the basis of the actual number
of days elapsed over a year of (i) 365 or 366 days, as the case may be, during
any period in which the Alternate Base Rate is based on the Prime Rate and (ii)
360 days during any period in which the Alternate Base Rate is based on the Base
CD rate or the Federal Funds Effective Rate) equal to the rate at the time
applicable to ABR Term Loan Borrowings plus 2%.
2.8 ALTERNATE RATE OF INTEREST. In the event, and on each occasion,
that on the day two Business Days prior to the commencement of any Interest
Period for Eurodollar Term Loans the Agent shall have determined that dollar
deposits in the principal amounts of such Eurodollar Term Loans are not
generally available in the London interbank market, or that the rates at which
such dollar deposits are being offered will not adequately and fairly reflect
the cost to any Term Loan Lender of making or maintaining its Eurodollar Term
Loan during such Interest Period, or that reasonable means do not exist for
ascertaining the Adjusted LIBO Rate, the Agent shall, as soon as practicable
thereafter, give written or telecopy notice of such determination to the
Borrower and the Term Loan Lenders. In the event of any such determination, any
request by the Borrower for conversion to, or continuation of, Eurodollar Term
Loans pursuant to subsection 2.4 shall, until the Agent shall have advised the
Borrower and the Term Loan Lenders that the circumstances giving rise to such
notice no longer exist, be deemed to be a request for ABR Term Loans. Each
determination by the Agent hereunder shall be conclusive absent manifest error.
2.9 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation
10
or in the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or not having
the force of law) shall change the basis of taxation of payments to any Term
Loan Lender of the principal of or interest on any Eurodollar Term Loan made by
such Term Loan Lender or any fees or other amounts payable hereunder (other than
changes in respect of taxes imposed on the overall net income of such Term Loan
Lender by the jurisdiction in which such Term Loan Lender has its principal
office or by any political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by such Term Loan Lender (except any such reserve requirement which is
reflected in the Adjusted LIBO Rate) or shall impose on such Term Loan Lender or
the London interbank market any other condition affecting this Agreement or
Eurodollar Term Loans made by such Term Loan Lender, and the result of any of
the foregoing shall be to increase the cost to such Term Loan Lender of making
or maintaining any Eurodollar Term Loan or to reduce the amount of any sum
received or receivable by such Term Loan Lender hereunder or under the Term
Notes (whether of principal, interest or otherwise) by an amount deemed by such
Term Loan Lender to be material, then the Borrower will pay to such Term Loan
Lender upon demand such additional amount or amounts as will compensate such
Term Loan Lender for such additional costs incurred or reduction suffered. The
Agent and each Term Loan Lender agree to give notice to the Borrower of any such
change in law, regulation, interpretation or administration with reasonable
promptness after becoming actually aware thereof and of the applicability
thereof to the Transactions.
(b) If any Term Loan Lender shall have determined that the
applicability of any law, rule, regulation or guideline adopted pursuant to or
arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption after the date
hereof of any other law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
lender or comparable agency charged with the interpretation or administration
thereof, or compliance by any Term Loan Lender (or any lending office of such
Term Loan Lender) or any Term Loan Lender's holding company with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central lender or comparable agency, has or would have the
effect of reducing the rate of return on such Term Loan Lender's capital or on
the capital of such Term Loan Lender's holding company, if any, as a consequence
of this Agreement or the Term Loans made by such Term Loan Lender pursuant
hereto to a level below that which such Term Loan Lender or such Term Loan
Lender's holding company could have achieved but for such adoption, change or
compliance (taking into consideration such Term Loan Lender's policies and the
policies of such Term Loan Lender's holding company with respect to capital
adequacy) by an amount deemed by such Term
11
Loan Lender to be material, then from time to time the Borrower shall pay to
such Term Loan Lender such additional amount or amounts as will compensate such
Term Loan Lender or such Term Loan Lender's holding company for any such
reduction suffered. The Agent and each Term Loan Lender agree to give notice to
the Borrower of any such change in law, regulation, interpretation or
administration with reasonable promptness after becoming actually aware thereof
and of the applicability to the transactions.
(c) A certificate of each Term Loan Lender setting forth such amount
or amounts, supported by calculations in reasonable detail, as shall be
necessary to compensate such Term Loan Lender or its holding company as
specified in paragraph (a) or (b) above, as the case may be, shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay each Term Loan Lender the amount shown as due on any such certificate
delivered by it within 10 days after its receipt of the same.
(d) Failure on the part of any Term Loan Lender to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any period shall
not constitute a waiver of such Term Loan Lender's right to demand such
compensation with respect to such period or any other period. The protection of
this subsection shall be available to each Term Loan Lender regardless of any
possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed.
2.10 CHANGE IN LEGALITY. (a) Notwithstanding any other provision
herein, if any change in any law or regulation or in the interpretation thereof
by any Governmental Authority charged with the administration or interpretation
thereof shall make it unlawful for any Term Loan Lender to make or maintain any
Eurodollar Term Loan or to give effect to its obligations as contemplated hereby
with respect to any Eurodollar Loan, then, by written notice to the Borrower and
to the Agent, such Term Loan Lender may:
(i) declare that Term Loans will not thereafter be converted to, or
continued as, Eurodollar Term Loans by such Term Loan Lender hereunder,
whereupon any request by the Borrower for conversion or continuation of a
Term Loan shall, as to such Term Loan Lender only, be deemed a request for
conversion to or continuation of an ABR Term Loan unless such declaration
shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Term Loans made by it
be converted to ABR Term Loans, in which event all such Eurodollar Term
Loans shall be automatically converted to ABR Term Loans as of the
effective date of such notice as provided in paragraph (b) below.
In the event any Term Loan Lender shall exercise its rights under (i) or (ii)
above, all payments and prepayments of principal which would otherwise have been
applied to repay the Eurodollar
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Term Loans that would have been made by such Term Loan Lender or the converted
Eurodollar Term Loans of such Term Loan Lender shall instead be applied to repay
the ABR Term Loans made by such Term Loan Lender in lieu of, or resulting from
the conversion of, such Eurodollar Term Loans.
(b) For purposes of this subsection 2.10, a notice to the Borrower
by any Term Loan Lender shall be effective as to each Eurodollar Term Loan, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
2.11 INDEMNITY. The Borrower shall indemnify each Term Loan Lender
against any loss or reasonable expense which such Term Loan Lender may sustain
or incur as a consequence of (a) any failure by the Borrower to fulfill on the
date of any borrowing hereunder the applicable conditions set forth in Section
5, (b) any failure by the Borrower to borrow or to refinance, convert or
continue any Term Loan hereunder after irrevocable notice of such borrowing,
refinancing, conversion or continuation has been given pursuant to subsection
2.3 or 2.4, (c) any payment, prepayment or conversion of a Eurodollar Term Loan
required by any other provision of this Agreement or otherwise made on a date
other than the last day of the Interest Period applicable thereto, (d) any
default in payment or prepayment of the principal amount of any Term Loan or any
part thereof or interest accrued thereon, as and when due and payable (at the
due date thereof, by irrevocable notice of prepayment or otherwise) or (e) the
occurrence of any Event of Default, including, in each such case, any loss or
reasonable expense sustained or incurred or to be sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain such Term Loan or any part thereof as a Eurodollar Term Loan. Such loss
or reasonable expense shall include an amount equal to the excess, if any, as
reasonably determined by such Term Loan Lender, of (i) its cost of obtaining the
funds for the Term Loan being paid, prepaid, converted or not borrowed,
converted or continued (based on the Adjusted LIBO Rate applicable thereto) for
the period from the date of such payment, prepayment, conversion or failure to
borrow, convert or continue to the last day of the Interest Period for such Term
Loan (or, in the case of a failure to borrow, convert or continue, the Interest
Period for such Term Loan which would have commenced on the date of such
failure) over (ii) the amount of interest (as reasonably determined by such Term
Loan Lender) that would be realized by such Term Loan Lender in reemploying the
funds so paid, prepaid, converted or not borrowed, converted or continued for
such period or Interest Period, as the case may be. A certificate of any Term
Loan Lender setting forth any amount or amounts, supported by calculations in
reasonable detail, which such Term Loan Lender is entitled to receive pursuant
to this subsection shall be delivered to the Borrower and shall be conclusive
absent manifest error.
2.12 PRO RATA TREATMENT. Except as required under subsection 2.10,
each Term Loan Borrowing, each payment or
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prepayment of principal of any Term Loans, each payment of interest on the Term
Loans, and any conversion of any Term Loans to or continuation of any Term Loans
as Term Loans of any Type shall be allocated pro rata among the Term Loan
Lenders in accordance with their respective Term Loan Commitment Percentages.
Each Term Loan Lender agrees that in computing such Term Loan Lender's portion
of any Term Loan Borrowing to be made hereunder, the Agent may, in its
discretion, round each Term Loan Lender's percentage of such Term Loan
Borrowing, computed in accordance with subsection 2.1, to the next higher or
lower whole dollar amount.
2.13 SHARING OF SETOFFS. Each Term Loan Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower, or pursuant to a secured claim under Section 506 of Title
11 of the United States Code or other security or interest arising from, or in
lieu of, such secured claim, received by such Term Loan Lender under any
applicable bankruptcy, insolvency or other similar law or otherwise, or by any
other means, obtain payment (voluntary or involuntary) in respect of any Term
Loans as a result of which the unpaid principal portion of its Term Loans shall
be proportionately less than the unpaid principal portion of the Term Loans of
any other Term Loan Lender, it shall be deemed simultaneously to have purchased
from such other Term Loan Lender at face value, and shall promptly pay to such
other Term Loan Lender the purchase price for, a participation in the Term Loans
of such other Term Loan Lender, so that the aggregate unpaid principal amount of
the Term Loans and participation in Term Loans held by each Term Loan Lender
shall be in the same proportion to the aggregate unpaid principal amount of all
Term Loans then outstanding as the principal amount of its Term Loans prior to
such exercise of banker's lien, setoff or counterclaim or other event referred
to above was to the principal amount of all Term Loans outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; PROVIDED,
HOWEVER, that, if any such purchase or purchases or adjustments shall be made
pursuant to this subsection and the payment giving rise thereto shall thereafter
be recovered, such purchase or purchases or adjustments shall be rescinded to
the extent of such recovery and the purchase price or prices or adjustment
restored without interest. The Borrower expressly consents to the foregoing
arrangements and agrees that any Term Loan Lender holding a participation in a
Term Loan deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower to such Term Loan Lender by reason thereof as fully as if such
Term Loan Lender had made a Loan directly to the Borrower in the amount of such
participation.
2.14 PAYMENTS. (a) The Borrower shall make each payment (including
principal of or interest on any Term Loans or other amounts) hereunder and under
any other Loan Document not later than 12:00 (noon), New York City time, on the
date when due in dollars to the Agent at its offices at 270 Park Avenue, New
York, New York, in immediately available funds.
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(b) Whenever any payment (including principal of or interest on any
Term Loans or other amounts provided for in this Agreement) hereunder or under
any other Loan Document shall become due, or otherwise would occur, on a day
that is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest, if applicable.
2.15 TAXES. (a) Any and all payments by the Borrower hereunder shall
be made, in accordance with subsection 2.14, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, EXCLUDING
taxes imposed on the Agent's or any Term Loan Lender's income and franchise
taxes imposed on the Agent or any Term Loan Lender by the United States or any
jurisdiction under the laws of which the Agent or any such Term Loan Lender is
organized or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "TAXES"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to the Term
Loan Lenders or the Agent (i) the sum payable shall be increased by the amount
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this subsection 2.15) such Term Loan
Lender or the Agent (as the case may be) shall receive an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant taxing authority or other Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document to which it is a party (hereinafter
referred to as "OTHER TAXES").
(c) The Borrower will indemnify each Term Loan Lender and the Agent
for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction or amounts payable under this subsection 2.15) paid
by such Term Loan Lender or the Agent, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Such indemnification shall be made within 30 days after the date any
Term Loan Lender or the Agent, as the case may be, makes written demand
therefor. If a Term Loan Lender or the Agent shall become aware that it is
entitled to receive a refund in respect of Taxes or Other Taxes, it shall
promptly notify the Borrower of the availability of such refund and shall,
within 30 days after receipt of a request by the Borrower, apply for such refund
at the Borrower's expense. If any Term Loan Lender or the Agent receives a
refund in respect of any Taxes or Other Taxes for which such Term Loan Lender or
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the Agent has received payment from the Borrower hereunder it shall promptly
notify the Borrower of such refund and shall, within 30 days after receipt of a
request by the Borrower (or promptly upon receipt, if the Borrower has requested
application for such refund pursuant hereto), repay such refund to the Borrower
without interest; PROVIDED that the Borrower, upon the request of such Term Loan
Lender or the Agent, agrees to return such refund (plus penalties, interest or
other charges) to such Term Loan Lender or the Agent in the event such Term Loan
Lender or the Agent is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Term Loan Lender
or the Agent, the Borrower will furnish to the Agent, at its address referred to
in Section 10.1 of the Revolving Credit Agreement, the original or a certified
copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this subsection
2.15 shall survive the payment in full of principal and interest hereunder.
(f) Each Term Loan Lender which is organized outside the United
States shall promptly notify the Borrower of any change in its funding office
and upon written request of the Borrower shall, prior to the immediately
following due date of any payment by the Borrower hereunder, deliver to the
Borrower such certificates, documents or other evidence, as required by the Code
or Treasury Regulations issued pursuant thereto, including Internal Revenue
Service Form 4224 and 1001 and any other certificate or statement or exemption
required by Treasury Regulation Section 1.1441-1(a) or Section 1.1441-6(c) or
any subsequent version thereof, properly completed and duly executed by such
Term Loan Lender establishing that such payment is (i) not subject to
withholding under the Code because such payment is effectively connected with
the conduct by such Term Loan Lender of a trade or business in the United States
or (ii) totally exempt from United States tax under a provision of an applicable
tax treaty. Unless the Borrower and the Agent have received forms or other
documents satisfactory to them indicating that payments hereunder or under the
Term Notes are not subject to United States withholding tax or are subject to
such tax at a rate reduced by an applicable tax treaty, the Borrower or the
Agent shall withhold taxes from such payments at the applicable statutory rate
in the case of payments to or for any Term Loan Lender or assignee organized
under the laws of a jurisdiction outside the United States.
(g) Any Term Loan Lender claiming any additional amounts payable
pursuant to this subsection 2.15 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document requested
by the Borrower or to change the jurisdiction of its applicable lending office
if the making of such a filing or change would avoid the need for or reduce the
amount of any such additional amounts which may thereafter accrue and would not,
in the sole
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determination of such Term Loan Lender, be otherwise disadvantageous to such
Term Loan Lender.
SECTION 3. [INTENTIONALLY OMITTED]
SECTION 4. REPRESENTATIONS AND WARRANTIES
The provisions of Article IV of the Revolving Credit Agreement
(together with related defined terms), as amended, modified and waived from time
to time in accordance with the terms thereof but without giving effect to any
cancellation or discharge of the Revolving Credit Agreement, are incorporated by
reference herein as if set forth at length herein, MUTATIS MUTANDIS, as if the
representations and warranties made therein are made by the Borrower. Such
representations and warranties shall be deemed to be made on the Term Loan
Closing Date.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO TERM LOANS. The obligations of each Term Loan
Lender to make its Term Loan is subject to the satisfaction of the following
conditions precedent:
(a) TERM LOAN DOCUMENTS. The Agent shall have received (i) this
Agreement, executed and delivered by a Responsible Officer of the
Borrower, with a counterpart for each Term Loan Lender, (ii) for the
account of each Term Loan Lender, a Term Note conforming to the
requirements hereof and executed by a Responsible Officer of the Borrower
and (iii) the Term Loan Guarantee and the Security Agreement, each
executed and delivered by a Responsible Officer of Bayou.
(b) CONDITIONS IN REVOLVING CREDIT AGREEMENT. All of the conditions
precedent set forth in Sections 5.01 and 5.02 of the Revolving Credit
Agreements shall have been satisfied or waived with the consent of the
Required Lenders.
(c) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Borrower and the other Loan Parties in or pursuant
to the Loan Documents shall be true and correct in all material respects
on and as of the Term Loan Closing Date as if made on and as of the Term
Loan Closing Date (except for changes permitted by the Revolving Credit
Agreement).
(d) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing on the Term Loan Closing Date or after giving effect to
the Term Loans requested to be made on the Term Loan Closing Date.
(e) NOTICE OF TERM LOAN BORROWING. The Agent shall
have received a notice of Term Loan Borrowing as required by
subsection 2.3.
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SECTION 6. AFFIRMATIVE COVENANTS
The provisions of Article VI of the Revolving Credit Agreement
(together with related defined terms), as amended, modified and waived from time
to time in accordance with the terms thereof but without giving effect to any
cancellation or discharge of the Revolving Credit Agreement, are incorporated by
reference herein as set forth at length herein to the extent applicable to the
Borrower and shall apply hereto MUTATIS MUTANDIS. The Borrower covenants and
agrees not to take any action that would result in a violation of the covenants
set forth in Article VI of the Revolving Credit Agreement. Additionally, the
Borrower covenants and agrees with each Term Loan Lender that so long as this
Agreement shall remain in effect or the principal of or interest on any Term
Loan or any other expenses or amounts payable under this Agreement shall be
unpaid, unless the Required Lenders shall otherwise consent in writing, the
Borrower will:
6.1 TERM LOAN BORROWING BASE. (a) Maintain the Term Loan Borrowing
Base at all times in a dollar amount not less than the aggregate principal
amount of the Term Loans outstanding at such time PLUS interest payable
hereunder for the next fiscal quarter; and
(b) within 15 Business Days after the last day of each fiscal month
(each such last day being called a "TERM LOAN DETERMINATION DATE"), furnish (i)
a Term Loan Borrowing Base Certificate to the Agent setting forth the Term Loan
Borrowing Base as of such Term Loan Determination Date, (ii) a certificate of a
Financial Officer of the Borrower setting forth in reasonable detail the
Unencumbered Cash and the amounts and types of Bayou (Tennessee) Inventory of
the Borrower as of such Determination Date and (iii) a copy of the Borrowing
Base Certificate certified by a Financial Officer of Bayou; PROVIDED, HOWEVER,
that the Term Loan Determination Date shall be the last day of each fiscal
quarter, and the foregoing certificates shall be required only on a quarterly
basis, as long as the aggregate amount of all Term Loans outstanding on the date
that would otherwise be the Term Loan Determination Date is less than
$3,000,000.
6.2 FINANCIAL STATEMENTS, REPORTS, ETC. Within 30 days after the
last day of each of the eighteen fiscal months of the Borrower commencing with
fiscal June, 1995, its consolidated and consolidating (if applicable) balance
sheets (which shall include its non-recourse subsidiaries) and related
statements of income and changes in cash flows, showing the financial condition
of the Borrower and its subsidiaries, if any, as of the close of such fiscal
month and the results of its operations and the operations of such subsidiaries,
if any, during such fiscal month and the then elapsed portion of the fiscal
year, all certified by one of its Financial Officers as fairly presenting the
financial condition and results of operations of the Borrower on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
adjustments.
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SECTION 7. NEGATIVE COVENANTS
The provisions of Article VII of the Revolving Credit Agreement
(together with related defined terms), as amended, modified and waived from time
to time in accordance with the terms thereof but without giving effect to any
cancellation or discharge of the Revolving Credit Agreement, are incorporated by
reference herein as set forth at length herein to the extent applicable to the
Borrower and shall apply MUTATIS MUTANDIS hereto. The Borrower covenants and
agrees not to take any action that would result in a violation of the covenants
set forth in Article VII of the Revolving Credit Agreement.
SECTION 8. EVENTS OF DEFAULT
The provisions of Article VIII of the Revolving Credit Agreement
(together with related defined terms), as amended, modified and waived from time
to time in accordance with the terms thereof but without giving effect to any
cancellation or discharge of the Revolving Credit Agreement, are incorporated by
reference herein as if set forth at length herein. Additionally, there shall be
an Event of Default if one or more Persons has demanded payment of amounts in
excess of $500,000 in the aggregate under Section 7.01 of the Preferred Stock
and Warrant Purchase Agreement or Section 5.13 of the Shareholder Agreement and
the Borrower or any of its Subsidiaries shall have made such payment(s) or shall
have agreed that such amounts are due. Additionally, if any Event of Default
under the Revolving Credit Agreement shall occur and be continuing then, and in
any such event, (A) if such event is an Event of Default specified in paragraph
(i) or (j) of Article VIII of the Revolving Credit Agreement automatically the
Term Loan Commitments shall immediately terminate and the Term Loans hereunder
(with accrued interest thereon) and all other amounts owing under this Agreement
and the Term Notes shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Required Lenders, the Agent may, or upon
the request of the Required Lenders, the Agent shall, by notice to the Borrower
declare the Term Loan Commitments to be terminated forthwith, whereupon the Term
Loan Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Agent may, or upon the request of the Required Lenders,
the Agent shall, by notice to the Borrower, declare the Term Loans hereunder
(with accrued interest thereon) and all other amounts owing under this Agreement
and the Term Notes to be due and payable forthwith, whereupon the same shall
immediately become due and payable.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 9. THE AGENT
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The provisions of Article IX of the Revolving Credit Agreement
(together with related defined terms), as amended, modified and waived from time
to time in accordance with the terms thereof but without giving effect to any
cancellation or discharge of the Revolving Credit Agreement, are incorporated by
reference herein as set forth at length herein, MUTATIS MUTANDIS, with
references therein to Bayou being references to the Borrower, references therein
to the Notes being references to the Term Notes and references therein to
Lenders being references to the Term Loan Lenders, INTER ALIA.
SECTION 10. MISCELLANEOUS
10.1 INCORPORATION. The provisions of Sections 10.01, 10.02, 10.08,
10.09, 10.10 and 10.12 of the Revolving Credit Agreement (together with related
defined terms), as amended, modified and waived from time to time in accordance
with the terms thereof but without giving effect to any cancellation or
discharge of the Revolving Credit Agreement, are incorporated by reference
herein as set forth at length herein, MUTATIS MUTANDIS.
10.2 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Term Loan Lenders and shall survive the making by
the Term Loan Lenders of the Term Loans, and the execution and delivery to the
Term Loan Lenders of the Term Notes evidencing such Term Loans, regardless of
any investigation made by the Term Loan Lenders or on their behalf, and shall
continue in full force and effect as long as the principal of or any accrued
interest on any Term Loan or any other amount payable under this Agreement or
any other Loan Document is outstanding and unpaid and so long as the Term Loan
Commitments have not been terminated.
10.3 BINDING EFFECT. This Agreement shall become effective when it
shall have been executed by the Borrower and the Agent and when the Agent and
the Borrower shall have received copies hereof which, when taken together, bear
the signatures of each Term Loan Lender, and thereafter shall be binding upon
and inure to the benefit of the Borrower, and Agent and each Term Loan Lender
and their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein without the
prior consent of all the Term Loan Lenders.
10.4 SUCCESSORS AND ASSIGNS. (a) Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Borrower, the Agent or the Term Loan Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
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(b) Each Term Loan Lender may assign to one or more assignees all or
a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Term Loan Commitment and the Term Loans at
the time owing to it and the Term Notes held by it); PROVIDED, HOWEVER, that (i)
except in the case of an assignment to a Term Loan Lender or an Affiliate of a
Term Loan Lender, the Borrower and the Agent must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) each such assignment shall be of a constant, and not a varying, percentage
of all the assigning Term Loan Lender's rights and obligations under this
Agreement, (iii) the parties to each such assignment shall execute and deliver
to the Agent an Assignment and Acceptance, together with the Term Note or Term
Notes subject to such assignment and (iv) no such assignment shall be permitted
or effective unless such Term Loan Lender concurrently assigns a ratable
interest in the Revolving Credit Agreement to its assignee. Upon acceptance and
recording pursuant to paragraph (e) of this subsection 10.4, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Term Loan Lender
under this Agreement and (B) the assigning Term Loan Lender thereunder shall, to
the extent provided in such assignment, be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Term Loan Lender's rights and obligations
under this Agreement, such Term Loan Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Term Loan Lender thereunder and the assignee thereunder shall be
deemed to confirm to and agree with each other and the other parties hereto as
follows: (i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, such assigning Term Loan Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto; (ii) such assigning Term Loan Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of Bayou, the Borrower or any of their Subsidiaries or the
performance or observance by Bayou or the Borrower of any of its obligations
under this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 6.04 of the Revolving Credit
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee
21
will independently and without reliance upon the Agent, such assigning Term Loan
Lender or any other Term Loan Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this Agreement are
required to be performed by it as a Term Loan Lender.
(d) The Agent shall maintain at one of its offices in The City of
New York a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Term Loan Lenders, and the
Term Loan Commitment of, and principal amount of the Term Loans owing to, each
Term Loan Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive in the absence of
manifest error and the Borrower, the Agent and the Term Loan Lenders may treat
each person whose name is recorded in the Register pursuant to the terms hereof
as a Term Loan Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower and any Term Loan Lender, at
any reasonable time and from time to time upon reasonable prior notice and
copies shall be made available to the Borrower upon request.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Term Loan Lender and an assignee together with the Term
Note or Term Notes subject to such assignment and, if required, the written
consent of the Borrower to such assignment, the Agent shall (subject to the
consent of the Agent to such assignment, if required), (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Term Loan Lenders. Within
five Business Days after receipt of notice, the Borrower, at its own expense,
shall execute and deliver to the Agent, in exchange for the surrendered Term
Note or Term Notes, a new Term Note or Term Notes to the order of such assignee
in a principal amount equal to the applicable Term Loans purchased by it
pursuant to such Assignment and Acceptance and, if the assigning Term Loan
Lender has retained any Term Loans, a new Term Note to the order of such
assigning Term Loan Lender in a principal amount equal to the Term Loans
retained by it. Such new Term Note or Term Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Term Note; such new Term Notes shall be dated the date of the surrendered Term
Notes which they replace and shall otherwise be in substantially the form of
Exhibit A hereto. Canceled Term Notes shall be returned to the Borrower.
(f) Each Term Loan Lender may without the consent of the Borrower or
the Agent sell participations to one or more Term
22
Loan Lenders or other financial institutions in all or a portion of its rights
and obligations under this Agreement (including all or a portion of its Term
Loan Commitment and the Term Loans owing to it and the Term Notes held by it);
PROVIDED, HOWEVER, that (i) such Term Loan Lender's obligations under this
Agreement shall remain unchanged, (ii) such Term Loan Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participating lenders or other entities shall be entitled to the
benefit of the cost protection provisions contained in subsections 2.9 and 2.11
to the same extent that the Term Loan Lender from which such participating
lender or other entity acquired its participation would be entitled to the
benefit of such cost protection provisions, (iv) no such sale of a participating
interest shall be effective or permitted unless such Term Loan Lender
concurrently sells a ratable participating interest in the Revolving Credit
Agreement to its assignee and (v) the Borrower, the Agent and the other Term
Loan Lenders shall continue to deal solely and directly with such Term Loan
Lender in connection with such Term Loan Lender's rights and obligations under
this Agreement, and such Term Loan Lender shall retain the sole right to enforce
the obligations of the Borrower relating to the Term Loans and their right to
approve any amendment, modification or waiver of any provision of this Agreement
(other than amendments, modifications or waivers with respect to any fees
payable hereunder or the amount of principal of or the rate at which interest is
payable on the Term Loans, or the dates fixed for payments of principal of or
interest on the Term Loans).
(g) Any Term Loan Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
subsection 10.4, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Loan Parties furnished to such Term
Loan Lender by or on behalf of either Loan Party; PROVIDED that, prior to any
such disclosure, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the confidentiality of
any confidential information relating to the Loan Parties received from such
Term Loan Lender.
(h) Nothing herein shall prohibit any Term Loan Lender from pledging
or assigning any Term Note to any Federal Reserve Bank in accordance with
applicable law.
(i) The Borrower shall not assign or delegate any of its rights or
duties hereunder.
10.5 EXPENSES; INDEMNITY. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Agent in connection with the
preparation of this Agreement and the other Loan Documents to which the Borrower
is a party or in connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or incurred by the Agent or any Term Loan
Lender in connection with the enforcement
23
or protection of their rights in connection with this Agreement and the other
Loan Documents to which the Borrower is a party or in connection with the Term
Loans made or the Term Notes issued hereunder, including the reasonable fees and
disbursements of Simpson Thacher & Bartlett, counsel for the Agent, and, in
connection with any such amendment, modification or waiver or any such
enforcement or protection, the reasonable fees and disbursements of any other
counsel for the Agent or any Term Loan Lender. The Borrower further agrees that
it shall indemnify the Term Loan Lenders from and hold them harmless against any
documentary taxes, assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Agreement or any of the other Loan
Documents to which it is a party.
(b) The Borrower agrees to indemnify the Agent, each Term Loan
Lender and its directors, officers, employees and agents (each such person being
called an "Indemnitee") against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document to which it
is a party or any agreement or instrument contemplated thereby, the performance
by the parties thereto of their respective obligations thereunder or the
consummation of the transactions contemplated thereby, (ii) the use of the
proceeds of the Term Loans or the Acquisition, (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as to any
Indemnitee, be available to the extent that such indemnified party's losses are
the result of any unexcused breach by an indemnified party of its obligations
under the Agreement or the result of its gross negligence or willful misconduct
of such Indemnitee or (iv) the noncompliance or asserted noncompliance with, or
liability or asserted liability under, any Environmental Law that is or is
asserted to be applicable to the Borrower or any Subsidiary, or to any property
owned or operated by any of them; PROVIDED that such indemnity shall not, as to
any Indemnitee, be available to the extent that such indemnified party's losses
are the result of any unexcused breach by an indemnified party of its
obligations under this Agreement or any other Loan Document or the result of the
gross negligence or willful misconduct of such Indemnitee.
(c) The provisions of this subsection 10.5 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Term Loans, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document to which the
Borrower is a party, or any investigation made by or on behalf of the Agent or
any Term Loan Lender. All amounts due under this subsection 10.5 shall be
payable on written demand therefor.
24
10.6 RIGHT OF SETOFF. If an Event of Default shall have occurred and
be continuing and any Term Loan Lender shall have requested the Agent to declare
the Term Loans immediately due and payable pursuant to Section 8, such Term Loan
Lender is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Term Loan Lender to or for the credit or
the account of the Borrower against any of and all the obligations of the
Borrower now or hereafter existing under this Agreement and other Loan Documents
to which it is a party held by such Lender, irrespective of whether or not such
Term Loan Lender shall have made any demand under this Agreement or such other
Loan Document and although such obligations may be unmatured. The rights of each
Term Loan Lender under this subsection are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
10.7 WAIVER OF JURY TRIAL. Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under
or in connection with this Agreement or any of the other Loan Documents. Each
party hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement and the other Loan Documents, as applicable, by, among other
things, the mutual waivers and certifications in this subsection 10.7.
10.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided herein.
10.9 APPLICABLE LAW. THIS AGREEMENT, THE TERM NOTES AND THE OTHER
LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.
10.10 HEADINGS. Section and subsection headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
10.11 JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) The Borrower
hereby irrevocably and unconditionally submits, for itself and its property, to
the non-exclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that
25
all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Term Loan Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against the Borrower or its properties in the courts of
any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.1 of the Revolving
Credit Agreement. Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
10.12 CONFIDENTIALITY. The Agent and the Term Loan Lenders agree to
keep confidential (and to cause their respective officers, directors, employees,
agents and representatives to keep confidential) all information, materials and
documents concerning the Loan Parties furnished to the Agent or any Term Loan
Lender (the "INFORMATION") by or on behalf of the Loan Parties. Notwithstanding
the foregoing, the Agent and each Term Loan Lender shall be permitted to
disclose Information (i) to such of its officers, directors, employees, agents
and representatives as need to know such Information in connection with its
participation in any of the Transactions or the administration of this
Agreement; (ii) to the extent required by applicable laws and regulations or by
any subpoena or similar legal process, or requested by any governmental agency
or authority; (iii) to the extent such Information (A) becomes publicly
available other than as a breach of this Agreement, (B) becomes available to the
Agent or such Term Loan Lender on a non-confidential basis from a source other
than a Loan Party or any Subsidiary thereof or (C) was available to the Agent or
such Term Loan Lender on a non-confidential basis prior to its disclosure to the
Agent or such Lender by a Loan Party or a Subsidiary thereof; (iv) to the extent
a Loan Party or a Subsidiary shall have consented to such disclosure in writing;
(v) in connection with the sale of any Collateral pursuant to the provisions of
the Security Agreement; or (vi) as necessary in connection with an assignment or
participation contemplated by subsections 10.4(b) and 10.4(f) hereof.
26
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
BAYOU STEEL CORPORATION (TENNESSEE)
By: ________________________________
Title:
CHEMICAL BANK,
as Agent and as a Term Loan
Lender
By: ________________________________
Title:
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION
By: ________________________________
Title:
THE DAIWA BANK, LIMITED
By: ________________________________
Title:
By: ________________________________
Title:
FIRST INTERSTATE BANK OF TEXAS,
N.A.
By: ________________________________
Title:
HIBERNIA NATIONAL BANK
By: ________________________________
Title:
<PAGE>
SCHEDULE 2.01
TO CREDIT AGREEMENT
LENDER COMMITMENT
- ------ --------------
Chemical Bank $12,272,727.27
270 Park Avenue
New York, New York 10017
Attention: Mr. Rohan Paul
Telecopy: (212) 270-2555
Internationale Nederlanden $12,272,727.27
(U.S.) Capital Corporation
200 Galleria Parkway
Atlanta, Georgia 30339
Attention: Mr. John Lanier
Telecopy: (404) 951-1005
First Interstate Bank of Texas, N.A. $ 8,181,818.18
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Attention: Mr. Frank Schageman
Telecopy: (713) 250-7029
The Daiwa Bank, Limited $ 8,181,818.18
909 Fannin Street, Suite 3750
Houston, Texas 77010
Attention: Mr. Mark Skul
Telecopy: (713) 759-1419
Hibernia National Bank $ 4,090,909.10
313 Carondelet Street
New Orleans, Louisiana 70130
Attention: Mr. John Castellano
Telecopy: (504) 533-2060
--------------
Total Commitment $45,000,000.00
==============
SCHEDULE 4.04
GOVERNMENTAL APPROVALS
Transfer of Air Permit for natural gas-fired reheat furnace (reheat of
steel billets for rolling) at Bayou Steel Corporation (Tennessee) (Tennessee
Air Pollution Control Board Permit No. 737587P).
<PAGE>
SCHEDULE 4.09
BAYOU STEEL CORPORATION
CURRENT LITIGATION REPORT
*7. File No. 90137
LMN
MICHAEL MCCOY V. BAYOU STEEL CORPORATION (OF LA PLACE) No. 85-246 "G"
(7/23/85): Claim for $2,000,000 pursuant to the Federal Employers Liability
Act ("FELA") by former employee of Bayou for injuries sustained in the course
of operating railway system. Bayou's insurance company has taken over Bayou's
defense. The FELA claim was dismissed and Bayou is paying Workmen's
Compensation benefits to the plaintiff which, are fully covered by insurance.
On 3/4/94 BSC was served with claim for compensation in the Louisiana Office
of Workers Compensation, District 7, Docket 94-00334, claiming that the
insurer was "refusing to pay necessary medical expenses" arising out of an
accident on 12/14/84. Matter referred to the insurance carrier. Answer filed
in Office of Workers Comp 4/19/94. Pretrial conference 8/9/94. Hearing on
default 5/27/94. In discovery.
*18. File No. 86135
LMN
JOHN E. FRIAR, ET AL. VS. CATERPILLAR, ET AL. (1986) 40th Judicial
District, St. John the Baptist Parish, Louisiana, Cause No. 17,062, Div. "A".
The lawsuit arises out of an accident on or about 9/22/83 in which John
Friar, a BSC employee, suffered a knee injury in a forklift accident, and is
suing Caterpillar and others. Bayou's insurer has intervened: in pretrial
appeal. Not come to trial. On 10/28/88, the Louisiana Supreme Court denied a
Writ of Certiorari removing Caterpillar from the matter. Friar has not yet
moved to proceed further against BSC. Summary Judgment motion by Boyce
Machinery, seller of the forklift, heard 2/26/91. Opposition filed 3/8/93.
Denied 4/7/93. Request for Notice of Trial and other matters filed 7/29/93; no
action since. Friar's lawyer expects to reset matter for trial "in future".
Supplemental earnings benefits being paid from 3/14/86 to date @ $404.50 every
two weeks and will continue for 84 weeks from August 1994. Friar seems to be
"Vanishing" (10/94). Status conference to be rescheduled. Pretrial order
03/01/95 SETS TRIAL AT 10/16/95; discovery completed by 9/1 and 9/15
(defendants) among other discovery and pleading matters.
-1-
*25. File No. 88008
LMN _ NONE
SEVERA JOSEPH V. BSC AND ABC INSURANCE COMPANY (1988) 40th Judicial
District, Parish of St. John the Baptist, Louisiana, Case No. 22457.
The lawsuit seeks $750,000 in damages for personal injuries to Joseph, an
employee of A-3M Vacuum Service, Inc., who allegedly was injured assisting in
the load of steel into a barge on the Mississippi River. A jury trial is
requested. In discovery. Being defended by insurance carrier. Summary Judgment
Motion filed by BSC. Opposed by Joseph and continued and still continues. A
valid "Statutory Employee Defense" appears to exist. Travelers insurance moves
to intervene on behalf of longshoremen, granted 9/23/91. Settlement offer of
$1,500 rejected. Waiting for prescriptive period to run; then, insurers will
file motion to dismiss for want of prosecution (3/25/94).
*50. File No.
LMN NONE
GLEN MATTHEWS VS. BSC
Lawyer's letter dated January 30, 1990, regarding March 23, 1989 accident
received and forwarded to our insurance carrier. Settlement discussions.
*63. File No. 91159
LMN Insurance Carrier
ROBERT L. TATUM V. BSC (1991)
40th Judicial District Court, St. John the Baptist (LA) Parish.
Summons and Complaint served on statutory agent on 12/13/91. Tatum, an
employee of E&N Contractors Inc., claims injury on 12/14/90 when truck he was
operating was struck by railroad car operated by remote control by an unknown
Bayou employee. Unspecified injuries in excess of $20,000 are claimed as
result of claimed negligence. Referred to and being defended by insurance
carrier. Bastian & Wynn, New Orleans, assigned as counsel 1/6/92. Answer filed
3/4/92. Third part complaint 3/4/92 filed by BSC against E&N Contractors for
indemnification. Third party answer not yet filed. In discovery. No trial
setting expected before end of 1993. No corporate exposure beyond insurance
coverage expected. Tatum's deposition 3/11/93. Tatum has returned to work as
of 9/92 and except for the period between 12/90 and 9/92 has sustained no loss
of income and probably no future loss. Case on hold, awaiting settlement
advices from insurer.
-2-
*70. File No. 93007(a)
LMN
BSC VS. UNITED STEELWORKERS OF AMERICA, LOCAL 9121 AND RONALD FERRARO,
INDIVIDUALLY AND AS PRESIDENT OF LOCAL 9121 (1993) 40th Judicial District
Court, St. John the Baptist Parish (La), No. 30676, Division C.
Verified Petition, Rule to Show Cause, and Memorandum, seeking Temporary
Restraining Order and/or Preliminary Injunction restraining defendants and
members from engaging in seven general types of activity [(a) interfering with
persons attempting to enter or leave the La Place facility by threats of
violence, etc., (b) congregating or massing near entrances or exits so as to
obstruct and impede the free use of exits and entrances by vehicles or
persons, (c) engaging in picketing, patrolling, or congregating near the
facility except by not more than two persons at each entrance or other
peaceful activities, (d) placing tacks, nails or other foreign objects in the
roads leading to the facility, (e) damaging vehicles or property maintained by
BSC or its customers, employees, etc., (f) causing injury or threatening to
cause and, (g) trespassing on private property.] during strike FILED 3/23/93;
Stipulate Injunctive Order signed by Court 3/24 permits five pickets at main
gate, controls vehicle approaches, etc., three pickets at other gates, standby
pickets, etc.; prohibits threatening intimidating conduct, damage to property
and trespassing and other matters. Violations of Order attended at status
conference 3/26/93, hearing on TRO 3/29/93. Injunctive Order (II) 3/30/93
further prohibits Union from stopping vehicles or congregating in certain
designated areas. Defendants Exceptions filed 3/29/93. First Rule for Contempt
and Memorandum in Support filed 4/22/93. Hearing 5/7/93 per ORDER 4/39/93.
Order 5/7/93 (or 5/10/93) expands prior Order-orders picketers "to refrain
from standing still in front of or within ten feet of any vehicle entering or
leaving plant; Second Order 5/7/93 (5/10/93) orders three (Schobel, Roussel
and Martin) and the Union to perform community service. Contempt hearing 9/24;
decision reserved. JUDGMENT 10/8/93 orders five days jail time for three
strikers; six days community service for 3 others; 60 hours community service
for Union; 12 assorted warnings dismisses six complaints; clarifies prior
(3/23 and 3/30) Orders by limiting one pass in front of vehicles in 90
seconds, prohibiting picketing of security guards and all physical engagement
between guards and strikers. Status conference 11/29/93 before Judge Daley.
Second Rule (motion) for contempt to stop continuing harassment and picket
line misconduct between 10/6/93 and 1/31/94 filed 2/8/93; hearing 3/9/94.
Union files Motion for Contempt based on 1/19/94 incident. Hearing 3/9
continued to 3/25/94. BSC files exception to Union motion on 3/16/94. Hearing
3/25 didn't finish and will continue 4/15/94. Two picketers off-line for 60
days; decision reserved on other matters. Decision judgment 5/6/93 orders jail
time for 8 strikers, community service for 1; bars two strikers from picket
line and
-3-
prohibits picketing of pedestrians. Third Rule (motion) for contempt
to stop picket line misconduct, threats, maintenance of structures, etc.
between 3/1/94 and 7/9/94. Status conference 8/8/94. Hearing on contempt order
9/6/94. Preliminary motions filed by 8/19/94 will be heard 9/1/94. Amendment
to contempt (third rule) motion filed by BSC 8/18/94. Decision reserved by
Judge Daley. Motion to Modify Restraining Order to allow Schobel & Walker to
return to line 9/18/94 to be heard 10/14/94. Motion to Continue 10/14 date filed
by BC 10/7/94; Judgment by Judge Daley 9/22 received 10/3; orders Hedricks of
BSC to 40 hours community service; decision also orders 208 hours community
service for 13 strikers (from 8 to 48 hours). BSC files motion (11/2/94) to
permit Hedricks to perform community service by 9/22/95 a/c Haiti assignment.
Order signed by Judge Daley 11/2/94. Rule for contempt regarding Pat Sellars set
for 04/05/95 is continued without date and Judge Daley recesses himself
03/28/95. Picket line accord regarding new gate reached before Judge Daley
05/04/95. Order entered 5/6/95.
*71.3 File No. 93007(b)
LMN PCM-112
U.S.W.A. VS. BSC (1993) National Labor Relations Board (NLRB), Case No.
15-CA-12133, 12441, 12528, 12431, 12609.
Filed 5/4/93; amended 5/20/93 and 7/15/93. Steelworkers charge failure to
bargain in good faith by (1) failing to submit a contract proposal, (2)
insisting on language rendering portions of contract unenforced, (3) insisting
on proposals unlawfully limiting Union activity on company time, (4) making
final offer on 3/20/93 stating a less favorable offer would be implemented in
three days, if not accepted, (5) falsely declaring impasse, (6) threatening to
implement an offer absent an impasse, lawful or otherwise, (7) making
regressive proposals without lawful justification, (8) reneging on tentative
agreements by failing to include them in final proposals and altering their
terms, (9) refusing to provide info re bargaining, names of personnel to be
discharged, or disciplined for strike related misconduct, (10) insisting it
wouldn't provide (9) info unless new contract was ratified, (11) failing to
provide negotiators with authority to negotiate, (12) failing to timely
respond to Union requests for point by point response to Union proposals, (13)
refusing to enter into tentative agreements on noneconomic issues with
potential cost implications on the ground that agreement on such issues must
await economic bargaining and (14) continually being late or unprepared at
negotiating sessions, (15) making illusory contract concessions, (16)
insisting on contractual provisions enabling the Company to reopen the
contracting out clause while denying the Union the right to strike, (17)
raising new demands at advanced states of bargaining, (18) engaging in a per
se refusal to negotiate concerning an incentive plan, (19) claiming that the
filing of the initial ULP charge in this case constituted an obstacle to
-4-
negotiations, (20) refusing to bargain because the Union had filed such
charge, (21) offering regressive proposals in retaliation for the filing of
such charge, (22) attaching preconditions to the making of proposals. Meeting
with NLRB investigator 7/26. Decart petition filed (15-RD-715) by BSC employee
in abeyance. Withdrawn 8/31/93 with approval of Regional Director. Response
submitted 7/27/93. Decision awaited; not expected until end of year.
Supplemental materials submitted to NLRB 12/6/93. Oral argument 12/14/93.
Decision expected by 12/17/93 or shortly thereafter. (23) On 12/30/93 USWA
filed charge vs. BSC alleging violations of Sec. 8(a)(5) and 8(d) by refusing
to reduce to writing certain statements made by H. M. Meyers at a meeting with
Governor Edwards at an 8/25/93 meeting at the Governor's mansion.
(15-CA-12431) Response to NLRB made 1/7/94. (24) On 1/13/94 filed charge vs.
BSC alleging violations of Sec. 8(a)(1)(b) by refusing access to Union's
safety and health inspector on 8/16/93 and has refused to provide Union with
other representative information since 8/16/93. (15-CA-12441). On 12/20/93
allegation (10) and part of (9) dealing with names of bargaining unit
personnel are withdrawn with NLRB approval. Settlement agreement signed
2/10/94 settles charges (3), (4), (6), (7), (8), (16), (17) and (21).
(15-CA-12133) Letter received on 3/1/94 dated 2/28/94, corrected dated 3/2/94
dismissing charges (1), (2), (5), (9), (11), (12), (13), (14), (15), (18),
(19), (20) and (22). Appeal period expires 3/16/94. USWA moves to extend time
to appeal to 4/5/94. BSC opposes 3/9/94. NLRB grants extension to 4/5/94 on
3/8/94. On 3/3/94 received letter dated 3/2/94 which also dismisses charge
(23) (#15-CA-12431). (25) On 3/21/94 USW filed charge vs. BSC stating that on
3/18/94 BSC violated Sec. 8a(1)(3) and (5) by insisting on new bargaining
demands relating to return to work which violated a tentative agreement
entered into on 3/12/94. (15-CA-12528) USWA has appealed dismissal of charges
(1), (2), (5), (9), (11), (12), (13), (14), (15), (18), (19), (20) and (22) as
of 4/6/94. NLRB acknowledges receipt 4/11/94. BSC response to charge (24) on
4/13/94. On 5/16/94 Union files charges (26) that since 4/94 BSC has refused
to pay strikers vacation benefits earned in 1992, immediately prior to going on
strike, coercing employees in the exercise of their Section 7 rights and
violating Section 8(a)(3). (15-CA-12600). On 12/14/94 NLRB denies appeal of USWA
substantially for reasons stated in 3/2/94 letter. NLRB specifically finds no
bad faith bargaining re incentive plan by BSC (18) and that BSC did make a
complete contract proposal. Union petitions for reconsideration 12/28/94. BSC
response to charges (25) and (26) filed with NLRB on 1/20/95. On 2/14/95 NLRB
refuses to proceed further in respect of charge (26) and charge (25), also
determines that (26) is time barred. Posting of settlement agreement in
(15-CA-12133), (3), (4), (6), (7), (8), (16), (17), (21), 12441 (24) and 12528
(25). On 02/28/95 Union files appeal with General Counsel NLRB of Regional
Directors refusal to issue Complaint on (26)-15-CA12609 regarding vacation
benefits.
-5-
*72. File No. 93007(c)
LMN PCM-115
BSC VS. OFFICE OF EMPLOYMENT SECURITY (1993) Louisiana Department of Labor
Office of Employment Security, Docket No. H00550AT93 HARRY ABADIE, ET AL. VS.
BSC, 40th Judicial District Court, St. John the Baptist Parish, LA, No. 31262
(APPEAL). KERN T. ADAMS, ET AL, VS. BSC, 29th Judicial District Court, St.
Charles Parish, Louisiana, Case No. 41634-D (APPEAL). ANDREW EALY V. BSC, 33rd
Judicial District Court, Ascension Parish, Louisiana, Case No. 005706
(APPEAL). RUSSEL BOURGEOIS VS. BSC, 23rd Judicial District Court, St. James
Parish, Louisiana, Case No. 22195 (APPEAL). TODD CHIASSION VS. BSC, ET AL, 24th
Judicial District Court, Jefferson Parish, Case No. 452-835 (APPEAL). TOMMY
FERGUSON VS. BSC, ET AL., 21st Judicial District Court, Livingston Parish,
Louisiana, Case No. 69436 (APPEAL). DANIEL C. BENNETT, ET AL. VS. BSC, et al.,
22nd Judicial District Court, St. Tammany Parish, Louisiana, Case No. 93-13263
(APPEAL). JOSEPH BROWNING VS. BSC, et al., 21st Judicial District Court,
Tangipahoa Parish, Louisiana, Case No. 9302565 (APPEAL). CHARLES KYZAR V. BSC,
21st Judicial District, Case No. 9302857 (APPEAL). Fifth Circuit Appeal District
Court No. 94-CA-00322.
Appeal and Petition, filed 5/11/93, for administrative review of Secretary
Gayle Truly ("Truly")'s decision awarding unemployment compensation to
approximately 250 strikers engaged in labor dispute at La Place. Hearing
before Administrative Law Judge Dennis Dykes, May 24, 1993, begun and
adjourned; resumed 6/18/93. Subpoenas requested, served on Hibernia Bank,
U.S.N.A. District 36 and Local 9121. Memorandum of Law submitted 7/2/93.
Decision expected by 7/9/93. Decision 7/9 disqualifies strikers for
unemployment compensation. Strikers, through Union attorney, appeal on
7/14/93. Union brief 7/16/93. BSC statement and memo 7/22. Board Review (OES)
Affirms Administrative Law Judge Decision 8/4/93. Appeal to 40th Judicial
District Court served on statutory agent (CT) 8/13/93. Answer and Request for
Notice filed 8/16/93. Appeal to 29th Judicial District Court served on
statutory agent 8/24/93. Motion for Extension of Time filed in Kern to allow
15 days from time State files administrative record to respond to pleading
(9/3/93). APPEAL to 23rd Judicial District Court. EALY served on statutory
agent 9/8/93. APPEAL to 23rd Judicial District Court BOURGEOIS served on
statutory agent 9/1/93. APPEAL to 24th Judicial District Court Chaisson served
on statutory agent 9/1/93. Notice Letters from Department of Labor re appeals
in BOURGEOIS. EALY and CHAISSON received (9/9/93) and in FERGUSON, BROWNING,
BENNETT received 9/20/93. Motion For Extension of Time filed in CHAISSON,
EALY, BOURGEOIS, and FERGUSON, BROWNING, BENNETT, similar to KEARN 9/13/93,
appeal to 21st Judicial Court (Tangipahoa) filed by CHARLES KYZAR individually
on 9/16/93, received 10/16/93 by statutory agent. Period to file
administrative record by Department of Labor elapsed 10/12/93, but will be
filed shortly. Joint Motion to Stay All Proceedings except St. John the
Baptist
-6-
action (31-262) to be filed shortly. Motion to Dismiss Kyzar appeal 10/28/93 on
basis of prescription and pending other action. Answer in ADAMS, BENNETT,
BOURGEOIS, BROWNING, CHIASSON, EALY, FERGUSON filed 11/24/93. Administrative
record filed. Request status conference with Daley in Abadie 31-262 11/23/93.
Stay Orders entered on 11/18/93 in ADAMS, BENNETT, BOURGEOIS, EALY, Fergusson
and CHIASSON on 11/19/93; BROWNING 11/23/93. State Answer 11/12/93 seeks
reversal of Board of Review Decision and a change in Louisiana law re striker
eligibility for compensation. Supreme Court of Louisiana appoints retired Judge
William V. Radman as judge ad hoc in the matter to take, hear and dispose of it.
Our brief is due 12/20/93, one week after union's brief due. All briefs and
rebuttals filed on 12/23/93, including brief on behalf of Department of Labor.
Motion to reseal documents filed 12/30/93 unopposed by Department of Labor.
Decision of Board of Review affirmed by Judge Redman of 40th Judicial District
Court and filed on 12/28/93 and received 1/7/94. Administrator can appeal to
Louisiana Court of Appeals or U.S. Court of Appeals, 5th Circuit, or file motion
for new trial. Must be filed by 3/14/94. Motions filed to reseal materials
originally filed under seal by 40th District Court, filed in all district
courts. Orders signed in ADAMS 1/5/94; BOURGEOIS 1/6/94; BROWNING 1/3/94;
Chaisson 1/5/94; FERGUSON 1/14/94 and EALY 1/11/94. Dept. of Labor files appeal
notice 1/21/94 to 40th JDC, motion for devolutive appeal; Union appeal petition
received 1/28/94; Union opposition to motion to reschedule and BSC reply filed
with Judge Redman 2/2/94. Judge Redman signs Order resealing documents 2/2/94.
Order giving clerk 30 days more time to file record on appeal entered 4/5/94.
Fifth Circuit Order 5/4/94 notes filing of transcript. DOL brief due 5/31/94;
BSC brief due 6/20/94. Oral argument requested by BSC 5/16/94. Appellants brief
filed 5/31/94. Dept of Labor brief filed 5/28/94. Our brief filed 6/20/94. D of
L reply brief 6/28/94. Oral argument 9/29/94. Decision reserved. Decision
reserved. Decision affirmed by 5th Circuit 10/25/94. Union and Labor Dept. say
they will appeal, or ask for cert. Rehearing must be requested by 11/8/94;
review petition to Louisiana Supreme Court by 11/24/94. Union Writ Application
filed 11/23. BSC response filed 12/30/94. Supreme Court denies both writs
2/3/95. Matter completed. Motion to dismiss ADAMS, EALY, BENNETT, BROWNING,
BOURGEOIS, CHIASSON and FERGUSON filed May 5, 1995. On May 5, 1995 Louisiana
Labor Department files Writ of Certiorari with U.S. Supreme Court (received
5/8/95). AFL-CIO asks for permission to file amicus brief in support of cert.
petition. BSC declines 5/16/95. Labor Department files motion to stay BSC motion
to dismiss ADAMS, EALY, BENNETT, BROWNING, BOURGEOIS, CHIASSON & FERGUSON on
5/8/95. BSC opposes 5/17/95 because on 5/16/95 BSC filed motions to postpone
motion to dismiss in related actions. Abadie case stayed.
*74.1 File No. 93008(b)
LMN SAS-132
-7-
U.S. (DEPT. OF LABOR) OCCUPATIONAL SAFETY & HEALTH ADMINISTRATION (OSHA)
VS. BSC (1993) Citation Inspection 102281888; OSHRC Docket #94-0416, Region 6,
Case #940059
Citation and Notification issued 12/22/93 (received 12/27/93) arising out
of inspection of La Place facility 6/28/93 _ 11/24/93. Contains three (3)
serious and three other violations of OSHA regulations and seeks $5,625 (three
serious) in penalties. Serious violations claim lead dust exposures in
changehouse lavatory and melt shop break room. Abatement dates for serious
violations are 1/12/94 and 2/10/94. Other violations related to fire
prevention programs, area lead exposure and require abatement dates of 2/10/94
and 1/5/94. Notice of Contest 1/19/94. Complaint received 2/10/94. Answer
filed 2/23/94. Notice of Docketing and Assignment of review commission Judge
(Louis G. LaVeccia) dated 4/8/94, received 5/11/94 from Atty. Robert Goldberg.
Meeting 6/17/94. Hearing 11/17/94. Union elects party status 9/23/94. Motion
to shorten time to take discovery 11/9/94 returnable 11/14/94. Working on
resolution and Settlement Agreement to reflect more of three "serious" to
"other" violations, vacate one "other" violation, reduce penalties to $4,125.
Settlement agreement signed by BSC 1/2/95. Notice of Order and Report 02/10/95
docketed 02/17/95 approving Settlement Agreement will become final 03/20/95,
unless OSHRC directs otherwise. petition for discretionary review has to be
filed by 03/09/95.
*74.3 File No. 93055
LMN SAS-129
U.S. (DEPT. OF LABOR) OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION (OSHA)
VS. BSC (1994) Citation Inspection 107631921; OSHRC Docket
Citation and Notification issued 4/22/94; received 4/26/94 arising out of
an inspection at La Place facility between 1/19/94 and 4/6/94. Citation
charges one willful violation and seeks $35,000 in penalty and immediate
abatement; charges BSC did not provide access to exposure records within 15
working days nor inform Steelworkers Local 9121 of reason for delay. Notice of
contest 5/9/94. Answer and Affirmative Defenses filed 7/5/94. U.S. WA.
"elects" party status 9/20/94. Settlement Agreement March 15 and 24, 1994
deletes willful classification to a "Section 17", provides for $14,000 penalty
and withdrawal of notice of contest.
*74.4 File No. 94034
LMN SAS-134
BSC V. REICH (1994) Eastern District of Louisiana. In the matter of
Establishment Inspection of BSC. Misc. No. 94-2357
OSHA inspection requested 7/21/94 per inspection warrant dated 7/18/94,
but not disclosed until 7/21/94. BSC files Motion to Stay or Quash warrant
7/21/94 and for expedited hearing 7/21/94. Hearing 7/29/94. Rescheduled. U.S.
Labor Dept. moves to judge
BSC in contempt of warrant 7/27/94. Hearing
-8-
8/18/94. BSC motion opposing contempt and support of motion to quash 8/10/94.
Working on resolution of matter. Agreement reached 9/9/94 letter from DOL
accepted by 9/12/94 letter from BSC. Motion to quash warrant withdrawn; motion
for contempt withdrawn. Inspection of plant to be set. BSC moves to withdraw
or dismiss motion to quash warrant 9/19/94. Settlement Agreement signed 9/27
and Inspection Protocol reached. Wall-to-wall inspection completed resolution
awaited. Proposal penalty $160,000 to be negotiated.
*77. File No. 93029
LMN
EVAN J. ROUSSEL, SR. VS. GAYLE F. TRULY, ADMINISTRATOR OF THE LOUISIANA
OFFICE OF EMPLOYMENT SECURITY AND BSC (1993), 24th Judicial District Court,
Jefferson Parish, Case No. 453-823
Attorneys letter and Petition were served on BSC's statutory agent by
regular mail (no postmark) on 9/28/93, and received at BSC Dallas, TX on
9/29/93. Plaintiff, former employee (separated on 5/13/93) and nonstriker has
appealed denial of unemployment compensation benefits rendered 8/13/93. Answer
filed 10/13/93. CT served 2/7/94 with administrative record and Dept. of
Labor's opposition to the Appellate Court. New Orleans Legal Assistance
Corporation requests notice of orders, hearings etc. Rule to show case 2/24/94
sets hearing on 4/6/94. Our brief due 3/31/94. Office of Employment Security
brief 3/29/94 favors our position. BSC memo of law filed 3/30/94. Judgment
affirmed 4/14/94.
*78. File No. 93052
LMN
SIMON VS. C&C MARINE, INC. AND BSC, Docket #31918, 40th Judicial District
Court, St. John the Baptist Parish, LA
Citation, Petition for Wrongful Death and Survival Action, Interrogatories
and Document Production Request were served on our statutory agent on 2/11/94.
The lawsuit arises out of an accident on 5/26/93, on a barge docked at BSC's
facility during which one Mark Simon, the plaintiff's son, was killed.
Unspecified damages are claimed. Answer due by 3/30/94. Rice Fowler, insurance
counsel, on board. First supplemental and amending petition per order 5/26/94.
Archer Daniels and America River Transport Co. (barge owners) file complaint
for exoneration 6/30/94 in Federal Court (EDist. Louisiana). Also, on 6/30/94
U.S.D.C. E. Dist. Louisiana issues stay of claims against barge owners.
Settlement discussions, BSC liability limited under Long Shoreman's Act to
$3,000. Settlement 03/14/95. ADM/AR&CO $11,000, C&C Marine $1,000 and BSC
$3,000. Case to be dismissed if payment made by 05/10/95. Mrs. Simon filed
claim with U.S. Department of Labor; settlement needs to be re-worked as of
03/24/95.
-9-
*80. File 94014
LMN
ESQUIVEL VS. SOUTHERN PACIFIC AND BSC, U.S. District Court, Central
District of California (Los Angeles), Cause No. CV-94-1079-SVW (EEX)
Summons, Complaint and Notice of Assignment papers were served on BSC's
statutory agent in Baton Rouge, Louisiana, by overnight courier on June 8,
1994. A response is due by JUNE 29, 1994. The lawsuit is brought by Enedina
Esquivel, a citizen of Mexico, and mother and sole heir of Jose Octavio
Esquivel. Jose was found dead in a Southern Pacific gandola rail car on
September 14, 1993 by an employee of Johanessen Trading Co., Commerce,
California. According to the Complaint, the three men were crushed by a shifting
load of steel beams. The Complaint contends that although it is unknown where
Jose boarded the rail car, the train originated in La Place, and alleges that
both Southern Pacific and BSC were negligent in loading and transporting steel I
beams in violation of federal regulations, which negligence caused Jose's death.
Damages of $1 million, costs of suit and other proper relief are claimed.
Insurance counsel is Schaffer & Lax (Los Angeles), Clifford Schaffer and David
Frishman. Answer filed 7/29/94. In discovery. $175,000 settlement demand made.
Settlement authority $50,000 given by insurers; $30,000 offered. Trial 4/11/95.
No reply. Settled for $40,000 per B. Verette on 12/7/94. BSC will participate in
discovery for background.
*81. File No.
LMN
STATE OF LOUISIANA (DEQ) V. BSC (1994) Department of Environmental Quality
Notice of Violation #AE-N-94-0098
On 6/9/94, BSC and BSC's statutory agent received a letter dated 6/3/94
from DEQ regarding compliance inspections conducted 2/23, 2/25 and 2/28, 3/2,
3/7 and 3/8/94 at the La Place minimill which revealed that (1) four fuel
storage tanks and six natural gas heaters were installed without applying for
permits from the Air Quality Division in violation of LAC 33:III.501.C.2., and
(2) airborne fugitive emissions were noted from "various places" in violation
of LA 33:III.1305. It was also noted that three fugitive emission sources and
the furnace disposal of filters and clothing had not been addressed in BSC's
12/93 revised permit application. Response is requested by 7/11/94. No
specific civil penalties are demanded, but Department reserves the right to
seek them.
-10-
*83. File No. 94048
LMN
JAMES L. STROUP V. BSC, Docket #94-08723, District 06, State of Louisiana,
Office of Workers' Compensation Programs, sixth Compensation District
Complaint filed 11/7/94 arising out of 5/14/94 injury for benefits under
the Longshore and Harbor Workers Compensation Act. Answer 1/27/95. Notice of
Pretrial 3/7/95 @2pm. Pretrial Statement rescheduled to 03/07/95. Defended by
carrier. In discovery. Status conference 04/18/95.
-11-
<PAGE>
SCHEDULE 4.16
ERISA
1. The Borrower has not filed Form 5500's with respect to the following
Welfare Benefit Plans for the years 1990-1993: life insurance, accident, death
and dismemberment, dental, medical, accident and sickness and educational
reimbursement.
2. The "Bayou Steel Defined Benefit Plan" was voluntarily terminated in
1985.
<PAGE>
SCHEDULE 4.17(a)
ENVIRONMENTAL LITIGATION
Environmental Litigation/Liabilities:
Louisiana Department of Environmental Quality
Issuance of Order to Close OC-0214 (Storm Water Retention pond)
Recission of Order To Upgrade OU-0131 (Application to upgrade storm water
permit to solid waste management permit)
Occupational Safety and Health Review Commission
Docket No. 94-1740
Resolution of Settlement Agreement to OSHA Citation issued April 22, 1994
Re: Alleged failure to provide information to USWA on a timely basis.
Occupational Safety and Health Administration
Proposed Penalties From Inspection No. 107630428
Citation and Notification of Penalty Issued April 4, 1995
U.S. Environmental Protection Agency (Region 6)
Multi Media Compliance Inspection (June, 1994)
Case Development Inspection (February, 1995)
Consent Agreement and Order among
Tennessee Department of Environmental and Conservation,
Tennessee Valley Steel Corporation and Southern Alloys and Metal
Corporation
<PAGE>
SCHEDULE 4.17(b)
ASSUMED LIABILITY OR CONTINGENT LIABILITY
Recognized liabilities associated with the ownership of Tennessee Valley
Steel Corporation's assets.
<PAGE>
SCHEDULE 5.01(d)
EXHIBIT 2
BAYOU STEEL CORPORATION
BORROWING BASE CERTIFICATE
(Amount (0000)
--------------
Accounts Receivable Balance $0
Less: Ineligibles Per Definition
in the Borrowing Agreement
(a) -0-
(b) -0-
(c) -0-
(d) -0-
(e) -0-
(f) -0-
(g) -0-
(h) -0-
(i) -0-
(j) -0-
(k) -0-
(l) -0-
(m) -0-
(n) -0-
(o) -0-
(p) -0-
(q) -0-
Total Ineligible A/R ($ 0)
Eligible A/R 0
Rate of Advance
Available A/R for Borrowing Base $0
Inventory Balance:
Scrap 0
Billets 0
Finished Goods 0(1)
Sub-Total 0
Less: Ineligibles Per Definition
in the Borrowing Agreement
(a) -0-
(b) -0-
(c) -0-
(d) -0-
(e) -0-
(f) -0-
Total ineligible Inventory (0)
------
Eligible Inventory 0
Rate of Advance
------
Available Inventory for Borrowing Base 0
------
Total Availability $0
======
- ------------
(1) Excludes transportation to stocking location.
Richard J. Gonzalez
Vice President, Chief Financial
Officer, Treasurer and Secretary
<PAGE>
SCHEDULE 5.01(d)
FORM OF BORROWING BASE CERTIFICATE
BAYOU STEEL CORPORATION
BORROWING BASE CERTIFICATE
AS OF [APPLICABLE DETERMINATION DATE]
(Delivered pursuant to Section 6.04(c) of the Credit Agreement dated as of
June 28, 1989, as amended and restated through June 1, 1995 (the "Credit
Agreement") among Bayou Steel Corporation, the Lenders named therein and
Chemical Bank, as Agent for the Lenders).
Accounts Receivable as of
[Applicable Determination Date] $
----------
Less: Ineligible Accounts Receivable (1)
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
N.
O.
P.
Q.
Total Ineligible Accounts Receivable $
----------
Eligible Accounts Receivable
Rate of Advance
Available Accounts Receivable for
Borrowing Base ----------
Inventory as of [Applicable Determination Date] ----------
Less: Ineligible Inventory as of
[Applicable Determination Date]
[Mill Rolls]
[Alloys and Electrodes]
[Reserve for Unpaid Shipping Costs]
------------
(1) Entries "A" through "Q" correspond to clauses (a) through (g) of the
definition of "Eligible Accounts Receivables" in the Credit Agreement.
[Aged Inventory]
[Balance Sheet Reserves]
[Parts]
[Miscellaneous]
Total Ineligible Inventory
----------
Eligible Inventory
Rate of Advance ----------
Available Inventory for Borrowing Base
----------
Available Accounts Receivable PLUS
Available Inventory
----------
Less:
Aggregate Principal
Amount of Outstanding Term Loans
----------
Next fiscal quarter's interest
payable on Term Loans
----------
$
----------
$
==========
Total Availability
<PAGE>
SCHEDULE 7.01
SCHEDULE OF INDEBTEDNESS
AS OF 3/31/95
------------------------------------------------------------
BALANCE RATE TERM REMAINING TERM
----------- ------ ---------- ---------------------------
First Mortgage
Notes 75,000,000 10.25% 84 months 72 months Maturity in 2001
Hibernia 377,021 10.25% 120 months 14 months
Hewlett Packard 126,989 8.75% 60 months 39 months
Mack Financial 83,094 8.50% 60 months 25 months
-----------
Long Term Debt 75,587,104
-----------
Hibernia 225,751 10.25% 12 months
Hewlett Packard 48,917 8.75% 12 months
Mack Financial 70,222 8.50% 12 months
-----------
Short Term Debt 344,890
-----------
Total Debt 75,931,994
===========
<PAGE>
SCHEDULE 7.01
SCHEDULE OF INDEBTEDNESS
AS OF 3/31/95
------------------------------------------------------------
BALANCE RATE TERM REMAINING TERM
----------- ------ ---------- ---------------------------
First Mortgage
Notes 75,000,000 10.25% 84 months 72 months Maturity in 2001
Hibernia 377,021 10.25% 120 months 14 months
Hewlett Packard 126,989 8.75% 60 months 39 months
Mack Financial 83,094 8.50% 60 months 25 months
-----------
Long Term Debt 75,587,104
-----------
Hibernia 225,751 10.25% 12 months
Hewlett Packard 48,917 8.75% 12 months
Mack Financial 70,222 8.50% 12 months
-----------
Short Term Debt 344,890
-----------
Total Debt 75,931,994
===========
<PAGE>
SCHEDULE 7.02
LIENS
1. Matters set forth as items 9 through 41 on Schedule B of First American
Title Insurance Company Owner's Policy of Title Insurance No. FA-Z18907,
attached.
2. Servitude and Easement from Bayou Steel Corporation to United Gas
Pipeline Company dated March 25, 1987 and recorded April 20, 1987 at Volume
221, Page 155, Deed Records of St. John the Baptist Parish, Louisiana, for
constructing, etc., of a gas pipeline, and property rights of Gulf South
Pipeline Company to a pipeline pursuant to Contract dated March 18, 1987.
3. Right-of-Way permit from Bayou Steel Corporation to Louisiana Power &
Light Company dated May 4, 1988, and recorded June 22, 1988, as Act 120617,
Conveyance 236, Folio 375 in the St. John the Baptist Parish Clerk's Office,
for electric power service.
4. Right-of-Way servitude from Bayou Steel Corporation to St. John the
Baptist Parish dated March 15, 1989, unrecorded, for sewage line.
5. UCC-1 filed July 10, 1987, in St. John the Baptist Parish (LA) by
Signal Capital Corp., under entry 37645, covering the lease of an A.T.&T.
System 75 telephone system and all standard and accessory equipment.
6. Matters set forth as items 9 through 16 on Schedule B of First American
Title Insurance Company Owner's Policy of Title Insurance No. FA-ZZ-48449M,
attached.
7. Matters set forth as items 1 through 24 on Schedule B of Chicago Title
Insurance Policy No. 0-72-42-105, attached.
8. Easement Agreement dated July 1, 1990 from River Road Realty
Corporation to Specialty Steel Products Inc. recorded July 18, 1990, as
instrument 90343634, in Cook County (Illinois) Records.
9. Matters set forth as items 3 through 6 on Schedule B of Fidelity
National Title Insurance Co. Policy No. 0-614481, attached, and matters
reserved in Deed from Matlock Bend Development Inc. to River Road Realty
Corporation recorded November 6, 1992, in Louden County, Tennessee, Register's
Office in Deed Book 202, Page 279.
10. Various UCC-1's were filed in favor of Chemical Bank as agent covering
accounts receivable, inventory and proceeds used as Collateral under the
Credit Agreement dated as of November 23, 1993, among Bayou Steel Corporation,
the Lenders named therein and Chemical Bank, as agent, as follows:
UCC-1
Rogers County, Oklahoma
Oklahoma County, Oklahoma
Cook County, Illinois
Secretary of State of Illinois
Allegheny County, Pennsylvania
Secretary of the Commonwealth of Pennsylvania
Parish of St. John the Baptist, Louisiana
11. Mortgage, Security Agreement and Financing Statement in favor of
Hibernia National Bank dated January 9, 1991 and recorded at volume 846, page
551 of the Rogers County Clerk's Office on January 10, 1991, as instrument
227, covering the Catoosa, Oklahoma property, and as amended by First
Amendment to Mortgage, Security Agreement and Financing Statement between the
parties effective as of November 22, 1993.
12. UCC-1 Financing Statements filed in favor of Hibernia National Bank in
connection with the Mortgage in item #12 above,
Secretary of State of Delaware (Instrument #10390)
Rogers County, Oklahoma Clerk (Instrument #228, Volume 846, Page 564)
Rogers County, Oklahoma Clerk (Instrument #33/N00186)
Orleans Parish, Louisiana (Instrument #36-52245)
and UCC-1 filings filed in connection with the First Amendment described
in item 12, filed as follows:
Secretary of State of Illinois (Instrument #3193686)
Recorder of Cook County, Illinois (Instrument #93U18765)
Oklahoma County, Oklahoma Clerk (Instrument #062432)
Rogers County, Oklahoma Clerk (Instrument [none])
Secretary of State of Pennsylvania (Instrument #22611664)
Secretary of State of Louisiana (Instrument #36-78880)
Recorder of Allegheny County, Pennsylvania (Instrument #8201-93)
13. Four (4) UCC-1s filed August 17, 1987 and January 5, 1988 in St. John
the Baptist Parish (LA) under entries 37838, 37839, 38294 and 38295,
respectively, covering five (5) caterpillar forklifts and two Cherokee scrap
haulers which were purchased by bill of sale on April 6, 1988.
14. One UCC-1 was filed July 24, 1986 in St. John the Baptist Parish (LA)
by MI Jack Products Inc. under entry 36162, covering the lease of a travel
lift, which was purchased on February 2, 1988.
15. The Mortgage and Collateral Assignment of Leases by Bayou Steel
Corporation and River Road Realty Corporation in favor of First National Bank
of Commerce, as Trustee and Collateral Agent, dated March 2, 1994, recorded on
March 3, 1994,
2
as Instrument No. 157232, at Mortgage Book 316, Folio 452, in the office of the
Clerk of Court and ex-officio Recorder for the Parish of Orleans (LA).
16. The Indenture from Bayou Steel Corporation to First National Bank of
Commerce, as Trustee, dated March 2, 1994, as attached to the above described
Mortgage and Collateral Assignment of Leases by Bayou Steel Corporation and
River Road Realty Corporation in favor of First National Bank of Commerce, as
"Exhibit A".
17. Various UCC-1s were filed in favor of First National Bank of Commerce,
as Collateral Agent covering Debtors right, title and interest in all real and
business property used as Collateral under the Indenture dated March 2, 1994
Bayou Steel Corporation to First National Bank of Commerce, as Trustee, as
follows:
Parish of Orleans, Louisiana (four)
Secretary of State, Illinois (one)
Secretary of State of Pennsylvania (one)
Allegheny County, Pennsylvania (one)
18. Matters set forth as items 8 through 45 on Schedule B, Part I of First
American Title Insurance Company Policy of Title Insurance No. FA-31-00626,
attached.
19. The Mortgage, Assignment of Rents and Leases and Security Agreement
from River Road Realty Corporation to First National Bank of Commerce, as
Trustee and Collateral Agent, Mortgagee dated as of March 3, 1994, recorded on
March 3, 1994 at Box 333 Page 94202748 in the office of the recorder of Cook
County, Illinois.
20. Matters set forth as items 1 through 26 on Schedule B of Chicago Title
Insurance Company Loan Policy No. 1401007498272 D1., attached.
21. One UCC-1 was filed in favor of Hewlett-Packard Company covering
Debtor's right, title and interest on electronic equipment per the equipment
schedule attached thereto, as follows:
Parish of St. John, Louisiana, 5/5/93
22. One UCC-1 filed in favor of Amplicon, Inc. covering all of Debtor's
right, title and interest in three Barko 550 Crawler Mounted Scrap Loaders, as
follows:
Parish of St. John, Louisiana, 1/31/90
3
<PAGE>
SCHEDULE 7.09
CAPITAL EXPENDITURES
($ MILLIONS)
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 2000 2001
------ ------ ------ ------ ----- ----- -----
BSC
----
<S> <C> <C> <C> <C> <C> <C> <C>
1. Projects in Prospectus........... 8.2
2. 2nd furnace efficiency........... 3.6 1.5 0.5
3. 2nd furnace environmental(1)..... 0.5 6.0(1) 4.0(1)
4. Dock & scrap yard modifications.. 4.0 6.0
5. Projects -- not specified........ 1.6 2.0 3.0 6.0 6.0 6.0 6.0
TVS
---
1. Specified projects............... 4.0 1.5 0.7
2. Not specified.................... 0.6 0.5 0.8 1.5 1.5 1.5 1.5
3. Reheat furnace modifications(2).. 10.0(2)
------ ------ ------ ------ ----- ----- -----
TOTAL CASH....................... $18.5 $15.5 $15.5 $ 7.5 $ 7.5 $ 7.5 $ 7.5
====== ====== ====== ====== ===== ===== =====
</TABLE>
Comments
- --------
(1) The environmental work on the second furnace may not be needed or may be
postponed 1 or 2 years pending a favorable interpretation of an existing
permit.
(2) The modifications to TVS' reheat furnace could be deferred pending market
conditions.
<PAGE>
SCHEDULE 2.2
TO TERM LOAN AGREEMENT
LENDER TERM LOAN COMMITMENT
- ------ --------------------
Chemical Bank $2,727,272.73
270 Park Avenue
New York, New York 10017
Attention: Mr. Rohan Paul
Telecopy: (212) 270-2555
Internationale Nederlanden $ 2,727,272.73
(U.S.) Capital Corporation
200 Galleria Parkway
Atlanta, Georgia 30339
Attention: Mr. John Lanier
Telecopy: (404) 951-1005
First Interstate Bank of Texas, N.A. $ 1,818,181.82
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Attention: Mr. Frank Schageman
Telecopy: (713) 250-7029
The Daiwa Bank, Limited $ 1,818,181.82
909 Fannin Street, Suite 3750
Houston, Texas 77010
Attention: Mr. Mark Skul
Telecopy: (713) 759-1419
Hibernia National Bank $ 909,090.90
313 Carondelet Street
New Orleans, Louisiana 70130
Attention: Mr. John Castellano
Telecopy: (504) 533-2060
--------------
Total Commitment $10,000,000.00
==============
<PAGE>
SCHEDULE 6.1(a)
Form of Term Loan Borrowing Base Certificate
BAYOU STEEL CORPORATION (TENNESSEE)
BORROWING BASE CERTIFICATE
AS OF [APPLICABLE TERM LOAN DETERMINATION DATE]
(Delivered pursuant to subsection 6.1 of the Term Loan Agreement dated as
of June 1, 1995 (as amended, supplemented or otherwise modified from time to
time, the "Term Loan Agreement") among Bayou Steel Corporation (Tennessee),
the Term Loan Lenders named therein and Chemical Bank, as Agent for the Term
Loan Lenders)
Bayou (Tennessee) Inventory as of
[Applicable Determination Date].................
[List components of Inventory]................... $
---------
Less:
Rejected/Returned Goods......................
Goods in Transit to Third Parties............
A.(1)........................................
B............................................
C............................................
D............................................
E............................................
---------
Bayou (Tennessee) Eligible Inventory............. $
Unencumbered Cash of Bayou (Tennessee)........... $
Applicable Bayou Accounts Receivable:
(a) Accounts of Bayou on most recent
Borrowing Base Certificate..............
(b) Aggregate Book Value of Consolidated
total assets of Bayou on most recent
Consolidated balance sheet of Bayou......
(c) Accounts equal to 5% of (b)..............
(d) 80% of (c)............................... $
---------
Total Term Loan Borrowing base................... $
=========
Less:
Aggregate Principal Amount of
Term Loans outstanding...................... $
Interest payable on Term Loans
for next fiscal quarter.....................
---------
Total Availability............................... $
=========
- -------------
(1) Line Items A through E correspond to clauses (a) through (e) of the
definition of Bayou (Tennessee) Eligible Inventory in the Term Loan
Agreement.
