<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[Mark One]
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From To
----- -----
Commission File Number 33-11634
TRANS-RESOURCES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 36-2729497
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
9 West 57th Street, New York, New York 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 888-3044
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO
--- ---
At August 11, 1997, there were outstanding 3,000 shares of common stock, par
value of $.01 per share, all of which were owned by TPR Investment Associates,
Inc., a privately-held Delaware corporation.
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Form 10-Q
TRANS-RESOURCES, INC.
Form 10-Q Index
June 30, 1997
PART I
Page
Number
------
Item 1. - Financial Statements (Unaudited):
Consolidated Statements of Operations .......................... 3
Consolidated Balance Sheets .................................... 4
Consolidated Statement of Stockholder's Equity ................. 5
Consolidated Statements of Cash Flows .......................... 6
Notes to Unaudited Consolidated Financial Statements ........... 7
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations .......................................... 8
PART II
Item 6. - Exhibits and Reports on Form 8-K ............................... 15
Signatures ............................................................... 16
2
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Form 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period Six Month Period
Ended June 30, Ended June 30,
-------------- --------------
(000's)
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES .............................. $ 110,751 $ 122,422 $ 194,283 $ 240,664
COSTS AND EXPENSES:
Cost of goods sold ............... 88,590 100,030 156,722 196,292
General and administrative ....... 10,832 11,440 20,298 23,085
--------- --------- --------- ---------
OPERATING INCOME ...................... 11,329 10,952 17,263 21,287
Interest expense ................. (7,217) (8,335) (14,421) (17,048)
Interest and other income - net .. 1,610 398 2,536 928
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM .............. 5,722 3,015 5,378 5,167
--------- --------- --------- ---------
INCOME TAX PROVISION:
Current .......................... 197 744 593 1,426
Deferred ......................... 908 807 893 1,134
--------- --------- --------- ---------
1,105 1,551 1,486 2,560
--------- --------- --------- ---------
INCOME BEFORE EXTRAORDINARY
ITEM ............................. 4,617 1,464 3,892 2,607
EXTRAORDINARY ITEM - Loss on repurchase
of debt (no income tax benefit) .. -- (160) -- (553)
--------- --------- --------- ---------
NET INCOME ............................ $ 4,617 $ 1,304 $ 3,892 $ 2,054
========= ========= ========= =========
</TABLE>
See notes to unaudited consolidated financial statements.
3
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Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------- ---------
(Unaudited)
(000's)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .............................. $ 23,256 $ 29,112
Accounts receivable .................................... 101,006 71,551
Inventories:
Finished goods ..................................... 25,883 33,618
Raw materials ...................................... 16,136 19,476
Other current assets ................................... 32,426 30,226
Prepaid expenses ....................................... 17,115 14,635
--------- ---------
Total Current Assets ............................... 215,822 198,618
PROPERTY, PLANT AND EQUIPMENT - NET ......................... 196,781 198,887
OTHER ASSETS ................................................ 34,031 29,126
--------- ---------
Total .............................................. $ 446,634 $ 426,631
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ................... $ 17,449 $ 17,481
Short-term debt ........................................ 16,276 15,348
Accounts payable ....................................... 58,273 38,033
Accrued expenses and other current liabilities ......... 30,826 33,321
--------- ---------
Total Current Liabilities .......................... 122,824 104,183
--------- ---------
LONG-TERM DEBT - NET:
Senior indebtedness, notes payable and other obligations 152,135 152,539
Senior subordinated indebtedness - net ................. 114,230 114,175
--------- ---------
Long-Term Debt - net ............................... 266,365 266,714
--------- ---------
OTHER LIABILITIES ........................................... 29,421 29,480
--------- ---------
STOCKHOLDER'S EQUITY:
Preferred stock, $1.00 par value, 100,000 shares
authorized, issued and outstanding ................. 7,960 7,960
Common stock, $.01 par value, 3,000 shares authorized,
issued and outstanding ............................. -- --
Additional paid-in capital ............................. 8,682 8,682
Retained earnings ...................................... 10,842 9,345
Cumulative translation adjustment ...................... (144) (367)
Unrealized gains on marketable securities .............. 684 634
--------- ---------
Total Stockholder's Equity ......................... 28,024 26,254
--------- ---------
Total .............................................. $ 446,634 $ 426,631
========= =========
</TABLE>
See notes to unaudited consolidated financial statements.
4
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Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
Six Month Period Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Additional Cumulative Unrealized
Preferred Common Paid-In Retained Translation Gains
Stock Stock Capital Earnings Adjustment on Securities Total
------- ------- ------- ------- ------- ------- -------
(000's)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1997.. $ 7,960 $ -- $ 8,682 $ 9,345 $ (367) $ 634 $26,254
Net income ............... 3,892 3,892
Dividends paid:
Common stock ........ (1,970) (1,970)
Preferred stock ..... (425) (425)
Net change during period.. 223 50 273
------- ------- ------- ------- ------- ------- -------
BALANCE, June 30, 1997 ... $ 7,960 $ -- $ 8,682 $10,842 $ (144) $ 684 $28,024
======= ======= ======= ======= ======= ======= =======
</TABLE>
See notes to unaudited consolidated financial statements.
5
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Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Month Period
Ended June 30,
------------------------
1997 1996
-------- --------
(000's)
<S> <C> <C>
OPERATING ACTIVITIES AND WORKING CAPITAL
MANAGEMENT:
Operations:
Net income .................................................... $ 3,892 $ 2,054
Items not requiring (providing) cash:
Depreciation and amortization ............................. 10,002 12,054
Deferred taxes and other - net ............................ (696) 667
-------- --------
Total ................................................ 13,198 14,775
Working capital management:
Accounts receivable and other current assets .................. (33,376) (34,750)
Inventories ................................................... 11,075 3,683
Prepaid expenses .............................................. (2,480) (638)
Accounts payable .............................................. 20,240 5,989
Accrued expenses and other current liabilities ................ (2,495) (3,744)
-------- --------
Cash provided (used) by operations and working
capital management ................................... 6,162 (14,685)
-------- --------
INVESTMENT ACTIVITIES:
Additions to property, plant and equipment ........................ (7,415) (6,921)
Purchases of marketable securities and other short-term investments (5,355) (3,833)
Sales of marketable securities and other short-term investments ... 7,076 623
Other - net ....................................................... (4,421) 7,682
-------- --------
Cash provided (used) by investment activities ............. (10,115) (2,449)
-------- --------
FINANCING ACTIVITIES:
Increase in short-term debt ....................................... 928 8,582
Increase in long-term debt ........................................ 6,500 47,522
Repurchases, payments and current maturities of long-term debt .... (6,936) (52,492)
Distributions to stockholder ...................................... (2,395) (2,081)
-------- --------
Cash provided (used) by financing activities .............. (1,903) 1,531
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS .............................. (5,856) (15,603)
CASH AND CASH EQUIVALENTS:
Beginning of period ............................................... 29,112 32,872
-------- --------
End of period ..................................................... $ 23,256 $ 17,269
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
6
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Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation and Other Matters
The consolidated financial statements of Trans-Resources, Inc. ("TRI"),
include TRI and its direct and indirect wholly-owned subsidiaries, after
elimination of intercompany accounts and transactions. TRI operates through its
subsidiaries, principally: Cedar Chemical Corporation ("Cedar"), and Cedar's
wholly-owned subsidiary, Vicksburg Chemical Company ("Vicksburg"); Na-Churs
Plant Food Company ("Na-Churs"); and Haifa Chemicals Ltd. ("HCL") and HCL's
wholly-owned subsidiary, Haifa Chemicals South, Ltd. ("HCSL"). TRI is a
wholly-owned subsidiary of TPR Investment Associates, Inc. ("TPR"). As used
herein, the term "the Company" means TRI together with its direct and indirect
subsidiaries. Certain prior period amounts have been reclassified to conform to
the manner of presentation in the current period.
On August 16, 1996 NMPC, Inc. (name changed from New Mexico Potash
Corporation upon completion of the sale of its potash operations; "NMPC"), a
wholly-owned subsidiary of Cedar, and EDP, Inc. (name changed from Eddy Potash,
Inc. upon completion of the sale of its potash operations; "EDP"), a
wholly-owned subsidiary of the Company, sold substantially all of their assets
for an aggregate consideration of $56,154,000, including a payment for working
capital of $11,154,000, and the assumption of specified liabilities (but
excluding, among other things, certain antitrust litigation). Approximately 50%
of the aggregate sales proceeds were applied to prepay debt secured by the
assets of NMPC or EDP. In connection with the sale, Vicksburg entered into a
five year potash supply agreement, at prevailing market rates during the period
(subject to certain adjustments), with the buyer.
NMPC and EDP had conducted the Company's potash mining and production
operations. During the six month period ended June 30, 1996, the potash
operations contributed approximately $29,000,000 (12%) to the Company's
consolidated revenues, after eliminating intercompany sales.
See Item 2 below - "Management's Discussion and Analysis of Financial
Condition and Results of Operations Labor Disruption at HCL" for certain
information regarding a labor dispute and strike at HCL.
7
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In the opinion of management, the unaudited consolidated financial
statements for the six month periods ended June 30, 1997 and 1996, respectively,
include all adjustments, which comprise only normal recurring accruals,
necessary for a fair presentation of the results for such periods. The results
of operations for the six month period ended June 30, 1997 are not necessarily
indicative of results that may be expected for any other interim period or the
full fiscal year. It is suggested that these unaudited consolidated financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 (the "Form 10-K"), which has been filed with the Securities
and Exchange Commission.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth, as a percentage of revenues and the
percentage dollar change of those items as compared to the prior period, certain
items appearing in the unaudited consolidated financial statements of the
Company.
<TABLE>
<CAPTION>
Percentage Period Percentage Period
of Revenues to of Revenues to
Three Month Period Six Month Period
Period Ended Changes Period Ended Changes
June 30, Increase June 30, Increase
1997 1996 (Decrease) 1997 1996 (Decrease)
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Revenues .......................... 100.0% 100.0% (9.5)% 100.0% 100.0% (19.3)%
Costs and expenses:
Cost of goods sold ............ 80.0 81.7 (11.4) 80.7 81.6 (20.2)
General and administrative .... 9.8 9.3 (5.3) 10.4 9.5 (12.1)
----- ----- ----- ----- -----
Operating income .................. 10.2 9.0 3.4 8.9 8.9 (18.9)
Interest expense .............. (6.5) (6.8) (13.4) (7.4) (7.1) (15.4)
Interest and other income - net 1.5 0.3 304.5 1.3 0.4 173.3
----- ----- ----- ----- -----
Income before income taxes
and extraordinary item ........ 5.2 2.5 89.8 2.8 2.2 4.1
Income tax provision .............. 1.0 1.3 (28.8) 0.8 1.1 (42.0)
----- ----- ----- ----- -----
Income before extraordinary item .. 4.2 1.2 215.4 2.0 1.1 49.3
Extraordinary item ................ -- (0.1) 100.0 -- (0.2) 100.0
----- ----- ----- ----- -----
Net income ........................ 4.2% 1.1% 254.1% 2.0% 0.9% 89.5%
===== ===== ===== ===== ===== =====
</TABLE>
8
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Form 10-Q
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements herein (and in the Form 10-K) constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include, but are
not limited to, statements concerning future revenues (e.g., impact of HCL work
stoppage and strike and inflation in Israel); expenses (e.g., cost savings
resulting from HCL's new labor agreement, future environmental costs and capital
expenditures); and access to lending sources and Israeli Government
entitlements. Such forward-looking statements involve unknown and uncertain
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
political stability, inflation and currency rates in those foreign countries
(including, without limitation, Israel) in which the Company generates a
significant portion of its production, sales and earnings; current or future
environmental developments or regulations which would require the Company to
make substantial expenditures, and changes in, or the failure of the Company to
comply with, such government regulations; the potentially hazardous nature of
certain of the Company's products; the ability to achieve anticipated labor cost
reductions at HCL; the Company's ability to continue to service and refinance
its debt; new plant start-up costs; competition; changes in business strategy or
expansion plans; raw material costs and availability; the final outcome of the
legal proceedings to which the Company is a party (see Item 3- "Legal
Proceedings" in the Form 10-K); and other factors referenced in this Form 10-Q
(or in the Company's Form 10-K).
LABOR DISRUPTION AT HCL
Technicians and engineers of HCL are members of the Union of
Technicians and Engineers, which operates throughout Israel. The other employees
of HCL are members of the "Histadrut", the dominant labor union in Israel. The
terms of employment of all employees are governed by a Specific Collective
Agreement ("SCA") negotiated by HCL with the Histadrut and the representatives
of the employees. In 1994, an agreement was signed with the technicians and
engineers for the three year period ended December 31, 1996. In 1995, an SCA was
signed with the Histadrut and the representatives of the employees for the two
year period ended December 31, 1996.
In September, 1996, in accordance with its rights pursuant to the
above-mentioned agreements, HCL announced the cancellation of such agreements
effective with their expiration dates. HCL also announced its intent to
negotiate a new SCA with basic changes for the period commencing after December
31, 1996.
9
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As a result of the announced cancellation of the labor agreements,
during October, 1996 HCL suffered several work stoppages and other job actions
which adversely affected plant productivity, which was followed by a complete
work stoppage and plant shut-down from October 29 to November 14, 1996. Based on
a decision of a regional labor court, HCL's plant was then ordered to be
re-opened temporarily. The court also ordered HCL and representatives of the
workers to continue to negotiate a settlement of the labor dispute.
Notwithstanding the court's ruling, HCL suffered numerous job actions by its
workers which again led to very low productivity. On December 3, 1996 the
workers declared a strike and the plant was shut-down. The plant remained closed
until March 10, 1997 when a new SCA was signed for the three year period ending
December 31, 1999. Subsequent to March 10, 1997, HCL's plant reopened and
gradually began production. By the end of May, 1997, HCL's plant was operating
at approximately full capacity.
As a result of the strike at HCL, 1997 (particularly the first quarter)
was significantly impacted by a reduction in sales volume, resulting in the
under-absorption of fixed overhead, and lower gross margins due to reduced
productivity, coupled with inventory shortages requiring purchases from third
parties and increased general and administrative expenses arising from higher
security and other costs. This adverse impact was partially offset by lower
labor costs.
Management believes that the cost savings as a result of the changes in
the terms of the new SCA over the labor costs it would otherwise have incurred
during the next few years will substantially exceed the costs incurred during
the period of labor disruption. Such savings commenced during the second quarter
of 1997.
RESULTS OF OPERATIONS
Three month period ended June 30, 1997 compared with the three month
period ended June 30, 1996:
Revenues decreased by 9.5% to $110,751,000 in 1997 from $122,422,000 in
1996, a decrease of $11,671,000, resulting from decreased sales of specialty
plant nutrients and industrial chemicals ($1,800,000) as a result of the HCL
strike and less favorable currency exchange rates in 1997 and a decrease of
sales of potash ($13,500,000) as a result of the sale of the Company's potash
operations, which were partially offset by higher sales of organic chemicals
($3,600,000). See "Labor Disruption at HCL" above for information regarding a
labor dispute and strike at HCL commencing October, 1996.
Cost of goods sold as a percentage of revenues decreased to 80.0% in
1997 compared with 81.7% in 1996. Gross profit was $22,161,000 in 1997 compared
with $22,392,000 in 1996 (20.0% of revenues in 1997 compared with 18.3% of
revenues in 1996), a decrease of $231,000. The primary factors resulting in the
decreased gross profit were (i) less favorable currency exchange rates in the
1997 period ($8,100,000) and (ii) the adverse effect of the strike at HCL (see
"Labor Disruption at HCL" above). These decreases were almost fully offset by
lower raw material, energy and
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wage costs, certain selling price increases and by higher organic chemical
margins in the 1997 period. General and administrative expense decreased to
$10,832,000 in 1997 from $11,440,000 in 1996, but increased slightly as a
percentage of revenues (9.8% of revenues in 1997 compared with 9.3% of revenues
in 1996).
As a result of the matters described above, the Company's operating
income increased by $377,000 to $11,329,000 in 1997 as compared with $10,952,000
in 1996.
Interest expense decreased by $1,118,000 ($7,217,000 in 1997 compared
with $8,335,000 in 1996) primarily as a result of (i) the maturity of the
Company's outstanding Senior Subordinated Reset Notes in September, 1996 and
(ii) the prepayment of senior bank debt upon the sale of the Company's potash
operations. Interest and other income - net increased in 1997 by $1,212,000,
principally as the result of certain realized gains on marketable securities in
the 1997 period.
As a result of the above factors, income before income taxes and
extraordinary item increased by $2,707,000 in 1997. The Company's provisions for
income taxes are impacted by the mix between domestic and foreign earnings and
vary from the U.S. Federal statutory rate principally due to the impact of
foreign operations and certain losses for which there is no current tax benefit.
In the 1996 period the Company acquired $7,885,000 principal amount of
its Senior Subordinated Reset Notes, which resulted in a loss of $160,000. Such
loss (which has no current tax benefit) is classified as an extraordinary item
in the accompanying Consolidated Statements of Operations. No such debt was
acquired in the 1997 period.
Six month period ended June 30, 1997 compared with the six month period
ended June 30, 1996:
Revenues decreased by 19.3% to $194,283,000 in 1997 from $240,664,000
in 1996, a decrease of $46,381,000, resulting from decreased sales of specialty
plant nutrients and industrial chemicals ($20,600,000) primarily as a result of
the HCL strike and less favorable currency exchange rates in 1997 and a decrease
of sales of potash ($29,400,000) as a result of the sale of the Company's potash
operations, which were partially offset by higher sales of organic chemicals
($3,600,000). See "Labor Disruption at HCL" above for information regarding a
labor dispute and strike at HCL commencing October, 1996.
Cost of goods sold as a percentage of revenues decreased to 80.7% in
1997 compared with 81.6% in 1996. Gross profit was $37,561,000 in 1997 compared
with $44,372,000 in 1996 (19.3% of revenues in 1997 compared with 18.4% of
revenues in 1996), a decrease of $6,811,000. The primary factors resulting in
the decreased gross profit were (i) less favorable currency exchange rates in
the 1997 period ($10,600,000), (ii) the adverse effect of the strike at HCL (net
of HCL's claim for reimbursement from an Israeli industrial association for
partial contribution towards the costs suffered during the period of the strike)
(see "Labor Disruption at HCL" above) and (iii) the sale of the Company's potash
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operations. These decreases were partially offset by higher organic chemical
margins in the 1997 period and lower raw material, energy and wage costs and
certain selling price increases. General and administrative expense decreased to
$20,298,000 in 1997 from $23,085,000 in 1996, but increased as a percentage of
revenues (10.4% of revenues in 1997 compared with 9.5% of revenues in 1996).
During the 1997 period, certain HCL general and administrative expenses
(security costs, communications expenses, etc.) were adversely effected by the
strike.
As a result of the matters described above, the Company's operating
income decreased by $4,024,000 to $17,263,000 in 1997 as compared with
$21,287,000 in 1996.
Interest expense decreased by $2,627,000 ($14,421,000 in 1997 compared
with $17,048,000 in 1996) primarily as a result of (i) the maturity of the
Company's Senior Subordinated Reset Notes in September, 1996 and (ii) the
prepayment of senior bank debt upon the sale of the Company's potash operations.
Interest and other income - net increased in 1997 by $1,608,000, principally as
the result of certain realized gains on marketable securities in the 1997
period.
As a result of the above factors, income before income taxes and
extraordinary item increased by $211,000 in 1997. The Company's provisions for
income taxes are impacted by the mix between domestic and foreign earnings and
vary from the U.S. Federal statutory rate principally due to the impact of
foreign operations and certain losses for which there is no current tax benefit.
In the 1996 period the Company acquired $19,122,000 principal amount of
its Senior Subordinated Reset Notes, which resulted in a loss of $553,000. Such
loss (which has no current tax benefit) is classified as an extraordinary item
in the accompanying Consolidated Statements of Operations. No such debt was
acquired in the 1997 period.
CAPITAL RESOURCES AND LIQUIDITY
The Company's consolidated working capital at June 30, 1997 and
December 31, 1996 was $92,998,000 and $94,435,000, respectively.
Operations for the six month periods ended June 30, 1997 and 1996,
after adding back non-cash items, provided cash of approximately $13,200,000 and
$14,800,000, respectively. During such periods other changes in working capital
used cash of approximately $7,000,000 and $29,500,000, respectively, resulting
in cash being provided (used) by operating activities and working capital
management of approximately $6,200,000 and ($14,700,000), respectively.
Investment activities during the six month periods ended June 30, 1997
and 1996 used cash of approximately $10,100,000 and $2,400,000, respectively,
including additions to property in 1997 and 1996 of approximately $7,400,000 and
$6,900,000, respectively, purchases of marketable securities and other
short-term investments of approximately $5,400,000 and $3,800,000, respectively,
and sales of marketable securities and other short-term investments of
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approximately $7,100,000 and $600,000, respectively. No major property additions
occurred in the 1997 or 1996 periods.
Financing activities during the six month periods ended June 30, 1997
and 1996 provided (used) cash of approximately ($1,900,000) and $1,500,000,
respectively.
As of June 30, 1997, the Company had outstanding long-term debt
(excluding current maturities) of $266,365,000. The Company's primary source of
liquidity is cash flow generated from operations and its unused credit lines.
Approximately 90% of HCL's sales are made outside of Israel in various
currencies, of which approximately 40% are in U.S. dollars, with the remainder
principally in Western European currencies. In order to mitigate the impact of
currency fluctuations against the U.S. dollar, the Company has a general policy
of hedging a significant portion of its foreign sales denominated in Western
European currencies by entering into forward exchange contracts. A portion of
these contracts qualify as hedges pursuant to Statement of Financial Accounting
Standards No. 52 and accordingly, unrealized gains and losses arising therefrom
are deferred and accounted for in the subsequent year as part of sales.
Unrealized gains and losses for the remainder of the forward exchange contracts
are recognized in income currently. If the Company had not followed such a
policy of entering into forward exchange contracts in order to hedge its foreign
sales, and instead recognized income based on the then prevailing foreign
currency rates, the Company's income before income taxes for the six month
periods ended June 30, 1997 and 1996, would have decreased by approximately
$3,900,000 and $3,200,000, respectively.
The principal purpose of the Company's hedging program (which is for
other than trading purposes) is to mitigate the impact of fluctuations against
the U.S. dollar, as well as to protect against significant adverse changes in
exchange rates. Accordingly, the gains and losses recognized relating to the
hedging program in any particular period and the impact on revenues had the
Company not had such a program are not necessarily indicative of its
effectiveness.
CAPITAL EXPENDITURES
During the six month period ended June 30, 1997 the Company invested
approximately $7,400,000 in capital expenditures. The Company currently
anticipates that capital expenditures for the year ending December 31, 1997 will
aggregate approximately $20,000,000. The Company's capital expenditures will be
used primarily for increasing certain production capacity and efficiency,
product diversification and for ecological matters.
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INFLATION
Inasmuch as only approximately $62,000,000 of HCL's annual operating
costs are denominated in New Israeli Shekels ("NIS"), HCL is exposed to
inflation in Israel to a limited extent. The combination of price increases
coupled with devaluation of the NIS have in the past generally enabled HCL to
avoid a material adverse impact from inflation in Israel. However, HCL's
earnings increase or decrease to the extent that the rate of future NIS
devaluation differs from the rate of Israeli inflation. For the years ended
December 31, 1996 and 1995 the inflation rate of the NIS as compared to the U.S.
Dollar exceeded the devaluation rate in Israel by 6.9% and 4.2%, respectively.
ENVIRONMENTAL MATTERS
See Item 1 - "Business - Environmental Matters" and Note O of Notes to
Consolidated Financial Statements included in the Company's Form 10-K for
information regarding environmental matters relating to the Company's various
facilities.
OTHER MATTERS
Effective August 1, 1997, Cedar and Westrade USA, Inc. ("Westrade")
formed Riceco LLC ("Riceco"), to market propanil, combination rice herbicides
and other rice-related chemicals (other than fertilizers) on a worldwide basis.
Cedar and Westrade each own 50% of Riceco.
Riceco, unlike other marketing companies which often serve several
markets, will concentrate solely on rice-related products. By capitalizing on
the strengths of Cedar and Westrade in formulation and production, Riceco's goal
is to become a significant marketer of rice-related products throughout the
world. All of Riceco's propanil products and combination formulations will be
produced by Cedar.
Westrade is a wholly owned subsidiary of Westrade, Inc., a Cayman
Islands corporation, which produces, markets and distributes various
agricultural chemicals.
14
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 10.16 - Credit Agreement, dated as of November 3, 1995 and
amended and restated as of July 31, 1997, among Cedar Chemical
Corporation, the Lenders listed on the signature pages thereof and The
Chase Manhattan Bank, as Administrative Agent (exhibits and schedules
omitted).
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter for which this
report is filed.
15
<PAGE> 16
Form 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANS-RESOURCES, INC.
---------------------
(Registrant)
Date: August 11, 1997 Lester W. Youner
---------------------
Vice President, Treasurer and
Chief Financial Officer
16
<PAGE> 17
TRANS-RESOURCES, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description Page No.
- ------- ----------- --------
<S> <C> <C>
10.16 Credit Agreement, dated as of November 3, 1995 and amended and
restated as of July 31, 1997, among Cedar Chemical Corporation, the
Lenders listed on the signature pages thereof and The Chase
Manhattan Bank, as Administrative Agent (exhibits and schedules
omitted).
27 Financial Data Schedule.
</TABLE>
17
<PAGE> 1
************************************************************
CEDAR CHEMICAL CORPORATION
CREDIT AGREEMENT
Dated as of November 3, 1995
and
Amended and Restated as of July 31, 1997
THE CHASE MANHATTAN BANK
as Administrative Agent
************************************************************
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINITIONS AND ACCOUNTING MATTERS
SECTION 1.01. Certain Defined Terms...................................... 1
SECTION 1.02. Accounting Terms and Determinations........................ 20
SECTION 1.03. Classes and Types of Loans and Lenders..................... 21
ARTICLE 2
COMMITMENTS
SECTION 2.01. Loans...................................................... 21
SECTION 2.02. Letters of Credit.......................................... 22
SECTION 2.03. Reductions of Commitments.................................. 24
SECTION 2.04. Fees....................................................... 25
SECTION 2.05. Lending Offices............................................ 26
SECTION 2.06. Several Obligations........................................ 26
SECTION 2.07. Notes...................................................... 26
SECTION 2.08. Use of Proceeds............................................ 27
ARTICLE 3
BORROWINGS, CONVERSIONS AND PREPAYMENTS
SECTION 3.01. Borrowings................................................. 27
SECTION 3.02. Prepayments and Conversions................................ 27
ARTICLE 4
PAYMENTS OF PRINCIPAL AND INTEREST
SECTION 4.01. Repayment of Loans......................................... 31
SECTION 4.02. Interest................................................... 31
ARTICLE 5
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
SECTION 5.01. Payments................................................... 33
SECTION 5.02. Pro Rata Treatment......................................... 34
SECTION 5.03. Computations............................................... 34
SECTION 5.04. Minimum and Maximum Amounts; Types......................... 34
SECTION 5.05. Certain Notices............................................ 35
SECTION 5.06. Non-receipt of Funds by the Administrative Agent........... 36
SECTION 5.07. Sharing of Payments, Etc................................... 36
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 5.08. Taxes...................................................... 37
ARTICLE 6
YIELD PROTECTION AND ILLEGALITY
SECTION 6.01. Additional Costs........................................... 39
SECTION 6.02. Limitation on Types of Loans............................... 41
SECTION 6.03. Illegality................................................. 41
SECTION 6.04. Substitute Base Rate Loans................................. 42
SECTION 6.05. Compensation............................................... 42
SECTION 6.06. Additional Costs in Respect of Letters of Credit........... 43
SECTION 6.07. Capital Adequacy........................................... 43
ARTICLE 7
CONDITIONS PRECEDENT
SECTION 7.01. Initial Tranche B Term Loans............................... 44
SECTION 7.02. Initial and Subsequent Loans and Letters of Credit......... 44
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
SECTION 8.01. Corporate Existence........................................ 44
SECTION 8.02. Information................................................ 45
SECTION 8.03. Litigation................................................. 46
SECTION 8.04. No Breach.................................................. 46
SECTION 8.05. Corporate Action........................................... 46
SECTION 8.06. Approvals.................................................. 46
SECTION 8.07. Regulations U and X........................................ 47
SECTION 8.08. ERISA...................................................... 47
SECTION 8.09. Taxes...................................................... 47
SECTION 8.10. Subsidiaries; Agreements................................... 47
SECTION 8.11. Investment Company Act..................................... 48
SECTION 8.12. Public Utility Holding Company Act......................... 48
SECTION 8.13. Ownership and Use of Properties............................ 48
SECTION 8.14. Environmental Matters...................................... 48
SECTION 8.15. Foreign Subsidiaries....................................... 51
ARTICLE 9
COVENANTS
SECTION 9.01. Information................................................ 52
SECTION 9.02. Taxes and Claims........................................... 56
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 9.03. Insurance.................................................. 56
SECTION 9.04. Maintenance of Existence; Conduct of Business.............. 59
SECTION 9.05. Maintenance of and Access to Properties.................... 59
SECTION 9.06. Compliance with Applicable Laws............................ 60
SECTION 9.07. Litigation................................................. 60
SECTION 9.08. Indebtedness............................................... 60
SECTION 9.09. Current Ratio.............................................. 60
SECTION 9.10. Leverage Ratio............................................. 60
SECTION 9.11. Interest Coverage Ratio.................................... 61
SECTION 9.12. Fixed Charge Coverage Ratio................................ 62
SECTION 9.13. Mergers, Asset Dispositions, Acquisitions, Etc............. 62
SECTION 9.14. Liens...................................................... 63
SECTION 9.15. Investments................................................ 63
SECTION 9.16. Restricted Payments........................................ 63
SECTION 9.17. Transactions with Affiliates............................... 64
SECTION 9.18. Lines of Businesses; Other Activities...................... 64
SECTION 9.19. Capital Expenditures....................................... 65
SECTION 9.20. Modification of Other Agreements........................... 65
SECTION 9.21. Bank Accounts.............................................. 66
SECTION 9.22. Interest Rate Protection................................... 66
SECTION 9.23. Environmental Matters...................................... 66
SECTION 9.24. Landlord's and Other Waivers............................... 67
ARTICLE 10
DEFAULTS
SECTION 10.01. Events of Default......................................... 67
SECTION 10.02. Collateral Account........................................ 70
ARTICLE 11
THE ADMINISTRATIVE AGENT
SECTION 11.01. Appointment, Powers and Immunities........................ 71
SECTION 11.02. Reliance by Administrative Agent.......................... 72
SECTION 11.03. Defaults.................................................. 72
SECTION 11.04. Rights as a Lender........................................ 72
SECTION 11.05. Indemnification........................................... 73
SECTION 11.06. Non-Reliance on Administrative Agent and Other Lenders.... 73
SECTION 11.07. Failure to Act............................................ 74
SECTION 11.08. Resignation or Removal of Administrative Agent............ 74
SECTION 11.09. Collateral Sub-Agents..................................... 74
SECTION 11.10. Register.................................................. 75
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Waiver.................................................... 75
SECTION 12.02. Notices................................................... 75
SECTION 12.03. Expenses, Etc............................................. 76
SECTION 12.04. Indemnification........................................... 76
SECTION 12.05. Amendments, Etc........................................... 77
SECTION 12.06. Successors and Assigns.................................... 77
SECTION 12.07. Confidentiality........................................... 79
SECTION 12.08. Survival.................................................. 79
SECTION 12.09. Captions.................................................. 79
SECTION 12.10. Counterparts; Integration................................. 79
SECTION 12.11. GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL............................................. 79
ARTICLE 13
EFFECTIVENESS, ETC
SECTION 13.01. Effectiveness............................................. 80
SECTION 13.02. Amendment to Company Pledge Agreement..................... 82
SECTION 13.02. Amendment to Company Pledge Agreement..................... 88
</TABLE>
SCHEDULES
SCHEDULE I - Assigned Agreements
SCHEDULE II - Security Documents
SCHEDULE III - Scheduled Term Loan Installments
SCHEDULE IV - Investments
SCHEDULE V - Credit Agreements, Letters of Credit, Liens, etc.
SCHEDULE VI - Environmental Matters
SCHEDULE VII - Eligible Foreign Account Debtors
EXHIBITS
EXHIBIT A - Form of Tranche A Term Note
EXHIBIT B - Form of Tranche B Term Note
EXHIBIT C - Form of Working Capital Note
EXHIBIT D - Form of Borrowing Base Certificate
EXHIBIT E - Form of Opinion of Counsel to the Company
EXHIBIT F - Form of Opinion of Counsel to the
Company and the Parent
EXHIBIT G - Form of Parent Guarantor Acknowledgment
EXHIBIT H - Form of Nine West Guarantor Acknowledgment
iv
<PAGE> 6
EXHIBIT I - Form of Subsidiary Guarantor Acknowledgement
EXHIBIT J - Form of Summary of Sales by Product Group
EXHIBIT K - Form of Summary of Sales by Product Group and
other Income Statement Information
EXHIBIT L - Form of Amendment No. 2 to Company Pledge Agreement
EXHIBIT M - Form of Riceco Promissory Note
v
<PAGE> 7
CREDIT AGREEMENT
AGREEMENT dated as of November 3, 1995 and amended and restated as of
July 31, 1997, among: CEDAR CHEMICAL CORPORATION, a corporation duly organized
and validly existing under the laws of the State of Delaware (together with its
successors, the "COMPANY"); each of the lenders which is or which may from time
to time become a signatory hereto (individually, together with its successors, a
"LENDER" and, collectively, together with their respective successors, the
"LENDERS"); and THE CHASE MANHATTAN BANK, as administrative agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"ADMINISTRATIVE AGENT").
WHEREAS, the Company is a party to a Credit Agreement (as heretofore
amended, the "ORIGINAL AGREEMENT") dated as of November 3, 1995, together with
each of the Lenders and The Chase Manhattan Bank, as administrative agent for
the Lenders;
WHEREAS, the parties hereto desire to further amend the Original
Agreement to (i) provide additional Tranche B Term Loans to the Company in the
aggregate amount of $9,000,000, (ii) permit the Company to contribute certain
propanil-related assets to a newly-formed entity to be 50% owned by the Company
and 50% owned by Westrade USA, Inc., (iii) change the amortization schedule for
the Tranche B Term Loans outstanding, (iv) amend the covenant restricting the
amount of outstanding indebtedness to EBITDA, (v) reduce the Working Capital
Commitments, and (vi) permit an increase in the amount of capital expenditures
permitted to be incurred by the Company and its Subsidiaries; and
WHEREAS, in order to set forth in one document, for the convenience of
the parties, the text of the Original Agreement as heretofore amended and as
amended by the amendments to be made upon the effectiveness hereof, the Original
Agreement as heretofore amended will, upon satisfaction of the conditions set
forth in Section 13.01 hereof, be amended and restated to read in full as set
forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING MATTERS
SECTION 1.01. Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
<PAGE> 8
"ADJUSTED CASH FLOW" shall mean, for any period, the sum (without
duplication), determined on a consolidated basis for the Company and its
Subsidiaries, of (i) Cash Flow for such period, minus (ii) (to the extent not
deducted in determining Cash Flow for such period) current income tax
liabilities of the Company and its Subsidiaries accrued during such period.
"AFFILIATE" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member of
the immediate family (including parents, siblings, spouse, children,
stepchildren, nephews, nieces and grandchildren) of such individual and any
trust whose principal beneficiary is such individual or one or more members of
such immediate family and any Person who is controlled by any such member or
trust. As used in this definition, "CONTROL" (including, with correlative
meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event, any Person which owns directly or indirectly more than 5% of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or more than 5% of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
"AMENDED AGREEMENT" shall mean this Credit Agreement dated as of
November 3, 1995 and amended and restated as of July 31, 1997 among the Company,
the Lenders and the Administrative Agent.
"AMENDMENT INFORMATION" means the written information distributed to
the Lenders with the letter dated July 16, 1997 from the Administrative Agent to
the Lenders in connection with this Amended Agreement and the transactions
contemplated hereby.
"APPLICABLE LENDING OFFICE" shall mean, for each Lender and for each
Type of Loan or Letter of Credit, the Lending Office of such Lender (or of an
affiliate of such Lender) designated for such Type of Loan or Letter of Credit
below its name on the signature pages hereof or such other office of such Lender
(or of an affiliate of such Lender) as such Lender may from time to time specify
to the Administrative Agent and the Company as the office by which its Loans of
such Type or such Letters of Credit are to be made and/or issued and maintained.
"APPLICABLE MARGIN" shall mean:
(a) With respect to any Tranche A Term Loan or Working Capital Loan or
Letter of Credit and during any Performance Period (or portion thereof), the
percentage indicated below opposite the Applicable Pricing Ratio for such
2
<PAGE> 9
Performance Period (or portion thereof) (determined, in the case of any Loan, as
a function of the type of such Loan):
<TABLE>
<CAPTION>
Applicable Base Euro- Letters
Pricing Rate dollar of
Tier Ratio Loans Loans Credit
<S> <C> <C> <C> <C>
Tier I Less than or .500% 1.750% 1.500%
equal to
2.25:1
Tier II Less than or .750% 2.000% 1.750%
equal to
3.0:1 but
more than
2.25:1
Tier III Less than or 1.000% 2.250% 2.000%
equal to
3.75:1 but
more than
3.0:1
Tier IV Greater 1.375% 2.625% 2.375%
than 3.75:1
</TABLE>
(b) With respect to any Tranche B Term Loan, 2.00% per annum for Base
Rate Loans and 3.25% per annum for Eurodollar Loans.
"APPLICABLE PRICING RATIO" shall mean, for any Performance Period, the
ratio of (x) Indebtedness of the Company and its Subsidiaries, determined on a
consolidated basis as at the end of the fiscal quarter (the "STATEMENT QUARTER")
to which the financial statements received by the Administrative Agent on the
first day of such Performance Period relate, to (y) Cash Flow for the period of
four fiscal quarters ending at the end of the statement quarter, considered as a
single accounting period, provided that if the Company shall at any time fail to
deliver the financial statements and related certificate with respect to any
fiscal quarter required pursuant to Section 9.01(a) or (b) and the last
paragraph of Section 9.01 on or prior to the date when due, then, until such
financial statements and related certificate shall have been delivered, the
Applicable Pricing Ratio shall be deemed to be greater than 3.75:1.
"ASSIGNED AGREEMENTS" shall mean, collectively, the agreements listed
on Schedule I hereto, as each such agreement shall, subject to Section 9.20
hereof, be modified and supplemented and in effect from time to time.
3
<PAGE> 10
"BANKRUPTCY CODE" shall mean the United States Bankruptcy Code, as now
or hereafter in effect, or any successor statute.
"BASE RATE" shall mean, with respect to any Base Rate Loan for any day,
the rate per annum equal to the higher as of such day of (i) the Federal Funds
Rate plus 1/2 of 1% or (ii) the Prime Rate.
"BASE RATE LOANS" shall mean Loans which bear interest at a rate based
upon the Base Rate.
"BASIC DOCUMENTS" shall mean the Financing Documents, the Assigned
Agreements and the Tax Sharing Agreement.
"BORROWING BASE" shall mean, as at any date, the amount of the
Borrowing Base as of the date of the Borrowing Base Certificate then most
recently delivered pursuant to Section 9.01(c), determined by calculating the
sum of (i) 85% of the aggregate amount of Eligible Receivables at said date plus
(ii) 50% of the aggregate amount of Eligible Inventory at said date; provided
that the amount determined pursuant to clause (ii) shall at no time exceed 50%
of the Borrowing Base.
"BORROWING BASE CERTIFICATE" shall mean a certificate, duly executed by
a Senior Officer, appropriately completed and in substantially the form of
Exhibit D hereto.
"BUSINESS DAY" shall mean any day other than a day on which commercial
banks are authorized or required to close in New York City and, where such term
is used in the definition of "QUARTERLY DATE" in this Section 1.01 and if such
day relates to a borrowing of, a payment or prepayment of principal of or
interest on, a conversion of or into, or an Interest Period for, a Eurodollar
Loan or a notice by the Company with respect to any such borrowing, payment,
prepayment, conversion or Interest Period, which is also a day on which dealings
in Dollar deposits are carried out in the London interbank market.
"CAPITAL EXPENDITURES" shall mean expenditures in respect of fixed or
capital assets by the Company or any of its Subsidiaries, including the capital
portion of lease payments made in respect of Capital Lease Obligations, but
excluding expenditures for the restoration or replacement of fixed or capital
assets to the extent financed by the proceeds of an insurance policy described
in clause (1) of Section 9.03 hereof.
"CAPITAL LEASE OBLIGATIONS" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property to the
extent such obligations are required to be classified and accounted for as a
capital lease on a
4
<PAGE> 11
balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board) and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
"CASH FLOW" shall mean, for any period, (i) the sum (without
duplication), determined on a consolidated basis for the Company and its
Subsidiaries, of (x) operating income of the Company and its Subsidiaries
(calculated before provision for income taxes, interest expense, extraordinary
items and income attributable to equity in affiliates) for such period plus (y)
depreciation, amortization and other non-cash items (to the extent deducted in
determining operating income) for such period plus (z) accrued interest income
(to the extent not included in determining operating income) for such period
minus (ii) proceeds received during such period (to the extent included in
determining operating income) of any insurance policy described in clause (1) of
Section 9.03 hereof.
"CEDAR INTERNATIONAL" shall mean Cedar International, Inc., a Tennessee
corporation, and its successors.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, and
regulations promulgated thereunder.
"CHASE" shall mean The Chase Manhattan Bank and its successors.
"CLASS" shall have the meaning assigned to such term in Section 1.03
hereof.
"CLOSING DATE" shall mean November 3, 1995.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute.
"COLLATERAL ACCOUNT" has the meaning set forth in the Security
Documents.
"COMMITMENTS" shall mean, as to any Lender, the aggregate of such
Lender's Tranche B Term Loan Commitment and Working Capital Commitment.
"COMPANY SECURITY AGREEMENT" has the meaning set forth in Schedule II
hereto.
5
<PAGE> 12
"CONTROLLED GROUP" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company, are treated as a single
employer under Section 414 of the Code.
"CURRENT ASSETS" shall mean at any date the current assets (excluding
cash and cash equivalents) of the Company and its Subsidiaries determined on a
consolidated basis as of such date.
"CURRENT LIABILITIES" shall mean at any date the consolidated current
liabilities (excluding the current portion of long-term Indebtedness) of the
Company and its Subsidiaries plus (without duplication) the current liabilities
of any Person (other than the Company or one of its Subsidiaries) which are
Guaranteed by the Company or one of its Subsidiaries, all determined on a
consolidated basis as of such date.
"DEFAULT" shall mean an Event of Default or an event which with notice
or lapse of time or both would, unless cured or waived, become an Event of
Default.
"DERIVATIVES OBLIGATIONS" of any Person shall mean all obligations of
such Person in respect of any Derivatives Transaction.
"DERIVATIVES TRANSACTION" shall mean any rate swap transaction, basis
swap, forward rate transaction, commodity swap, commodity option, equity or
equity index swap, equity or equity index option, bond option, interest rate
option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any option with
respect to any of the foregoing transactions) or any combination of the
foregoing transactions.
"DOLLARS" and "$" shall mean lawful money of the United States of
America.
"EFFECTIVE DATE" shall have the meaning specified in Section 13.01.
"ELIGIBLE INVENTORY" shall mean, as at any date of determination
thereof, the value (determined at the lower of cost or market on a first-in,
first-out basis) of all Inventory owned by (and in the possession or under the
control of) the Company or any Subsidiary Guarantor and located in a
jurisdiction in the United States of America as to which appropriate Uniform
Commercial Code file search reports have been received and appropriate Uniform
Commercial Code financing statements have been filed naming the Company as
"DEBTOR" and the Administrative Agent as "SECURED PARTY"; provided that the
Administrative Agent (with the consent of the Required Lenders) may at any time
exclude from Eligible
6
<PAGE> 13
Inventory any type of Inventory which they (in their sole discretion) determine
to be unmarketable as a result of their general credit and lending standards.
"ELIGIBLE RECEIVABLES" shall mean, as at any date of determination
thereof, the aggregate of all Receivables at said date due to the Company or any
Subsidiary Guarantor other than the following (determined without duplication):
(a) all Receivables which, at the date of the original issuance of the
respective invoice therefor, were payable more than 60 days (or, in the case of
a Receivable in respect of a sale of pesticides, 180 days) after such date,
(b) any Receivable due from an account debtor whose principal place of
business is located outside the United States of America unless (i) such
Receivable is fully backed by an irrevocable letter of credit issued or
confirmed by a U.S. commercial bank having a combined capital and surplus of not
less than $150,000,000 or (ii) such account debtor is listed as an eligible
foreign account debtor on Schedule VII hereto, as such Schedule may be modified
from time to time by the Administrative Agent with the consent of the Required
Lenders,
(c) any Receivable due from (i) an Affiliate of the Company or (ii) an
account debtor which is the subject of bankruptcy, insolvency or similar
proceedings or which the Required Lenders (through the Administrative Agent)
have notified the Company does not have a satisfactory credit standing (as
determined in the reasonable discretion of the Required Lenders),
(d) any Receivable which remains unpaid for more than 60 days after the
date set forth for payment in the invoice originally issued therefor,
(e) all Receivables due from any account debtor if more than 25% of the
aggregate amount of the Receivables due from such account debtor have at the
time remained unpaid for more than 60 days after the date set forth for payment
in the invoice originally issued therefor,
(f) any Receivable as to which there is any unresolved dispute with, or
claim or defense (which has not been waived) by, the respective account debtor
(but only to the extent of such dispute, claim or defense),
(g) any Receivable evidenced by an instrument (as defined in Article 9
of the Uniform Commercial Code) not in the possession of the Administrative
Agent and any other Receivable in which the Administrative Agent does not have a
perfected first priority security interest,
(h) any Receivable due from the United States or any department, agency
or instrumentality thereof, unless the Company has complied with the
requirements of the Federal Assignment of Claims Act, and
7
<PAGE> 14
(i) if the Receivables due from any account debtor exceed an amount
equal to 20% of the aggregate of all Receivables at said date, an amount of such
Receivables equal to such excess.
"ENVIRONMENTAL LAWS" shall mean any and all applicable federal, state,
local and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and other governmental
restrictions relating to the environment or the effect of the environment on
human health or to emissions, discharges or release of pollutants, contaminants,
Hazardous Substances or wastes into the environment, including, without
limitation, ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation thereof.
"ENVIRONMENTAL LIABILITIES" shall mean all liabilities in connection
with or relating to the business, assets, presently or previously owned or
leased property, activities (including, without limitation, off-site disposal)
or operations of the Company and each Subsidiary, whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which arise under or
relate to matters covered by Environmental Laws (including, without limitation,
any matter disclosed or required to be disclosed in Schedule VI hereto).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"EURODOLLAR BASE RATE" shall mean, with respect to any Eurodollar
Loans, the rate per annum equal to the offered rate for Dollar deposits for a
period of time comparable to the Interest Period for such Loans which appears on
the display page designated as the "LIBO PAGE" on the Reuters Money Rates
Service (or such other page as may replace the LIBO page at that service) at
approximately 11:00 A.M., London time, on the day that is two Business Days
before the first day of such Interest Period, provided that if at least two
rates appear on the Reuters Money Rates Service "LIBO PAGE", the "EURODOLLAR
BASE RATE" applicable to such Interest Period shall be the arithmetic mean of
such rates; or (ii) if no such rate appears on the Reuters Money Rates Service
"LIBO PAGE" at such time, the rate per annum at which Dollar deposits are
offered by the principal London office of The Chase Manhattan Bank to leading
banks in the London interbank market at approximately 11:00 A.M., London time,
on the day that is two Business Days before the first day of such Interest
Period having a term comparable to such Interest Period and in an amount
comparable to the principal amount of the Eurodollar Loans of The Chase
Manhattan Bank to which such Interest Period relates. If no rate can be
determined pursuant to clauses (i) and (ii) above, the provisions of Section
6.02 shall apply.
8
<PAGE> 15
"EURODOLLAR LOANS" shall mean Loans the interest on which is determined
on the basis of rates referred to in the definition of "EURODOLLAR BASE RATE" in
this Section 1.01.
"EURODOLLAR RATE" shall mean, for any Eurodollar Loans, a rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
the Administrative Agent to be equal to (i) the Eurodollar Base Rate for such
Loans for the Interest Period for such Loans divided by (ii) 1 minus the Reserve
Requirement, if any, for such Loans for such Interest Period.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Section 10.01 hereof.
"EXCESS CASH FLOW" shall have the meaning assigned to such term in
paragraph (F) of Section 3.02(b)(i) hereof.
"FACILITIES" shall mean the facilities of the Company and its
Subsidiaries located in West Helena, Arkansas, Vicksburg, Mississippi, and
Memphis, Tennessee.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
Chase on such day on such transactions as determined by the Administrative
Agent.
"FINANCING DOCUMENTS" shall mean this Agreement, the Parent Guaranty,
the Parent Equity Contribution Agreement, the Nine West Guaranty, the Subsidiary
Guaranty, the Parent Guarantor Acknowledgment, the Nine West Guarantor
Acknowledgment, the Subsidiary Guarantor Acknowledgment, the Notes and the
Security Documents.
"FOREIGN SUBSIDIARIES" shall mean the Subsidiaries of the Company
listed under the heading "FOREIGN SUBSIDIARIES OF CEDAR CHEMICAL CORPORATION" in
Schedule IV.
"FUNDED INDEBTEDNESS" shall mean Indebtedness which matures more than
one year after the incurrence thereof or is extendible, renewable or
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refundable, at the option of the obligor, to a date more than one year after the
incurrence thereof (including the current portion thereof).
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States consistently applied.
"GUARANTY" by any Person shall mean any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise, other
than agreements to purchase goods at an arm's length price in the ordinary
course of business) or (ii) entered into for the purpose of assuring in any
other manner the holder of such Indebtedness of the payment thereof or to
protect such holder against loss in respect thereof (in whole or in part),
provided that the term Guaranty shall not include endorsements for collection or
deposit in the ordinary course of business. The term "GUARANTEE" used as a verb
has a corresponding meaning.
"HAZARDOUS SUBSTANCES" shall mean any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having constituent elements displaying
any of the foregoing characteristics, whether or not regulated under
Environmental Laws.
"INDEBTEDNESS" shall mean, as to any Person (determined without
duplication): (i) indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
or acquisition price of property or services, other than accounts payable (other
than for borrowed money) incurred in the ordinary course of business; (ii)
obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other financial institutions for the
account of such Person (whether or not such obligations are contingent); (iii)
Capital Lease Obligations of such Person; (iv) obligations of such Person to
redeem or otherwise retire shares of capital stock of such Person; (v)
indebtedness of others of the type described in clause (i), (ii), (iii) or (iv)
above secured by a Lien on the property of such Person, whether or not the
respective obligation so secured has been assumed by such Person; and (vi)
indebtedness of others of the type described in clause (i), (ii), (iii) or (iv)
above Guaranteed by such Person.
"INFORMATION MEMORANDUM" shall mean the Information Memorandum dated
October 1995, submitted to the Lenders in connection with the transactions
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contemplated by this Agreement and all materials which the Company and the
Administrative Agent agreed on the Closing Date constituted supplements thereto.
"INTEREST EXPENSE" shall mean, for any period, the sum (determined
without duplication) of the aggregate amount of interest accruing during such
period on Indebtedness of the Company and its Subsidiaries (on a consolidated
basis), including the interest portion of payments under Capital Lease
Obligations and any capitalized interest, and excluding amortization of debt
discount and expense.
"INTEREST PERIOD" shall mean, with respect to any Eurodollar Loans, the
period commencing on the date such Loans are made or converted from Base Rate
Loans or the last day of the next preceding Interest Period with respect to such
Loans and ending on the numerically corresponding day in the first, third or
sixth calendar month thereafter, as the Company may select as provided in
Section 5.05 hereof, except that each such Interest Period which commences on
the last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may commence before and
end after any date set forth in Schedule III unless, after giving effect
thereto, the aggregate principal amount of the Loans of any Class having
Interest Periods which end after such date shall be equal to or less than the
amount of Loans of such Class then permitted to be outstanding hereunder; (ii)
each Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day (or, if such next succeeding
Business Day falls in the next succeeding calendar month, on the next preceding
Business Day); and (iii) notwithstanding clause (i) above, no Interest Period
shall have a duration of less than one month and, if the Interest Period
therefor would otherwise be a shorter period, such Loans shall not be available
hereunder.
"INTEREST RATE AGREEMENT" shall have the meaning assigned to such term
in Section 9.22 hereof.
"INVENTORY" shall mean inventory (as defined in Article 9 of the
Uniform Commercial Code) to the extent comprised of readily marketable
materials, products or goods of a type manufactured or consumed by the Company
in the ordinary course of business as presently conducted (but excluding
work-in-process which is not readily marketable in its current form).
"INVESTMENTS" shall have the meaning assigned to such term in Section
9.15 hereof.
"LETTER OF CREDIT" shall have the meaning assigned to such term in
Section 2.02(a) hereof.
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"LETTER OF CREDIT LIABILITIES" shall mean, at any time and in respect
of any Letter of Credit, the sum of (i) the amount available for drawings under
such Letter of Credit plus (ii) the aggregate unpaid amount of all Reimbursement
Obligations at the time due and payable in respect of previous drawings made
under such Letter of Credit.
"LEVERAGE RATIO" shall have the meaning set forth in Section 9.10.
"LIEN" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, the Company and each of its
Subsidiaries shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"LIQUID INVESTMENTS" shall mean (i) certificates of deposit maturing
within 90 days of the acquisition thereof denominated in Dollars and issued by
(X) a Lender or (Y) a bank or trust company having combined capital and surplus
of at least $500,000,000 and which has (or which is a Subsidiary of a bank
holding company which has) publicly traded debt securities rated AA or higher by
Standard & Poor's Corporation or Aa-2 or higher by Moody's Investors Service,
Inc.; (ii) obligations issued or guaranteed by the United States of America,
with maturities not more than one year after the date of issue; and (iii)
commercial paper with maturities of not more than 90 days and a published rating
of not less than A-2 from Standard & Poor's Corporation or P-2 from Moody's
Investors Service, Inc.
"LOANS" shall mean the loans provided for by Section 2.01 of the
Original Agreement and Section 2.01 hereof.
"MAP/MKP PROJECT" shall mean the construction of new facilities of
Vicksburg Chemical Company in Vicksburg, Mississippi for the production of
monoammonium phosphate and monopotassium phosphate.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on the
condition (financial or otherwise), results of operations, assets, liabilities,
business, operations or prospects of the Company and its Subsidiaries, taken as
a whole; (ii) a material adverse effect on the ability of the Parent, Nine West
or any Subsidiary Guarantor to perform its obligations under each Basic Document
to which it is a party; or (iii) a material adverse effect on the rights and
remedies of the Administrative Agent and the Lenders under the Financing
Documents.
"MORTGAGES" shall mean, collectively, the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust and similar instruments listed on
Schedule II, each in form and substance satisfactory to the Administrative
Agent,
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executed by the respective mortgagors in favor of the Administrative Agent for
the benefit of the Lenders.
"MULTIEMPLOYER PLAN" shall mean at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which the Company or
any member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be a
member of the Controlled Group during such five year period.
"NET CASH PROCEEDS" shall mean, in each case as set forth in reasonable
detail in a certificate of a Senior Officer delivered to the Administrative
Agent: (a) with respect to the disposition of any asset by the Company or any of
its Subsidiaries, the excess, if any, of (i) the cash received (including any
cash payments received by way of deferred payment pursuant to, or monetization
of, a note or installment receivable or otherwise, but only as and when
received) in connection with such disposition over (ii) the sum of (A) the
amount of any Indebtedness which is secured by such asset and which is required
to be repaid in connection with the disposition thereof, plus (B) the reasonable
out-of-pocket expenses incurred by the Company or such Subsidiary, as the case
may be, in connection with such disposition, plus (C) provision for taxes,
including income taxes, attributable to the disposition of such asset; (b) with
respect to the issuance of any equity securities or Indebtedness of the Company
or any of its Subsidiaries, the gross proceeds received from such issuance less
all reasonable out-of-pocket expenses, discounts and commissions and other fees
and expenses incurred or to be incurred and all federal, state, local and
foreign taxes assessed or to be assessed in connection therewith; (c) with
respect to the receipt by the Company or the Administrative Agent of any payment
under an insurance policy described in clause (1) of Section 9.03 hereof or
pursuant to any condemnation award, the aggregate amount of any such payment
made to the Company or the Administrative Agent less any income tax liability of
the Company relating to such payment and all legal expenses incurred in
connection with the recovery or collection thereof; and (d) with respect to the
termination of any Plan, the excess, if any, of (i) the amounts received by the
Company or any Subsidiary in connection with such termination over (ii) the
amount of taxes payable by such Person in connection therewith.
"NET WORKING INVESTMENT" shall mean, at any date, the amount by which
Current Assets exceeds Current Liabilities at such date.
"NINE WEST" shall mean Nine West Corporation, a Delaware corporation,
and its successors.
"NINE WEST GUARANTOR ACKNOWLEDGMENT" shall mean the Nine West Guarantor
Acknowledgment and Consent dated the Effective Date executed by Nine West,
substantially in the form of Exhibit H hereto.
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"NINE WEST GUARANTY" shall mean the Nine West Guaranty dated as of the
Closing Date executed by Nine West, as said agreement shall be modified and
supplemented and in effect from time to time.
"NMPC CLOSING DATE" shall mean the date of consummation of the
NMPC Sale.
"NMPC SALE" shall mean the sale by New Mexico Potash Corporation of all
or substantially all of its assets.
"NOTES" shall have the meaning assigned to such term in Section 2.07
hereof.
"ORIGINAL AGREEMENT" shall have the meaning set forth in the recitals
to this Amended Agreement.
"PARENT" shall mean Trans-Resources, Inc., a Delaware Corporation, and
its successors.
"PARENT EQUITY CONTRIBUTION AGREEMENT" shall mean the Parent Equity
Contribution Agreement dated as of April 15, 1997 between the Parent and the
Administrative Agent, as such agreement shall be modified and supplemented and
in effect from time to time.
"PARENT GUARANTOR ACKNOWLEDGMENT" shall mean the Parent Guarantor
Acknowledgment and Consent dated the Effective Date executed by the Parent,
substantially in the form of Exhibit G hereto.
"PARENT GUARANTY" shall mean the Parent Guaranty dated as of the
Closing Date executed by the Parent, as said agreement shall be modified and
supplemented and in effect from time to time.
"PARTICIPATION LETTERS OF CREDIT" shall have the meaning assigned to
such term in Section 2.02(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERFORMANCE PERIOD" shall mean each period commencing on a day that
the consolidated statements of income and cash flow and the consolidated balance
sheet required to be delivered to the Administrative Agent under Section 9.01(a)
or 9.01(b) hereof with respect to a fiscal quarter of the Company, and the
related certificate described in the last paragraph of Section 9.01 hereof, are
received by the Administrative Agent and ending on a day immediately preceding
the day on
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<PAGE> 21
which the next subsequent set of such information required to be delivered to
the Administrative Agent under Section 9.01 hereof with respect to a fiscal
quarter of the Company is received by it.
"PERSON" shall mean an individual, a corporation, a company, a
voluntary association, a partnership, a trust, an unincorporated organization or
a government or any agency, instrumentality or political subdivision thereof.
"PLAN" shall mean an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (i) is
maintained or contributed to, by the Company or any member of the Controlled
Group for employees of the Company or any member of the Controlled Group or (ii)
has at any time within the preceding five years been maintained, or contributed
to, by the Company or any Person which was at such time a member of the
Controlled Group for employees of any Person which was at such time a member of
the Controlled Group.
"POST-DEFAULT RATE" shall mean (i) in respect of any principal of any
Loan, a rate per annum equal to the sum of 2% plus the rate of interest
applicable to such Loan and (ii) in respect of any Reimbursement Obligation or
any other amount payable by the Company under this Agreement or any Security
Document, a rate per annum equal to the sum of 2% plus the Base Rate as in
effect from time to time plus the Applicable Margin for Base Rate Loans that are
Working Capital Loans.
"POTASSIUM NITRATE PROJECT" shall mean the debottlenecking of the
potassium nitrate plant of Vicksburg Chemical Company located at Vicksburg,
Mississippi for the purpose of expanding production capacity.
"PRIME RATE" shall mean the rate of interest from time to time
announced by Chase at the Principal Office as its prime commercial lending rate.
Each change in the interest rate provided for herein resulting from a change in
the Prime Rate shall take effect at the time of such change in the Prime Rate.
"PRINCIPAL OFFICE" shall mean the principal office of Chase, presently
located at 270 Park Avenue, New York, New York 10017.
"PROPANIL ASSETS" means the Domestic Pesticide Registrations, Task
Force Agreements and Intellectual Property (each as defined in the RICECO J.V.
Agreement), the royalty-free license agreement rights to Foreign Pesticide
Registrations and foreign trademarks listed on Schedule 3.1 to the RICECO J.V.
Agreement and the other assets of the Company or its Subsidiaries contributed to
RICECO in accordance with Section 3.1 of the RICECO J.V. Agreement.
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"QUARTERLY DATES" shall mean the last Business Day of each January,
April, July and October.
"RECEIVABLE" shall mean, as at any date of determination thereof, the
unpaid portion of the obligation, as stated in U.S. Dollars on the respective
invoice, of a customer of the Company or any Subsidiary Guarantor in respect of
Inventory purchased and shipped and services rendered, net of any credits,
rebates or offsets owed to the respective customer and also net of any
commissions payable to third parties.
"REGULATED ACTIVITY" shall mean any generation, treatment, storage,
recycling, transportation or disposal of any Hazardous Substance.
"REGULATION D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"REGULATORY CHANGE" shall mean, with respect to any Lender, any change
on or after the date of this Agreement in United States federal, state or
foreign laws or regulations (including Regulation D) or the adoption or making
on or after such date of any interpretations, directives or requests applying to
a class of lenders including such Lender of or under any United States federal
or state, or any foreign, laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"REIMBURSEMENT OBLIGATIONS" shall mean as at any date, the obligations
of the Company then outstanding under Section 2.02(e) hereof to reimburse any
Lender in the case of Syndicated Letters of Credit or Chase in the case of
Participation Letters of Credit.
"RELEASE" shall mean any discharge, emission or release, including a
"RELEASE" as defined in CERCLA at 42 U.S.C. Section 9601(22). The term
"RELEASED" shall have a corresponding meaning.
"RELEVANT PARTY" shall mean (i) the Company, (ii) the Parent, (iii)
Nine West, (iv) any Subsidiary Guarantor and (v) any other party to any of the
Assigned Agreements.
"REQUIRED CLASS LENDERS" shall mean, with respect to any Class of
Lenders, (x) at any time while no Loans or Letter of Credit Liabilities of such
Class of Lenders are outstanding, (i) for the Class of Lenders holding Working
Capital Commitments, Lenders having at least 66 2/3% of the aggregate amount of
the Working Capital Commitments and (ii) for the Class of Lenders holding
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Tranche B Term Loan Commitments, Lenders having at least 66 2/3% of the
aggregate amount of the Tranche B Term Loan Commitments and (y) at any time
while any Loans or Letter of Credit Liabilities (if any) of such Class of
Lenders are outstanding, (i) for the Class of Lenders holding Tranche A Term
Loans or Working Capital Loans or Letter of Credit Liabilities, Lenders holding
at least 66 2/3% of the outstanding aggregate principal amount of the Tranche A
Term Loans, the Working Capital Loans and Letter of Credit Liabilities
(including, without limitation, participations in the Participation Letters of
Credit) and (ii) for the Class of Lenders holding Tranche B Term Loans, Lenders
holding at least 66 2/3% of the outstanding aggregate principal amount of the
Tranche B Term Loans.
"REQUIRED LENDERS" shall mean, at any time while no Loans or Letter of
Credit Liabilities are outstanding, Lenders having at least 66 2/3% of the
aggregate amount of the Commitments and, at any time while any Loans or Letter
of Credit Liabilities are outstanding, Lenders holding at least 66 2/3% of the
outstanding aggregate principal amount of the Loans and Letter of Credit
Liabilities (including, without limitation, participations in the Participation
Letters of Credit).
"RESERVE REQUIREMENT" shall mean, for any Eurodollar Loans for any
Interest Period therefor, the average maximum rate at which reserves (including
any marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "EUROCURRENCY LIABILITIES" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the Eurodollar Rate is to be determined
as provided in the definition of "EURODOLLAR BASE RATE" in this Section 1.01 or
(ii) any category of extensions of credit or other assets which include
Eurodollar Loans.
"RESTRICTED PAYMENT" shall mean dividends (in cash, property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for the purchase,
redemption, retirement or other acquisition of, any shares of any class of
capital stock of the Company, or the exchange or conversion of any shares of any
class of capital stock of the Company for or into any obligations of or shares
of any other class of capital stock of the Company or any other property, but
excluding dividends payable solely in, or exchanges or conversions for or into,
shares of capital stock of the Company of the same or a junior class; provided
that payments to the Company or a Wholly-Owned Subsidiary shall not constitute
Restricted Payments.
"RICECO" shall mean RICECO, LLC, a Delaware limited liability company,
and its successors.
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"RICECO J.V. AGREEMENT" shall mean the RICECO, LLC Limited Liability
Company Agreement dated as of May 5, 1997, as such agreement shall, subject to
Section 9.20 hereof, be modified and supplemented and in effect from time to
time.
"RICECO J.V. DOCUMENTS" shall mean the RICECO J.V. Agreement, the
Services Agreement between the Company and RICECO dated on or about August 1,
1997, the Manufacturing Agreement between the Company and RICECO dated on or
about August 1, 1997, and the Agreement between RICECO and Duwest dated on or
about August 1, 1997, as each such agreement shall, subject to Section 9.20
hereof, be modified and supplemented and in effect from time to time.
"RICECO MEMBER INTEREST" shall mean the Company's 50% member
interest in RICECO pursuant to the RICECO J.V. Agreement.
"SECURITY DOCUMENTS" shall mean, collectively, the Mortgages and the
other agreements listed on Schedule II hereto; and, from and after the execution
and delivery thereof, shall include any supplemental mortgage or security
document required pursuant to Section 9.19 hereof.
"SENIOR OFFICER" shall mean the chief executive officer, president,
chief operating officer, chief financial officer or treasurer of the Company.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation of
which at least a majority of the outstanding shares of stock having by the terms
thereof ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more of the Subsidiaries
of such Person or by such Person and one or more of the Subsidiaries of such
Person.
"SUBSIDIARY GUARANTOR" shall mean each of the following Subsidiaries of
the Company: Vicksburg Chemical Company, a Delaware corporation, Cedar
International and each other Subsidiary of the Company that from time to time
becomes a party to the Subsidiary Guaranty.
"SUBSIDIARY GUARANTOR ACKNOWLEDGMENT" shall mean the Subsidiary
Guarantor Acknowledgment and Consent dated the Effective Date executed by each
Subsidiary Guarantor, substantially in the form of Exhibit I hereto.
"SUBSIDIARY GUARANTY" shall mean the Subsidiary Guaranty dated as of
the Closing Date, as said agreement shall be modified and supplemented and in
effect from time to time.
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"SYNDICATED LETTERS OF CREDIT" shall have the meaning assigned to such
term in Section 2.02(a) hereof.
"TAX SHARING AGREEMENT" shall mean the tax sharing agreement dated as
of December 30, 1991 among the Company, the Parent, Nine West, TPR Investment
Associates, Inc., a Delaware corporation, and TR Media Corporation, a Delaware
corporation.
"TERM LOAN" shall mean, as to any Lender, a Tranche A Term Loan or
Tranche B Term Loan, or both.
"TRANCHE A TERM LOAN" shall mean, as to any Lender, a Loan made by such
Lender pursuant to Section 2.01(i) of the Original Agreement.
"TRANCHE A TERM NOTES" shall mean the promissory notes of the Company
evidencing the Tranche A Term Notes, substantially in the form of Exhibit A
hereto.
"TRANCHE B TERM LOAN" shall mean, as to any Lender, a Loan made by such
Lender pursuant to Section 2.01(ii) of the Original Agreement or pursuant to
Section 2.01(i) hereof.
"TRANCHE B TERM LOAN COMMITMENT" shall mean, as to any Lender, the
obligation of such Lender to make a Tranche B Term Loan to the Company in a
principal amount up to but not exceeding the amount set forth opposite such
Lender's name on the signature pages hereof under the caption "TRANCHE B TERM
LOAN COMMITMENT" (as the same may be reduced from time to time pursuant to
Section 2.03).
"TRANCHE B TERM NOTES" shall mean the promissory notes of the Company
evidencing the Tranche B Term Loans, substantially in the form of Exhibit B
hereto.
"TYPE" shall have the meaning assigned to such term in Section 1.03
hereof.
"UNFUNDED LIABILITIES" shall mean, with respect to any Plan, at any
time, the amount (if any) by which (i) the value of all benefits liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such benefits under Title IV
of ERISA (excluding any accrued but unpaid contributions), all determined as of
the then most recent valuation date for such Plan, but only to the extent that
such excess represents a
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<PAGE> 26
potential liability of the Company or any member of the Controlled Group to the
PBGC or any other Person under Title IV of ERISA.
"WHOLLY-OWNED SUBSIDIARY" shall mean a Subsidiary of the Company all of
whose outstanding shares of capital stock (except directors' qualifying shares)
are directly or indirectly owned by the Company.
"WORKING CAPITAL AVAILABILITY PERIOD" shall mean the period from and
including the Effective Date to but not including October 31, 2001.
"WORKING CAPITAL COMMITMENT" shall mean, as to any Lender, the
obligation of such Lender to make Working Capital Loans and incur Letter of
Credit Liabilities in an aggregate principal amount at any one time outstanding
up to but not exceeding the amount set forth opposite such Lender's name on the
signature pages hereof under the caption "WORKING CAPITAL COMMITMENT" (as the
same may be reduced from time to time pursuant to Section 2.03 hereof).
"WORKING CAPITAL COMMITMENT PERCENTAGE" shall mean, as to any Lender,
the percentage equivalent of a fraction the numerator of which is the Working
Capital Commitment of such Lender and the denominator of which is the aggregate
amount of the Working Capital Commitments of all Lenders.
"WORKING CAPITAL LOAN" shall mean, as to any Lender, a Loan made by
such Lender pursuant to Section 2.01(ii) hereof.
"WORKING CAPITAL NOTES" shall mean the promissory notes of the Company
evidencing the Working Capital Loans, substantially in the form of Exhibit C
hereto.
"WORKING CAPITAL OBLIGATIONS" shall mean, as at any date of
determination thereof, the sum of the following (determined without
duplication): (i) the aggregate principal amount of Working Capital Loans
outstanding hereunder plus (ii) the aggregate amount of the Letter of Credit
Liabilities hereunder.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with GAAP;
provided that if any change in GAAP in itself materially affects the calculation
of any financial covenant in Article 9, the Company may by notice to the
Administrative Agent, or the Administrative Agent (at the request of the
Required Lenders) may by notice to the Company, require that such covenant
thereafter be calculated in accordance with GAAP as in effect, and applied by
the Company, immediately before such
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change in GAAP occurs. If such notice is given, the compliance certificates
delivered pursuant to Section 9.01 after such change occurs shall be accompanied
by reconciliations of the difference between the calculation set forth therein
and a calculation made in accordance with GAAP as in effect from time to time
after such change occurs. To enable the ready determination of compliance with
the covenants set forth in Article 9 hereof, the Company will not change from
December 31 in each year the date on which its fiscal year ends, nor from March
31, June 30 and September 30 the dates on which the first three fiscal quarters
in each fiscal year end.
SECTION 1.03. Classes and Types of Loans and Lenders. Loans hereunder
are distinguished by "CLASS" and by "TYPE", and Lenders hereunder are
distinguished by "CLASS". The "CLASS" of a Loan (or of a Commitment to make such
a Loan) refers to the determination whether such Loan is a Tranche A Term Loan,
a Tranche B Term Loan or a Working Capital Loan, each of which constitutes a
Class of Loan. The "CLASS" of a Lender refers to the determination whether such
Lender holds Tranche A Term Loans or Working Capital Loans (or Commitments to
make any such Class of Loans), on the one hand, or Tranche B Term Loans (or
Tranche B Term Loan Commitments), on the other hand, each of which constitutes a
Class. The "TYPE" of a Loan refers to the determination whether such Loan is a
Eurodollar Loan or a Base Rate Loan. Identification of a Loan may be by both
Class and Type (e.g., a "EURODOLLAR WORKING CAPITAL LOAN" indicates that such
Loan is both a Eurodollar Loan and a Working Capital Loan).
ARTICLE 2
COMMITMENTS
SECTION 2.01. Loans. Each Lender severally agrees, on the terms and
subject to the conditions of this Agreement, to make Loans as follows:
(i) Tranche B Term Loans. On the Effective Date, each Lender
shall make a Loan to the Company in an amount equal to its Tranche B
Term Loan Commitment.
(ii) Working Capital Loans. From time to time during the
Working Capital Availability Period, each Lender shall make Loans to
the Company in an aggregate principal amount at any one time
outstanding which, together with an amount equal to its Working Capital
Commitment Percentage of all Letter of Credit Liabilities at such time
in respect of Syndicated Letters of Credit and Participation Letters of
Credit, shall not exceed its Working Capital Commitment, as reduced
from time to time
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pursuant to Section 2.03 hereof. The aggregate amount of all Working
Capital Obligations shall not at any time exceed the lesser of (i) the
aggregate of the Working Capital Commitments as reduced from time to
time pursuant to Section 2.03 hereof and (ii) the Borrowing Base.
SECTION 2.02. Letters of Credit. (a) Subject to the terms and
conditions hereof, the Working Capital Commitments may, in addition to the
Working Capital Loans provided for in Section 2.01 hereof, be utilized, upon the
request of the Company, by the issuance of letters of credit (i) by Chase for so
long as it is Administrative Agent hereunder if the Company shall so request in
the notice referred to in Section 2.02(b) and Chase shall agree that such letter
of credit shall be issued by Chase rather than by each of the Lenders (such
letters of credit issued by Chase being hereinafter referred to as the
"PARTICIPATION LETTERS OF CREDIT"), or (ii) by the Lenders pursuant to which
each Lender shall be severally obligated to pay its Working Capital Commitment
Percentage of any drawing made thereunder (such letters of credit issued by the
Lenders being hereafter referred to as the "SYNDICATED LETTERS OF CREDIT", and
the Syndicated Letters of Credit and Participation Letters of Credit being
collectively referred to as the "LETTERS OF CREDIT"). Upon the date of issuance
of a Participation Letter of Credit, Chase shall be deemed, without further
action by any party hereto, to have sold to each Lender, and each Lender shall
be deemed, without further action by any party hereto, to have purchased from
Chase, a participation to the extent of such Lender's Working Capital Commitment
Percentage in such Participation Letter of Credit and the related Letter of
Credit Liabilities. The aggregate amount of all Working Capital Obligations
shall not at any time exceed the lesser of (i) the aggregate of the Working
Capital Commitments as reduced from time to time pursuant to Section 2.03 hereof
and (ii) the Borrowing Base. The aggregate amount of all Letter of Credit
Liabilities shall not at any time exceed an amount equal to the lesser of (i)
the aggregate amount of the Working Capital Commitments as reduced from time to
time pursuant to Section 2.03 hereof and (ii) $7,500,000.
(b) The Company shall give the Administrative Agent at least seven
Business Days' (in the case of Syndicated Letters of Credit) or three Business
Days' (in the case of Participation Letters of Credit) irrevocable prior notice
(effective upon receipt) specifying the date such Letter of Credit is to be
issued, whether it is requesting that such Letter of Credit be a Participation
Letter of Credit or a Syndicated Letter of Credit, and describing the proposed
terms of such Letter of Credit and the nature of the transactions proposed to be
supported thereby. Upon receipt of such notice the Administrative Agent shall
promptly notify each Lender of the contents thereof and of such Lender's Working
Capital Commitment Percentage of the amount of such proposed Letter of Credit
and, in the case of Syndicated Letters of Credit, not later than five Business
Days prior to the requested issuance date for such Letter of Credit shall
prepare and send to the Lenders and the Company a proposed form of such Letter
of Credit.
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(c) On each day during the period commencing with the issuance by the
Lenders of any Syndicated Letter of Credit or the issuance by Chase of any
Participation Letter of Credit and until such Letter of Credit shall have
expired or been terminated, the Working Capital Commitment of each Lender shall
be deemed to be utilized for all purposes hereof in an amount equal to such
Lender's Working Capital Commitment Percentage of the amount then available for
drawings under such Syndicated Letter of Credit or Participation Letter of
Credit (as the case may be).
(d) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment or other drawing under such Letter of Credit, the
Administrative Agent shall promptly notify the Company and each Lender as to the
amount to be paid as a result of such demand or drawing and the respective
payment date. If at any time Chase shall make a payment to a beneficiary of a
Participation Letter of Credit in respect of a drawing or in respect of an
acceptance created in connection with a drawing under such Participation Letter
of Credit, each Lender will pay to Chase, immediately upon Chase's demand at any
time during the period commencing after such payment until reimbursement
therefor in full by the Company, an amount equal to such Lender's Working
Capital Commitment Percentage of such payment, together with interest on such
amount for each day from the date of Chase's demand for such payment (or, if
such demand is made after 11:00 a.m. (New York City time) on such date, from the
next succeeding Business Day) to the date of payment by such Lender of such
amount at a rate of interest per annum equal to the Federal Funds Rate for such
period.
(e) The Company shall be irrevocably and unconditionally obligated
forthwith to reimburse (x) the Administrative Agent for the account of each
Lender in the case of Syndicated Letters of Credit, and (y) Chase in the case of
Participation Letters of Credit for any amounts paid by such Lender or Chase (as
the case may be) upon any drawing under any Letter of Credit, without
presentment, demand, protest or other formalities of any kind. Chase will pay to
each Lender such Lender's Working Capital Commitment Percentage of all amounts
received from the Company for application in payment, in whole or in part, of
the Reimbursement Obligation in respect of any Participation Letter of Credit,
but only to the extent such Lender has made payment to Chase in respect of such
Participation Letter of Credit pursuant to clause (d) above.
(f) The issuance by the Lenders of each Syndicated Letter of Credit or
the issuance by Chase of each Participation Letter of Credit shall, in addition
to the conditions precedent set forth in Article 7 hereof, be subject to the
conditions precedent (x) that in the case of a Syndicated Letter of Credit, such
Letter of Credit shall be in such form, contain such terms and support such
transactions as shall be reasonably satisfactory to each Lender and the
Administrative Agent and
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that the Company shall have executed and delivered such other instruments and
agreements relating to such Letter of Credit as the Required Lenders shall have
reasonably requested, and (y) that in the case of Participation Letters of
Credit, such Letter of Credit shall be in such form, and shall contain such
terms and support such transactions, as shall be reasonably satisfactory to
Chase, and that the Company shall have executed and delivered such other
instruments and agreements relating to such Letter of Credit as Chase shall have
reasonably requested. No Letter of Credit shall have a term extending beyond the
earlier of (i) one year from the date of issuance and (ii) seven Business Days
prior to the last day of the Working Capital Availability Period. A Lender shall
be deemed to have determined that a proposed Syndicated Letter of Credit is
satisfactory unless it shall have notified the Administrative Agent otherwise
(which notice shall be effective upon receipt) on or before the date three
Business Days prior to the requested date of issuance of such Syndicated Letter
of Credit. If any Lender shall breach its obligation to execute and deliver a
Syndicated Letter of Credit hereunder, the other Lenders shall be relieved of
their obligation to execute and deliver and issue such Syndicated Letter of
Credit, provided that nothing herein shall affect any rights the Company may
have against the breaching Lender as a result of such breach.
(g) The Company hereby indemnifies and holds harmless each Lender and
the Administrative Agent (which for purposes of this Section 2.02(g) shall
include a reference to Chase acting in its individual capacity hereunder as
issuer of Participation Letters of Credit) from and against any and all claims
and damages, losses, liabilities, costs or expenses which such Lender or the
Administrative Agent may incur (or which may be claimed against such Lender or
the Administrative Agent by any Person whatsoever) by reason of or in connection
with the execution and delivery or transfer of or payment or failure to pay
under any Letter of Credit, including, without limitation, any claims, damages,
losses, liabilities, costs or expenses which the Administrative Agent may incur
by reason of or in connection with the failure of any other Lender to fulfill or
comply with its obligations to the Administrative Agent hereunder (but nothing
herein contained shall affect any rights the Company may have against such
defaulting Lender); provided that the Company shall not be required to indemnify
any Lender or the Administrative Agent for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused by
(i) the willful misconduct or gross negligence of such Lender or the
Administrative Agent in determining whether a request presented under any Letter
of Credit complied with the terms of such Letter of Credit or (ii) such Lender's
failure to pay under any Letter of Credit after the presentation to it of a
request strictly complying with the terms and conditions of the Letter of
Credit. Nothing in this Section 2.02(g) is intended to limit the obligations of
the Company under any other provision of this Agreement.
SECTION 2.03. Reductions of Commitments.
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(a) Mandatory. (i) The Working Capital Commitments shall terminate on
the last day of the Working Capital Availability Period.
(ii) The Tranche B Term Loan Commitments shall terminate on
the Effective Date.
(iii) In addition, the Working Capital Commitments shall be
reduced in the amount and on the date of each prepayment applied to the
Working Capital Loans (or to provide cover for Letter of Credit
Liabilities) pursuant to paragraph (B), (C), (D), (E) or (F) of Section
3.02(b)(i).
(b) Optional. The Company shall have the right to terminate or reduce
the Commitments of any Class at any time or from time to time, provided that:
(i) the Company shall give notice of each such termination or reduction to the
Administrative Agent as provided in Section 5.05 hereof, and (ii) each partial
reduction of any Class shall be in an aggregate amount at least equal to
$1,000,000.
(c) No Reinstatement. Commitments once terminated or reduced may not be
reinstated.
SECTION 2.04. Fees.
(a) Commitment Fees. The Company shall pay to the Administrative Agent
for the account of each Lender commitment fees on the daily average unused
amount of such Lender's Commitments, for the period from the Effective Date to
and including the earlier of the date the Commitments are terminated or, in the
case of the Working Capital Commitments, the last day of the Working Capital
Availability Period at a rate per annum equal to 1/2 of 1%. Accrued commitment
fees shall be payable on the Quarterly Dates and on the earlier of the date the
Commitments are terminated or, in the case of the Working Capital Commitments,
the last day of the Working Capital Availability Period. Fees accrued pursuant
to Section 2.04(a) of the Original Agreement for the period preceding the
Effective Date shall be payable on the first Quarterly Date following the
Effective Date.
(b) Letter of Credit Fees.
(i) The Company shall pay to the Administrative Agent for the
account of each Lender, ratably in accordance with its Working Capital
Commitment Percentage, a letter of credit fee at a rate per annum equal
to the Applicable Margin for Letters of Credit on the daily aggregate
amount available for drawings under each Letter of Credit. In the case
of each Participation Letter of Credit, the Company shall pay to Chase,
as issuer of such Letters of Credit and for its own account, an
additional letter of credit fee at the rate of 1/4 of 1% per annum on
the daily aggregate amount
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available for drawings under such Participation Letter of Credit. Fees
under this subsection (b)(i) shall accrue for each day from and after
the issuance of the initial Letter of Credit, and accrued fees shall be
payable on each Quarterly Date and on the earlier of the date the
Working Capital Commitments are terminated or the last day of the
Working Capital Availability Period and, if later, on the first day
thereafter on which no Letters of Credit are outstanding.
(ii) The Company shall pay to Chase, for its own account, such
documentary, processing charges and administrative fees with respect to
all Letters of Credit in such amounts and at such times as may be
notified to the Company by Chase, in accordance with the customary
practices of Chase.
(c) Other Fees.
(i) On the Effective Date the Company shall pay to the
Administrative Agent, for the account of each Lender, a fee equal to .1
of 1% of the sum of such Lender's Tranche A Term Loans, Tranche B Term
Loans and Working Capital Commitments, in each case outstanding under
the Original Agreement immediately prior to the Effective Date.
(ii) The Company shall pay to the Administrative Agent on the
Effective Date other fees in the amounts heretofore mutually agreed.
(iii) The Company shall pay to the Administrative Agent, so
long as any of the Commitments are in effect and until payment in full
of all Loans hereunder, the termination of all Letters of Credit and
payment in full of all Letter of Credit Liabilities, all interest
thereon and all other amounts payable hereunder, a periodic
administrative agency fee on the dates and in the amount heretofore
mutually agreed.
SECTION 2.05. Lending Offices. The Loans of each Type made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office
for Loans of such Type.
SECTION 2.06. Several Obligations. The failure of any Lender to make
any Loan to be made by it on the date specified therefor shall not relieve any
other Lender of its obligation to make its Loan on such date, but neither the
Administrative Agent nor any Lender shall be responsible for the failure of any
other Lender to make a Loan to be made by such other Lender.
SECTION 2.07. Notes. The Loans of each Class made by each Lender shall
be evidenced by a single Tranche A Term Note, Tranche B Term Note or Working
Capital Note of the Company (each a "NOTE") in substantially the form of Exhibit
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A, B or C hereto, as the case may be, payable to the order of such Lender in a
principal amount equal to such Lender's Commitment of such Class as originally
in effect and otherwise duly completed. Each Lender is hereby authorized by the
Company to endorse on the schedule (or a continuation thereof) attached to each
Note of such Lender, to the extent applicable, the date, amount and Type of and
the Interest Period (if any) for each Loan of the relevant Class made by such
Lender to the Company hereunder, and the date and amount of each payment or
prepayment of principal of such Loan received by such Lender, provided that any
failure by such Lender to make any such endorsement or any error in such
endorsement shall not affect the obligations of the Company under such Note or
hereunder in respect of such Loan.
SECTION 2.08. Use of Proceeds. The proceeds of the Tranche B Term Loans
made pursuant to Section 2.01(i) hereof shall be used to repay existing
outstanding Working Capital Loans and to finance Capital Expenditures in
connection with the Potassium Nitrate Project and the MAP/MKP Project. The
proceeds of the Working Capital Loans shall be used by the Company for working
capital and other general corporate purposes.
ARTICLE 3
BORROWINGS, CONVERSIONS AND PREPAYMENTS
SECTION 3.01. Borrowings. The Company shall give the Administrative
Agent notice of each borrowing to be made hereunder as provided in Section 5.05
hereof. Not later than 11:00 a.m. New York time on the date specified for each
such borrowing hereunder, each Lender shall make available the amount of the
Loan to be made by it on such date to the Administrative Agent, at the Principal
Office, in immediately available funds, for the account of the Company. The
amount so received by the Administrative Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Company by depositing the
same, in immediately available funds, in an account designated by the Company
maintained with the Administrative Agent at the Principal Office.
SECTION 3.02. Prepayments and Conversions.
(a) Optional Prepayments and Conversions. The Company shall have the
right to prepay Loans or to convert Loans of one Type into Loans of the other
Type, at any time or from time to time, provided that: (i) the Company shall
give the Administrative Agent notice of each such prepayment or conversion as
provided in Section 5.05 hereof, and (ii) except to the extent required pursuant
to Section 3.02(b) or 6.04 hereof, Eurodollar Loans may be prepaid or converted
only on the last day of an Interest Period for such Loans.
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(b) Mandatory Prepayments and Cover. (i) Events Requiring Prepayment
and Cover.
(A) Borrowing Base and Commitment Amount. The Company
shall from time to time prepay the Working Capital Loans (or
provide cover for Letter of Credit Liabilities as provided
below) in such amounts as shall be necessary so that at all
times the aggregate outstanding amount of the Working Capital
Obligations shall be less than or equal to the lesser of (i)
the Working Capital Commitments and (ii) the Borrowing Base.
(B) Insurance Proceeds and Condemnation Awards.
Promptly following the receipt thereof by the Company or any
of its Subsidiaries, the Company shall deposit with the
Administrative Agent in the Collateral Account maintained by
the Company pursuant to the Security Documents an amount of
cash or Liquid Investments equal to the aggregate Net Cash
Proceeds (if greater than $50,000) of any payment made to the
Company or any of its Subsidiaries (i) under any insurance
policy described in clause (1) of Section 9.03 hereof or (ii)
pursuant to any condemnation award. With respect to any such
payment or award, so long as no Default has occurred and is
continuing, the aggregate amount of such Net Cash Proceeds
which the Company or such Subsidiary has expended or committed
to expend for the restoration or replacement of the asset in
respect of which such payment or award was made shall be
released by the Administrative Agent to the Company upon
request to pay for such restoration or replacement; provided
that in the event that within 180 days of receipt of such
payment the Company or such Subsidiary shall not have expended
or committed to expend an equivalent amount for the
restoration or replacement of the asset in respect of which
such payment was made, the excess of the amount of such
payment over the amount of such expenditures and commitments
shall be applied to prepay the Loans (or provide cover for
Letter of Credit Liabilities as provided below) on such 180th
day.
(C) Issuance of Capital Stock or Incurrence of
Indebtedness. The Company shall prepay the Loans (or provide
cover for Letter of Credit Liabilities as provided below) in
the amount of and on the date of each receipt by the Company
or any of its Subsidiaries of (i) 50% of the Net Cash Proceeds
from the issuance subsequent to the Effective Date of common
stock by the Company or any of its Subsidiaries (upon the
exercise of options or otherwise), (ii) 100% of the Net Cash
Proceeds from the issuance
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subsequent to the Effective Date of capital stock other than
common stock by the Company or any of its Subsidiaries (upon
the exercise of options or otherwise) or (iii) 100% of the Net
Cash Proceeds from the incurrence of any Funded Indebtedness
not otherwise permitted under Section 9.08 to which the
Required Lenders have consented.
(D) Asset Dispositions. The Company shall prepay the
Loans (or provide cover for Letter of Credit Liabilities as
provided below) in the amount of and on the date of each
receipt by the Company or any of its Subsidiaries of the Net
Cash Proceeds of any disposition by such Person of assets
(except for inventory sold in the ordinary course of business)
to the extent the aggregate amount of such Net Cash Proceeds
exceeds $500,000 during any fiscal year; provided that the
amount of any prepayment with respect to Net Cash Proceeds
received by the Company or any Subsidiary of the Company from
the disposition by such Person of any division or Subsidiary
of such Person to which the Required Lenders (or, to the
extent required by Section 12.05, all the Lenders) have
consented shall not exceed the Threshold Amount. For the
purposes of this section, "THRESHOLD AMOUNT" shall mean that
portion (if any) of the Net Cash Proceeds received by the
Company or any of its Subsidiaries from any disposition by
such Person of any division or Subsidiary of such Person
which, if applied to prepay the Loans outstanding, would
result in a Leverage Ratio (calculated as of the date of
receipt of such Net Cash Proceeds and after giving pro forma
effect to such asset disposition as if such disposition had
occurred on the first day of the four fiscal quarters included
in the calculation of such Leverage Ratio) equal to (i) in the
case of any such asset disposition occurring after the
Effective Date but on or before the second anniversary of the
Closing Date hereof, 2.5 to 1.0 and (ii) in the case of any
such asset disposition occurring after the second anniversary
of the Closing Date hereof, 2.0 to 1.0. So long as the Net
Cash Proceeds of any such asset disposition are less than the
Threshold Amount, the Company shall prepay the Loans (or
provide cover for Letter of Credit Liabilities as provided
below) in the amount equal to 100% of such Net Cash Proceeds.
(E) Reversion of Pension Plans. The Company shall
prepay the Loans (or provide cover for Letter of Credit
Liabilities as provided below) in the amount of and on the
date of each receipt by the Company or any of its Subsidiaries
of Net Cash Proceeds from the termination of a Plan.
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(F) Excess Cash Flow. If for any fiscal year
commencing with the fiscal year ending on December 31, 1997,
(x) the sum of (A) Adjusted Cash Flow for such period plus (B)
the amount of any decrease in Net Working Investment during
such period exceeds (y) the sum of (i) Interest Expense for
such period, (ii) the maximum amount of Capital Expenditures
permitted to be made pursuant to Section 9.19 during such
period (without giving effect to the proviso set forth in
Section 9.19), (iii) the aggregate principal amount of
payments during such period of Term Loans pursuant to Section
3.02(a) or 4.01(a) and Working Capital Loans (to the extent
such payments are made pursuant to clause (i) of paragraph (1)
above after repayment in full of the Term Loans) and (iv) the
amount of any increase in Net Working Investment during such
period, then the Company shall, on the first Quarterly Date
following the end of such period, prepay the Loans (or provide
cover for Letter of Credit Liabilities as provided below) in
an amount equal to 75% of such excess ("EXCESS CASH FLOW");
provided that if the Company has disposed of substantially all
of the assets or capital stock of any Subsidiary or division
of the Company during such period, the calculation of any
increase or decrease in Net Working Investment during such
period shall be made assuming that such disposition had
occurred on the first day of such period.
(ii) Order of Prepayments and Cover. Any prepayment pursuant
to paragraph (B), (C), (D) (unless such prepayment is with respect to
Net Cash Proceeds received by the Company or any of its Subsidiaries
from the disposition by such Person of any division of or Subsidiary of
such Person and is in an amount equal to the Threshold Amount (a
"SUBSIDIARY SALE")), (E) or (F) of clause (b)(i) above shall be
applied, first, to the Term Loans and second, to the Working Capital
Loans or Letter of Credit Liabilities. Any prepayment pursuant to
paragraph (D) of clause (b)(i) above with respect to a Subsidiary Sale
and in an amount equal to the Threshold Amount shall be applied to all
the Loans (or Letter of Credit Liabilities).
(iii) Prepayment and Cover of Working Capital Obligations. If
the Company shall be required pursuant to paragraphs (D) through (F) of
clause (b)(i) and clause (b)(ii) above to prepay any Working Capital
Loans or provide cover for any Letter of Credit Liabilities, the
Company shall, until the relevant Working Capital Loans have been paid
in full, first prepay the principal of such Loans and then, following
such payment in full, provide cover for the relevant Letter of Credit
Liabilities. Cover for Letter of Credit Liabilities shall be effected
by paying all Reimbursement Obligations then due and payable and then
paying to the Administrative
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Agent immediately available funds, to be held by the Administrative
Agent in the Collateral Account maintained by the Company pursuant to
the Security Documents, in an amount equal to the required prepayment,
which amount shall be retained by the Administrative Agent in such
Collateral Account and applied to pay any Reimbursement Obligations
which become due until such time as the Letters of Credit shall have
been terminated and all of the Letter of Credit Liabilities paid in
full.
ARTICLE 4
PAYMENTS OF PRINCIPAL AND INTEREST
SECTION 4.01. Repayment of Loans.
(a) The Term Loans shall mature in installments in the respective
aggregate amounts and on the dates set forth in Schedule III.
(b) The Working Capital Loans shall mature on October 31, 2001.
(c) Any prepayment of the Term Loans pursuant to Section 3.02(a) or
paragraph (B), (C), (D), (E) or (F) of Section 3.02(b)(i) shall be applied to
reduce ratably all future installments of Term Loans required pursuant to clause
(a) above, unless the provisions of paragraph (d) of this Section apply.
(d) If the Company prepays any Loans pursuant to Section 3.02(a) or
Section 3.02(b)(i)(B), (C), (D), (E) or (F) hereof, the Company shall, so long
as both Tranche A Term Loans and Tranche B Term Loans remain outstanding,
provide at least two Business Days' prior notice to the Administrative Agent
(which notice shall specify the aggregate principal amount of Loans to be
prepaid and the date fixed for such prepayment), of such prepayment. Upon
receipt of any such notice from the Company to the Administrative Agent, the
Administrative Agent shall send a notice (an "ELECTION NOTICE") to each Lender
holding Tranche B Loans (which notice shall specify the prepayment amount, such
Lender's ratable share in respect of such Lender's Tranche B Loans of such
prepayment and the date fixed for prepayment). If any such Lender notifies the
Administrative Agent not later than 12:00 noon on the Business Day prior to the
date fixed for prepayment in such Election Notice that such Lender elects not to
have such Lender's ratable share of such prepayment applied to the prepayment of
its Tranche B Loans, such ratable share shall be applied to prepay ratably the
Tranche A Term Loans outstanding on the date of such prepayment.
SECTION 4.02. Interest. The Company will pay to the Administrative
Agent for the account of each Lender interest on the unpaid principal amount of
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each Loan made by such Lender for the period commencing on the date of such Loan
to but excluding the date such Loan shall be paid in full, at the following
rates per annum:
(a) if such Loan is a Base Rate Loan, the Base Rate plus the Applicable
Margin; and
(b) if such Loan is a Eurodollar Loan, the Eurodollar Rate plus the
Applicable Margin.
Notwithstanding any of the foregoing, the Company will pay to the Administrative
Agent for the account of each Lender interest at the applicable Post-Default
Rate on the principal of any Loan made by such Lender, on any Reimbursement
Obligation and on any other amount payable by the Company hereunder to or for
the account of such Lender (but, if such amount is interest, only to the extent
legally enforceable), (x) which shall not be paid in full when due (whether at
stated maturity, by acceleration or otherwise) or (y) upon the occurrence and
during the continuation of an Event of Default, for the period commencing on the
due date thereof or date of occurrence of such Event of Default until the same
is paid in full or such Event of Default has been waived or cured.
Accrued interest on each Loan shall be payable (i) if such Loan is a
Base Rate Loan, on each Quarterly Date, (ii) if such Loan is a Eurodollar Loan,
on the last day of the Interest Period for such Loan (and, if such Interest
Period exceeds three months' duration, quarterly, commencing on the first
quarterly anniversary of the first day of such Interest Period), and (iii) in
any event, upon the payment, prepayment or conversion thereof, but only on the
principal so paid or prepaid or converted; provided that interest payable at the
Post-Default Rate shall be payable from time to time on demand of the
Administrative Agent or the Required Lenders. Promptly after the determination
of any interest rate provided for herein or any change therein, the
Administrative Agent shall notify the Lenders and the Company thereof.
Notwithstanding the foregoing provisions of this Section 4.02, if at
any time the rate of interest set forth above on any Loan of or other obligation
payable to any Lender (the "STATED RATE") exceeds the maximum non-usurious
interest rate permissible for such Lender to charge commercial borrowers under
applicable law (the "MAXIMUM RATE" for such Lender), the rate of interest
charged on such Loan of or other obligation payable to such Lender hereunder
shall be limited to the Maximum Rate for such Lender.
If the Stated Rate for any Loan of a Lender that has theretofore been
subject to the preceding paragraph at any time is less than the Maximum Rate for
such Lender, the principal amount of such Loan shall bear interest at the
Maximum Rate for such Lender until the total amount of interest paid to such
Lender or
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accrued on its Loans hereunder equals the amount of interest which would have
been paid to such Lender or accrued on such Lender's Loans hereunder if the
Stated Rate had at all times been in effect.
If, upon payment in full of all amounts payable hereunder, the total
amount of interest paid to any Lender or accrued on such Lender's Loans under
the terms of this Agreement is less than the total amount of interest which
would have been paid to such Lender or accrued on such Lender's Loans if the
Stated Rate had, at all times, been in effect, then the Company shall, to the
extent permitted by applicable law, pay to the Administrative Agent for the
account of such Lender an amount equal to the difference between (a) the lesser
of (i) the amount of interest which would have accrued on such Lender's Loans if
the Maximum Rate for such Lender had at all times been in effect or (ii) the
amount of interest which would have accrued on such Lender's Loans if the Stated
Rate had at all times been in effect and (b) the amount of interest actually
paid to such Lender or accrued on its Loans under this Agreement.
If any Lender ever receives, collects or applies as interest any sum in
excess of the Maximum Rate for such Lender, such excess amount shall be applied
to the reduction of the principal balance of its Loans or to other amounts
(other than interest) payable hereunder, and if no such principal is then
outstanding, such excess or part thereof remaining shall be paid to the Company.
ARTICLE 5
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
SECTION 5.01. Payments. Except to the extent otherwise provided herein,
all payments of principal, interest, Reimbursement Obligations and other amounts
to be made by the Company hereunder and under the Notes shall be made in
Dollars, in immediately available funds, to the Administrative Agent at the
Principal Office, not later than 11:00 a.m. New York time on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).
The Administrative Agent, or any Lender for whose account any such payment is
made, may (but shall not be obligated to) debit the amount of any such payment
which is not made by such time to any ordinary deposit account of the Company
with the Administrative Agent or such Lender, as the case may be. The Company
shall, at the time of making each payment hereunder or under any Note, specify
to the Administrative Agent the Loans or other amounts payable by the Company
hereunder to which such payment is to be applied (and in the event that it fails
to so specify, or if an Event of Default has occurred and is continuing, the
Administrative Agent may apply such payment as it may elect in its sole
discretion
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<PAGE> 40
to amounts then due, but subject to the other terms and conditions of this
Agreement, including, without limitation, Section 5.02 hereof). Each payment
received by the Administrative Agent hereunder or under any Note for the account
of a Lender shall be paid promptly to such Lender, in immediately available
funds, for the account of such Lender's Applicable Lending Office. If the due
date of any payment hereunder or under any Note would otherwise fall on a day
which is not a Business Day such date shall be extended to the next succeeding
Business Day and interest shall be payable for any principal so extended for the
period of such extension.
SECTION 5.02. Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each borrowing from the Lenders under Section 2.01 hereof
shall be made from the Lenders, each payment of commitment fees and letter of
credit fees under Section 2.04 hereof shall be made for the account of the
Lenders, and each termination or reduction of the Commitments under Section 2.03
hereof shall be applied to the Commitments of the Lenders, pro rata according to
the Lenders' respective percentages of the Tranche B Term Commitments or Working
Capital Commitments, as the case may be; (b) each payment by the Company of
principal of or interest on Loans of a particular Class and Type (other than
payments in respect of Loans of individual Lenders provided for by Article 6
hereof) shall be made to the Administrative Agent for the account of the Lenders
pro rata in accordance with the respective unpaid principal amounts of such
Loans held by the Lenders; (c) each conversion of Loans of a particular Type
(other than conversions of Loans of individual Lenders pursuant to Section 6.04
hereof) shall be made pro rata among the Lenders in accordance with the
respective principal amounts of such Loans held by the Lenders; (d) each
Syndicated Letter of Credit will be issued by the Lenders severally and ratably
among the Lenders in accordance with their respective Working Capital Commitment
Percentages; and (e) the Lenders (other than Chase) shall purchase from Chase
participations in the Participation Letters of Credit to the extent of their
respective Working Capital Commitment Percentages.
SECTION 5.03. Computations. Interest based on the Prime Rate hereunder
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year) and actual days elapsed (including the first day but, excluding the last
day) occurring in the period for which payable. All other interest and all fees
shall be computed on the basis of a year of 360 days and actual days elapsed
(including the first day but, except in the case of letter of credit fees,
excluding the last day) occurring in the period for which payable.
SECTION 5.04. Minimum and Maximum Amounts; Types. Except for
prepayments made pursuant to Section 3.02(b) hereof, each borrowing, conversion
and prepayment of principal of Loans shall be in an aggregate principal amount
equal to (a) in the case of Eurodollar Loans, $1,000,000 or any larger multiple
thereof, and (b) in the case of Base Rate Loans, $500,000 or any multiple of
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<PAGE> 41
$100,000 greater than $500,000, except that any borrowing may be in the
aggregate amount of the unused portion of each Class of Commitment (borrowings,
conversions or prepayments of Loans of different Classes or Types or, in the
case of Eurodollar Loans, having different Interest Periods, at the same time
hereunder to be deemed separate borrowings, conversions and prepayments for
purposes of the foregoing, one for each Class, Type or Interest Period).
Notwithstanding anything to the contrary contained in this Agreement there shall
not be, at any one time, more than five Interest Periods in effect with respect
to Eurodollar Loans.
SECTION 5.05. Certain Notices. Notices to the Administrative Agent of
terminations or reductions of Commitments, of borrowings, conversions and
prepayments of Loans and of the duration of Interest Periods shall be
irrevocable and shall be effective only if received by the Administrative Agent
not later than 12:00 noon (or, in the case of borrowings of Base Rate Loans,
11:00 a.m.) New York time on the number of Business Days prior to the date of
the relevant termination, reduction, borrowing, conversion and/or prepayment
(subject to Section 4.01(d) hereof) specified below:
<TABLE>
<CAPTION>
Number of
Business
Notice Days Prior
------ ----------
<S> <C>
Termination or reduction of
Commitments 3
Borrowing of Base Rate Loans 0
Prepayment of Base Rate
Loans 1
Borrowing or prepayment of,
conversion of or into, or
duration of Interest Period for,
Eurodollar Loans 3
Prepayment of Eurodollar
Loans required pursuant to
Section 3.02(b) 1
</TABLE>
provided, however, that, for purposes of the borrowing of the Tranche B Term
Loans hereunder, notice of such borrowing shall be effective if received by the
Administrative Agent not later than 10:00 a.m. New York time on the date of such
borrowing. Each notice of termination or reduction shall specify the amount of
the Commitments of each Class to be terminated or reduced. Each notice of
borrowing, conversion or prepayment shall specify the amount, Class and Type of
the Loans to be borrowed, converted or prepaid (subject to Sections 3.02(a) and
35
<PAGE> 42
5.04 hereof), the date of borrowing, conversion or prepayment (which shall be a
Business Day) and, in the case of Eurodollar Loans, the duration of the Interest
Period therefor (subject to the definition of Interest Period). Each such notice
of duration of an Interest Period shall specify the Loans to which such Interest
Period is to relate. The Administrative Agent shall promptly notify the affected
Lenders of the contents of each such notice. In the event that the Company fails
to select the duration of any Interest Period for any Eurodollar Loans within
the time period and otherwise as provided in this Section 5.05, such Loans (if
outstanding as Eurodollar Loans) will be automatically converted into Base Rate
Loans on the last day of the then current Interest Period for such Loans or (if
outstanding as Base Rate Loans) will remain as, or (if not then outstanding)
will be made as, Base Rate Loans.
SECTION 5.06. Non-receipt of Funds by the Administrative Agent. Unless
the Administrative Agent shall have been notified by a Lender or the Company
(the "PAYOR") prior to the date on which such Lender is to make payment to the
Administrative Agent of the proceeds of a Loan to be made by it hereunder (or
the proceeds of a drawing to be paid by such Lender under any Syndicated Letter
of Credit or the payment of any amount by such Lender to reimburse Chase for a
drawing under any Participation Letter of Credit) or the Company is to make a
payment to the Administrative Agent for the account of one or more of the
Lenders, as the case may be (such payment being herein called the "REQUIRED
PAYMENT"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Administrative Agent, the
Administrative Agent may assume that the Required Payment has been made and may,
in reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Administrative Agent, the recipient
of such payment (or, if such recipient is the beneficiary of a Letter of Credit,
the Company and, if the Company fails to pay the amount thereof to the
Administrative Agent forthwith upon demand, the Lenders ratably in proportion to
their respective Working Capital Percentages) shall, on demand, pay to the
Administrative Agent the amount made available to it together with interest
thereon in respect of the period commencing on the date such amount was so made
available by the Administrative Agent until the date the Administrative Agent
receives such amount at a rate per annum equal to the Federal Funds Rate for
such period.
SECTION 5.07. Sharing of Payments, Etc. The Company agrees that, in
addition to (and without limitation of) any right of set-off, bankers' lien or
counterclaim a Lender may otherwise have, each Lender shall be entitled, at its
option, to offset balances held by it for the account of the Company at any of
its offices, in Dollars or in any other currency, against any principal of or
interest on any of such Lender's Loans to the Company hereunder, or any
Reimbursement Obligation or other obligation of the Company hereunder, which is
not paid when
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<PAGE> 43
due (regardless of whether such balances are then due to the Company), in which
case it shall promptly notify the Company and the Administrative Agent thereof,
provided that such Lender's failure to give such notice shall not affect the
validity thereof. If a Lender shall obtain payment of any principal of or
interest on any Loan made by it under this Agreement, or on any Reimbursement
Obligation or other obligation then due to such Lender hereunder, through the
exercise of any right of set-off, banker's lien, counterclaim or similar right,
or otherwise, it shall promptly purchase from the other Lenders participations
in the Loans made, or Reimbursement Obligations or other obligations held, by
the other Lenders in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Lenders shall share the
benefit of such payment (net of any expenses which may be incurred by such
Lender in obtaining or preserving such benefit) pro rata in accordance with the
unpaid principal and interest on the Loans and Reimbursement Obligations or
other obligations then due to each of them. To such end all the Lenders shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must otherwise be restored.
The Company agrees, to the fullest extent it may effectively do so under
applicable law, that any Person purchasing a participation in the Loans made, or
Reimbursement Obligations or other obligations held, by another Person, whether
or not acquired pursuant to the foregoing arrangements, may exercise all rights
of set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans and
Reimbursement Obligations or other obligations in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of the Company.
SECTION 5.08. Taxes. (a) Any and all payments by the Company hereunder
shall be made, in accordance with Section 5.01, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Lender and the Administrative Agent, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender or the Administrative Agent (as the case may be) is organized
or any political subdivision thereof and, in the case of each Lender, taxes
imposed on its income, and franchise taxes imposed on it, by the jurisdiction of
such Lender's Applicable Lending Office or any political subdivision thereof
(all such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "TAXES"). If the Company shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent, (i) except as provided in
subsection (g) below, the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.08), such Lender or the
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<PAGE> 44
Administrative Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Company shall
make such deductions and (iii) the Company shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Company agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, any
Letter of Credit or any other Basic Document or other document referred to
herein or therein (hereinafter referred to as "OTHER TAXES").
(c) The Company will indemnify each Lender and the Administrative
Agent for the full amount of Taxes or Other Taxes (including related penalties,
interest and expenses) imposed by any jurisdiction on amounts payable under this
Section 5.08 paid by such Lender or the Administrative Agent (as the case may
be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Company
will furnish to the Administrative Agent, at its address referred to in Section
12.02, the original or a certified copy of a receipt evidencing payment thereof.
(e) If any Lender subsequently receives from a taxing authority a
refund of any Tax previously paid by the Company and for which the Company has
indemnified the Lender pursuant to this Section 5.08, such Lender shall within
30 days after receipt of such refund, and to the extent permitted by applicable
law, pay to the Company the net amount of any such recovery after deducting
taxes and expenses attributable thereto.
(f) Not later than the Effective Date or, in the case of any bank or
financial institution that becomes a Lender after the Effective Date pursuant to
Section 12.06, the date of the instrument of assignment pursuant to which such
bank or financial institution became a Lender, and annually thereafter or at
such other times as the Administrative Agent or the Company may request, each
Lender organized under the laws of a jurisdiction outside the United States
shall provide the Administrative Agent and the Company (i) with duly completed
copies of Form 1001 or Form 4224 or (ii) if such Lender is not treated as a
"BANK" under Section 881(c)(3)(A) of the Code and is claiming exemption from
United States withholding taxes under Section 881(c) of the Code, with a
statement under penalties of perjury that it is not a "BANK" under Section
881(c)(3)(A) of the
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<PAGE> 45
Code, is not a 10-percent shareholder within the meaning of Section 881(c)(3)(B)
of the Code, and is not a controlled foreign corporation receiving interest from
a related person within the meaning of Section 881(c)(3)(C) of the Code, and
with duly completed copies of Form W-8, or in each case any successor form
prescribed by the Internal Revenue Service of the United States certifying as to
such Lender's status as exempt from United States withholding taxes with respect
to all payments to be made to such Lender hereunder or other documents
satisfactory to the Company and the Administrative Agent indicating that all
payments to be made to such Lender hereunder are not subject to such taxes (an
"EXEMPTION CERTIFICATE"). In the case of payments to or for any Lender organized
under the laws of a jurisdiction outside the United States, unless the
Administrative Agent has received an Exemption Certificate from such Lender, the
Administrative Agent may withhold taxes from such payments at the applicable
statutory rate. If the Company is required to pay additional amounts to any
Lender pursuant to this Section 5.08, such Lender shall use reasonable efforts
to designate a different Applicable Lending Office if such designation will
thereafter avoid the need for any additional payments under this Section 5.08
and will not, in the sole judgment of such Lender, be otherwise disadvantageous
to such Lender.
(g) If a Lender organized under the laws of a jurisdiction outside the
United States has not delivered an Exemption Certificate to the Company on or
before the Effective Date or, in the case of any bank or financial institution
that becomes a Lender after the Effective Date pursuant to Section 12.06, the
date of the instrument of assignment pursuant to which such bank or financial
institution became a Lender, then the Company shall not have any obligation to
indemnify such Lender for Taxes (including related penalties, interest and
expenses) imposed by the United States or any political subdivision thereof
pursuant to Section 5.08(a) and (c) hereof.
ARTICLE 6
YIELD PROTECTION AND ILLEGALITY
SECTION 6.01. Additional Costs.
(a) The Company shall pay to the Administrative Agent for the account
of each Lender from time to time such amounts as such Lender may determine to be
necessary to compensate it for any costs incurred by such Lender which such
Lender determines are attributable to its making or maintaining of any
Eurodollar Loans hereunder or its obligation to make any of such Loans
hereunder, or any reduction in any amount receivable by such Lender hereunder in
respect of any of such Loans or such obligation (such increases in costs and
reductions in amounts
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<PAGE> 46
receivable being herein called "ADDITIONAL COSTS"), in each case resulting from
any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to
such Lender under this Agreement or its Notes in respect of any of such
Loans (other than changes which affect franchise taxes or taxes
measured by or imposed on the overall net income of such Lender or of
its Applicable Lending Office for any of such Loans, in each case by
the jurisdiction in which such Lender is organized, has its principal
place of business or has such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit,
insurance assessment or similar requirements relating to any extensions
of credit or other assets of, or any deposits with or other liabilities
of, such Lender (including any of such Loans or any deposits referred
to in the definition of "EURODOLLAR BASE RATE" in Section 1.01 hereof
but excluding, with respect to any such Eurodollar Loan, any such
requirements included in the applicable Reserve Requirement); or
(iii) imposes any other condition affecting this Agreement (or
any of such extensions of credit or liabilities).
Each Lender will notify the Company through the Administrative Agent of any
event occurring after the date of this Agreement which will entitle such Lender
to compensation pursuant to this Section 6.01(a) as promptly as practicable
after it obtains knowledge thereof and determines to request such compensation,
and (if so requested by the Company through the Administrative Agent) will
designate a different Applicable Lending Office for the Eurodollar Loans of such
Lender if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender (provided that such Lender shall have no
obligation to so designate an Applicable Lending Office located in the United
States of America). Each Lender will furnish the Company with a statement
setting forth the basis and amount of each request by such Lender for
compensation under this Section 6.01(a). If any Lender requests compensation
from the Company under this Section 6.01(a), the Company may, by notice to such
Lender through the Administrative Agent, suspend the obligation of such Lender
to make additional Eurodollar Loans to the Company until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 6.04 hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 6.01, if, by reason of any Regulatory Change, any Lender either (i)
incurs Additional Costs based on or measured by the excess above a specified
level of the amount of a category of deposits or other liabilities of such
Lender which includes
40
<PAGE> 47
deposits by reference to which the interest rate on Eurodollar Loans is
determined as provided in this Agreement or a category of extensions of credit
or other assets of such Lender which includes Eurodollar Loans or (ii) becomes
subject to restrictions on the amount of such a category of liabilities or
assets which it may hold, then, if such Lender so elects by notice to the
Company (with a copy to the Administrative Agent), the obligation of such Lender
to make Eurodollar Loans hereunder shall be suspended until the date such
Regulatory Change ceases to be in effect (in which case the provisions of
Section 6.04 hereof shall be applicable).
(c) Determinations and allocations by any Lender for purposes of this
Section 6.01 of the effect of any Regulatory Change on its costs of maintaining
its obligations to make Loans or of making or maintaining Loans or on amounts
receivable by it in respect of Loans, and of the additional amounts required to
compensate such Lender in respect of any Additional Costs, shall be conclusive
absent manifest error.
SECTION 6.02. Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if, with respect to any Eurodollar Loans:
(a) the Administrative Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits referred
to in the definition of "EURODOLLAR BASE RATE" in Section 1.01 hereof are not
available in the relevant amounts or for the relevant maturities for purposes of
determining the rate of interest for such Loans for Interest Periods therefor as
provided in this Agreement; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Administrative Agent that the relevant rates of
interest referred to in the definition of "EURODOLLAR BASE RATE" in Section 1.01
hereof upon the basis of which the rates of interest for such Loans are to be
determined do not accurately reflect the cost to such Lenders of making or
maintaining such Loans for Interest Periods therefor;
then the Administrative Agent shall promptly notify the Company and each Lender
thereof, and so long as such condition remains in effect, the Lenders shall be
under no obligation to make Eurodollar Loans or to convert Base Rate Loans into
Eurodollar Loans and the Company shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Loans, either prepay such
Loans or convert such Loans into Base Rate Loans in accordance with Section 3.02
hereof.
SECTION 6.03. Illegality. Notwithstanding any other provision of this
Agreement to the contrary, in the event that it becomes unlawful for any Lender
or its Applicable Lending Office to (a) honor its obligation to make Eurodollar
Loans hereunder, or (b) maintain Eurodollar Loans hereunder, then such Lender
shall
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<PAGE> 48
promptly notify the Company thereof through the Administrative Agent and such
Lender's obligation to make Eurodollar Loans hereunder shall be suspended until
such time as such Lender may again make and maintain Eurodollar Loans (in which
case the provisions of Section 6.04 hereof shall be applicable).
SECTION 6.04. Substitute Base Rate Loans. If the obligation of any
Lender to make Eurodollar Loans shall be suspended pursuant to Section 6.01,
6.02 or 6.03 hereof, all Loans which would otherwise be made by such Lender as
Eurodollar Loans shall be made instead as Base Rate Loans (and, if an event
referred to in Section 6.01(b) or 6.03 hereof has occurred and such Lender so
requests by notice to the Company with a copy to the Administrative Agent, each
Eurodollar Loan of such Lender then outstanding shall be automatically converted
into a Base Rate Loan on the date specified by such Lender in such notice) and,
to the extent that Eurodollar Loans are so made as (or converted into) Base Rate
Loans, all payments of principal which would otherwise be applied to such
Eurodollar Loans shall be applied instead to such Base Rate Loans.
SECTION 6.05. Compensation. The Company shall pay to the Administrative
Agent for the account of each Lender, upon the request of such Lender through
the Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan made by
such Lender on a date other than the last day of an Interest Period for such
Loan; or
(b) any failure by the Company to borrow a Eurodollar Loan to be made
by such Lender on the date for such borrowing specified in the relevant notice
of borrowing under Section 5.05 hereof;
such compensation to include, without limitation, an amount equal to the excess,
if any ("PROSPECTIVE LOSS OF MARGIN"), of (i) the amount of interest which would
have accrued on the principal amount so paid, prepaid or converted or not
borrowed for the period from the date of such payment, prepayment or conversion
or failure to borrow to the last day of the Interest Period for such Loan (or,
in the case of a failure to borrow, the Interest Period for such Loan which
would have commenced on the date of such failure to borrow) at the applicable
rate of interest for such Loan provided for herein over (ii) the interest
component (as reasonably determined by such Lender) of the amount (as reasonably
determined by such Lender) such Lender would have bid in the London interbank
market for Dollar deposits of leading banks in amounts comparable to such
principal amount and maturities comparable to such period; provided that such
compensation shall not include prospective loss of margin as a result of any
mandatory prepayment pursuant to Section 3.02(b) hereof or if all Commitments
have been terminated, all
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<PAGE> 49
Loans have been repaid and no Letters of Credit are outstanding immediately
after giving effect to a payment or prepayment which would give rise to the
right to such compensation.
SECTION 6.06. Additional Costs in Respect of Letters of Credit. If as a
result of any Regulatory Change there shall be imposed, modified or deemed
applicable any tax, reserve, special deposit or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder or participations therein, and the result shall be to increase
the cost to any Lender of issuing or maintaining any Letter of Credit or any
participation therein, or reduce any amount receivable by any Lender hereunder
in respect of any Letter of Credit (which increase in cost, or reduction in
amount receivable, shall be the result of such Lender's reasonable allocation of
the aggregate of such increases or reductions resulting from such event), then,
upon demand by such Lender, the Company agrees to pay to such Lender, from time
to time as specified by such Lender, such additional amounts as shall be
sufficient to compensate such Lender for such increased costs or reductions in
amount. A statement as to such increased costs or reductions in amount incurred
by such Lender shall be submitted by such Lender to the Company and shall be
conclusive as to the amount thereof absent manifest error.
SECTION 6.07. Capital Adequacy. If any Lender shall determine that the
adoption or implementation after the date hereof of any applicable law, rule,
regulation or treaty regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Lender or any Person controlling such Lender (a "PARENT") as a
consequence of its obligations hereunder to a level below that which such Lender
(or its Parent) could have achieved but for such adoption, change or compliance
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, within 15
days after demand by such Lender (with a copy to the Administrative Agent), the
Company shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction. A statement of any Lender claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive absent manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
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ARTICLE 7
CONDITIONS PRECEDENT
SECTION 7.01. Initial Tranche B Term Loans. The obligation of each
Lender to make the initial Tranche B Term Loans to be made by it under this
Amended Agreement is subject to the condition precedent that the Effective Date
shall have occurred on or before September 30, 1997.
SECTION 7.02. Initial and Subsequent Loans and Letters of Credit. The
obligation of each Lender to make any Loan to be made by it hereunder, or to
issue any Letter of Credit hereunder, is subject to the conditions precedent
that, as of the date of such Loan or such issuance, and before and after giving
effect thereto:
(i) no Default shall have occurred and be continuing; and
(ii) the representations and warranties made by each of the
Parent, Nine West, the Company and its Subsidiaries in each Basic
Document to which it is a party shall be true (or, in the case of Basic
Documents which are not Financing Documents, true in all material
respects) on and as of the date of the making of such Loan or such
issuance, with the same force and effect as if made on and as of such
date.
Each notice of borrowing by the Company hereunder, or request for issuance of a
Letter of Credit, shall constitute a certification by the Company to the effect
set forth in the preceding sentence (both as of the date of such notice and as
of the date of such borrowing or issuance).
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Lenders and the
Administrative Agent as follows:
SECTION 8.01. Corporate Existence. Each of the Company and its
Subsidiaries: (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power, and has all governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being or as proposed to be conducted, except in the case of such licenses,
authorizations, consents and approvals, where the failure to obtain them would
not have a Material Adverse Effect; and (c) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would have a Material
Adverse Effect.
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SECTION 8.02. Information. (a) The Information Memorandum did not as of
the date thereof and as of the Closing Date, and the Amendment Information did
not as of the date thereof and will not as of the Effective Date, contain any
untrue statement of a material fact or assumption or omit to state a material
fact or assumption necessary in order to make the statements contained therein
not misleading; provided that although the management of the Company believes
that the projections presented in the Information Memorandum and the Amendment
Information are reasonable, the Company makes no representation as to their
attainability. Without limiting the generality of paragraph (a):
(i) The audited consolidated balance sheets of the Company and
its Subsidiaries as of December 31, 1996 and the related consolidated
statements of income and retained earnings and cash flows for the year
then ended (the "COMPANY AUDITED STATEMENTS"), have been prepared in
accordance with generally accepted accounting principles consistently
applied. The Company Audited Statements fairly present the financial
position of the Company and its Subsidiaries at December 31, 1996 and
the results of their operations and cash flows for the year then ended
in conformity with generally accepted accounting principles.
(ii) The consolidated balance sheets of the Company and its
Subsidiaries as of March 31, 1997 and the related consolidated
statements of income and retained earnings and cash flows for the three
months ended March 31, 1997, have been prepared in accordance with
generally accepted accounting principles for interim financial
information, and include all adjustments, which are of a normal and
recurring nature, and fairly present, in all material respects, the
financial position of the Company and its Subsidiaries as of March 31,
1997 and the results of their operations and cash flows for the three
months ended March 31, 1997.
(iii) The pro forma consolidated balance sheets of the Company
and its Subsidiaries as of March 31, 1997, prepared after giving effect
to the making of the Tranche B Term Loans to be made on the Effective
Date hereunder, copies of which have been delivered to the Lenders,
fairly present in all material respects on a pro forma basis the
financial position of the Company and its Subsidiaries as of March 31,
1997.
(iv) The Company and its Subsidiaries did not on the date of
the balance sheet referred to in clause (iii) above, and will not on
the Effective Date, have any material contingent liabilities, material
liabilities for taxes, unusual and material forward or long-term
commitments or material unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided
for in said balance sheet.
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(b) The Company has disclosed to the Lenders in writing in this
Agreement any and all facts (other than general economic and industry
conditions) which have or may have a Material Adverse Effect.
(c) Since March 31, 1997 no event has occurred and no condition has
come into existence which has had, or is reasonably likely to have, a Material
Adverse Effect.
SECTION 8.03. Litigation. There are no legal or arbitral proceedings or
any proceedings by or before any governmental or regulatory authority or agency,
now pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries in which there is a reasonable
possibility of an adverse decision which could have a Material Adverse Effect.
SECTION 8.04. No Breach. None of the execution and delivery of the
Basic Documents or the transactions therein contemplated or compliance with the
terms and provisions thereof will conflict with or result in a breach of, or
require any consent under, the certificate of incorporation or by-laws of the
Company or any of its Subsidiaries, or any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or
agency, or any Basic Document or other material agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which it is bound or to
which it is subject, or constitute a default under any such agreement or
instrument, or (except for the Liens created pursuant to the Security Documents)
result in the creation or imposition of any Lien upon any of the revenues or
assets of the Company or any of its Subsidiaries pursuant to the terms of any
such agreement or instrument.
SECTION 8.05. Corporate Action. Each of the Company, its Subsidiaries,
Nine West and the Parent, as the case may be, has all necessary corporate power
and authority to perform its obligations under the Basic Documents to which it
is a party; the execution, delivery and performance by the Company, its
Subsidiaries, Nine West and the Parent of the Basic Documents to which they are
parties have been duly authorized by all necessary corporate action; and this
Agreement has been duly and validly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, each of the
other Basic Documents to which the Company, any of its Subsidiaries, Nine West
or the Parent is to be a party will constitute its legal, valid and binding
obligation, in each case enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or moratorium or other similar laws relating to the enforcement of creditors'
rights generally and by general equitable principles.
SECTION 8.06. Approvals. Each of the Company, its Subsidiaries, Nine
West and the Parent, as the case may be, has obtained all authorizations,
approvals and consents of, and has made all filings and registrations with, any
governmental
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or regulatory authority or agency and any third party necessary for the
execution, delivery or performance by it of any Basic Document to which it is a
party or for the validity or enforceability thereof, except for filings and
recordings of the Liens created pursuant to, or permitted by, the Security
Documents.
SECTION 8.07. Regulations U and X. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U or X of the Board of Governors
of the Federal Reserve System) and no part of the proceeds of any Loan hereunder
will be used to purchase or carry any such margin stock.
SECTION 8.08. ERISA. The Company and each member of the Controlled
Group have fulfilled their obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the Code
with respect to each Plan. No such Person has (i) sought a waiver of the minimum
funding standard under Section 412 of the Code in respect of any Plan, (ii)
failed to make any contribution or payment to any Plan or Multiemployer Plan, or
made any amendment to any Plan, which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Code or (iii) incurred any liability under Title IV of ERISA (other than a
liability to the PBGC for premiums under Section 4007 of ERISA).
SECTION 8.09. Taxes. Each of the Company, Nine West, the Parent and
their respective Subsidiaries has filed all United States Federal income tax
returns and all other material tax returns which are required to be filed by it
and has paid all taxes due pursuant to such returns or pursuant to any
assessment received by it, except to the extent the same may be contested as
permitted by Section 9.02 hereof. There are no material tax disputes or contests
relating to the Company, Nine West, the Parent or any of their respective
Subsidiaries pending as of the Effective Date. The charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of the Company, adequate.
SECTION 8.10. Subsidiaries; Agreements. (a) Schedule IV hereto is a
complete and correct list, as of the Effective Date, of all Subsidiaries of the
Company and of all Investments held by the Company or any of its Subsidiaries in
any joint venture or other Person. Except for the Liens created by the Security
Documents, the Company owns, free and clear of Liens, all outstanding shares of
its Subsidiaries and all such shares are validly issued, fully paid and
non-assessable and the Company (or the respective Subsidiary of the Company)
also owns, free and clear of Liens, all such Investments.
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(b) Schedule V hereto is a complete and correct list of all credit
agreements, indentures, capitalized leases, obligations in respect of letters of
credit, guaranties, joint venture agreements, and other material instruments in
effect as of the Effective Date providing for, evidencing, securing or otherwise
relating to any Indebtedness or lease obligations of the Company or any of its
Subsidiaries, and all obligations of the Company or any of its Subsidiaries to
issuers of surety or appeal bonds issued for account of the Company or any of
its Subsidiaries, and such list correctly sets forth the names of the debtor or
lessee and creditor or lessor with respect to the Indebtedness or lease
obligations outstanding or to be outstanding and the property subject to any
Lien securing such Indebtedness or lease obligation. The Company has heretofore
delivered to the Administrative Agent a complete and correct copy of all such
credit agreements, indentures, capitalized leases, letter of credit obligations,
guaranties, joint venture agreements and other material instruments, including
any modifications or supplements thereto, as in effect on the date hereof.
SECTION 8.11. Investment Company Act. Neither the Company nor any of
its Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended, or, directly or indirectly, controlled by or
acting on behalf of any Person which is an investment company, within the
meaning of said Act.
SECTION 8.12. Public Utility Holding Company Act. Neither the Company
nor any of its Subsidiaries is a "HOLDING COMPANY", or an "AFFILIATE" of a
"HOLDING COMPANY" or a "SUBSIDIARY COMPANY" of a "HOLDING COMPANY", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 8.13. Ownership and Use of Properties. Each of the Company and
its Subsidiaries will have on the Effective Date and at all times thereafter,
legal title or ownership of, or the right to use pursuant to enforceable and
valid agreements or arrangements, all tangible property, both real and personal
and all franchises, licenses, copyrights, patents and know-how which is material
to the operation of its business as proposed to be conducted.
SECTION 8.14. Environmental Matters. (a) The Company and each of its
Subsidiaries have obtained all permits, certificates, licenses, approvals,
registrations and other authorizations which are required under all applicable
Environmental Laws to conduct their respective businesses as currently
conducted, except to the extent failure to have any such permit, certificate,
license, approval, registration or authorization would not have a Material
Adverse Effect. The Company and each of its Subsidiaries are in compliance with
the terms and conditions of all such permits, certificates, licenses, approvals,
registrations and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and
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timetables contained in any applicable Environmental Law or in any notice or
demand letter from any regulatory authority issued, entered, promulgated or
approved thereunder, except to the extent failure to comply would not have a
Material Adverse Effect.
(b) In addition, except (x) as described in Schedule VI or (y) to the
extent that the liabilities that could reasonably be expected to result from the
matters referred to in this Section 8.14(b) would not exceed $200,000
individually or $750,000 in the aggregate:
(i) No notice, notification, demand, request for information,
citation, summons or order has been issued and received by the Company
or any of its Subsidiaries, no complaint has been served on the Company
or any of its Subsidiaries, no penalty has been assessed and, to the
best knowledge of the Company, no investigation or review is pending or
threatened by any governmental entity or other Person with respect to
(1) any alleged failure by the Company or any of its Subsidiaries to
have any environmental permit, certificate, license, approval,
registration or authorization required in connection with the conduct
of the business of the Company or any of its Subsidiaries, (2) any
alleged failure by the Company or any of its Subsidiaries to comply
with the terms and conditions of any such permit, certificate, license,
approval, registration or authorization or of any other limitation,
restriction, condition, standard, prohibition, requirement, obligation,
schedule or timetable contained in any applicable Environmental Law,
(3) any Regulated Activity or (4) any Release of any Hazardous
Substance;
(ii) Neither the Company nor its Subsidiaries nor the
businesses conducted by such Persons nor, to the best knowledge of the
Company or any of its Subsidiaries, any other Person, other than in
compliance with applicable Environmental Laws, has disposed of or
placed, held, located or otherwise handled, any Hazardous Substance on,
under or at any property now or previously owned, operated or leased by
the Company or any of its Subsidiaries, and none of such properties has
been used (whether by the Company or any of its Subsidiaries or, to the
best knowledge of the Company or any of its Subsidiaries, by any other
Person) as a dump site or storage (whether permanent or temporary) site
for any Hazardous Substance; and
(A) no polychlorinated biphenyls (PCBs), radioactive
material, urea formaldehyde or lead is or has been present at
any property now or previously owned, operated or leased by
the Company or any of its Subsidiaries;
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(B) no asbestos is or has been present in airborne or
friable form at any property now or previously owned, operated
or leased by the Company or any of its Subsidiaries;
(C) there are no underground storage tanks, active or
abandoned, which have been used to store or which otherwise
contain or have contained any Hazardous Substance at any
property now or previously owned, operated or leased by the
Company or any of its Subsidiaries; and
(D) no Hazardous Substance has been Released in a
reportable quantity or is present in a threshold planning
quantity, where such a quantity has been established by
statute, ordinance, rule, regulation or order, at, on or under
any property now or previously owned, operated or leased by
the Company or any of its Subsidiaries.
(iii) None of the Company, any of its Subsidiaries, or any of
the businesses conducted by such Persons has transported or arranged
for the transportation (directly or indirectly) of any Hazardous
Substance except as a commercial product to any location which is
listed or proposed for listing on the National Priorities List
promulgated pursuant to CERCLA ("NPL"), or the Comprehensive
Environmental Response, Compensation and Liability Information System
("CERCLIS") or on any similar federal, state, foreign or local list or
which is the subject of federal, state, foreign or local enforcement
actions or, to the best knowledge of the Company, other investigations
which may lead to claims against the Company or any of its Subsidiaries
for clean-up costs, remedial work, damages to natural resources or for
personal injury claims, including, but not limited to, claims under
CERCLA;
(iv) All oral or written notifications of a Release of a
Hazardous Substance required to be filed under any applicable
Environmental Law have been filed by or on behalf of the Company and
its Subsidiaries and no property now or previously owned, operated or
leased by the Company or any of its Subsidiaries is listed or, to the
knowledge of the Company or any of its Subsidiaries, proposed for
listing, on the NPL or on CERCLIS or any similar federal, state,
foreign or local list of sites requiring investigation or clean-up
which may lead to claims for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including, but not
limited to, claims under CERCLA;
(v) Except in compliance with applicable Environmental Laws or
as reported under applicable Environmental Laws, no Hazardous Substance
generated by the Company or any of its Subsidiaries has been stored
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(except as a commercial product), recycled, treated or Released or
disposed of by the Company or any of its Subsidiaries at any location;
(vi) There are no Liens arising under or pursuant to any
applicable Environmental Laws on property owned, operated or leased by
the Company or any of its Subsidiaries, and no actions by any
governmental entity have been taken or, to the best knowledge of the
Company, are in process which could subject any of such properties to
such Liens, and no notice or restriction relating to the presence of
any Hazardous Substance at any such property is required to be placed
in any deed to such property; and
(vii) There are no existing liabilities or potential
liabilities of the Company or any Subsidiary relating to health and
safety matters for past or present employees, agents, third party
contractors or other workers, including, but not limited to, such
liabilities arising from OSHA compliance or wrongful death actions.
(viii) There are no existing liabilities or potential
liabilities of the Company or any Subsidiary identified in any
environmental investigations, studies, audits, tests, reviews or other
analyses conducted by or which are in the possession of the Company or
any of its Subsidiaries in relation to any property or facility now or
previously owned, operated or leased by the Company or any Subsidiary
which are not disclosed in the reports described in Section 7.01(o) of
the Original Agreement or disclosed in Schedule VI. The Company
conducts and, to the best knowledge of the Company, has conducted all
such environmental investigations, studies, audits, tests, reviews or
other analyses in relation to all properties and facilities now or
previously owned, operated or leased by the Company or any of its
Subsidiaries which are required under applicable Environmental Laws and
maintains such records and reports for the time periods prescribed
under applicable Environmental Laws.
(c) For purposes of this Section, representations given with respect to
the Company and its Subsidiaries shall be deemed given also with respect to any
matters which could result in Environmental Liabilities, to the extent successor
liability could be imposed under applicable Environmental Laws on the Company or
any of its Subsidiaries.
SECTION 8.15. Foreign Subsidiaries. The Foreign Subsidiaries (i) do not
own or lease assets having an aggregate fair market value in excess of $10,000,
(ii) have no revenues and (iii) have no business operations.
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ARTICLE 9
COVENANTS
The Company agrees that, so long as any of the Commitments are in
effect and until payment in full of all Loans hereunder, the termination of all
Letters of Credit and payment in full of all Letter of Credit Liabilities, all
interest thereon and all other amounts payable under the Financing Documents,
unless the Required Lenders shall agree otherwise as contemplated by Section
12.05 hereof:
SECTION 9.01. Information. The Company shall deliver to the
Administrative Agent, together with enough copies for each of the Lenders:
(a) as soon as available and in any event within 90 days after the end
of each fiscal year of the Company, consolidated statements of income, retained
earnings and cash flow of the Company and its Subsidiaries for such year, the
consolidating statements of income of the Company and its Subsidiaries, and the
related consolidated and consolidating balance sheet as at the end of such year,
setting forth with respect to the consolidated financial statements in
comparative form the corresponding figures (if any) for the preceding fiscal
year, and accompanied, in the case of said consolidated financial statements, by
an opinion thereon of Price Waterhouse LLP or other independent certified public
accountants of recognized national standing, which opinion shall state that said
consolidated financial statements fairly present in all material respects the
consolidated financial condition and results of operations of the Company and
its Subsidiaries as at the end of, and for, such fiscal year, and a standard
letter from such accountants stating that, in performing the auditing procedures
necessary for their above-described opinion (but without any special or
additional procedures for that purpose), nothing came to their attention that
caused them to believe, except as specifically stated, that (i) the Company was
not in compliance with any of the terms, covenants, provisions or conditions of
this Agreement and (ii) the Company's calculation of the Receivables and
Inventory included in the Borrowing Base as of the end of such fiscal year was
not fairly stated, in all material respects, in relation to the financial
statements from which such information was derived;
(b) as soon as available and in any event within 30 days after the end
of each monthly accounting period of the Company (and as soon as available and
in any event within 50 days after the end of each fiscal quarter of the Company
other than the last fiscal quarter in each fiscal year) consolidated statements
of income, retained earnings and cash flow of the Company and its Subsidiaries,
the consolidating statements of income of the Company and its Subsidiaries and
other reports, at the request of the Administrative Agent or any Lender, in each
case in a form reasonably satisfactory to the Administrative Agent, for such
monthly accounting period and such fiscal quarter and for the portion of the
fiscal year ended at the end of such monthly accounting period (and such fiscal
quarter), and
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the related consolidated and consolidating balance sheet as at the end of such
monthly accounting period (and such fiscal quarter), setting forth with respect
to the consolidated financial statements in comparative form the corresponding
figures from the Company's operating budget for such fiscal year and the figures
as at and for the corresponding dates and periods in the immediately preceding
fiscal year and accompanied, in each case, by (i) a reconciliation, in form and
detail reasonably satisfactory to the Administrative Agent, of the Inventory and
Receivables figures set forth in such financial statements as at the end of such
monthly accounting period (and such fiscal quarter) to the Borrowing Base
Certificate previously delivered as at said date pursuant to clause (c) below,
(ii) a summary of sales by product group substantially in the form of Exhibit J,
(iii) in the case of the last monthly accounting period of any fiscal quarter, a
summary of sales by product group and other income statement information
substantially in the form of Exhibit K, and (iv) a certificate of a Senior
Officer, which certificate shall state that said consolidated financial
statements fairly present in all material respects the consolidated financial
condition and results of operations of the Company in accordance with GAAP and
which shall contain footnotes of the type required by the Securities and
Exchange Commission to be included in quarterly reports on Form 10-Q,
consistently applied, as at the end of, and for, such period (subject to normal
year-end audit adjustments);
(c) as soon as available and in any event within (i) seven Business
Days after the last day of each calendar month, and (ii) five Business Days
after receipt of a request therefor (which may be given from time to time) from
the Required Lenders, a Borrowing Base Certificate as at such day or the date of
such request, as the case may be; provided that, in the case of any Borrowing
Base Certificate to be delivered pursuant to the foregoing clause (ii), Eligible
Inventory shall be calculated based on the amount of Eligible Inventory as of
the date of the Borrowing Base Certificate most recently delivered pursuant to
clause (i), adjusted to reflect the Company's best estimate of changes in
Eligible Inventory since the date of such Borrowing Base Certificate;
(d) within 15 days after the beginning of each fiscal year of the
Company, a copy of the operating budget, including, without limitation,
projection of the anticipated cash flow, of the Company and its Subsidiaries,
divisions and product group for such fiscal year, such budget to be accompanied
by a certificate of a Senior Officer specifying the assumptions on which such
budget was prepared, stating that such officer has no reason to question the
reasonableness of any material assumptions on which such budget was prepared and
providing such other details as the Administrative Agent may reasonably request;
(e) once during each fiscal year of the Company, if requested by the
Administrative Agent or the Required Lenders, a report of an independent
collateral auditor (which may be, or be affiliated with, one of the Lenders)
with respect to the Receivables and Inventory components included in the
Borrowing
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Base, which report shall indicate that, based upon a review by such auditor of
the Receivables (including verification with respect to the amount, aging,
identity and credit of the respective account debtors and the billing practices
of the Company conducted in a manner comparable to that employed by the
Company's independent certified public accountants in connection with audits of
the annual financial statements of the Company) and Inventory (including
verification as to the value, location and respective types), the information
set forth in the Borrowing Base Certificate most recently delivered is accurate
and complete in all material respects;
(f) as soon as available and in any event within 90 days after the end
of each fiscal year of the Parent, consolidated statements of operations,
stockholder's equity and cash flow of the Parent and its Subsidiaries for such
year and the related consolidated balance sheet as at the end of such year,
setting forth in each case in comparative form the corresponding figures (if
any) for the preceding fiscal year, and accompanied by an opinion thereon of
Deloitte & Touche LLP or other independent certified public accountants of
recognized national standing, which opinion shall state that said consolidated
financial statements fairly present in all material respects the consolidated
financial condition and results of operations of the Parent and its Subsidiaries
as at the end of, and for, such fiscal year; provided that so long as the Parent
and its Subsidiaries timely file a Form 10-K with the Securities and Exchange
Commission, the requirements of this paragraph may be satisfied by the delivery
of such Form 10-K;
(g) as soon as available and in any event within 50 days after the end
of each fiscal quarter of the Parent (other than the last fiscal quarter in each
fiscal year), consolidated statements of operations, stockholder's equity and
cash flow of the Parent and its Subsidiaries for such fiscal quarter and for the
portion of the fiscal year ended at the end of such fiscal quarter, and the
related consolidated balance sheet as at the end of such fiscal quarter,
accompanied by a certificate of the chief financial officer or treasurer of the
Parent, which certificate shall state that said consolidated financial
statements fairly present in all material respects the consolidated financial
condition and results of operations of the Parent in accordance with GAAP and
containing footnotes of the type required by the Securities and Exchange
Commission to be included in quarterly reports on Form 10-Q, consistently
applied, as at the end of, and for, such period (subject to normal year-end
audit adjustments); provided that so long as the Parent and its Subsidiaries
timely file a Form 10-Q with the Securities and Exchange Commission, the
requirements of this paragraph may be satisfied by the delivery of such Form
10-Q;
(h) promptly upon the mailing thereof to the shareholders or creditors
of the Company or the Parent generally, copies of all financial statements,
reports and proxy statements so mailed;
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(i) promptly upon the filing thereof, copies of all registration
statements (other than any registration statements on Form S-8 or its
equivalent) and any reports which the Company or the Parent shall have filed
with the Securities and Exchange Commission;
(j) if and when the Company or any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of any "REPORTABLE EVENT" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC, (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate or appoint a trustee to administer
any Plan, a copy of such notice; (iv) applies for a waiver of the minimum
funding standard under Section 412 of the Code, a copy of such application; (v)
gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with the PBGC; (vi) gives notice
of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or makes any amendment to any Plan which has resulted or
could result in the imposition of a Lien or the posting of a bond or other
security, a certificate of a Senior Officer setting forth details as to such
occurrence and action, if any, which the Company or member of the Controlled
Group is required or proposes to take;
(k) promptly following the delivery thereof to the Company or to the
Board of Directors or management of the Company, a copy of any management letter
or written report by independent public accountants with respect to the
financial condition, operations, business or prospects of the Company;
(l) promptly after management of the Company knows that any Default
has occurred and is continuing, a notice of such Default, describing the same in
reasonable detail;
(m) (i) once during every two fiscal years of the Company, if
requested by the Administrative Agent or the Required Lenders, an update
prepared by an independent engineer satisfactory to the Administrative Agent of
the reports required to be delivered pursuant to Section 7.01(o) of the Original
Agreement, reporting any material changes in the estimate of current liabilities
and assessment of potential sources of future liabilities contained therein and
(ii) at any time upon (x) notice from the Company to the Administrative Agent
pursuant to Section 9.23 or (y) the determination by the Administrative Agent
that an event described in clauses (i), (ii), (iii) or (iv) of Section 9.23
shall have occurred, an update prepared
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by an independent engineer satisfactory to the Administrative Agent of the
reports required to be delivered pursuant to Section 7.01(o) of the Original
Agreement, reporting any material changes in the estimate of current liabilities
and assessment of potential sources of future liabilities contained therein,
provided that any report delivered pursuant to this clause (ii) shall be limited
to the facilities with respect to which such notice was given or such
determination was made (and reasonably related issues); and
(n) from time to time such other information regarding the financial
condition, operations, prospects or business of the Company as the
Administrative Agent or any Lender through the Administrative Agent may
reasonably request.
The Company will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of a
Senior Officer (i) to the effect that, to the best of his knowledge after due
inquiry, no Default has occurred and is continuing (or, if any Default has
occurred and is continuing, describing the same in reasonable detail) and (ii)
setting forth in reasonable detail the computations necessary to determine
whether it was in compliance with Sections 9.08 to 9.16, inclusive, and 9.19 and
9.21 hereof as of the end of the respective monthly accounting period, fiscal
quarter or fiscal year.
SECTION 9.02. Taxes and Claims. The Company will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any property belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien upon the property of the Company or such Subsidiary, provided that
neither the Company nor such Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim the payment of which is being contested in
good faith and by proper proceedings if it maintains adequate reserves with
respect thereto and if such contest, proceedings and reserves have been
described in a certificate of a Senior Officer delivered to the Lenders.
SECTION 9.03. Insurance. The Company will maintain, and will cause each
of its Subsidiaries to maintain, insurance with responsible companies in such
amounts and against such risks as is usually carried by owners of similar
businesses and properties in the same general areas in which the Company and its
Subsidiaries operate, provided that in any event the Company shall maintain:
(1) Property/Business Interruption Insurance -- insurance (x)
against loss or damage covering all of the tangible real and personal
property and improvements of the Company and its Subsidiaries, by
reason of any Peril (as defined below), (y) covering any construction
or repair of improvements, for the total value of the work performed
and equipment, supplies and material furnished against any Peril and
(z) against loss of
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operating income earned from the operation of the Facilities, by reason
of any Peril affecting the operation thereof, and insurance against any
other insurable loss of operating income by reason of any business
interruption affecting the Company and its Subsidiaries to the extent
covered by standard business interruption policies in the States in
which the Facilities are located, which insurance shall in each case
cover the actual loss of net profit together with the necessary
continuing expenses during the period of interruption by reason of the
particular Peril or other insurable business interruption in amounts
(subject to such deductibles which shall not exceed $250,000 in the
case of any policy for any such insurance described in the foregoing
clause (x) or (y) or, in the case of any policy for any such insurance
described in the foregoing clause (z), 10 days) as shall be reasonable
and customary, but in no event less than the greater of (A) (i) with
respect to any policy for any such insurance described in clause (x) or
(y) other than any policy for insurance against risks of flood at
Vicksburg Chemical Company, the aggregate outstanding principal amount
of the Term Loans, (ii) with respect to any policy for insurance
against risk of flood at Vicksburg Chemical Company, $10,000,000
annually or (iii) with respect to any policy for any such insurance
described in clause (z), $38,255,000, or (iv) in each case, such lesser
amount as the Required Lenders shall have consented to in writing, and
(B) the amounts necessary to avoid the insured named therein from
becoming a co-insurer of any loss under such policy.
(2) Automobile Liability Insurance for Bodily Injury and
Property Damage -- or cause to be carried insurance in respect of all
vehicles (whether owned, hired or rented by the Company or any of its
Subsidiaries) at any time in such amounts as are then customary for
vehicles used in connection with property similar in use to the
Facilities and as otherwise may be required by applicable law.
(3) Comprehensive General Liability Insurance -- insurance
against (i) claims for bodily injury, death or property damage
occurring on, in or about the Facilities and adjoining streets and
sidewalks, (ii) claims arising out of the sudden and accidental release
or spillage of toxic wastes or substances, provided that the Company
shall not be required to maintain insurance against claims for testing,
monitoring, cleanup, removal, containment, neutralizing, detoxification
or treatment of any facility owned, occupied, or controlled by the
Company, or of any facility where waste of the Company is handled,
treated or disposed of, and (iii) claims for bodily injury, death or
property damage resulting from the use of products sold by the Company
or any of its Subsidiaries in such amounts as are then customary for
property similar in use, and for operations and businesses similar, to
the Facilities located in the States in which the Facilities are
located, but in any event in an amount per occurrence of at least
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<PAGE> 64
$1,000,000 and $2,000,000 annually in the aggregate and with a
deductible (or self-insured amount) not in excess of $250,000 per
occurrence, except that, with respect to claims arising out of clause
(ii) above, the deductible shall be $1,000,000 per occurrence.
(4) Workers' Compensation Insurance -- insurance (including
Employers' Liability Insurance) to the extent required by applicable
law.
(5) Marine Open Cargo Insurance -- insurance against claims
for property damage occurring on, in or about waterways, in such
amounts as are then customary for similar cargo but in any event in an
amount per occurrence of at least $1,500,000 if property is below deck,
and $100,000 if property is on deck and with a deductible (or
self-insured amount) not in excess of $10,000.
(6) Other Insurance -- such other insurance, including
War-Risk Insurance when and to the extent obtainable by the Company
from the United States Government, in each case as is generally carried
by owners of similar properties in the States in which the Facilities
are located, in such amounts and against such risks as are then
customary for property similar in use to such Facilities.
Such insurance shall be written by financially responsible companies selected by
the Company, having an (except in the case of foreign insurers acceptable to the
Required Lenders) A.M. Best rating of "A-" or better and in a financial size
category of VI or larger, or by other companies acceptable to the Required
Lenders, and (other than workers' compensation) shall name the Administrative
Agent as loss payee and/or as additional insured, as its interests may appear.
Each policy referred to in this Section 9.03 shall include effective waivers by
the insurer of all claims for insurance premiums against the Administrative
Agent or any Lender, provide that all insurance proceeds in excess of $50,000
per claim which would otherwise be payable to the Company or any Subsidiary of
the Company under any of the policies described in this Section 9.03 shall be
adjusted with the Administrative Agent (upon consultation with the Company), and
payable to the Administrative Agent (for deposit in the Collateral Account
maintained pursuant to the Security Documents and application in accordance with
Section 3.02(b)(i)(B)), provide that it will not be canceled or reduced except
after not less than 30 days' written notice to the Administrative Agent and
provide that the interests of the Administrative Agent and the Lenders shall not
be invalidated by any act or negligence of the Company or any Person having an
interest in the Facilities nor by occupancy or use of the Facilities for
purposes more hazardous than permitted by such policy nor by any foreclosure or
other proceedings relating to the Facilities. The Company will advise the
Administrative Agent promptly of any policy cancellation, reduction or
amendment.
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Not later than five Business Days prior to the termination or expiry
date of any such insurance the Company shall deliver to the Administrative Agent
certificates of insurance evidencing that such insurance has been renewed or
replaced, subject only to the payment of premiums as they become due. The
Company shall not obtain or carry separate insurance concurrent in form or
contributing in the event of loss with that required by this Section unless the
Administrative Agent is named as loss payee and insured therein, with loss
payable as provided herein. The Company will immediately notify the
Administrative Agent whenever any such separate insurance is obtained and shall
deliver to the Administrative Agent the certificates evidencing the same.
If, in the opinion of the Company, any of the insurance which it is
required to maintain pursuant to this Section is not available on commercially
reasonable terms, the Company shall so notify the Administrative Agent and the
Lenders and, with the consent of the Required Lenders, may elect not to purchase
such insurance; provided that if the Company shall not have received notice of
disapproval from the Required Lenders within 20 days of receipt by the Lenders
of such notice from the Company, the Lenders shall be deemed to have consented,
for the purposes of this Section, to the election not to purchase such
insurance.
For purposes hereof, the term "PERIL" shall mean, collectively, (i)
fire, lightning, flood, windstorm, hail, explosion, earthquake, riot and civil
commotion, vandalism and malicious mischief, damage from aircraft, vehicles and
smoke and (ii) all other perils covered by the "ALL-RISK" endorsement then in
use in the States in which the Facilities are located.
SECTION 9.04. Maintenance of Existence; Conduct of Business. The
Company will preserve and maintain, and will cause each of its Subsidiaries to
preserve and maintain, its corporate existence and all of its rights, privileges
and franchises necessary in the normal conduct of its business, and will conduct
its business in a regular manner; provided that nothing herein shall prevent the
merger and dissolution of any Subsidiary of the Company into the Company so long
as the Company is the surviving corporation.
SECTION 9.05. Maintenance of and Access to Properties. The Company will
keep, and will cause each of its Subsidiaries to keep, all of its properties
necessary in its business in good working order and condition (having regard to
the condition of such properties at the time such properties were acquired by
the Company or such Subsidiary), ordinary wear and tear excepted, and proper
books of record and account in which full, true and correct entries in
conformity with GAAP shall be made of all dealings and transactions in relation
to its business activities, and will permit representatives of the Lenders to
inspect such properties and, upon reasonable notice and at reasonable times, to
examine and make extracts and copies from the books and records of the Company
and any such Subsidiary.
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SECTION 9.06. Compliance with Applicable Laws. The Company will comply,
and will cause each of its Subsidiaries to comply, with the requirements of all
applicable laws, rules, regulations and orders of any governmental body or
regulatory authority (including, without limitation, all Environmental Laws), a
breach of which would have a Material Adverse Effect, except where contested in
good faith and by proper proceedings.
SECTION 9.07. Litigation. The Company will promptly give to the
Administrative Agent (which shall promptly notify each Lender) notice in writing
of (i) all judgments against it or any of its Subsidiaries which individually
exceed $100,000 or in the aggregate exceed $250,000 and (ii) all litigation and
of all proceedings of which it is aware before any courts, arbitrators or
governmental or regulatory agencies affecting the Company or any of its
Subsidiaries except litigation or proceedings which, if adversely determined,
would not in the reasonable opinion of the Company have a Material Adverse
Effect.
SECTION 9.08. Indebtedness. The Company will not, and will not permit
any of its Subsidiaries to, create, incur or suffer to exist any Indebtedness
except: (i) Indebtedness to the Lenders under the Financing Documents, (ii)
Indebtedness outstanding on the Effective Date and identified in Schedule V
hereto and any renewals, extensions or refinancings of Indebtedness in Part B of
such Schedule, provided that such renewals, extensions or refinancings shall not
increase the amount of such Indebtedness or of the collateral securing it, (iii)
Indebtedness of the Subsidiary Guarantors to the Company, so long as such
Indebtedness is evidenced by a note satisfactory to the Administrative Agent,
(iv) Indebtedness incurred or assumed for the purpose of financing all or part
of the cost of acquiring any asset ("PURCHASE MONEY INDEBTEDNESS") in an
aggregate principal amount at anytime outstanding not to exceed $3,000,000 and
(v) other Indebtedness of the Company and its Subsidiaries in an aggregate
principal amount at any time outstanding not to exceed $1,000,000.
SECTION 9.09. Current Ratio. The Company will not permit the ratio of
Current Assets to Current Liabilities at any time to be less than 1.5 to 1.
SECTION 9.10. Leverage Ratio. The Company will not permit the ratio
(the "LEVERAGE RATIO"), at any date during the periods set forth below, of (i)
the amount equal to Indebtedness of the Company and its Subsidiaries, determined
on a consolidated basis as of such date, minus, if such date is on or before
June 30, 1998, the aggregate amount of cash deposited in the Collateral Account
referred to in the Company Security Agreement as of such date that is not in
excess of the Tranche B Term Loans made under this Amended Agreement, to (ii)
Cash Flow for the twelve consecutive months of the Company most recently ended,
on or prior to such date, considered as a single accounting period, to exceed
the ratio set forth below for the period in which such date occurs:
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<TABLE>
<CAPTION>
Periods Ratio
------- -----
<S> <C>
From the Effective Date
through July 30, 1997 3.80:1.00
From July 31, 1997 through
December 30, 1997 3.50:1.00
From December 31, 1997
through December 30, 1998 3.00:1.00
From December 31, 1998
through December 30, 1999 2.75:1.00
From December 31, 1999
through December 30, 2000 2.25:1.00
From December 31, 2000 and 2.00:1.00
at all times thereafter
</TABLE>
provided that for purposes of calculating compliance with this covenant, Cash
Flow shall be calculated on and after the NMPC Closing Date after giving pro
forma effect to the NMPC Sale as if the NMPC Sale had occurred on the first day
of the four fiscal quarters most recently ended on or prior to the NMPC Closing
Date.
SECTION 9.11. Interest Coverage Ratio. The Company will not permit the
ratio, calculated as at the end of each fiscal quarter for the four fiscal
quarters then ended, of Cash Flow for such period to Interest Expense for such
period to be less than the ratio set forth below for the period in which such
fiscal quarter ends:
<TABLE>
<CAPTION>
Periods Ratio
------- -----
<S> <C>
From the Effective Date
through December 30, 1997 2.25:1.00
From December 31, 1997
through December 30, 1998 3.00:1.00
From December 31, 1998
through December 30, 1999 3.50:1.00
From December 31, 1999 and 4.00:1.00
at all times thereafter
</TABLE>
provided that for purposes of calculating compliance with this covenant, Cash
Flow shall be calculated on and after the NMPC Closing Date after giving pro
forma effect to the NMPC Sale as if the NMPC Sale had occurred on the first day
of the four fiscal quarters most recently ended on or prior to the NMPC Closing
Date.
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SECTION 9.12. Fixed Charge Coverage Ratio. The Company will not permit
the ratio, calculated as at the end of each fiscal quarter for the four fiscal
quarters then ended of (i) Cash Flow for such period minus Capital Expenditures
for such period to (ii) Interest Expense for such period plus the aggregate
amount of installments of principal of the Term Loans payable during such period
pursuant to Section 4.01 to be less than the ratio set forth below for the
period in which such fiscal quarter ends:
<TABLE>
<CAPTION>
Periods Ratio
------- -----
<S> <C>
From the Effective Date and at 1.10:1.00
all times thereafter
</TABLE>
provided that for purposes of calculating compliance with this covenant, Cash
Flow and Capital Expenditures shall be calculated on and after the NMPC Closing
Date after giving pro forma effect to the NMPC Sale as if the NMPC Sale had
occurred on the first day of the four fiscal quarters most recently ended on or
prior to the NMPC Closing Date.
SECTION 9.13. Mergers, Asset Dispositions, Acquisitions, Etc. Except as
expressly permitted by Section 9.04, the Company will not, and will not permit
any of its Subsidiaries to, be a party to any merger or consolidation, or sell,
lease, assign, transfer or otherwise dispose of any assets, or acquire assets
from any Person, except (i) dispositions of inventory in the ordinary course of
business; (ii) dispositions of worn out or obsolete tools or equipment no longer
used or useful in the business of the Company and its Subsidiaries, provided
that tools and equipment disposed of in any single fiscal year by the Company
and its Subsidiaries shall not have an aggregate fair market value in excess of
$1,000,000; (iii) acquisitions of current assets in the ordinary course of
business and expenditures in respect of fixed or capital assets to the extent
permitted under Section 9.19 hereof; (iv) acquisitions of Investments permitted
under Section 9.15 hereof; (v) the contribution of the Propanil Assets and not
more than $50,000 in cash as permanent capital to RICECO in exchange for the
RICECO Member Interest and the contribution of not more than $2,750,000 in cash
as an advance (the "CASH ADVANCE") to RICECO, in each case in accordance with
and pursuant to the RICECO J.V. Agreement; provided that the Cash Advance shall
be repaid by RICECO to the Company in full in cash on or before July 31, 1998
and shall be evidenced by a promissory note, substantially in the form of
Exhibit M, and pledged to the Administrative Agent in a manner satisfactory to
it; (vi) other dispositions of assets during any fiscal year having an aggregate
fair market value not exceeding $1,000,000; and (vii) acquisitions of assets in
the same line or lines of business activity as the businesses conducted by the
Company or its Subsidiaries on the Effective Date, provided that (x) the
consideration for such assets shall not be more than the fair market value of
such assets, (y) the fair market value of any single asset acquired shall not
exceed $5,000,000 and (z) the aggregate fair market
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value of all such assets acquired after the Closing Date shall not exceed
$10,000,000.
SECTION 9.14. Liens. The Company will not, and will not permit any of
its Subsidiaries to, create or suffer to exist any Lien upon any property or
assets, now owned or hereafter acquired, securing any Indebtedness or other
obligation, except: (i) the Liens created pursuant to the Security Documents and
other Liens existing on the Effective Date and listed in Schedule V hereto; (ii)
Liens existing on other assets at the date of acquisition thereof or which
attach to such assets concurrently with or within 90 days after the acquisition
thereof, securing Indebtedness incurred to finance the acquisition thereof in an
aggregate principal amount at any time outstanding not exceeding $3,000,000;
(iii) other Liens arising in the ordinary course of the business of the Company
or such Subsidiary which are not incurred in connection with the borrowing of
money or the obtaining of advances or credit and which do not materially detract
from the value of its property or assets or materially impair the use thereof in
the operation of its business; and (iv) the Permitted Encumbrances referred to
in the Mortgages.
SECTION 9.15. Investments. The Company will not, and will not permit
any of its Subsidiaries to, make or permit to remain outstanding any advances,
loans or other extensions of credit or capital contributions (other than prepaid
expenses in the ordinary course of business) to (by means of transfers of
property or assets or otherwise), or purchase or own any stocks, bonds, notes,
debentures or other securities of, any Person (all such transactions being
herein called "INVESTMENTS"), except: (i) operating deposit accounts with any of
the Lenders; (ii) Liquid Investments in the name and under the control of the
Administrative Agent (or a collateral sub-agent for the Administrative Agent) as
contemplated by the Security Documents; (iii) subject to Section 9.17 hereof,
Investments in accounts and notes receivable acquired in the ordinary course of
business as presently conducted; (iv) to the extent permitted by Section 9.13(v)
hereof, an Investment consisting of the RICECO Member Interest; provided that
the Administrative Agent shall have at all times a first priority perfected
security interest in the RICECO Member Interest for the benefit of the Lenders,
pursuant to documentation in form and substance satisfactory to the
Administrative Agent; and (v) Investments existing on the Effective Date set
forth on Schedule IV and additional Investments in Subsidiaries of the Company
with the prior written consent of the Required Lenders.
SECTION 9.16. Restricted Payments. The Company will not, and will not
permit any of its Subsidiaries to, declare or make any Restricted Payment,
except that so long as no Default has occurred and is continuing the Company may
make Restricted Payments; provided that the aggregate amount of all Restricted
Payments made pursuant hereto shall not exceed the sum of (x) 25% of Excess Cash
Flow for each fiscal year commencing with the fiscal year ending December 31,
1997, (y) 50% of the aggregate amount of Net Cash Proceeds from
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any asset sale or disposition which is not required, pursuant to the proviso to
the first sentence of Section 3.02(b)(i)(D), to be applied to the repayment of
Loans and (z) if the Parent is obligated to make a cash equity contribution
pursuant to the Parent Equity Contribution Agreement, an amount equal to such
cash equity contribution; provided that no Restricted Payment shall be made
pursuant to this clause (z) unless (A) the Company shall have been in compliance
with Sections 9.09 to 9.12 inclusive of the Original Agreement (without giving
effect to any amendment made after the Closing Date to the appropriate numeric
ratios corresponding to the respective periods set forth in the schedules to
such Sections) for any fiscal quarter of the Company commencing on or after July
1, 1997 and (B) the Company shall have delivered financial statements with
respect to such fiscal quarter pursuant to Section 9.01(a) or (b) demonstrating
compliance with such Sections.
SECTION 9.17. Transactions with Affiliates. Except as expressly
permitted by this Agreement, the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly: (i) make any Investment in an
Affiliate of the Company; (ii) transfer, sell, lease, assign or otherwise
dispose of any assets to an Affiliate of the Company; (iii) merge into or
consolidate with or purchase or acquire assets from an Affiliate of the Company;
or (iv) enter into any other transaction directly or indirectly with or for the
benefit of an Affiliate of the Company (including, without limitation,
Guaranties and assumptions of obligations of an Affiliate of the Company);
provided that (a) any Affiliate of the Company who is an individual may serve as
a director, officer or employee of the Company and receive reasonable
compensation or indemnification in connection with his or her services in such
capacity; (b) the Company or a Subsidiary of the Company may enter into any
transaction with an Affiliate of the Company providing for the leasing of
property, the rendering or receipt of services or the purchase or sale of
inventory and other assets in the ordinary course of business if the monetary or
business consideration arising therefrom would be substantially as advantageous
to the Company or such Subsidiary as the monetary or business consideration
which would obtain in a comparable arm's length transaction with a Person not an
Affiliate of the Company; (c) the Company may contribute the Propanil Assets and
make a cash contribution to RICECO in accordance with and pursuant to the RICECO
J.V. Agreement to the extent permitted pursuant to Section 9.13(v); and (d) the
Company may perform its obligations under the Tax Sharing Agreement.
SECTION 9.18. Lines of Businesses; Other Activities. (a) Neither the
Company nor any of its Subsidiaries shall engage to any substantial extent in
any line or lines of business activity other than the businesses conducted by it
on the Effective Date.
(b) Each of the Company and its Subsidiaries shall engage in
Derivatives Transactions only for bona fide hedging purposes in the ordinary
course of business, and not for speculative purposes.
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SECTION 9.19. Capital Expenditures. The Company will not permit the
aggregate amount of Capital Expenditures made in any period referred to below to
exceed the sum of:
(i) for each fiscal year set forth below, the amount set forth
opposite such fiscal year:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1996 $7,000,000
1997 7,500,000
1998 8,000,000
1999 8,500,000
2000 9,000,000
2001 9,500,000; plus
</TABLE>
(ii) for fiscal year 1997, $3,000,000, for fiscal year 1998,
$8,000,000 and for fiscal year 1999, $1,500,000; provided that such
Capital Expenditures shall be applied solely to the Potassium Nitrate
Project and/or the MAP/MKP Project; and provided further that the
aggregate amount of Capital Expenditures incurred in connection with
the Potassium Nitrate Project pursuant to this clause (ii) shall not
exceed $5,500,000, and the aggregate amount of Capital Expenditures
incurred pursuant to this clause (ii) in connection with the MAP/MKP
Project shall not exceed $7,000,000; plus
(iii) Capital Expenditures consisting of capitalized Interest
Expense incurred in connection with Capital Expenditures permitted
pursuant to clause (ii) above;
provided that to the extent that Capital Expenditures in any period are less
than the permitted amount for such period set forth in clause (i) or (ii) above,
the amount of such shortfall may be carried forward to any succeeding fiscal
year.
If any property acquired or constructed by the Company or any Subsidiary after
the date hereof is not subject to the Lien of the Security Documents, the
Company or such Subsidiary will execute and deliver such mortgages and other
security documents as may be necessary, or as the Administrative Agent may
request, to subject such property to such a Lien.
SECTION 9.20. Modification of Other Agreements. The Company will not,
and will not permit any of its Subsidiaries to, consent to any modification,
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supplement or waiver of any of the provisions of any of the Assigned Agreements
in any respect to the extent such modification, supplement or waiver would
impair materially the benefit to the Company or such Subsidiary of such Assigned
Agreement, it being understood that any modification, supplement or waiver of
any Assigned Agreement which materially adversely affects the amount or timing
of any payment by or to the Company or any of its Subsidiaries thereunder shall
be deemed to impair materially the benefit thereof to the Company for purposes
hereof, without the prior written consent of the Administrative Agent (with the
approval of the Required Lenders). The Company will not amend or modify (i) its
certificate of incorporation or by-laws in a manner adverse to the interests of
the Lenders and the Agent, or (ii) the Tax Sharing Agreement or any RICECO J.V.
Document in a manner adverse to the Company or to the interests of the Lenders
and the Agent, in each case without the prior written consent of the
Administrative Agent (with the approval of the Required Lenders).
SECTION 9.21. Bank Accounts. Neither the Company nor any of its
Subsidiaries will maintain any accounts with any bank or other financial
institution having outstanding daily collected balances at any one time
exceeding $100,000 in the aggregate except (i) the Collateral Account referred
to in the Security Documents, (ii) any Lockbox Account (as defined in the
Security Documents) and (iii) any accounts maintained solely to meet payroll
disbursements with respect to employees of the Company or its Subsidiaries;
provided that the daily collected balances of such payroll accounts shall not,
when added together with the daily collected balances outstanding under any
other accounts of the Company and its Subsidiaries (other than the Collateral
Account), exceed $500,000.
SECTION 9.22. Interest Rate Protection. The Company shall continue to
maintain one or more Interest Rate Agreements entered into pursuant to Section
9.22 of the Original Agreement, which effectively enable the Company to fix or
place a limit upon the interest payable with respect to 50% of the principal
amount of the Term Loans outstanding on the Closing Date for a period of three
years of 7% per annum on the Eurodollar Base Rate that would be applicable to
such Loans (assuming Interest Periods of six months commencing as of the date
such Interest Rate Agreements are effective). For purposes hereof, the term
"INTEREST RATE AGREEMENT" shall mean (i) an interest rate swap agreement,
interest rate cap agreement or similar arrangement between the Company and one
or more of the Lenders or (ii) an interest rate cap agreement or similar
arrangement between the Company and one or more financial institutions (other
than a Lender) approved by the Administrative Agent (which approval shall not be
unreasonably withheld) pursuant to which the Company is not required to make any
payments other than reasonable initial fees.
SECTION 9.23. Environmental Matters. The Company will promptly give to
the Lenders notice in writing of any complaint, order, citation, notice or other
written communication from any Person with respect to, or if the Company
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becomes aware after due inquiry of, (i) the existence or alleged existence of a
violation of any applicable Environmental Law or Environmental Liability at,
upon, under or within any property now or previously owned, leased, operated or
used by the Company or any of its Subsidiaries or any part thereof, or due to
the operations or activities of the Company, any Subsidiary or any other Person
on or in connection with such property or any part thereof (including receipt by
the Company or any Subsidiary of any notice of the happening of any event
involving the Release or cleanup of any Hazardous Substance), (ii) any Release
on such property or any part thereof in a quantity that is reportable under any
applicable Environmental Law, (iii) the commencement of any cleanup pursuant to
or in accordance with any applicable Environmental Law of any Hazardous
Substances on or about such property or any part thereof and (iv) any pending or
threatened proceeding for the termination, suspension or non-renewal of any
permit required under any applicable Environmental Law, in each of cases (i),
(ii), (iii) and (iv), (x) which could result in liability or expenses in excess
of $100,000 or (y) which individually or in the aggregate could have a Material
Adverse Effect.
SECTION 9.24. Landlord's and Other Waivers. The Company shall use its
best efforts to (i) deliver to the Administrative Agent waivers of contractual
and statutory landlord's, landlord's mortgagee's and warehouseman's Liens in
form and substance satisfactory to the Administrative Agent under each existing
lease (including the headquarter's lease in Memphis, Tennessee), warehouse
agreement or similar agreement to which the Company or any of its Subsidiaries
is a party and (ii) incorporate such waivers when the existing lease, warehouse
agreement or similar agreement is amended, renewed or extended; provided that
the Company will obtain waivers of both contractual and statutory landlord's,
landlord's mortgagee's and warehouseman's Liens in form and substance
satisfactory to the Administrative Agent in connection with each new lease,
warehouse agreement or similar agreement entered into by the Company or any of
its Subsidiaries.
ARTICLE 10
DEFAULTS
SECTION 10.01. Events of Default. If one or more of the following
events (herein called "EVENTS OF DEFAULT") shall occur and be continuing:
(a) default in the payment of (i) any principal of any Loan or any
Reimbursement Obligation when due, (ii) any interest of any Loan or any
Reimbursement Obligation within two Business Days after the due date thereof or
(iii) any other amount payable under the Financing Documents within three
Business Days after the due date thereof; or
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(b) the Company or any of its Subsidiaries shall default in the payment
when due of (i) any principal of or interest on Indebtedness having an aggregate
outstanding principal amount of at least $250,000 (other than the Loans) or (ii)
any payment obligation in respect of Derivatives Obligations having aggregate
payment obligations of at least $250,000; or any event or condition shall occur
which results in the acceleration of the maturity of any such Indebtedness or
enables (or, with the giving of notice or lapse of time or both, would enable)
the holder of any such Indebtedness or any Person acting on such holder's behalf
to accelerate the maturity thereof; or
(c) any representation or warranty made by the Company, Nine West, the
Parent or any Subsidiary Guarantor in any Financing Document or in any
certificate furnished to any Lender or the Administrative Agent pursuant to the
provisions of any Financing Document, shall prove to have been false or
misleading in any material respect as of the time made or furnished; or
(d) (i) the Company shall default in the performance of any of its
obligations under clauses (c) or (l) of Section 9.01, or Section 9.03 or
Sections 9.08 through 9.25 hereof; (ii) any Subsidiary Guarantor shall default
in the performance of any of its obligations under the Subsidiary Guaranty;
(iii) the Parent shall default in the performance of any of its obligations
under the Parent Guaranty or the Parent Equity Contribution Agreement; (iv) Nine
West shall default in the performance of any of its obligations under the Nine
West Guaranty; (v) any Relevant Party (other than the Company or any Subsidiary
Guarantor) shall default in the performance of any of its material obligations
in any Basic Document in any material respect; or (vi) the Company or any
Subsidiary Guarantor shall default in the performance of any of its other
obligations in any Basic Document, and such default described in this subclause
(vi) shall continue unremedied for a period of 30 days after notice thereof to
the Company by the Administrative Agent or the Required Lenders (through the
Administrative Agent); or
(e) the Company or any of its Subsidiaries shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become due;
or
(f) the Company or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the Bankruptcy Code, (iv) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts, (v) fail to
object in a timely manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code, or (vi) take any
corporate or partnership action for the purpose of effecting any of the
foregoing; or
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(g) a proceeding or case shall be commenced, without the application or
consent of the Company or any of its Subsidiaries in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of such
Person or of all or any substantial part of its assets, or (iii) similar relief
in respect of such Person under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 days; or an order for relief against
such Person shall be entered in an involuntary case under the Bankruptcy Code;
or
(h) a final judgment or judgments for the payment of money shall be
rendered by a court or courts against the Company or any of its Subsidiaries in
excess of $250,000 in the aggregate, and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within 10 days from the date of entry thereof, or the
Company or such Subsidiary shall not, within said period of 10 days, or such
longer period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal; or
(i) the Company or any member of the Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess of $250,000 which it shall
have become liable under Title IV of ERISA; or notice of intent to terminate a
Plan or Plans having aggregate Unfunded Liabilities in excess of $250,000 shall
be filed under Title IV of ERISA by the Company or any member of the Controlled
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer, any such Plan or Plans; or
a condition shall exist by reason of which the PBGC would be entitled to obtain
a decree adjudicating that any such Plan or Plans must be terminated; or there
shall occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause the Company or one or more members of the
Controlled Group to incur a current payment obligation in excess of $250,000; or
(j) any of the Assigned Agreements or the Tax Sharing Agreement shall
be terminated prior to the end of its stated term, or shall cease to be in full
force and effect prior to the end of its stated term, for whatever reason,
without the prior consent of the Required Lenders; or
(k) without limiting the generality of clause (d) above, any of the
insurance required to be maintained (or caused to be maintained) by the Company
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under Section 9.03 hereof shall be terminated and not simultaneously replaced
with other insurance satisfactory to the Required Lenders; or
(l) except as the result of any transfer made pursuant to the Nine West
Pledge Agreement, Nine West shall cease to be the beneficial owner of 100% of
the issued and outstanding capital stock of the Company; or the Parent shall
cease to be the beneficial owner of 100% of the issued and outstanding capital
stock of Nine West; or more than 49.9% of the shares of capital stock of the
Parent are held by any Person or Persons other than TPR Investments Associates,
Inc.; or, so long as the number of directors on the board of directors shall
equal four, less than two representatives of TPR Investments Associates, Inc.
shall be directors of the board of directors of the Parent; or, in the event the
number of directors on the board of directors of the Parent increases to five or
more or decreases to three or less, representatives of TPR Investments
Associates, Inc. shall cease to constitute a majority of the board of directors
of the Parent; or
(m) (i) any Security Document or the Subsidiary Guaranty shall cease,
for any reason, to be in full force and effect or any party thereto (other than
the Lenders) shall so assert in writing; or (ii) any Security Document shall
cease to be effective to grant a Lien on the collateral described therein with
the priority purported to be created thereby;
THEREUPON: the Administrative Agent may (and, if directed by the Required
Lenders, shall) (a) declare the Commitments terminated (whereupon the
Commitments shall be terminated) and/or (b) terminate any Letter of Credit
providing for such termination by sending a notice of termination as provided
therein and/or (c) declare the principal amount then outstanding of and the
accrued interest on the Loans and Reimbursement Obligations and commitment fees,
letter of credit fees and all other amounts payable hereunder and under the
Notes to be forthwith due and payable, whereupon such amounts shall be and
become immediately due and payable, without notice (including, without
limitation, notice of intent to accelerate), presentment, demand, protest or
other formalities of any kind, all of which are hereby expressly waived by the
Company; provided that in the case of the occurrence of an Event of Default with
respect to the Company referred to in clause (f) or (g) of this Section 10.01,
the Commitments shall be automatically terminated and the principal amount then
outstanding of and the accrued interest on the Loans and Reimbursement
Obligations and commitment fees, letter of credit fees and all other amounts
payable hereunder and under the Notes shall be and become automatically and
immediately due and payable, without notice (including, without limitation,
notice of intent to accelerate), presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company.
SECTION 10.02. Collateral Account. The Company hereby agrees, in
addition to the provisions of Section 10.01 hereof, that upon the occurrence and
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during the continuance of any Event of Default, it shall, if requested by the
Administrative Agent or the Required Lenders, pay (and, in the case of any Event
of Default with respect to the Company referred to in clause (f) or (g) of
Section 10.01 hereof, forthwith, without any demand or the taking of any other
action by the Lenders, it shall automatically be obligated to pay) to the
Administrative Agent an amount in immediately available funds equal to the then
aggregate amount available for drawings under all Letters of Credit issued for
the account of the Company, which funds shall be held by the Administrative
Agent in the Collateral Account maintained by the Company pursuant to the
Security Documents, and be subject to investment and withdrawal only as provided
therein.
ARTICLE 11
THE ADMINISTRATIVE AGENT
SECTION 11.01. Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the Letters of Credit and the other Basic Documents with
such powers as are specifically delegated to the Administrative Agent by the
terms hereof and thereof, together with such other powers as are reasonably
incidental thereto. The Administrative Agent (which term as used in this Section
11.01 shall include reference to its affiliates and its and its affiliates'
officers, directors, employees and agents and to Chase acting in its individual
capacity hereunder as issuer of Participation Letters of Credit): (a) shall have
no duties or responsibilities except those expressly set forth in this
Agreement, the Letters of Credit and the other Basic Documents, and shall not by
reason of this Agreement, the Letters of Credit or any other Basic Document be a
trustee for any Lender, (b) shall not be responsible to the Lenders for any
recitals, statements, representations or warranties contained in this Agreement,
the Letters of Credit or any other Basic Document, or in any certificate or
other document referred to or provided for in, or received by any of them under,
this Agreement, the Letters of Credit or any other Basic Document, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, the Letters of Credit or any other Basic Document or any other
document referred to or provided for herein or therein or for any failure by the
Company or any of its Subsidiaries or any other Person to perform any of its
obligations hereunder or thereunder, (c) shall not be required to initiate or
conduct any litigation or collection proceedings hereunder or under any other
Basic Document except to the extent requested by the Required Lenders, and (d)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or under the Letters of Credit, any other Basic Document or any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct. The Administrative Agent may employ agents
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and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Without in any way limiting any of the foregoing, each Lender
acknowledges that the Administrative Agent shall have no greater responsibility
in the operation of Letters of Credit than is specified in the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 (or any replacement or revision thereof in effect
from time to time).
SECTION 11.02. Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Administrative Agent. As to any matters not expressly provided for by this
Agreement, the Letters of Credit or any other Basic Document, the Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder and thereunder in accordance with instructions signed by the
Required Lenders and such instructions of the Required Lenders and any action
taken or failure to act pursuant thereto shall be binding on all of the Lenders.
SECTION 11.03. Defaults. The Administrative Agent shall not be deemed
to have knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans or Reimbursement Obligations) unless the
Administrative Agent has received notice from a Lender or the Company specifying
such Default and stating that such notice is a "NOTICE OF DEFAULT". In the event
that the Administrative Agent receives such a notice of the occurrence of a
Default, the Administrative Agent shall give prompt notice thereof to the
Lenders (and shall give each Lender prompt notice of each such non-payment). The
Administrative Agent shall (subject to Section 11.07 hereof) take such action
with respect to such Default as shall be directed by the Required Lenders,
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Lenders.
SECTION 11.04. Rights as a Lender. With respect to its Commitments and
the Loans made and Letter of Credit Liabilities held by it, Chase in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Administrative Agent, and the term "LENDER" or "LENDERS" shall, unless the
context otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent may (without having to account therefor to
any Lender) accept deposits from, lend money to and generally engage in any kind
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of banking, trust or other business with the Company (and any of its Affiliates)
as if it were not acting as the Administrative Agent and the Administrative
Agent may accept fees and other consideration from the Company (in addition to
the agency fees and arrangement fees heretofore agreed to between the Company,
the Administrative Agent) for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.
SECTION 11.05. Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 2.02(g), 12.03
or 12.04 hereof, but without limiting the obligations of the Company under said
Sections 2.02(g), 12.03 and 12.04), ratably in accordance with their respective
Commitments (provided that if any Lender does not have a Commitment of any Class
outstanding, such Lender's Commitment of such Class shall be deemed to be the
aggregate outstanding principal amount of its Loans and Letter of Credit
Liabilities, if applicable, of such Class), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Administrative Agent in any way relating
to or arising out of this Agreement, the Letters of Credit or any other Basic
Document or any other documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby (including, without
limitation, the costs and expenses which the Company is obligated to pay under
Sections 2.02(g), 12.03 and 12.04 hereof but excluding, unless a Default has
occurred and is continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents, provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.
SECTION 11.06. Non-Reliance on Administrative Agent and Other Lenders.
Each Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement, the Letters of Credit or any of the other
Basic Documents. The Administrative Agent shall not be required to keep itself
informed as to the performance or observance by the Company or any other Person
of this Agreement or any of the other Basic Documents or any other document
referred to or provided for herein or therein or to inspect the properties or
books of the Company or any other Person. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, under the Letters of Credit or the other
Basic
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Documents, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Company or any other Person (or any of
their affiliates) which may come into the possession of the Administrative
Agent.
SECTION 11.07. Failure to Act. Except for action expressly required of
the Administrative Agent hereunder, under the Letters of Credit and under the
other Basic Documents, the Administrative Agent shall in all cases be fully
justified in failing or refusing to act hereunder and thereunder unless it shall
receive further assurances to its satisfaction by the Lenders of their
indemnification obligations under Section 11.05 hereof against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
SECTION 11.08. Resignation or Removal of Administrative Agent. Subject
to the appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by giving notice
thereof to the Lenders and the Company and the Administrative Agent may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Administrative Agent reasonably acceptable to the Company. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Administrative Agent (the "NOTICE DATE"), then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent reasonably acceptable to the Company. Any
successor Administrative Agent shall be (i) a Lender or (ii) if no Lender has
accepted such appointment within 40 days after the Notice Date, a bank which has
an office in New York, New York with a combined capital and surplus of at least
$250,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Article 11 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 the Administrative Agent.
SECTION 11.09. Collateral Sub-Agents. Each Lender by its execution and
delivery of this Agreement agrees, as contemplated by the Security Documents,
that, in the event it shall hold any Liquid Investments referred to therein,
such Liquid Investments shall be held in the name and under the control of such
Lender and such Lender shall hold such Liquid Investments as a collateral
sub-agent for the Administrative Agent thereunder.
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SECTION 11.10. Register. The Company hereby designates the
Administrative Agent to serve as its agent, solely for purposes of this Section
11.10, to maintain a register (the "REGISTER") on which it will record the
Tranche B Term Loan Commitments and the Working Capital Commitments from time to
time of each of the Lenders, the Loans made by each of the Lenders and each
repayment in respect of the principal amount of the Tranche A Term Loans,
Tranche B Term Loans and Working Capital Loans of each Lender. Failure to make
any such recordation, or any error in such recordation, shall not affect the
Company's obligations in respect of such Loans. With respect to any Lender, the
transfer of the Commitments of such Lender and the rights to the principal of,
and interest on, any Loan made pursuant to such Commitments shall not be
effective until such transfer is recorded on the Register maintained by the
Administrative Agent with respect to ownership of such Commitments and Loans and
prior to such recordation all amounts owing to the transferor with respect to
such Commitments and Loans shall remain owing to the transferor. The
registration of assignment or transfer of all or part of any Commitments and
Loans shall be recorded by the Administrative Agent on the Register only upon
the acceptance by the Administrative Agent of a properly executed and delivered
assignment instrument in accordance with Section 12.06. The Company agrees to
indemnify the Administrative Agent and its directors, officers, employees,
attorneys and agents from, and hold each of them harmless against, any and all
losses, claims, damages and liabilities of whatsoever nature which may be
imposed on, asserted against or incurred by any of them in performing their
duties under this Section 11.10.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Waiver. No failure on the part of the Administrative
Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under any Basic Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided in the Basic Documents are cumulative and not exclusive of any remedies
provided by law.
SECTION 12.02. Notices. All notices and other communications provided
for herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telex, telegraph,
telecopy, cable or other writing and telexed, telecopied, telegraphed, cabled,
mailed or delivered to the intended recipient at the "ADDRESS FOR NOTICES"
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specified below its name on the signature pages hereof; or, as to any party, at
such other address as shall be designated by such party in a notice to the
Company and the Administrative Agent given in accordance with this Section
12.02. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telex or telecopier,
delivered to the telegraph or cable office or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
SECTION 12.03. Expenses, Etc. The Company agrees to pay or reimburse
each of the Lenders and the Administrative Agent for paying: (a) the reasonable
fees and expenses of Davis Polk & Wardwell, special counsel to the
Administrative Agent, and special local counsel to the Administrative Agent in
the States in which the Mortgages are recorded in connection with (i) the
preparation, execution and delivery of this Agreement (including the Exhibits
hereto) and the Security Documents and the making of the Loans and issuance of
Letters of Credit hereunder and (ii) any modification, supplement or waiver of
any of the terms of this Agreement, the Letters of Credit or any other Basic
Document; (b) if an Event of Default occurs, all reasonable costs and expenses
of each of the Lenders and the Administrative Agent (including reasonable
counsels' fees) incurred as a result of such Event of Default and collection,
enforcement, bankruptcy, insolvency and other proceedings resulting therefrom;
(c) all costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any lien or
security interest contemplated by this Agreement, any Security Document or any
document referred to herein or therein; and (d) all costs, expenses and other
charges in respect of title insurance procured with respect to the Liens created
pursuant to the Mortgages.
SECTION 12.04. Indemnification. The Company shall indemnify the
Administrative Agent, the Lenders and each affiliate thereof and their
respective directors, officers, employees, attorneys and agents from, and hold
each of them harmless against, any and all losses, liabilities, claims or
damages to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from (i) any actual or
proposed use by the Company of the proceeds of any extension of credit (whether
a Loan or a Letter of Credit) by any Lender hereunder or breach by the Company
of this Agreement or any other Basic Document, (ii) any Environmental
Liabilities or (iii) any investigation, litigation or other proceeding
(including any threatened investigation or proceeding) relating to the
foregoing, whether or not the indemnified Person is a party thereto, and the
Company shall reimburse the Administrative Agent and each Lender, and each
affiliate thereof and their respective directors, officers, employees and
agents, upon demand for any expenses (including legal fees and fees of
engineers, environmental consultants and similar technical personnel) incurred
in connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified.
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SECTION 12.05. Amendments, Etc. No amendment or waiver of any provision
of this Agreement or the Notes or any other Financing Document, nor any consent
to any departure by the Company therefrom, shall in any event be effective
unless the same shall be agreed or consented to by the Required Lenders and the
Company, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, that no
amendment, waiver or consent shall, unless in writing and signed by all the
Lenders, do any of the following: (i) increase any Commitment of any of the
Lenders or subject the Lenders to any additional obligations; (ii) reduce the
principal of, or interest on, any Loan, Reimbursement Obligation or fees
hereunder; (iii) postpone any date fixed for any payment of principal of, or
interest on, any Loan, Reimbursement Obligation or fee hereunder pursuant to
Sections 2.02, 2.04, 4.01(a), 4.01(b) or 4.02 hereof; (iv) change the percentage
of any of the Commitments or of the aggregate unpaid principal amount of any of
the Loans and Letter of Credit Liabilities, or the number of Lenders, which
shall be required for the Lenders or any of them to take any action under this
Agreement; (v) change any provision contained in Sections 2.08, 6, 12.03 or
12.04 hereof or this Section 12.05 or Section 12.08 hereof; (vi) release all or
substantially all of the security for the obligations of the Company under this
Agreement or any Note; (vii) sell or otherwise dispose of all or substantially
all of the assets (or, in the case of any Subsidiary, the capital stock of) any
Subsidiary of the Company or any division of the Company or any of its
Subsidiaries or (viii) release the Parent from its obligations under the Parent
Guaranty, release Nine West from its obligations under the Nine West Guaranty or
release any Subsidiary Guarantor from its obligations under the Subsidiary
Guaranty. Notwithstanding anything in this Section 12.05 to the contrary, no
amendment, waiver or consent shall be made with respect to Article 11 without
the consent of the Administrative Agent. In addition, no amendment,
modification, termination or waiver of any provision of Section 2.03, 3.02 or
4.01(c) which has the effect of changing any voluntary or mandatory prepayments
or Commitment reductions applicable to any Class (an "AFFECTED CLASS") in a
manner that disproportionately disadvantages such Class relative to the other
Class shall be effective without the written consent of the Required Class
Lenders of the Affected Class (it being understood and agreed that any
amendment, modification, termination or waiver of any provision which only
postpones or reduces any voluntary or mandatory prepayment or Commitment
reduction from those set forth in Section 2.03, 3.02 or 4.01(c) with respect to
only one Class shall be deemed to not disproportionately disadvantage the other
Class and, therefore, shall not require the consent of Required Class Lenders of
such other Class).
SECTION 12.06. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns except that the Company may not assign its rights or
obligations hereunder or under the Notes without the prior written consent of
all of the Lenders. Each Lender may assign any Loan or Loans or Letter of Credit
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Liabilities or all or any part of its Commitments of any Class (i) to any
affiliate thereof, (ii) to any other Lender, or (iii) with the consent of the
Administrative Agent, which consent shall not be unreasonably withheld, to any
other bank or financial institution or fund; provided that any assignment shall
not be less than $5,000,000 or, if less, shall constitute an assignment of all
of such Lender's Commitments, Loans and Letter of Credit Liabilities. Upon
execution by the assignor and the assignee of an instrument pursuant to which
the assignee assumes such rights and obligations, payment by such assignee to
such assignor of an amount equal to the purchase price agreed between such
assignor and such assignee and delivery to the Administrative Agent and the
Company of an executed copy of such instrument together with payment by such
assignee to the Administrative Agent of a processing fee of $2,500, such
assignee shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights and benefits as it would have if it were a Lender
hereunder and the assignor shall be, to the extent of such assignment (unless
otherwise provided therein) released from its obligations under this Agreement.
Upon the consummation of such assignment, the Company shall make appropriate
arrangements so that, if required, new Notes are issued to the assignor and the
assignee. If such assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall, prior to the date of the
applicable instrument of assumption, deliver to the Company and the
Administrative Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with Section 5.08(f).
Each Lender may (without the consent of any other party to this Agreement) sell
participations in all or any part of any Loan or Loans made or Letter of Credit
Liabilities held by it to another bank or other entity, in which event the
participant shall not have any rights under this Agreement (except as provided
in the next succeeding sentence hereof), or in the case of a Loan, such Lender's
Note (the participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed by such Lender in
favor of the participant relating thereto, which agreement shall not give the
participant the right to consent to any modification, amendment or waiver other
than one described in clause (i), (ii), (iii) or (vi) of Section 12.05 hereof).
The Company agrees that each participant shall be entitled to the benefits of
Sections 5.08 and 6.01 with respect to its participation; provided that no
participant shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such participant had no such transfer occurred. Each Lender may furnish any
information concerning the Company and its Subsidiaries in the possession of
such Lender from time to time to assignees and participants (including
prospective assignees and participants) which have agreed in writing to be bound
by the provisions of Section 12.07 hereof. The Administrative Agent and the
Company may, for all purposes of this Agreement, treat any Lender as the holder
of any Note drawn to its order (and owner of the Loans evidenced thereby) until
written notice of assignment or other transfer shall have been received by them
from such Lender. Notwithstanding anything to the contrary, any Lender
78
<PAGE> 85
may at any time assign all or any portion of its rights under this Agreement,
its Notes and the other Financing Documents to a Federal Reserve Bank. No such
assignment shall release the transferor Lender from its obligations under the
Financing Documents.
SECTION 12.07. Confidentiality. Each Lender agrees to exercise all
reasonable efforts to keep confidential any information delivered or made
available by the Company to it which is clearly indicated to be confidential
information; provided that nothing herein shall prevent any Lender from
disclosing such information (i) to any other Lender, (ii) to its officers,
directors, employees, agents, attorneys and accountants who have a need to know
such information in accordance with customary banking practices and who receive
such information having been made aware of the restrictions set forth in this
Section, (iii) upon the order of any court or administrative agency, (iv) upon
the request or demand of any regulatory agency or authority having jurisdiction
over such Lender, (v) which has been publicly disclosed, (vi) to the extent
reasonably required in connection with any litigation to which the
Administrative Agent, any Lender, the Company or their respective affiliates may
be a party, (vii) to the extent reasonably required in connection with the
exercise of any remedy hereunder, (viii) to such Lender's legal counsel and
independent auditors, and (ix) to any actual or proposed participant or assignee
of all or part of its rights hereunder which has agreed in writing to be bound
by the provisions of this Section 12.07.
SECTION 12.08. Survival. The obligations of the Company under Sections
2.02(g), 5.08, 6.01, 6.05, 6.06, 6.07, 12.03 and 12.04 hereof and the
obligations of the Lenders under Section 11.05 shall survive the repayment of
the Loans and Reimbursement Obligations and the termination of the Commitments
and the Letters of Credit.
SECTION 12.09. Captions. The table of contents and the captions and
section headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Agreement.
SECTION 12.10. Counterparts; Integration. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement
constitutes the entire agreement and understanding among the parties hereto and
supersedes any and all prior agreements and understandings, oral and written,
relating to the subject matter hereof (except to the extent specific reference
is made to any such agreement in Section 2.04 hereof).
SECTION 12.11. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL. THIS AGREEMENT AND THE NOTES SHALL
79
<PAGE> 86
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
ARTICLE 13
EFFECTIVENESS, ETC
SECTION 13.01. Effectiveness. This Amended Agreement shall become
effective on the date (the "EFFECTIVE DATE") on which all of the following
conditions precedent shall have been fulfilled to the satisfaction of the
Administrative Agent:
(a) Corporate Action. The Administrative Agent shall have received
certified copies of the certificate of incorporation and by-laws of the Company,
Nine West and each Subsidiary Guarantor and of all corporate action taken by the
Company, Nine West and each such Subsidiary authorizing the execution, delivery
and performance of, in the case of the Company, this Amended Agreement and, in
the case of Nine West and each such Subsidiary, the Guarantor Acknowledgment
(including, without limitation, a certificate of the Company, Nine West and each
such Subsidiary setting forth the resolutions of its Board of Directors
authorizing the transactions contemplated thereby).
(b) Incumbency. The Company, Nine West, the Parent and each Subsidiary
shall have delivered to the Administrative Agent a certificate in respect of the
name and signature of each of the officers (i) who is authorized to sign on its
behalf, in the case of the Company, this Amended Agreement and, in the case of
Nine West, the Parent and each Subsidiary, the Guarantor Acknowledgment and
80
<PAGE> 87
(ii) who will, until replaced by another officer or officers duly authorized for
that purpose, act as its representative for the purposes of signing documents
and giving notices and other communications in connection with the Basic
Documents. The Administrative Agent and each Lender may conclusively rely on
such certificates until it receives notice in writing from the Company to the
contrary.
(c) Notes. The Administrative Agent shall have received new Tranche B
Term Notes for each Lender extending a new Tranche B Term Loan Commitment under
the Amended Agreement, duly completed and executed.
(d) Fees and Expenses. The Company shall have paid to the
Administrative Agent, for its account and for the account of the Lenders, fees
in the amounts previously agreed upon among the Company and the Administrative
Agent; and shall have in addition paid to the Administrative Agent all amounts
payable under Section 12.03 hereof on or before the date of this Agreement.
(e) Opinions of Counsel to the Company. The Administrative Agent shall
have received an opinion of Apperson, Crump, Duzane & Maxwell, PLC, counsel to
the Company, substantially in the form of Exhibit E hereto, and an opinion of
Rubin, Baum, Levin, Constant & Friedman, counsel to the Parent, Nine West and
the Company, substantially in the form of Exhibit F hereto, in each case
covering such other matters relating to the transactions contemplated hereby as
the Required Lenders may reasonably request.
(f) Condition of Company. Each of the Lenders shall have received a
copy of, and shall be satisfied with, (i) the consolidated financial statements
of the Company and its Subsidiaries for the fiscal quarter ended March 31, 1997
and (ii) the pro forma financial statements of the Company and its Subsidiaries
referred to in Section 8.02(a)(iii).
(g) RICECO J.V. Documents. The Lenders shall have received a copy of,
and the Required Lenders shall be satisfied with the form and substance of, each
RICECO J.V. Document.
(h) Working Capital Loan Prepayments. The Company shall have prepaid
(or made arrangements satisfactory to the Administrative Agent for prepaying) on
the Effective Date the Working Capital Loans in such amounts as shall be
necessary so that on the Effective Date the aggregate outstanding amount of the
Working Capital Obligations shall be less than or equal to the lesser of (x) the
Working Capital Commitments outstanding on the Effective Date under this Amended
Agreement and (y) the Borrowing Base.
(i) Counterparts. The Administrative Agent shall have received
counterparts of this Amended Agreement, the Parent Guarantor Acknowledgment, the
Nine West Guarantor Acknowledgment and the Subsidiary Guarantor
81
<PAGE> 88
Acknowledgment executed and delivered by or on behalf of each of the parties
hereto or thereto (or, in the case of any Lender as to which the Administrative
Agent shall not have received such a counterpart, the Administrative Agent shall
have received evidence satisfactory to it of the execution and delivery by such
Lender of a counterpart hereof).
(j) Other Documents. The Administrative Agent shall have received such
other documents relating to the transactions contemplated hereby as the
Administrative Agent may reasonably request.
SECTION 13.02. Amendment to Company Pledge Agreement. The Lenders
authorize the Administrative Agent to enter into an amendment to the Company
Pledge Agreement, substantially in the form of Exhibit L, that provides for the
pledge to the Administrative Agent of the Riceco Promissory Note, substantially
in the form of Exhibit M, evidencing the Cash Advance made by the Company to
RICECO, as described in clause (v) of Section 9.13.
On the Effective Date the Original Agreement will be automatically amended and
restated in its entirety to read as set forth herein. On and after the Effective
Date (i) the rights and obligations of the parties hereto shall be governed by
this Amended Agreement; provided that rights and obligations of the parties
hereto with respect to the period prior to the Effective Date shall continue to
be governed by the provisions of the Original Agreement as in effect prior to
the Effective Date, (ii) each reference to "THE DATE HEREOF" shall mean "THE
EFFECTIVE DATE", (iii) the reference to "SECTION 3.02(b)(2) OF THE CREDIT
AGREEMENT" in Section 5(C)(ii) of the Company Security Agreement shall mean and
be a reference to "SECTION 3.02(b)(i)(B) OF THE CREDIT AGREEMENT" and (iv) the
second sentence of Section 13 of the Company Security Agreement shall be deemed
to have been amended to add the following additional proviso before the period
at the end thereof: "; and provided further that when the Company delivers the
Propanil Assets to RICECO, the Security Interests with respect to the Propanil
Assets shall automatically terminate and all rights thereto shall automatically
revert to the Company". With effect from and including the Effective Date, the
Tranche B Term Commitment and the Working Capital Commitment of each Lender
shall be the respective amounts set forth opposite the name of such Lender on
the signature pages hereof, as each such amount may be reduced from time to time
pursuant to Section 2.03 hereof.
82
<PAGE> 89
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
CEDAR CHEMICAL CORPORATION
By: /s/ John Bumpers
Title: Executive Vice President
Address for Notices:
5100 Poplar Avenue
Suite 2414
Memphis, TN 38137
Telecopy Number: (901) 685-5399
Attention: John Bumpers
Copies to:
Trans-Resources, Inc.
Telecopy Number: (212) 888-3708
Attention: Lester W. Youner
Apperson, Crump, Duzane &
Maxwell, PLC
Telecopy Number: (901) 521-0789
Attention: Allen T. Malone, Esq.
Rubin, Baum, Levin, Constant &
Friedman
Telecopy Number: (212) 698-7825
Attention: Edward Klimerman, Esq.
<PAGE> 90
Tranche B Term Loan Commitment: THE CHASE MANHATTAN BANK
$1,555,680.99
By: /s/ David Bradley
Working Capital Title: Managing Director
Commitment
$6,066,691.43 Address for Notices:
The Chase Manhattan Bank
270 Park Avenue, 38th Floor
New York, New York 10017
Attention: Global Chemical
Industries Group
Telecopy Number: (212) 270-6759
Lending Offices for all Loans:
The Chase Manhattan Bank
1 Chase Manhattan Plaza, 8th
Floor
New York, New York 10081
Attention: Loan and Agency
Services
Telecopy Number: (212) 552-5777
<PAGE> 91
Tranche B Term Loan Commitment: BANK LEUMI TRUST COMPANY OF NEW YORK
$0
By:
Working Capital Title:
Commitment:
$3,250,000.00 Address for Notices:
Bank Leumi Trust Company of New York
579 Fifth Avenue
3rd Floor
New York, NY 10017
Attention: Gloria Bucher / Steve
Navarro
<PAGE> 92
Tranche B Term Loan Commitment: THE BANK OF NOVA SCOTIA
$0
By:
Working Capital Title:
Commitment:
$3,250,000.00 Address for Notices:
The Bank of Nova Scotia
One Liberty Plaza
26th Floor
New York, NY 10006
Attention: Loan Accounting/Marcia
Samuels
<PAGE> 93
Tranche B Term Loan Commitment: FIRST AMERICAN NATIONAL BANK
$0
By:
Working Capital Title:
Commitment:
$6,500,000.00 Address for Notices:
First American National Bank
Participations Department
NA-0075
4th and Union
Nashville, TN 37237
Attention: Frenisa Joy
<PAGE> 94
Tranche B Term Loan Commitment: FBS AG CREDIT, INC.
$504,545.19
By:
Working Capital Title:
Commitment:
$3,683,308.57 Address for Notices:
FBS Ag Credit, Inc.
950 Seventeenth Street
Suite 350
Denver, CO 80202
Attention: Alan V. Schuler
<PAGE> 95
Tranche B Term Loan Commitment: GIROCREDIT BANK AG DER SPARKASSEN
$0
By:
Working Capital Title:
Commitment:
By:
$3,250,000.00 Title:
Address for Notices:
GiroCredit Bank
280 Park Avenue
32d Floor, West Building
New York, NY 10017
Attention: Anca Trifan
<PAGE> 96
Tranche B Term Loan Commitment: MERRILL LYNCH SENIOR FLOATING RATE FUND,
INC.
$2,313,257.94
By:
Working Capital Title:
Commitment:
$0 Address for Notices:
Merrill Lynch Senior Floating Rate
Fund, Inc.
800 Scudders Mill Road - Area 2C
Plainsboro, NJ 08536
Attention: Anthony Clemente
<PAGE> 97
Tranche B Term Loan Commitment: PILGRIM PRIME RATE TRUST
$2,313,257.94
By:
Working Capital Title:
Commitment:
$0 Address for Notices:
Pilgrim Prime Rate Trust
Two Renaissance Square
40 North Central Avenue
Suite 1200
Phoenix, AZ 85004-3444
Attention: Michael Hatley
<PAGE> 98
Tranche B Term Loan Commitment: VAN KAMPEN AMERICA CAPITAL PRIME RATE
INCOME TRUST
$2,313,257.94
By:
Working Capital Title:
Commitment:
$0 Address for Notices:
Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: Brian Murphy
Copy to:
State Street Bank & Trust
Corporate Trust Department
P.O. Box 778
Boston, MA 02102
Attention: Laura Magazu
<PAGE> 99
Tranche B Term Loan Commitment: INDOSUEZ CAPITAL FUNDING II, LIMITED
$0
By: Indosuez Capital,
Working Capital as Portfolio Advisor
Commitment:
By:
$0 Title:
Address for Notices:
Indosuez Capital Funding II, Limited
1211 Avenue of the Americas
7th Floor
New York, NY 10036-8701
Attention: Francoise Berthelot
<PAGE> 100
Total Tranche B Term Loan Commitments
$9,000,000
Total Working Capital Commitments
$26,000,000
THE CHASE MANHATTAN BANK
as Administrative Agent
By: /s/ David Bradley
Title: Managing Director
Address for Notices:
The Chase Manhattan Bank
270 Park Avenue, 38th Floor
New York, New York 10017
Attention: Global Chemical Industries
Group
Telecopy Number: (212) 270-6759
Lending Offices for all Loans:
The Chase Manhattan Bank
1 Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Loan and Agency Services
Telecopy Number: (212) 552-5777
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
TRANS-RESOURCES, INC.
Financial Data Schedule
Article 5 of Regulation S-X
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 23,256
<SECURITIES> 0
<RECEIVABLES> 101,006
<ALLOWANCES> 0
<INVENTORY> 42,019
<CURRENT-ASSETS> 215,822
<PP&E> 305,994
<DEPRECIATION> 109,213
<TOTAL-ASSETS> 446,634
<CURRENT-LIABILITIES> 122,824
<BONDS> 266,365
0
7,960
<COMMON> 0
<OTHER-SE> 20,064
<TOTAL-LIABILITY-AND-EQUITY> 446,634
<SALES> 194,283
<TOTAL-REVENUES> 194,283
<CGS> 156,722
<TOTAL-COSTS> 156,722
<OTHER-EXPENSES> 20,298
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,421
<INCOME-PRETAX> 5,378
<INCOME-TAX> 1,486
<INCOME-CONTINUING> 3,892
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,892
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
