<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1996.
Commission File Number
1-13366
SINTER METALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 25-1677695
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Public Square, Cleveland, Ohio 44113
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216)771-6700
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports; and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
------ ------
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock as of the latest practicable date. As of
May 1, 1996, the Registrant had the following classes of common stock
outstanding:
Class A Common Stock, $0.001 par value 5,004,747
Class B Common Stock, $0.001 par value 2,543,381
Page 1 of Pages
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SINTER METALS, INC.
FORM 10-Q
INDEX
PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements................................3
Consolidated Balance Sheets as of
March 31, 1996 and December 31, 1995................3
Consolidated Statements of Operations for
the Three Months ended March 31, 1996 and
1995................................................5
Consolidated Statements of Cash Flows for
the Three Months ended March 31, 1996 and
1995................................................6
Notes to Consolidated Financial Statements..........7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..........13
Index to Exhibits...........................................14
SIGNATURES...........................................................15
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SINTER METALS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- -----------
ASSETS (Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,883 $ 1,462
Accounts receivable, net of
allowance of $113 and $111,
respectively 13,592 11,129
Inventories 10,858 10,194
Other current assets 649 643
-------- --------
Total current assets 26,982 23,428
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land 586 586
Buildings and building
improvements 6,251 6,251
Machinery and equipment 33,020 32,757
Construction-in-progress 2,744 1,113
-------- --------
42,601 40,707
Less accumulated depreciation (13,277) (12,024)
-------- --------
Total property, plant
and equipment 29,324 28,683
INTANGIBLE ASSETS 12,991 13,109
-------- --------
TOTAL ASSETS $ 69,297 $ 65,220
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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SINTER METALS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
1996 1995
----------- ------------
(Unaudited) (Audited)
CURRENT LIABILITIES:
<S> <C> <C>
Current maturities of long-term debt $ 267 $ 267
Accounts payable 8,891 7,068
Accrued payroll and vacation 1,956 1,241
Accrued benefits 2,543 3,080
Other accrued expenses 2,070 1,996
Income taxes payable 1,741 648
------- -------
Total current liabilities 17,468 14,300
------- -------
LONG-TERM OBLIGATIONS:
Term loan 2,274 2,291
Borrowings under revolving credit
agreement 569 2,141
Other noncurrent liabilities 979 1,000
Deferred income taxes 4,157 4,026
------- -------
Total long-term obligations 7,979 9,458
------- -------
Total liabilities 25,447 23,758
------- -------
STOCKHOLDERS' EQUITY:
Class A, par value $.001 per share;
authorized 20,000,000 shares;
issued and outstanding 5,004,747 shares 5 5
Class B, par value $.001 per share;
authorized 5,000,000 shares;
issued and outstanding 2,543,381 shares 2 2
Additional paid-in capital 27,838 27,838
Cumulative translation adjustments 322 331
Retained earnings 15,683 13,286
------- -------
Total stockholders' equity 43,850 41,462
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $69,297 $65,220
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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SINTER METALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1996 1995
------ ------
<S> <C> <C>
Net sales $27,977 $24,624
Cost of sales 21,552 19,068
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GROSS PROFIT 6,425 5,556
Selling, general and
administrative expenses 2,482 1,914
Amortization of intangible
assets 99 69
------- -------
INCOME FROM OPERATIONS 3,844 3,573
Interest expense 70 35
Other expense, net -- 26
------- -------
INCOME BEFORE PROVISION
FOR INCOME TAXES 3,774 3,512
Provision for income taxes 1,375 1,400
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NET INCOME APPLICABLE TO
COMMON STOCK $ 2,399 $ 2,112
======= =======
Net income per common share $ .32 $ .28
======= =======
Weighted average common
shares outstanding 7,548 7,448
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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SINTER METALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------
1996 1995
------ ------
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $2,399 $2,112
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,371 1,130
Deferred income taxes 131 280
Other (32) -0-
Cash provided (used) by working capital
items, net of acquisition
Accounts receivable, net (2,463) (2,284)
Inventories (664) (747)
Other current assets (6) (33)
Accounts payable 1,823 163
Accrued payroll and benefits 178 476
Other accrued expenses 74 206
Accrued taxes 1,093 701
------- ------
Net cash provided by operating activities 3,904 2,004
CASH FLOW FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (1,894) (829)
------- ------
(1,894) (829)
CASH FLOW FROM FINANCING ACTIVITIES:
Term debt borrowings -0- 192
Term debt repayments (17) -0-
Decrease in net borrowings under revolving
credit line (1,572) (1,275)
------- ------
Net cash (used) by financing activities (1,589) (1,083)
------- ------
Net increase in cash 421 92
CASH, beginning of period 1,462 78
------- ------
CASH, end of period $ 1,883 $ 170
======= ======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest $ 85 $ 28
======= ======
Cash payments for income taxes $ 13 $ 411
======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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SINTER METALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. ORGANIZATION:
-------------
The Company's principal business consists of the design, engineering and
production of precision pressed metal components for use primarily in the
automotive, home appliance, lawn and garden and power tool industries. The
Company manufactures over 1,000 different components such as gears, bearings and
sprockets, for use in engines, transmissions and other drive mechanisms.
2. PRINCIPLES OF CONSOLIDATION:
----------------------------
The consolidated financial statements include the accounts of the Company and
its wholly-owned divisions, PPMI, Midwest and Sinterteknik. All significant
intercompany transactions and accounts have been eliminated in the accompanying
consolidated financial statements. Effective January 1, 1996, all of the
Company's domestic operating subsidiaries, including PPMI and Midwest, were
merged into Sinter Metals.
The interim financial statements included herein have been prepared by the
Company without audit. The financial information presented herein, while not
necessarily indicative of results to be expected for the full year, reflect all
adjustments, consisting of normal recurring adjustments, which in the opinion of
the Company are necessary for a fair presentation of the results of operations
for the periods indicated.
3. INVESTMENT IN PMH:
------------------
As part of its business strategy, in 1993, the Company purchased a 30% interest
in Powder Metal Holding, Inc. (PMH), a nonoperating holding company that owns
100% of ICM/Krebsoge (ICM/K) (a domestic manufacturer of pressed metal
products). ICM/K has operating facilities located in Indiana, Ohio and Canada.
The most recent audited financial statements indicate that PMH had total assets
of $56.3 million, net sales of $106.5 million and net income of $9.1 million as
of and for the year ended December 31, 1995.
While PMH returned to profitability in 1994 and 1995, the net worth of PMH at
December 31, 1995, remains a negative $29.1 million. Accordingly, the Company
chose not to recognize in the accompanying statement of operations its pro rata
portion of PMH's first quarter 1996 and 1995 net income.
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At the time of the purchase, the Company and PMH entered into a conditional
merger agreement (the Conditional Merger Agreement) and a shareholders'
agreement (the Shareholders' Agreement). Each party's obligation to consummate
the merger under the Conditional Merger Agreement was subject to a number of
conditions, including ICM/K and the Company meeting certain financial and
operating targets as of and for the year ended December 31, 1995. While the
Company met the prescribed targets, ICM/K did not, and on April 30, 1996, the
Conditional Merger Agreement expired.
The Shareholders' Agreement gives the Company a right of first refusal on the
sale of the balance of PMH stock. If the Company continues to maintain its stock
position in PMH, it may, after December 31, 1998, sell its position to PMH on a
prescribed formula that is dependent upon the performance of PMH for the twelve
months preceding such sale. The Shareholders' Agreement also requires unanimous
consent of the shareholders for most major corporate actions, including but not
limited to the following, (i) any merger, consolidation or reorganization of
PMH, (ii) the disposition of any property in excess of $1 million, (iii) capital
contributions in excess of $2 million and (iv) the approval of executive
compensation.
Summarized income statement information for PMH is presented for the three
months ended March 31, 1996 and 1995, as follows(dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------
(Unaudited)
1996 1995
------- -------
<S> <C> <C>
Net sales $27,562 $30,038
Gross profit 2,370 5,366
Net income (loss) $ (253) $ 1,680
======= =======
</TABLE>
4. INVENTORIES:
------------
The major components of inventories were as follows (dollars in thousands):
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
(Unaudited) (Audited)
<S> <C> <C>
Raw Materials $ 3,069 $ 2,945
Work-in-process 4,606 4,481
Finished goods 3,538 3,105
------- -------
$11,213 $10,531
LIFO reserve (355) (337)
------- -------
$10,858 $10,194
======= =======
</TABLE>
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<PAGE> 9
5. REVOLVING CREDIT FACILITY:
--------------------------
Concurrent with the Company's initial public offering, the Company entered into
a revolving line of credit aggregating $22.5 million. The revolving line of
credit was subsequently amended and expanded in January 1996 (the New Revolver).
The New Revolver is a $30 million unsecured facility and matures in January
1999. The New Revolver contains various affirmative and negative covenants
customary for unsecured revolving credit financing, and bears interest at
optional rates as defined. Based on the borrowing rates currently available to
the Company for bank loans with similar terms and average maturities, the fair
value of long-term debt was substantially the same as its carrying value at
March 31, 1996 and December 31, 1995.
6. ACQUISITION:
------------
Effective June 26, 1995, the Company purchased the stock of Kolsva Sinterteknik
for a combination of $3.8 million in cash and 100,000 shares of the Company's
Class A Common Stock. The transaction was financed through the Company's
revolving credit facility. As a part of the transaction, the Company assumed
long-term debt of Sinterteknik aggregating approximately $1.9 million.
The transaction was recorded utilizing the purchase method of accounting and,
accordingly, the gross purchase price has been allocated to the tangible and
intangible assets acquired and liabilities assumed, based upon their estimated
fair value at the date of acquisition. Proforma financial operating results as
if the acquisition had been completed on January 1, 1995, are as follows
(dollars in thousands):
Three Months Ended
March 31, 1995
------------------
Net sales $26,687
Gross profit 6,148
Income before taxes 3,774
Net income applicable to common stock 2,282
Net income per common share .30
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company was organized in 1991 to facilitate the stock acquisition of
Pennsylvania Pressed Metals Inc. The acquisition was financed through borrowings
under a secured credit agreement and issuance by the Company of subordinated
notes, preferred stock, common stock and capital appreciation rights. In 1993,
the capital appreciation rights ("CAR") were repurchased.
In October 1994, the Company successfully completed an initial public offering
of its Class A Common Stock raising net proceeds of approximately $14.7 million
after consideration of transaction expenses. The Company used the net proceeds
from the initial public offering together with borrowings of approximately $2.0
million under the Company's revolving credit facility to repay all of its then
outstanding senior and a portion of its subordinated indebtedness and to redeem
a portion of its preferred stock.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED
MARCH 31, 1995
Net Sales. Net sales increased $3.4 million, or 13.6%, to $28.0 million in the
first quarter of 1996 from $24.6 million in the comparable quarter of 1995. The
increase in net sales reflects the impact of the Kolsva Sinterteknik AB
("Sinterteknik") acquisition, increased penetration in the automotive market and
an increase in the selling price per unit. The increase in selling price per
unit is primarily attributable to additional secondary work being performed by
the Company.
Sales for the automotive market remained flat for the quarter, reflecting the
Company's increased penetration in the automotive market offset by the impact of
the General Motors strike. The Company estimates that the impact of the General
Motors strike aggregated approximately $.8 million to $1.0 million in sales
volume. Sales for each of the Company's other major markets, appliance, lawn and
garden and power tools, experienced increases during the first quarter.
Gross profit. Gross profit increased by $.9 million, or 15.6%, to $6.4 million
in 1996. The gross profit margin increased from 22.6% in the first quarter of
1995 to 23.0% in the comparable period in 1996. The increase is principally
attributable to a change in product mix. The Company has been experiencing a
change in the complexity of the product, which results in a higher selling price
per pound a higher gross margin.
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<PAGE> 11
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $.6 million in 1996 to $2.5 million.
Similarly, selling, general and administrative expenses as a percentage of sales
increased from 7.8% to 8.9% for the first quarter of 1995 and 1996,
respectively. The increase in selling, general and administrative expenses for
the 1996 first quarter is primarily attributable to the administrative costs
incurred in the Swedish subsidiary.
Income from operations. Income from operations increased by $.3 million, or
7.6%, in 1996, as compared to 1995. Income from operations as a percent of net
sales decreased from 14.5% in 1995 to 13.7% in 1996, reflecting the increase in
selling, general and administrative expenses described above.
Income Taxes. The provision for income taxes was $1.4 million in 1996 and
1995 reflecting the favorable tax rate in Sweden.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are to fund its working capital,
purchase capital equipment and fund potential acquisitions. Historically, the
Company has used income generated by operations as well as borrowings available
under long-term credit agreements and the issuance of subordinated notes to fund
these capital needs. In conjunction with the Company's initial public offering
in 1994, the Company utilized the proceeds from the offering to repay its
long-term debt and a portion of its subordinated notes. The Company's remaining
subordinated notes and preferred stock were converted into shares of Class A
Common Stock.
To provide ongoing liquidity and to fund short-term working capital
requirements, the Company in January 1996 expanded and amended its revolving
credit agreement. The revised credit agreement is unsecured and provides $30
million of funds for working capital needs, capital expenditures and to fund
potential acquisitions. Utilizing the new agreement, the Company had available
at March 31, 1996 approximately $27.8 million of borrowings available to fund
growth and acquisition needs.
In addition to the new revolving credit agreement, the Company issued on April
10, 1996, an industrial development bond aggregating $7.2 million. The bond is a
tax exempt floating interest rate bond and will be utilized to fund the
construction of the new plant facility in Chicago and anticipated additional
plant equipment.
Net cash provided by operating activities increased in 1996 by approximately
$1.9 million from the 1995 level of $2.0 million. The increase is primarily
attributable to the Company's increase of accounts payable levels in 1996. Net
cash provided by operating activities is principally generated from net income
of the Company, and non cash charges
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<PAGE> 12
for depreciation, which are substantial due to the capital intensive nature of
the Company's business and changes in working capital.
Capital expenditures aggregated $1.9 and $.8 million for 1996 and 1995,
respectively. Capital expenditures are anticipated to increase to approximately
$9.0 million in 1996 to fund the Company's previously announced plant expansions
and capital expenditures as is customary for a business in this capital
intensive industry. As of March 31, 1996, the Company had no other commitments
for capital expenditures outside the ordinary course of business.
The capital requirements of the Company are subject to change as business
conditions vary and investment opportunities arise. The Company has articulated
an acquisition growth strategy and historically has averaged one acquisition per
year. Accordingly, the Company is always looking at acquisition opportunities of
various sizes, and these opportunities may require expansion of the existing
long-term debt facilities. The Company believes that it has sufficient borrowing
capacity to increase its long-term borrowing level, if it becomes appropriate
due to changes in capital requirements. The Company believes that its existing
indebtedness, coupled with funds generated by the Company's operations, will be
sufficient to provide the Company with the liquidity and capital resources
necessary to fund the anticipated working capital requirements and capital
expenditures of the Company for at least the next twelve months.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) See attached Exhibit Index.
(b) Reports on Form 8-K. No reports have been filed by the
Company on Form 8-K during the period covered by this
report.
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
- -------
NUMBER DESCRIPTION OF DOCUMENT PAGE NO.
- ------ ----------------------- --------
<S> <C>
4.1 Credit Agreement dated as of January 18,
1996, by and among Sinter Metals, Inc., the
lenders set forth therein, and the issuing
bank referred to therein, Mellon Bank, N.A.,
as Agent.
10.1 Adjustable Rate Industrial Develop-
ment Bonds (Series 1996 Sinter Metals,
Inc. Project) dated as of April 1,
1996, by and among Sinter Metals,
Inc. and the Village of Richton
Park, Cook County, Illinois.
27.0 Financial Data Schedule
</TABLE>
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SINTER METALS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this Report on Form 10-Q for the period ended March
31, 1996, to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: May 10, 1996 SINTER METALS, INC.
/s/ Joseph W. Carreras
-----------------------------------
Joseph W. Carreras
Chairman of the Board and Chief
Executive Officer (Duly Authorized
Officer)
/s/ Michael T. Kestner
-----------------------------------
Michael T. Kestner
Vice President and Chief Financial
Officer (Chief Accounting Officer)
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<PAGE> 16
CONSENT OF MAKER
----------------
The undersigned, maker of the Discretionary Demand Note, dated
__________, 199_, in favor of Sinter Metals, Inc., a Delaware corporation, in
the principal amount of up to $__________, hereby consents to, accepts and
acknowledges receipt of a copy of, the foregoing Pledge Agreement this ___ day
of ________, 199_, and agree that, upon the occurrence of an Event of Default
(as defined in the foregoing Pledge Agreement), the undersigned will acknowledge
Mellon Bank, N.A., for itself and as Agent for the Lenders, as holder of the
Discretionary Demand Note and will make all payments on account of the
Discretionary Demand Note directly to Mellon Bank, N.A. In the event of a breach
by the undersigned of any provision herein or in the foregoing Pledge Agreement,
all of the Obligations (as defined in the foregoing Pledge Agreement) shall,
without presentment, demand, protest or notice of any kind, become immediately
due and payable unless Mellon Bank, N.A. shall otherwise elect in writing.
______________________________
By: __________________________
Its: _________________________
<PAGE> 1
EXECUTION COPY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of January 18, 1996
by and among
SINTER METALS, INC.
as Borrower,
THE LENDERS PARTY HERETO FROM TIME TO TIME,
as the Lenders,
THE ISSUING BANK REFERRED TO HEREIN,
as Issuing Bank
and
MELLON BANK, N.A.,
as Agent
----------------
U.S. $30,000,000
----------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
SECTION TITLE PAGE
- ------- ----- ----
<S> <C> <C>
ARTICLE 1
DEFINITIONS; CONSTRUCTION.......................................... 1
1.1 Certain Definitions........................................................................... 1
1.2 Construction.................................................................................. 16
1.3 Accounting Principles......................................................................... 17
ARTICLE 2
THE CREDITS................................................. 17
2.1 Revolving Credit Loans........................................................................ 17
2.2 Revolving Credit Commitment Fee............................................................... 18
2.3 Making of Loans............................................................................... 18
2.4 Interest Rates................................................................................ 19
2.5 Conversion or Renewal of Interest Rate Options................................................ 24
2.6 Prepayments Generally......................................................................... 25
2.7 Optional Prepayments.......................................................................... 25
2.8 Mandatory Prepayments......................................................................... 25
2.9 Interest Payment Dates........................................................................ 26
2.10 Pro Rata Treatment; Payments Generally; Interest on Overdue Amounts........................... 26
2.11 Additional Compensation in Certain Circumstances.............................................. 27
2.12 Taxes......................................................................................... 29
2.13 Funding by Branch, Subsidiary or Affiliate.................................................... 30
ARTICLE 3
THE LETTER OF CREDIT SUBFACILITY....................................... 31
3.1 The Letter of Credit Subfacility.............................................................. 31
3.2 Procedure for Issuance and Amendment of Letters of Credit..................................... 34
3.3 Letter of Credit Participating Interests...................................................... 35
3.4 Letter of Credit Drawings and Reimbursements.................................................. 36
3.5 Obligations Absolute.......................................................................... 37
3.6 Additional Compensation in Certain Circumstances.............................................. 38
3.7 Further Assurances............................................................................ 38
3.8 Letter of Credit Agreement and Applications................................................... 38
3.9 Cash Collateral for Letters of Credit......................................................... 38
3.10 Indemnification of Issuing Bank............................................................... 39
3.11 The Issuing Bank and the Lenders.............................................................. 40
ARTICLE 4
REPRESENTATIONS AND WARRANTIES........................................ 41
4.1 Corporate Status.............................................................................. 41
4.2 Corporate Power and Authorization............................................................. 41
4.3 Execution and Binding Effect.................................................................. 42
4.4 Governmental Approvals and Filings............................................................ 42
4.5 Absence of Conflicts.......................................................................... 42
4.6 Audited Financial Statements.................................................................. 43
</TABLE>
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<TABLE>
SECTION TITLE PAGE
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<S> <C> <C>
4.7 Interim Financial Statements.................................................................. 43
4.8 Absence of Undisclosed Liabilities............................................................ 43
4.9 Absence of Material Adverse Changes........................................................... 44
4.10 Accurate and Complete Disclosure.............................................................. 44
4.11 Projections................................................................................... 44
4.12 Solvency...................................................................................... 44
4.13 Margin Regulations............................................................................ 44
4.14 Subsidiaries.................................................................................. 44
4.15 Partnerships, etc............................................................................. 45
4.16 Litigation.................................................................................... 45
4.17 Absence of Events of Default.................................................................. 45
4.18 Absence of Other Conflicts.................................................................... 45
4.19 Insurance..................................................................................... 45
4.20 Title to Property............................................................................. 46
4.21 Intellectual Property......................................................................... 46
4.22 Taxes......................................................................................... 46
4.23 Employee Benefits............................................................................. 46
4.24 Environmental Matters......................................................................... 47
4.25 Regulatory Restrictions....................................................................... 48
ARTICLE 5
CONDITIONS OF CREDIT EXTENSIONS....................................... 48
5.1 Conditions to Initial Credit Extension........................................................ 48
5.2 Conditions to All Credit Extensions........................................................... 50
ARTICLE 6
AFFIRMATIVE COVENANTS............................................ 51
6.1 Basic Reporting Requirements.................................................................. 51
6.2 Insurance..................................................................................... 54
6.3 Payment of Taxes and Other Potential Charges and Priority Claims.............................. 54
6.4 Preservation of Corporate Status.............................................................. 55
6.5 Governmental Approvals and Filings............................................................ 55
6.6 Maintenance of Properties, Franchises, Etc.................................................... 55
6.7 Avoidance of Other Conflicts.................................................................. 55
6.8 Financial Accounting Practices................................................................ 55
6.9 Use of Proceeds............................................................................... 56
6.10 Continuation of or Change in Business......................................................... 56
6.11 Consolidated Tax Return....................................................................... 56
6.12 Subsidiary Guaranty........................................................................... 56
6.13 Solvency...................................................................................... 56
ARTICLE 7
NEGATIVE COVENANTS.............................................. 57
7.1 Financial Covenants........................................................................... 57
7.2 Liens......................................................................................... 57
7.3 Indebtedness.................................................................................. 58
7.4 Guaranties, Indemnities, etc.................................................................. 59
</TABLE>
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<TABLE>
SECTION TITLE PAGE
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<S> <C> <C>
7.5 Loans, Advances and Investments............................................................... 60
7.6 Dividends and Related Distributions........................................................... 61
7.7 Sale-Leasebacks............................................................................... 61
7.8 Leases........................................................................................ 62
7.9 Mergers, Acquisitions, etc.................................................................... 62
7.10 Dispositions of Properties.................................................................... 63
7.11 Issuance of Subsidiary Stock.................................................................. 63
7.12 Dealings with Affiliates...................................................................... 64
7.13 Limitations on Modification of Certain Agreements and Instruments............................. 64
7.14 Limitation on Payments and Modification of Restricted Indebtedness............................ 64
7.15 Limitation on Other Restrictions on Dividends by Subsidiaries, etc............................ 65
7.16 Limitation on Other Restrictions on Liens..................................................... 65
7.17 Limitation on Other Restrictions on Amendment of the Loan Documents, etc...................... 65
ARTICLE 8
DEFAULTS................................................... 65
8.1 Events of Default............................................................................. 65
8.2 Consequences of an Event of Default........................................................... 69
ARTICLE 9
THE AGENT.................................................. 69
9.1 Appointment................................................................................... 69
9.2 General Nature of Agent's Duties.............................................................. 69
9.3 Exercise of Powers............................................................................ 70
9.4 General Exculpatory Provisions................................................................ 70
9.5 Administration by the Agent................................................................... 71
9.6 Lender Not Relying on Agent or Other Lenders.................................................. 72
9.7 Indemnification of Agent by Lenders........................................................... 72
9.8 Agent in its Individual Capacity.............................................................. 72
9.9 Holders of Notes.............................................................................. 73
9.10 Successor Agent............................................................................... 73
9.11 Additional Agents............................................................................. 73
9.12 Calculations.................................................................................. 73
9.13 Funding by Agent.............................................................................. 74
ARTICLE 10
MISCELLANEOUS................................................ 74
10.1 Holidays...................................................................................... 74
10.2 Records....................................................................................... 74
10.3 Amendments and Waivers........................................................................ 74
10.4 No Implied Waiver; Cumulative Remedies........................................................ 75
10.5 Notices....................................................................................... 75
10.6 Expenses; Taxes; Indemnity.................................................................... 76
10.7 Severability.................................................................................. 77
10.8 Prior Understandings.......................................................................... 77
10.9 Duration; Survival............................................................................ 77
10.10 Counterparts.................................................................................. 77
</TABLE>
-iii-
<PAGE> 5
<TABLE>
SECTION TITLE PAGE
- ------- ----- ----
<S> <C> <C>
10.11 Limitation on Payments........................................................................ 77
10.12 Set-Off....................................................................................... 78
10.13 Sharing of Collections........................................................................ 78
10.14 Successors and Assigns; Participations; Assignments........................................... 79
10.15 Confidentiality............................................................................... 81
10.16 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial; Limitation of
Liability..................................................................................... 81
</TABLE>
-iv-
<PAGE> 6
Exhibit A Form of Revolving Credit Note
Exhibit B-1 Form of Standby Letter of Credit Application
Exhibit B-2 Form of Merchandise Letter of Credit Application
Exhibit B-3 Form of Letter of Credit Agreement
Exhibit C Form of Opinion of Counsel to the Borrower
Exhibit D Form of Compliance Certificate
Exhibit E Form of Subsidiary Guaranty
Exhibit F Form of Transfer Supplement
Exhibit G [INTENTIONALLY OMITTED]
Exhibit H Form of Pledge Agreement
Schedule 3.1(g) Prior Letters of Credit
Schedule 4.1 Corporate Status
Schedule 4.4 Governmental Approvals and Filings
Schedule 4.5 Absence of Conflicts
Schedule 4.8 Absence of Undisclosed Liabilities
Schedule 4.9 Material Adverse Changes
Schedule 4.14 Subsidiaries
Schedule 4.15 Partnerships, etc.
Schedule 4.16 Litigation
Schedule 4.18 Absence of Other Conflicts
Schedule 4.19 Insurance
Schedule 4.22 Taxes
Schedule 4.23 Employee Benefits
Schedule 4.24 Environmental Matters
Schedule 7.2 Permitted Liens
Schedule 7.3 Permitted Indebtedness
Schedule 7.4 Permitted Guaranties, Indemnities, etc.
Schedule 7.5 Permitted Loans, Advances and Investments
Schedule 7.12 Permitted Dealings with Affiliates
Schedule 7.17 Agreements Containing Restrictions on Amendment of
Loan Documents
-v-
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of January 18, 1996, by and
among SINTER METALS, INC., a Delaware corporation (the "Borrower"), the Lenders
party hereto from time to time, the Issuing Bank referred to herein and MELLON
BANK, N.A., a national banking association, as agent for the Lenders hereunder
(in such capacity, together with its successors in such capacity, the "Agent").
Recital:
The Borrower has requested the Agent, the Lenders and the
Issuing Bank to enter into this Agreement and extend credit as provided herein
and the Agent, the Lenders and the Issuing Bank are willing to provide such
credit on the terms and subject to the conditions herein contained.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS; CONSTRUCTION
-------------------------
1.1 CERTAIN DEFINITIONS. In addition to other words and terms
defined elsewhere in this Agreement, as used herein the following words and
terms shall have the following meanings, respectively, unless the context hereof
otherwise clearly requires:
"Acquisitions" shall have the meaning set forth in Section
7.9(b) hereof.
"Affected Lender" shall have the meaning set forth in
Section 2.4(e) hereof.
"Affiliate" of a Person (the "Specified Person") shall mean
any Person which directly or indirectly controls, or is controlled by,
or is under common control with, the Specified Person; PROVIDED,
HOWEVER, that none of the ICM/K Entities shall be deemed to be an
Affiliate of Borrower so long as Borrower holds (directly or
indirectly) thirty percent (30%) or less of the shares of voting stock
of PMH; and PROVIDED FURTHER, HOWEVER, that in the event Borrower shall
hold (directly or indirectly) more than thirty percent (30%) of the
shares of voting stock of PMH, the ICM/K Entities shall be deemed to be
Affiliates of Borrower for purposes of this Agreement.
"Agent" shall have the meaning set forth in the preamble
hereto.
"Agent's Office" shall mean the Agent's office located at Two
Mellon Bank Center, Pittsburgh, Pennsylvania 15259, or at such other
office or offices of the Agent or any branch, subsidiary or affiliate
thereof as may be designated in writing from time to time by the Agent
to the Borrower.
"Agreement" shall mean, on any date, this Credit Agreement as
originally in effect and as thereafter from time to time amended,
supplemented, amended and restated or otherwise modified and in effect
on such date.
"Applicable Margin" shall have the meaning set forth in
Section 2.4(b) hereof.
"Assured Obligations" shall have the meaning set forth in the
definition of "Guaranty Equivalent."
<PAGE> 8
"Base Rate" shall have the meaning set forth in Section 2.4(a)
hereof.
"Base Rate Option" shall have the meaning set forth in Section
2.4(a) hereof.
"Base Rate Portion" of any Loan or Loans shall mean at any
time the portion, including the whole, of such Loan or Loans bearing
interest at such time (i) under the Base Rate Option or (ii) in
accordance with Section 2.10(c)(ii) hereof. If no Loan or Loans is
specified, "Base Rate Portion" shall refer to the Base Rate Portion of
all Loans outstanding at such time.
"Borrower" shall have the meaning set forth in the preamble
hereto.
"Business Day" shall mean any day other than a Saturday,
Sunday, public holiday under the laws of the Commonwealth of
Pennsylvania or other day on which banking institutions are authorized
or obligated to close in the city in which the Agent's Office is
located.
"Capitalized Lease" shall mean at any time any lease which is,
or is required under GAAP to be, capitalized on the balance sheet of
the lessee at such time, and "Capitalized Lease Obligation" of any
Person at any time shall mean the aggregate amount which is, or is
required under GAAP to be, reported as a liability on the balance sheet
of such Person at such time as lessee under a Capitalized Lease.
"Cash Equivalent Investments" shall mean any of the following,
to the extent acquired for investment and not with a view to achieving
trading profits: (a) obligations fully backed by the full faith and
credit of the United States of America maturing not in excess of three
(3) months from the date of acquisition, (b) commercial paper rated
"P-1" by Moody's Investors Service or "A-1" by Standard & Poor's
Corporation on the date of acquisition, (c) investments in money market
funds which funds are rated at least AAAm or AAAm G by Standard &
Poor's Corporation or Aaa by Moody's Investors Service, and (d) the
following obligations of any Affiliate of a Lender or any domestic
commercial bank having capital and surplus in excess of Five Hundred
Million Dollars ($500,000,000), which has, or the holding company of
which has, a commercial paper rating meeting the requirements specified
in clause (b) above: (i) time deposits, certificates of deposit and
acceptances maturing not in excess of nine (9) months from the date of
acquisition, or (ii) repurchase obligations with a term of not more
than seven (7) days for underlying securities of the type referred to
in clause (a) above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, and any successor statute
of similar import, and regulations thereunder, in each case as in
effect from time to time.
"CERCLIS" shall mean the Comprehensive Environmental Response,
Compensation and Liability Information System List, as the same may be
amended from time to time.
"Change of Control" shall mean, as at any time, the failure
(for any reason, voluntarily or involuntarily) by the members of the
Control Group in the aggregate to own (beneficially and of record) and
have the right to vote shares of voting common stock of the Borrower
representing twenty-five percent (25%) of the voting power of all the
voting common stock of the Borrower (assuming for purposes of such
calculation that all then-outstanding options, warrants, conversion
rights or other rights held by any Person which may in any
circumstances give such other Person the right to acquire shares of
voting common stock are exercised at such time by such other
2
<PAGE> 9
Person (so that all shares of voting common stock potentially issuable
pursuant to such rights shall be deemed outstanding and held by such
Person for purposes of such calculation), regardless of whether such
rights are in fact then exercisable or whether any conditions to such
exercise are then met).
"Closing Date" shall mean January 18, 1996.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to
sections of the Code shall be construed also to refer to any successor
sections.
"Commitments" of a Lender shall mean the Revolving Credit
Commitment of such Lender.
"Commitment Percentage" of a Lender at any time shall mean the
Commitment Percentage for such Lender set forth below its name on the
signature page hereof, subject to transfer to another Lender as
provided in Section 10.14 hereof.
"Consolidated Amortization Expense" for any period, with
respect to the Borrower and its Subsidiaries, shall mean the charges
against income for amortization payments for such period, determined on
a consolidated basis in accordance with GAAP.
"Consolidated Depreciation Expense" for any period, with
respect to the Borrower and its Subsidiaries, shall mean the charges
against income for depreciation for such period, determined on a
consolidated basis in accordance with GAAP.
"Consolidated EBIT" for any period, with respect to the
Borrower and its Subsidiaries, shall mean the sum of (a) Consolidated
Net Income for such period PLUS (b) Consolidated Interest Expense for
such period PLUS (c) Consolidated Income Tax Expense for such period,
all as determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" for any period, with respect to the
Borrower and its Subsidiaries, shall mean the sum of (a) Consolidated
EBIT PLUS (b) Consolidated Depreciation Expense for such period PLUS
(c) Consolidated Amortization Expense for such period, all as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Funded Debt" of the Borrower and its
Subsidiaries at any time shall mean Indebtedness (including the current
portion thereof) of the Borrower and its Subsidiaries which would as of
such time be classified in whole or in part as a long-term liability in
accordance with GAAP, and in any event includes (i) any Indebtedness
having a final maturity later than one (1) year after the date of
incurrence of such Indebtedness and (ii) any Indebtedness which is
renewable or extendable pursuant to its terms by the obligor in its
sole discretion to a date later than one (1) year after the date of
incurrence of such Indebtedness.
"Consolidated Income Tax Expense" for any period, with respect
to the Borrower and its Subsidiaries, shall mean the charges against
income for foreign, federal, state and local income taxes for such
period, determined on a consolidated basis in accordance with GAAP.
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<PAGE> 10
"Consolidated Interest Expense" for any period shall mean the
total interest expense of the Borrower and its Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Lease Expense" for any Fiscal Year with respect
to some or all leases shall mean the aggregate rental expense with
respect to such leases or all leases, as the case may be, of the
Borrower and its Subsidiaries, determined on a consolidated basis in
respect of such Fiscal Year in accordance with GAAP, but in any case
including taxes, insurance, maintenance and similar expenses which the
lessee is obligated to pay under the terms of such leases and which are
properly expensed during such Fiscal Year in accordance with GAAP.
"Consolidated Net Income" for any period shall mean the net
earnings (or loss) after taxes of the Borrower and its Subsidiaries for
such period, determined on a consolidated basis in accordance with
GAAP, but not including any extraordinary items determined in
accordance with GAAP; PROVIDED, HOWEVER, that there shall be deducted
therefrom (a) the income (or deficit) of any Person accrued prior to
the date it becomes a Subsidiary or is merged into or consolidated with
or is otherwise acquired by or combined with the Borrower or any
Subsidiary in a business combination accounted for as a pooling of
interests, including, in the case of a successor to the Borrower or any
Subsidiary by consolidation or merger or transfer of assets, any
earnings of the successor corporation prior to such consolidation,
merger or transfer of assets, (b) income or loss accounted for by the
Borrower on the equity method because of the income (or deficit) during
such period of any Person (other than a Subsidiary) in which the
Borrower or any Subsidiary has an ownership interest, but the deduction
for such equity income shall be reversed to the extent that during such
period or at any subsequent time an amount not in excess of such income
has been actually received by the Borrower or such Subsidiary in the
form of cash or property dividends or similar distributions, (c) income
or loss of a non-domestic Subsidiary to the extent that the
repatriation of such income is prohibited, (d) the undistributed
earnings of any Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is
restricted (whether such restriction arises by operation of Law, by
agreement, by its articles of incorporation or by-laws (or other
constituent documents), or otherwise), and (e) any gain arising from
the acquisition of any securities, or the extinguishment, under GAAP,
of any Indebtedness of the Borrower or any Subsidiary.
"Consolidated Net Worth" at any time shall mean the total
amount of stockholders' equity of the Borrower and its Subsidiaries at
such time, determined on a consolidated basis in accordance with GAAP.
"Consolidated Tangible Net Worth" at any time shall mean
Consolidated Net Worth, except that there shall be deducted therefrom
the book value of all intangible assets of the Borrower and its
Subsidiaries at such time.
"Consolidated Total Liabilities" for any period shall mean the
total liabilities of the Borrower and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Control," "controlled" and "controlling," when used with
respect to a Person (the "specified Person"), means the possession,
directly or indirectly, of the power to direct or cause the direction
of the management or policies of the specified Person, whether through
the ownership of voting securities, by contract or otherwise. A
Person's beneficial ownership of
4
<PAGE> 11
shares of voting common stock entitling that Person to cast votes
representing at least ten percent (10%) of the voting power of all the
voting common stock of any corporation shall create a presumption that
such Person has control of such corporation.
"Control Group" shall mean the following Persons: Joseph W.
Carreras, Citicorp Venture Capital Ltd. and Donald L. Le Vault.
"Controlled Group Member" shall mean each trade or business
(whether or not incorporated) which together with the Borrower or any
Subsidiary of the Borrower is treated as a single employer under
Sections 4001(a)(14) or 4001(b)(1) of ERISA or Sections 414(b), (c),
(m) or (o) of the Code.
"Corresponding Source of Funds" shall mean, in the case of any
Funding Segment of the Euro-Rate Portion, the proceeds of hypothetical
receipts by a Notional Euro-Rate Funding Office or by a Lender through
a Notional Euro-Rate Funding Office of one (1) or more Dollar deposits
in the interbank eurodollar market at the beginning of the Euro-Rate
Funding Period corresponding to such Funding Segment having maturities
approximately equal to such Euro-Rate Funding Period and in an
aggregate amount approximately equal to such Lender's Pro Rata share of
such Funding Segment.
"Credit Extension" shall mean: (a) the making of any Loan by
any Lender or (b) the issuance, or extension of the expiration date
of, any Letter of Credit by the Issuing Bank.
"Deemed Obligor" shall have the meaning set forth in the
definition of "Guaranty Equivalent."
"Dollar," "Dollars" and the symbol "$" shall mean lawful money
of the United States of America.
"Environmental Affiliate" shall mean, with respect to any
Person, any other Person whose liability (contingent or otherwise) for
any Environmental Claim such Person has retained, assumed or otherwise
is liable for (by Law, agreement or otherwise).
"Environmental Approvals" shall mean any Governmental Action
pursuant to or required under any Environmental Law.
"Environmental Claim" shall mean, with respect to any Person,
any action, suit, proceeding, investigation, notice, claim, complaint,
demand, request for information or other communication (written or
oral) by any other Person (including but not limited to any
Governmental Authority, citizens' group or present or former employee
of such Person) alleging, asserting or claiming any actual or potential
(a) violation of any Environmental Law, (b) liability under any
Environmental Law or (c) liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages, property
damages, personal injuries, fines or penalties arising out of, based on
or resulting from the presence, or release into the environment, of any
Environmental Concern Materials at any location, whether or not owned
by such Person.
"Environmental Cleanup Site" shall mean any location which is
listed or proposed for listing on the National Priorities List, on
CERCLIS or on any similar state list of sites requiring investigation
or cleanup, or which is the subject of any pending or threatened
action, suit,
5
<PAGE> 12
proceeding or investigation related to or arising from any alleged
violation of any Environmental Law.
"Environmental Concern Materials" shall mean (a) any flammable
substance, explosive, radioactive material, hazardous material,
hazardous waste, toxic substance, solid waste, pollutant, contaminant
or any related material, raw material, substance, product or by-product
of any substance specified in or regulated or otherwise affected by any
Environmental Law (including but not limited to any "hazardous
substance" as defined in CERCLA or any similar state Law), (b) any
toxic chemical or other substance from or related to industrial,
commercial or institutional activities, and (c) asbestos, gasoline,
diesel fuel, motor oil, waste and used oil, heating oil and other
petroleum products or compounds, polychlorinated biphenyls, radon and
urea formaldehyde.
"Environmental Law" shall mean any Law, whether now existing
or subsequently enacted or amended, relating to (a) pollution or
protection of the environment, including natural resources, (b)
exposure of Persons, including but not limited to employees, to
Environmental Concern Materials, (c) protection of the public health or
welfare from the effects of products, by-products, wastes, emissions,
discharges or releases of Environmental Concern Materials or (d)
regulation of the manufacture, use or introduction into commerce of
Environmental Concern Materials including their manufacture,
formulation, packaging, labeling, distribution, transportation,
handling, storage or disposal. Without limitation, "Environmental Law"
shall also include any Environmental Approval and the terms and
conditions thereof.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import, and
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"Euro-Rate" shall have the meaning set forth in Section 2.4(a)
hereof.
"Euro-Rate Funding Period" shall have the meaning set forth in
Section 2.4(c) hereof.
"Euro-Rate Option" shall have the meaning set forth in Section
2.4(a) hereof.
"Euro-Rate Portion" of any Loan or Loans shall mean at any
time the portion, including the whole, of such Loan or Loans bearing
interest at any time under the Euro-Rate Option or at a rate calculated
by reference to the Euro-Rate under Section 2.10(c)(i) hereof. If no
Loan or Loans is specified, "Euro-Rate Portion" shall refer to the
Euro-Rate Portion of all Loans outstanding at such time.
"Euro-Rate Reserve Percentage" shall have the meaning set
forth in Section 2.4(a) hereof.
"Event of Default" shall mean any of the Events of Default
described in Section 8.1 hereof.
"Extended Letter of Credit" shall have the meaning set forth
in Section 3.1(b) hereof.
"Federal Funds Effective Rate" for any day shall mean the rate
per annum (rounded upward to the nearest one-one hundredth (1/100) of
one percent (1%)) determined by the Agent (which determination shall be
conclusive) to be the rate per annum announced by the Federal
6
<PAGE> 13
Reserve Bank of New York (or any successor) on such day as being the
weighted average of the rates on overnight federal funds transactions
arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor)
in substantially the same manner as such Federal Reserve Bank computes
and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; PROVIDED, HOWEVER,
that if such Federal Reserve Bank (or its successor) does not announce
such rate on any day, the "Federal Funds Effective Rate" for such day
shall be the Federal Funds Effective Rate for the last day on which
such rate was announced.
"Financial Test A" shall have the meaning set forth in Section
2.4(b) hereof.
"Financial Test B" shall have the meaning set forth in Section
2.4(b) hereof.
"Financial Test C" shall have the meaning set forth in Section
2.4(b) hereof.
"Fiscal Year" shall mean a fiscal year ending December 31.
"Funding Breakage Date" shall have the meaning set forth in
Section 2.11(b) hereof.
"Funding Breakage Indemnity" shall have the meaning set forth
in Section 2.11(b) hereof.
"Funding Segment" of the Euro-Rate Portion of the Revolving
Credit Loans at any time shall mean the entire principal amount of such
Portion to which, at the time in question, there is applicable a
particular Euro-Rate Funding Period beginning on a particular day and
ending on a particular day. (By definition, each such Portion is at all
times composed of an integral number of discrete Funding Segments and
the sum of the principal amounts of all Funding Segments of any such
Portion at any time equals the principal amount of such Portion at such
time.)
"GAAP" shall have the meaning set forth in Section 1.3 hereof.
"Governmental Action" shall have the meaning set forth in
Section 4.4 hereof.
"Governmental Authority" shall mean any government or
political subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.
"Guarantor" shall mean any Person that now or may hereafter
guarantee the payment and performance of the Obligations.
"Guaranty Equivalent": A Person (the "Deemed Guarantor") shall
be deemed to be subject to a Guaranty Equivalent in respect of any
indebtedness, obligation or liability (the "Assured Obligation") of
another Person (the "Deemed Obligor") if the Deemed Guarantor directly
or indirectly guarantees, becomes surety for, endorses, assumes, agrees
to indemnify the Deemed Obligor against, or otherwise agrees, becomes
or remains liable (contingently or otherwise) for, such Assured
Obligation. Without limitation, a Guaranty Equivalent shall be deemed
to exist if a Deemed Guarantor agrees, becomes or remains liable
(contingently or otherwise), directly or indirectly: (a) to purchase or
assume, or to supply funds for the payment, purchase or satisfaction,
of, an Assured Obligation, (b) to make any loan, advance, capital
contribution or other investment in, or to purchase or lease any
property or services from, a Deemed Obligor (i) to maintain the
7
<PAGE> 14
solvency of the Deemed Obligor, (ii) to enable the Deemed Obligor to
meet any other financial condition, (iii) to enable the Deemed Obligor
to satisfy any Assured Obligation or to make any Stock Payment or any
other payment, or (iv) to assure the holder of such Assured Obligation
against loss, (c) to purchase or lease property or services from the
Deemed Obligor regardless of the non-delivery of or failure to furnish
of such property or services, (d) in a transaction having the
characteristics of a take-or-pay or throughput contract or as described
in paragraph 6 of FASB Statement of Financial Accounting Standards No.
47, or (e) in respect of any other transaction the effect of which is
to assure the payment or performance (or payment of damages or other
remedy in the event of nonpayment or nonperformance) of any Assured
Obligation.
"ICM/K Entities" shall mean and include PMH and its
wholly-owned Subsidiary, ICM/Krebsoge, a Delaware corporation.
"IRB Facility" shall mean the proposed bond facility for the
issuance Industrial Development Revenue Bonds in the aggregate original
principal amount of Seven Million Six Hundred Thousand Dollars
($7,600,000) by either (i) the Village of Richton Park, Illinois, or
(ii) the Illinois Development Finance Authority.
"IRB Letter of Credit" shall mean a Standby Letter of Credit
to be issued hereunder for the account of the Borrower to provide
credit support for the financing arrangements under the IRB Facility in
an original face amount not to exceed Seven Million Six Hundred
Thousand Dollars ($7,600,000).
"Indebtedness" of a Person shall mean, without duplication:
(a) All obligations on account of money borrowed
by, or credit extended to or on behalf of, or for or on
account of deposits with or advances to, such Person;
(b) All obligations of such Person evidenced by
bonds, debentures, notes or similar instruments;
(c) All obligations of such Person for the
deferred purchase price of property or services;
(d) All obligations secured by a Lien on property
owned by such Person (whether or not assumed); and all
obligations of such Person under Capitalized Leases (without
regard to any limitation of the rights and remedies of the
holder of such Lien or the lessor under such Capitalized Lease
to repossession or sale of such property), it being understood
that obligations of such Person under operating leases shall
not be considered Indebtedness for purposes hereof;
(e) The face amount of all letters of credit issued
for the account of such Person and, without duplication, the
unreimbursed amount of all drafts drawn thereunder, and all
other obligations of such Person associated with such letters
of credit or draws thereon, but excluding the face amount of
any letters of credit which support the obligations of such
Person with respect to other Indebtedness of such Person, to
the extent such other Indebtedness is reflected in any
determination of the Indebtedness of such Person;
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<PAGE> 15
(f) All obligations of such Person in respect
of acceptances or similar obligations issued for the account
of such Person; and
(g) All obligations of such Person under a product
financing or similar arrangement described in paragraph 8 of
FASB Statement of Accounting Standards No. 49 or any similar
requirement of GAAP.
"Indemnified Parties" shall mean the Agent, the Lenders, their
respective Affiliates, and the directors, officer, employees, attorneys
and agents of each of the foregoing.
"Initial Revolving Credit Committed Amount" shall have the
meaning set forth in Section 2.1(a) hereof.
"Issuing Bank" shall mean Mellon and such Affiliates of Mellon
which are financial institutions as Mellon may in its discretion from
time to time elect to cause to issue Letters of Credit.
"KST" shall mean Kolsva Sinterteknik, A.B., a Swedish
corporation.
"Law" shall mean any law (including common law), constitution,
statute, treaty, convention, regulation, rule, ordinance, order,
injunction, writ, decree or award of any Governmental Authority.
"LC Collateral Account" shall have the meaning set forth in
Section 3.9(b)(i) hereof.
"LC Indemnified Parties" shall have the meaning set forth in
Section 3.10 hereof.
"Lender" shall mean any of the Lenders listed on the signature
pages hereof, subject to the provisions of Section 10.14 hereof
pertaining to Persons becoming or ceasing to be Lenders.
"Lender" shall in any event include the Issuing Bank.
"Letters of Credit" shall have the meaning set forth in
Section 3.1(a) hereof and shall also include Extended Letters of
Credit.
"Letter of Credit Agreement" shall have the meaning set forth
in Section 5.1(a) hereof.
"Letter of Credit Applications" shall have the meaning set
forth in Section 3.2(a)(ii) hereof.
"Letter of Credit Exposure" at any time shall mean the sum at
such time of (a) the aggregate amount of all Unreimbursed Draws under
Letters of Credit (whether or not the Letter of Credit under which any
such Unreimbursed Draw arose is then outstanding) and (b) the aggregate
Undrawn Availability under all outstanding Letters of Credit.
"Letter of Credit Facing Fee" shall have the meaning set forth
in Section 3.1(f) hereof.
"Letter of Credit Fee" shall have the meaning set forth in
Section 3.1(d) hereof.
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<PAGE> 16
"Letter of Credit Participating Interest" shall have the
meaning set forth in Section 3.3(a) hereof.
"Lien" shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement
of any nature whatsoever, including but not limited to any conditional
sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security.
"Loan" shall mean any Revolving Credit Loan by a Lender to the
Borrower under this Agreement, and "Loans" shall mean all Revolving
Credit Loans made by the Lenders under this Agreement.
"Loan Documents" shall mean this Agreement, the Notes, the
Transfer Supplements, the Letters of Credit, the Letter of Credit
Agreement, the Letter of Credit Applications, any Subsidiary Guaranties
and all other agreements, instruments and certificates executed and
delivered in connection with any of the foregoing, together with all
agreements and instruments extending, renewing, refinancing or
refunding any indebtedness, obligation or liability arising under any
of the foregoing, in each case as the same may be amended, modified or
supplemented from time to time hereafter.
"Loan Party" shall mean the Borrower and any Guarantor.
"London Business Day" shall mean a day for dealing in deposits
in Dollars by and among banks in the London interbank market and which
is a Business Day.
"Material Adverse Effect" shall mean: (a) a material adverse
effect on the business, operations or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole, (b) a
material adverse effect on the ability of any Loan Party to perform or
comply with any of the terms and conditions of any Loan Document, or
(c) material adverse effect on the legality, validity, binding effect
or enforceability of any Loan Document, or the ability of the Agent or
any Lender to enforce any rights or remedies under or in connection
with any Loan Document.
"Mellon" shall mean Mellon Bank, N.A., a national banking
association.
"Merchandise Letter of Credit" shall have the meaning set
forth in Section 3.1(a) hereof.
"Merchandise Letter of Credit Application" shall have the
meaning set forth in Section 3.2(a)(ii) hereof.
"Merger Documents" shall mean (i) the Certificate of Ownership
and Merger Merging Pennsylvania Pressed Metals, Inc. into Sinter
Metals, Inc., filed with the Secretary of State of the State of
Delaware on December 27, 1995, (ii) the Articles of Merger-Domestic
Business Corporation related thereto and filed with the Department of
State of the Commonwealth of Pennsylvania on December 27, 1995, (iii)
the Plan of Merger of Pennsylvania Pressed Metals, Inc. and Sinter
Metals, Inc., (iv) the Certificate of Ownership and Merger Merging
Midwest Sintered Products Corporation into Sinter Metals, Inc., filed
with the Secretary of State of the State of Delaware on December 27,
1995, (v) the Articles of Merger related thereto and filed with the
Secretary of State of Illinois on December 27, 1995, (vi) the Plan of
Merger of Midwest Sintered
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Products Corporation and Sinter Metals, Inc., (vii) all corporate
resolutions (whether by shareholders, directors or otherwise) adopted
in connection with the Mergers, and (viii) all other documents relating
to any Governmental Action taken in connection with the Mergers.
"Mergers" shall mean, collectively, the merger of (i) Midwest
Sintered Products Corporation, an Illinois corporation, with and into
Borrower, with Borrower being the surviving corporation, and (ii)
Pennsylvania Pressed Metals, Inc., a Pennsylvania corporation, with and
into Borrower, with Borrower being the surviving corporation.
"Multiemployer Plan" shall mean any employee benefit plan
which is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA and to which the Borrower or any Controlled Group
Member has or had an obligation to contribute.
"Note" or "Notes" shall mean the Revolving Credit Note(s) of
the Borrower executed and delivered under this Agreement, together with
all extensions, renewals, refinancings or refundings of any thereof in
whole or part.
"Notional Euro-Rate Funding Office" shall have the meaning
given to that term in Section 2.13(a) hereof.
"Obligations" shall mean all indebtedness, obligations and
liabilities of the Borrower to any Lender, the Issuing Bank or the
Agent from time to time arising under or in connection with or related
to or evidenced by or secured by or under color of this Agreement or
any other Loan Document, and all extensions, renewals or refinancings
thereof, whether such indebtedness, obligations or liabilities are
direct or indirect, otherwise secured or unsecured, joint or several,
absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising. Without limitation of
the foregoing, such indebtedness, obligations and liabilities include
(a) the principal amount of Loans, interest, fees, indemnities or
expenses under or in connection with this Agreement or any other Loan
Document, and all extensions, renewals, refinancings and refundings
thereof, whether or not such Loans were made in compliance with the
terms and conditions of this Agreement or in excess of the obligation
of the Lenders to lend and (b) interest and other obligations arising
or accruing after the commencement of any bankruptcy, insolvency,
reorganization, dissolution or similar proceeding with respect to the
Borrower, any other Loan Party or any other Person, or which would have
arisen or accrued but for the commencement of such proceeding, even if
such obligation or the claim thereof is not enforceable or allowable in
such proceeding. Obligations shall remain Obligations notwithstanding
any assignment or transfer or any subsequent assignment or transfer of
any of the Obligations or any interest therein.
"Offered Rate" shall have the meaning set forth in Section
2.4(a) hereof.
"Offered Rate Option" shall have the meaning set forth in
Section 2.4(a) hereof.
"Offered Rate Portion" of any Loan or Loans shall mean at any
time the portion, including the whole, of such Loan or Loans bearing
interest at such time (i) under the Offered Rate Option or (ii) in
accordance with Section 2.10(c)(ii) hereof. If no Loan or Loans is
specified, "Offered Rate Portion" shall refer to the Offered Rate
Portion of all Loans outstanding at such time.
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"Option" shall mean the Base Rate Option, the Offered Rate
Option or the Euro-Rate Option, as the case may be.
"Participant" shall have the meaning set forth in Section
10.14(b) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation
established under Title IV of ERISA or any other governmental agency,
department or instrumentality succeeding to the functions of said
corporation.
"Pension-Related Event" shall mean any of the following events
or conditions:
(a) Any action is taken by any Person (i) to
terminate, or which would result in the termination of, a
Plan, either pursuant to its terms or by operation of law
(including, without limitation, any amendment of a Plan which
would result in a termination under Section 4041(e) of ERISA),
or (ii) to have a trustee appointed for a Plan pursuant to
Section 4042 of ERISA;
(b) PBGC notifies any Person of its determination
that an event described in Section 4042 of ERISA has occurred
with respect to a Plan, that a Plan should be terminated, or
that a trustee should be appointed for a Plan;
(c) Any Reportable Event occurs with respect to a
Plan;
(d) Any action occurs or is taken which could result
in the Borrower or any Subsidiary of the Borrower becoming
subject to liability for a complete or partial withdrawal by
any Person from a Multiemployer Plan (including, without
limitation, seller liability incurred under Section 4204(a)(2)
of ERISA), or the Borrower, any Subsidiary of the Borrower or
any Controlled Group Member receives from any Person a notice
or demand for payment on account of any such alleged or
asserted liability; or
(e) (i) There occurs any failure to meet the minimum
funding standard under Section 302 of ERISA or Section 412 of
the Code with respect to a Plan, or any tax return is filed
showing any tax payable under Section 4971(a) of the Code with
respect to any such failure, or the Borrower, any Subsidiary
of the Borrower or any Controlled Group Member receives a
notice of deficiency from the Internal Revenue Service with
respect to any alleged or asserted such failure, or (ii) any
request is made by any Person for a variance from the minimum
funding standard, or an extension of the period for amortizing
unfunded liabilities, with respect to a Plan.
"Permitted Liens" shall have the meaning set forth in Section
7.2 hereof.
"Person" shall mean an individual, corporation, partnership,
limited liability company, trust, unincorporated association, joint
venture, joint-stock company, Governmental Authority or any other
entity.
"Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA (other than a Multiemployer Plan)
covered by Title IV of ERISA by reason of Section 4021 of ERISA, of
which the Borrower or any Subsidiary of the Borrower or any Controlled
Group Member is or has been within the preceding five years a
"contributing sponsor" within the
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<PAGE> 19
meaning of Section 4001(a)(13) of ERISA, or which is or has been within
the preceding five years maintained for employees of the Borrower or
any Subsidiary of the Borrower or any Controlled Group Member.
"Pledge Agreement" shall mean the Pledge Agreement
substantially in the form of Exhibit H attached hereto.
"PMH" shall mean Powder Metal Holding, Inc., a Delaware
corporation.
"Portion" shall mean the Base Rate Portion, the Offered Rate
Portion or the Euro-Rate Portion, as the case may be.
"Postretirement Benefits" shall mean any benefits, other than
retirement income, provided by the Borrower or any Loan Party to
retired employees, or to their spouses, dependents or beneficiaries,
including, without limitation, group medical insurance or benefits, or
group life insurance or death benefits.
"Postretirement Benefit Obligation" shall mean that portion of
the actuarial present value of all Postretirement Benefits expected to
be provided by the Borrower or any Subsidiary of the Borrower which is
attributable to employees' service rendered to the date of
determination (assuming that such liability accrues ratably over an
employee's working life to the earlier of his date of retirement or the
date on which the employee would first become eligible for full
benefits), reduced by the fair market value as of the date of
determination of any assets which are segregated from the assets of the
Borrower or such Subsidiary and which have been restricted so that they
cannot be used for any purpose other than to provide Postretirement
Benefits or to defray related expenses.
"Potential Default" shall mean any event or condition which
with notice, passage of time or a determination by the Lender, or any
combination of the foregoing, would constitute an Event of Default.
"Prime Rate" as used herein, shall mean the fluctuating
interest rate per annum announced from time to time by Mellon as its
"prime rate" thereafter in effect, it being specifically acknowledged
that the Prime Rate is not necessarily the lowest rate of interest then
available from Mellon on fluctuating-rate loans.
"Prior Letters of Credit" shall have the meaning set forth in
Section 3.1(g) hereof.
"Pro Forma Activities" shall have the meaning set forth in
Section 4.11 hereof.
"Pro Rata" shall mean from or to each Lender in proportion to
its Commitment Percentage.
"Purchasing Lender" shall have the meaning set forth in
Section 10.14(c) hereof.
"Register" shall have the meaning set forth in Section
10.14(d) hereof.
"Regular Payment Date" shall mean the last day of each March,
June, September and December after the date hereof.
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"Reimbursement Obligation" with respect to a Letter of Credit
means the obligation of the Borrower to reimburse the Issuing Bank for
Unreimbursed Draws, together with interest thereon.
"Reportable Event" means (i) a reportable event described in
Section 4043 of ERISA and regulations thereunder, (ii) a withdrawal by
a substantial employer from a Plan to which more than one employer
contributes, as referred to in Section 4063(b) of ERISA, (iii) a
cessation of operations at a facility causing more than twenty percent
(20%) of Plan participants to be separated from employment, as referred
to in Section 4062(e) of ERISA, or (iv) a failure to make a required
installment or other payment with respect to a Plan when due in
accordance with Section 412 of the Code or Section 302 of ERISA which
causes the total unpaid balance of missed installments and payments
(including unpaid interest) to exceed Five Hundred Thousand Dollars
($500,000).
"Required Lenders" shall mean, as of any date, Lenders which
have made Loans constituting, in the aggregate, sixty-six and
two-thirds (66-2/3%) in principal amount of Loans outstanding on such
date or, if no Loans are outstanding on such date, Lenders which have
Commitments constituting, in the aggregate, sixty-six and two-thirds
percent (66-2/3%) of the total Commitments of all the Lenders.
"Responsible Officer" shall mean the Chairman and Chief
Executive Officer, President and Chief Operating Officer, Vice
President and Chief Financial Officer, Vice President and Secretary-
Treasurer, and Assistant Treasurer of the Borrower.
"Restricted Indebtedness" shall mean at any time any
Indebtedness for borrowed money of the Borrower which is approved in
writing by, and which has subordination provisions, terms of payment,
interest rates and other terms and conditions satisfactory to, the
Lenders.
"Revolving Credit Commitment" shall have the meaning set forth
in Section 2.1(a) hereof.
"Revolving Credit Commitment Fee" shall have the meaning set
forth in Section 2.2 hereof.
"Revolving Credit Committed Amount" shall have the meaning set
forth in Section 2.1(a) hereof.
"Revolving Credit Exposure" of any Lender at any time shall
mean the sum at such time of the outstanding principal amount of such
Lender's Revolving Credit Loans PLUS such Lender's Pro Rata share of
the sum of the aggregate Letter of Credit Exposure.
"Revolving Credit Facility" shall mean the Revolving Credit
Agreement, dated as of November 1, 1994, by and between the Borrower
and Mellon, as amended, modified and supplemented from time to time,
and all notes, mortgages, security agreements and other documents,
agreements and instruments relating thereto or executed in connection
therewith or as security therefor or evidencing Indebtedness
thereunder.
"Revolving Credit Loans" shall have the meaning set forth in
Section 2.1(a) hereof.
"Revolving Credit Maturity Date" shall mean January 18, 1999,
as such date may be extended in accordance with Section 2.1(d) hereof.
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"Revolving Credit Note" shall mean the promissory note of the
Borrower executed and delivered under Section 2.1(c) hereof, any
promissory note issued in substitution therefor pursuant to Sections
2.11(b) or 10.14(c) hereof, together with all extensions, renewals,
refinancings or refundings thereof in whole or part.
"Solvent" means, with respect to any Person at any time, that
at such time (a) the sum of the debts and liabilities (including,
without limitation, contingent liabilities) of such Person is not
greater than all of the assets of such Person at a fair valuation, (b)
the present fair salable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (c) such
Person has not incurred, will not incur, does not intend to incur, and
does not believe that it will incur, debts or liabilities (including,
without limitation, contingent liabilities) beyond such Person's
ability to pay as such debts and liabilities mature, (d) such Person is
not engaged in, and is not about to engage in, a business or a
transaction for which such Person's property constitutes or would
constitute unreasonably small capital, and (e) such Person is not
otherwise insolvent as defined in, or otherwise in a condition which
could in any circumstances then or subsequently render any transfer,
conveyance, obligation or act then made, incurred or performed by it
avoidable or fraudulent pursuant to, any Law that may be applicable to
such Person pertaining to bankruptcy, insolvency or creditors' rights
(including but not limited to the Bankruptcy Code of 1978, as amended,
and, to the extent applicable to such Person, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act, or any other
applicable law pertaining to fraudulent conveyances or fraudulent
transfers or preferences).
"Standard Notice" shall mean an irrevocable notice (which may
be by telephone confirmed in writing) provided to the Agent on a
Business Day which is
(a) The same Business Day in the case of selection
of, conversion to or renewal of the Base Rate Option or the
Offered Rate Option or prepayment of any Base Rate Portion or
Offered Rate Portion; and
(b) At least two (2) London Business Days in advance
in the case of selection of, conversion to or renewal of the
Euro-Rate Option or prepayment of any Euro-Rate Portion.
Standard Notice must be provided no later than 10:30 a.m.,
Pittsburgh time, on the last day permitted for such notice.
"Standby Letter of Credit" shall have the meaning set forth in
Section 3.1(a) hereof.
"Standby Letter of Credit Application" shall have the meaning
set forth in Section 3.2(b)(ii) hereof.
"Stated Amount" of a Letter of Credit shall mean the face
amount thereof, drawn or undrawn, regardless of the existence or
satisfaction of any conditions or limitations on drawing.
"Stock Payment" by any Person shall mean any dividend,
distribution or payment of any nature (whether in cash, securities, or
other property) on account of or in respect of any shares of the
capital stock (or warrants, options or rights therefor) of such Person,
including but not limited to any payment on account of the purchase,
redemption, retirement, defeasance or
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<PAGE> 22
acquisition of any shares of the capital stock (or warrants, options or
rights therefor) of such Person, in each case regardless of whether
required by the terms of such capital stock (or warrants, options or
rights) or any other agreement or instrument, but shall not include any
payment made by any Person to its corporate parent in respect of
management fees.
"Subsidiary" of a Person at any time shall mean any
corporation of which a majority (by number of shares or number of
votes) of any class of outstanding capital stock normally entitled to
vote for the election of one or more directors (regardless of any
contingency which does or may suspend or dilute the voting rights of
such class) is at such time owned directly or indirectly, beneficially
or of record, by such Person or one or more Subsidiaries of such
Person, and any trust of which a majority of the beneficial interest is
at such time owned directly or indirectly, beneficially or of record,
by such Person or one or more Subsidiaries of such Person.
"Subsidiary Guaranty" shall mean a Guaranty and Suretyship
Agreement substantially in the form of Exhibit E attached hereto.
"Taxes" shall have the meaning set forth in Section 2.12
hereof.
"Third Party Reimbursement Agreement" shall have the meaning
set forth in Section 3.1(h) hereof.
"Transfer Effective Date" shall have the meaning set forth in
the applicable Transfer Supplement.
"Transfer Supplement" shall have the meaning set forth in
Section 10.14(c) hereof.
"Treasury Rate" as of any Funding Breakage Date shall mean the
rate per annum determined by the applicable Lender (which determination
shall be conclusive absent manifest error) to be the semiannual
equivalent yield to maturity (expressed as a semiannual equivalent and
decimal and, in the case of United States Treasury bills, converted to
a bond equivalent yield) for United States Treasury securities maturing
on the last day of the corresponding Euro-Rate Funding Period and
trading in the secondary market in reasonable volume (or if no such
securities mature on such date, the rate determined by standard
securities interpolation methods as applied to the series of securities
maturing as close as possible to, but earlier than, such date, and the
series of such securities maturing as close as possible to, but later
than, such date).
"Undrawn Availability" with respect to a Letter of Credit at
any time shall mean the maximum amount available to be drawn under such
Letter of Credit at such time, regardless of the existence or
satisfaction of any conditions or limitations on drawing.
"Unreimbursed Draws" with respect to a Letter of Credit at
such time shall mean the aggregate amount at such time of all payments
made by the Issuing Bank under such Letter of Credit, to the extent not
repaid by the Borrower on the date when due.
1.2 CONSTRUCTION. Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular, the
singular the plural and the part the whole; "or" has the inclusive meaning
represented by the phrase "and/or"; and "property" includes all properties and
assets of any kind or nature, tangible or intangible, real, personal or mixed.
References in this Agreement to "determination" (and similar terms) by the Agent
or by any Lender include good faith estimates by the
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<PAGE> 23
Agent or by any Lender (in the case of quantitative determinations) and good
faith beliefs by the Agent or by any Lender (in the case of qualitative
determinations). The words "hereof," "herein," "hereunder" and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. References herein to "out-of-pocket expenses" of a
Person (and similar terms) include, but are not limited to, the fees of in-house
counsel and other in-house professionals of such Person to the extent that such
fees are routinely identified and specifically charged under such Person's
normal cost accounting system. The section and other headings contained in this
Agreement and the Table of Contents preceding this Agreement are for reference
purposes only and shall not control or affect the construction of this Agreement
or the interpretation thereof in any respect. Section, subsection and exhibit
references are to this Agreement unless otherwise specified.
1.3 ACCOUNTING PRINCIPLES.
(a) As used herein, "GAAP" shall mean generally accepted
accounting principles in the United States, applied on a basis consistent with
the principles used in preparing the Borrower's financial statements as of
September 30, 1995, and for the fiscal quarter then ended, as referred to in
Section 4.6 hereof.
(b) Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters shall be
made, and all financial statements to be delivered pursuant to this Agreement
shall be prepared, in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or financial terms shall
have the meanings ascribed to such terms by GAAP.
ARTICLE 2
THE CREDITS
2.1 REVOLVING CREDIT LOANS.
(a) REVOLVING CREDIT COMMITMENTS. Subject to the terms and
conditions and relying upon the representations and warranties herein set forth,
each Lender, severally and not jointly, agrees (such agreement being herein
called such Lender's "Revolving Credit Commitment") to make loans (the
"Revolving Credit Loans") to the Borrower at any time or from time to time on or
after the date hereof and to but not including the Revolving Credit Maturity
Date. A Lender shall have no obligation to make any Revolving Credit Loan to the
extent that the aggregate principal amount of such Lender's Revolving Credit
Loans at any time outstanding PLUS such Lender's Pro Rata share of the aggregate
Letter of Credit Exposure would exceed such Lender's Revolving Credit Committed
Amount at such time. Each Lender's "Revolving Credit Committed Amount" at any
time shall be equal to the amount set forth as its "Initial Revolving Credit
Committed Amount" below its name on the signature pages hereof, and subject to
transfer to another Lender as provided in Section 10.14 hereof. The sum of the
Revolving Credit Committed Amounts of the Lenders shall not exceed Thirty
Million Dollars ($30,000,000) at any time.
(b) NATURE OF CREDIT. Within the limits of time and amount set
forth in this Section 2.1, and subject to the provisions of this Agreement, the
Borrower may borrow, repay and reborrow Revolving Credit Loans hereunder.
(c) REVOLVING CREDIT NOTES. The obligation of the Borrower to
repay the unpaid principal amount of the Revolving Credit Loans made to it by
each Lender and to pay interest thereon shall be evidenced in part by promissory
notes of the Borrower, one to each Lender, dated the Closing
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Date (the "Revolving Credit Notes") in substantially the form attached hereto as
Exhibit A, with the blanks appropriately filled, payable to the order of such
Lender in a face amount equal to such Lender's Initial Revolving Credit
Committed Amount.
(d) MATURITY. To the extent not due and payable earlier, the
Revolving Credit Loans shall be due and payable on the Revolving Credit Maturity
Date. The Borrower may at any time request in writing to extend the Revolving
Credit Maturity Date for an additional year. Such written request shall be
delivered by the Borrower to the Agent. Upon receipt of such written request
from the Borrower, the Lenders, in their sole discretion, shall determine
whether or not to so extend the Revolving Credit Maturity Date. After such
determination shall have been made, the Lenders shall notify the Borrower of
such determination. A denial by the Lenders of the Borrower's request to extend
the Revolving Credit Maturity Date in any one instance shall not affect the
Borrower's right to make a request for extension at any other time prior to the
expiration of the term of this Agreement.
2.2 REVOLVING CREDIT COMMITMENT FEE. The Borrower shall pay to
the Agent for the account of each Lender a commitment fee (the "Revolving Credit
Commitment Fee") equal to 0.125% per annum (based on a year of three hundred
sixty (360) days and actual days elapsed), for each day from and including the
date hereof to but not including the Revolving Credit Maturity Date, on the
amount (not less than zero (0)) equal to (a) such Lender's Revolving Credit
Committed Amount on each such day MINUS (b) the sum of (i) the aggregate
principal amount of such Lender's Revolving Credit Loans outstanding on each
such day PLUS (ii) such Lender's Pro Rata share of the aggregate Letter of
Credit Exposure on each such day. Such Revolving Credit Commitment Fee shall be
due and payable for the preceding period for which such fee has not been paid on
each Regular Payment Date and on the Revolving Credit Maturity Date. The Agent
shall deliver to the Borrower on or immediately before each Regular Payment Date
and the Revolving Credit Maturity Date a notice (which may be by telecopier)
setting forth the Revolving Credit Commitment Fee payable on such Date;
PROVIDED, HOWEVER, that the failure by the Agent to deliver such notice shall
not affect the obligation of the Borrower to pay the Revolving Credit Commitment
Fee.
2.3 MAKING OF LOANS. Whenever the Borrower desires that the
Lenders make Revolving Credit Loans, the Borrower shall provide Standard Notice
to the Agent setting forth the following information (a separate notice being
required for each such type of Loan):
(a) The date, which shall be a Business Day, on which such
proposed Loans are to be made;
(b) The aggregate principal amount of such proposed Loans,
which shall be the sum of the principal amounts selected pursuant to
clause (c) of this Section 2.3;
(c) The interest rate Option or Options selected in accordance
with Section 2.4(a) hereof and the principal amounts selected in
accordance with Section 2.4(d) hereof of the Base Rate Portion, the
Offered Rate Portion and each Funding Segment of the Euro-Rate Portion
of such proposed Loans; and
(d) With respect to each such Funding Segment of such proposed
Loans, the Euro-Rate Funding Period to apply to such Funding Segment,
selected in accordance with Section 2.4(c) hereof.
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Standard Notice having been so provided, the Agent shall promptly notify each
Lender of the information contained therein and of the amount of such Lender's
Loan. Unless any applicable condition specified in Article 5 hereof has not been
satisfied, on the date specified in such Standard Notice each Lender shall make
the proceeds of its Loan available to the Agent at the Agent's Office, no later
than 2:00 o'clock p.m., Pittsburgh time, in funds immediately available at the
Agent's Office. The Agent will make the funds so received available to the
Borrower in funds immediately available at the Agent's Office. The Agent shall
notify the Borrower as soon as practicable if for any reason a proposed Loan is
or will not be made on the date requested by the Borrower.
2.4 INTEREST RATES.
(a) OPTIONAL BASES OF BORROWING. The unpaid principal amount
of the Loans shall bear interest for each day until due on one (1) or more bases
selected by the Borrower from among the interest rate Options set forth below.
Subject to the provisions of this Agreement, the Borrower may select different
Options to apply simultaneously to different Portions of the Loans and may
select different Funding Segments to apply simultaneously to different parts of
the Euro-Rate Portion of the Loans.
(i) "BASE RATE OPTION": A rate per annum (computed
on the basis of a year of three hundred sixty (360) days and actual
days elapsed) for each day equal to the Base Rate for such day PLUS the
Applicable Margin for such day. The "Base Rate" for any day shall mean
the Prime Rate for such day, such interest rate to change automatically
from time to time effective as of the effective date of each change in
the Prime Rate.
(ii) "EURO-RATE OPTION": A rate per annum (based on
a year of three hundred sixty (360) days and actual days elapsed) for
each day equal to the Euro-Rate for such day PLUS the Applicable Margin
for such day. "Euro-Rate" for any day shall mean, for each Funding
Segment of the Euro-Rate Portion corresponding to a proposed or
existing Euro-Rate Funding Period, the rate per annum determined by the
Agent by dividing (the resulting quotient to be rounded upward to the
nearest one one-hundredth of one percent (0.01%)) (A) the rate of
interest (which shall be the same for each day in such Euro-Rate
Funding Period) determined by the Agent in accordance with its usual
procedures (which determination shall be conclusive) to be the average
of the rates per annum for deposits in Dollars offered to major money
center banks in the London interbank market at approximately 11:00
a.m., London time, two (2) London Business Days prior to the first day
of such Euro-Rate Funding Period for delivery on the first day of such
Euro-Rate Funding Period in amounts comparable to such Funding Segment
and having maturities comparable to such Euro-Rate Funding Period by
(B) a number equal to one (1) MINUS the Euro-Rate Reserve Percentage
for such day.
The "Euro-Rate" may also be expressed by the following
formula:
[the average of the rates offered to major money
center banks in the London interbank market
Euro-Rate = determined by the Agent per subsection (A) above ]
-------------------------------------------------
[1.00 - Euro-Rate Reserve Percentage ]
"Euro-Rate Reserve Percentage" for any day shall mean the
percentage (expressed as a decimal, rounded upward to the nearest one
one-hundredth of one percent (0.01%)) (which determination shall be conclusive),
which is in effect on such day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) representing the maximum reserve
requirement (including,
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<PAGE> 26
without limitation, supplemental, marginal and emergency reserve requirements)
with respect to eurocurrency funding (currently referred to as "Eurocurrency
liabilities") of a member bank in such System. The Euro-Rate shall be adjusted
automatically as of the effective date of each change in the Euro-Rate Reserve
Percentage. The Euro-Rate Option shall be calculated in accordance with the
foregoing whether or not any Lender is actually required to hold reserves in
connection with its eurocurrency funding or, if required to hold such reserves,
is required to hold reserves at the "Euro-Rate Reserve Percentage," as herein
defined.
The Agent shall give prompt notice to the Borrower and to the
Lenders of the Euro-Rate determined or adjusted in accordance with the
definition of the Euro-Rate Reserve Percentage, which determination or
adjustment shall be conclusive.
(iii) "OFFERED RATE OPTION": A rate per annum (computed on the
basis of a year of three hundred sixty (360) days and actual days
elapsed) for each day equal to the Offered Rate for such day PLUS the
Applicable Margin for such day. The "Offered Rate" for any day shall
mean the fluctuating interest rate per annum determined by Mellon with
reference to its Automatic Borrowing Service rate in effect on such
day, such interest rate to change automatically from time to time
effective as of the effective date of each change in such Automatic
Borrowing Service rate.
(b) APPLICABLE MARGINS.
(i) Except and to the extent that the conditions
set forth in Section 2.4(b)(ii) below apply on a particular day, the
"Applicable Margin" for each applicable interest rate Option for any
day shall mean the applicable percentage set forth below:
Interest Rate Option Applicable Margin
-------------------- -----------------
Base Rate Option 0.000%
Offered Rate Option 0.875%
Euro-Rate Option 0.875%
(ii) The Applicable Margin for each applicable
interest rate Option for each day shall mean the applicable percentage
set forth below, if and for so long as (x) no Event of Default or
Potential Default shall have occurred and be continuing and (y)
Financial Test A, Financial Test B or Financial Test C set forth below
shall be satisfied for such day. For purposes of determining the
Applicable Margin, Financial Test A, Financial Test B or Financial Test
C, as the case may be, shall be deemed to be satisfied effective on the
first day of the calendar month following the calendar month in which
the Agent shall have received from the Borrower a certificate, duly
completed and signed by a Responsible Officer, accompanied by the
Borrower's financial statements for the fiscal quarter most recently
ended (or, if such most recently ended fiscal quarter is the last of a
Fiscal Year, for the Fiscal Year then ended), demonstrating compliance
with the applicable financial test, and such financial test shall be
deemed to remain satisfied until the earlier of (A) the first day of
the calendar month following the calendar month in which the Agent
shall have received from the Borrower the Borrower's next annual or
quarterly financial statements pursuant to Section 6.1(a) or 6.1(b)
hereof accompanied by the certificate required by this sentence and (B)
the last day of the calendar month in which the Borrower's next annual
or quarterly financial statements are required to be delivered pursuant
to Section 6.1(a) or 6.1(b) hereof.
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<PAGE> 27
Notwithstanding the foregoing, for the period from the Closing Date
until the first day of the calendar month in which the Agent shall
receive the first annual or quarterly financial statements pursuant to
Section 6.1(a) or 6.1(b) hereof, for purposes of the Applicable Margin,
Financial Test A, Financial Test B or Financial Test C, as the case may
be, shall be deemed satisfied effective on the Closing Date if, not
less than two (2) Business Days prior to the Closing Date, the Agent
shall have received a certificate, duly completed and signed by a
Responsible Officer, accompanied by the Borrower's unaudited financial
statements for the fiscal quarter ended September 30, 1995,
demonstrating compliance with the applicable financial test, and such
financial test shall be deemed to remain satisfied until the earlier of
(A) the first day of the calendar month following the calendar month in
which the Agent shall have received from the Borrower the Borrower's
next annual or quarterly financial statements pursuant to Section
6.1(a) or 6.1(b) hereof accompanied by the certificate required by the
foregoing sentence or (B) the last day of the calendar month in which
the Borrower's next annual or quarterly financial statements are
required to be delivered pursuant to Section 6.1(a) or 6.1(b) hereof.
FINANCIAL TEST A:
Interest Rate Option Applicable Margin
-------------------- -----------------
Base Rate Option 0.000%
Offered Rate Option 0.875%
Euro-Rate Option 0.875%
"Financial Test A" means that, as of the end of the relevant fiscal quarter, the
ratio of Consolidated Funded Debt as of the end of such fiscal quarter to
Consolidated EBITDA for the period of four (4) consecutive fiscal quarters
ending on the last day of such fiscal quarter, considered as a single accounting
period, is less than or equal to 2.00 to 1.00 and greater than 1.50 to 1.00.
FINANCIAL TEST B:
Interest Rate Option Applicable Margin
-------------------- -----------------
Base Rate Option 0.000%
Offered Rate Option 0.750%
Euro-Rate Option 0.750%
"Financial Test B" means that, as of the end of the relevant fiscal quarter, the
ratio of Consolidated Funded Debt as of the end of such fiscal quarter to
Consolidated EBITDA for the period of four (4) consecutive fiscal quarters
ending on the last day of such fiscal quarter, considered as a single accounting
period, is less than or equal to 1.50 to 1.00 and greater than 1.00 to 1.00.
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<PAGE> 28
FINANCIAL TEST C:
Interest Rate Option Applicable Margin
-------------------- -----------------
Base Rate Option 0.000%
Offered Rate Option 0.625%
Euro-Rate Option 0.625%
"Financial Test C" means that, as of the end of the relevant fiscal quarter, the
ratio of Consolidated Funded Debt as of the end of such fiscal quarter to
Consolidated EBITDA for the period of four (4) consecutive fiscal quarters
ending on the last day of such fiscal quarter, considered as a single accounting
period, is less than or equal to 1.00 to 1.00.
(c) EURO-RATE FUNDING PERIODS. At any time when the Borrower
shall select, convert to or renew the Euro-Rate Option to apply to any part of
the Loans, the Borrower shall specify one (1) or more periods (the "Euro-Rate
Funding Periods") during which each such Option shall apply. Such Euro-Rate
Funding Periods shall be one (1), two (2), three (3), six (6) or twelve (12)
months; PROVIDED, HOWEVER, that:
(i) Each Euro-Rate Funding Period shall begin on a
London Business Day, and the term "month," when used in connection with
a Euro-Rate Funding Period, shall be construed in accordance with
prevailing practices in the interbank eurodollar market at the
commencement of such Euro-Rate Funding Period, as determined by the
Agent (which determination shall be conclusive absent manifest error);
and
(ii) The Borrower may not select a Euro-Rate Funding
Period that would end after the Revolving Credit Maturity Date.
(d) TRANSACTIONAL AMOUNTS. Every selection of, conversion
from, conversion to or renewal of an interest rate Option and every payment or
prepayment of any Loans shall be in a principal amount such that after giving
effect thereto the aggregate principal amount of the Base Rate Portion or the
Offered Rate Portion, as the case may be, of the Revolving Credit Loans or the
aggregate principal amount of each Funding Segment of the Euro-Rate Portion of
the Revolving Credit Loans shall be as set forth below:
Portion or Funding Segment Allowable Aggregate Principal Amounts
-------------------------- -------------------------------------
Base Rate Portion One Hundred Thousand Dollars ($100,000)
or any amount in excess thereof;
Each Funding Segment of the Euro- Five Hundred Thousand Dollars ($500,000)
Rate Portion or an integral multiple of One Hundred
Thousand Dollars ($100,000) in excess
thereof; and
Offered Rate Portion One Hundred Thousand
Dollars ($100,000) or any amount in
excess thereof.
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<PAGE> 29
Notwithstanding anything to the contrary set forth herein or in any of the other
Loan Documents, in no event shall any Loan bearing interest at the Offered Rate
Option be made hereunder if, after giving effect to such Loan, the aggregate
outstanding principal amount of all Loans bearing interest at the Offered Rate
Option would exceed Two Million Dollars ($2,000,000). Prior to the occurrence of
an Event of Default, notwithstanding the provisions of Section 2.3, any Loan
requested to be made bearing interest at the Offered Rate Option shall be made
solely by Mellon and Mellon, on the date specified in the applicable Standard
Notice, shall make the proceeds of such Loan available to the Agent in
accordance with Section 2.3. Upon the occurrence of an Event of Default, (i) all
Loans then outstanding bearing interest at the Offered Rate Option shall
automatically be converted to Base Rate Option Loans, and (ii) each other Lender
shall purchase from Mellon a Pro Rata portion of such converted Loans. The
amount of such Pro Rata portion shall be paid by the applicable Lender to the
Agent whereupon the Agent shall forward such amount to Mellon in accordance with
Mellon's instructions. In no event shall Loans bearing interest at the Offered
Rate Option be made if, at the time such Loan is requested, an Event of Default
shall exist.
(e) EURO-RATE UNASCERTAINABLE; IMPRACTICABILITY. If
--------------------------------------------
(i) on any date on which a Euro-Rate would
otherwise be set, the Agent (in the case of clauses (A) or (B) below)
or any Lender (in the case of clause (C) below) shall have determined
(which determination shall be conclusive absent manifest error) that:
(A) adequate and reasonable means do not exist for
ascertaining such Euro-Rate,
(B) a contingency has occurred which materially and
adversely affects the interbank eurodollar market, or
(C) the effective cost to such Lender of funding a
proposed Funding Segment of the Euro-Rate Portion from a
Corresponding Source of Funds shall exceed the Euro-Rate
applicable to such Funding Segment, or
(ii) at any time any Lender shall have determined
(which determination shall be conclusive) that the making, maintenance
or funding of any part of the Euro-Rate Portion has been made
impracticable or unlawful by compliance by such Lender or a Notional
Euro-Rate Funding Office with any Law or guideline or interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof or with any request or
directive of any such Governmental Authority (whether or not having the
force of law);
then, and in any such event, the Agent or such Lender, as the case may be, may
notify the Borrower of such determination (and any Lender giving such notice
shall notify the Agent). Upon such date as shall be specified in such notice
(which shall not be earlier than the date such notice is given), the obligation
of each of the Lenders to allow the Borrower to select, convert to or renew the
Euro-Rate Option shall be suspended until the Agent or such Lender, as the case
may be, shall have later notified the Borrower (and any Lender giving such
notice shall notify the Agent) of the Agent's or such Lender's determination
(which determination shall be conclusive) that the circumstance giving rise to
such previous determination no longer exist.
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<PAGE> 30
If any Lender notifies the Borrower of a determination under
subsection (ii) of this Section 2.4(e), the Euro-Rate Portion of the Loans of
such Lender (the "Affected Lender") shall automatically be converted to the Base
Rate Option as of the date specified in such notice (and accrued interest
thereon shall be due and payable on such date).
If, at the time the Agent or a Lender makes a determination
under subsection (i) or (ii) of this Section 2.4(e), the Borrower previously has
notified the Agent that it wishes to select, convert to or renew the Euro-Rate
Option with respect to any proposed Loans but such Loans have not yet been made,
such notification shall be deemed to provide for selection of, conversion to or
renewal of the Base Rate Option instead of the Euro-Rate Option with respect to
such Loans or, in the case of a determination by a Lender, such Loans of such
Lender.
2.5 CONVERSION OR RENEWAL OF INTEREST RATE OPTIONS.
(a) CONVERSION OR RENEWAL. Subject to the provisions of
Section 2.11(b) hereof and the other provisions of this Agreement, and if no
Event of Default shall have occurred and be continuing or shall exist, the
Borrower may (i) convert any part of its Loans from an interest rate Option to
another interest rate Option at any time, and (ii) renew the Euro-Rate Option as
to any Funding Segment of the Euro-Rate Portion at the expiration of the
Euro-Rate Funding Period for such Funding Segment of the Euro-Rate Portion.
Whenever the Borrower desires to convert or renew any interest rate Option, the
Borrower shall provide to the Agent Standard Notice setting forth the following
information:
(w) The date, which shall be a Business Day, on
which the proposed conversion or renewal is to be made;
(x) The principal amounts selected in accordance with
Section 2.4(d) hereof of the Base Rate Portion, the Offered Rate
Portion and each Funding Segment of the Euro-Rate Portion to be
converted from or renewed;
(y) The interest rate Option or Options selected in
accordance with Section 2.4(a) hereof and the principal amounts
selected in accordance with Section 2.4(d) hereof of the Base Rate
Portion, the Offered Rate Portion and each Funding Segment of the
Euro-Rate Portion to be converted to; and
(z) With respect to each Funding Segment to be
converted to or renewed, the Euro-Rate Funding Period selected in
accordance with Section 2.4(c) hereof to apply to such Funding Segment.
Standard Notice having been so provided, after the date
specified in such Standard Notice, interest shall be calculated upon the
principal amount of the Loans as so converted or renewed. Interest on the
principal amount of the Euro-Rate Portion of the Loans converted or renewed
(automatically or otherwise) shall be due and payable on the conversion or
renewal date (unless otherwise due earlier hereunder) and interest on the
principal amount of the Base Rate Portion of the Loans or the Offered Rate
Portion of the Loans, as the case may be, converted or renewed (automatically or
otherwise) shall be due and payable on the earlier of the first day of the
calendar month immediately succeeding the calendar month in which such
conversion or renewal occurred or the Revolving Credit Maturity Date (unless
otherwise due earlier hereunder).
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<PAGE> 31
(b) FAILURE TO RENEW. Absent due notice from the Borrower of
renewal in the circumstances described in Section 2.5(a) hereof, any part of the
Euro-Rate Portion for which such notice is not received shall be converted
automatically to the Base Rate Option on the last day of the expiring Euro-Rate
Funding Period.
2.6 PREPAYMENTS GENERALLY. Subject to Section 2.8 hereof with
respect to mandatory prepayments, whenever the Borrower desires or is required
to prepay any part of its Loans, it shall provide Standard Notice to the Agent
setting forth the following information:
(a) The date, which shall be a Business Day, on which
the proposed prepayment is to be made;
(b) The total principal amount of such prepayment,
which shall be the sum of the principal amounts selected pursuant to
clause (c) of this Section 2.6; and
(c) The principal amounts selected in accordance with Section
2.4(d) hereof of the Base Rate Portion, the Offered Rate Portion and
each part of each Funding Segment of the Euro-Rate Portion to be
prepaid.
Standard Notice having been so provided, on the date specified in such Standard
Notice, the principal amounts of the Base Rate Portion and the Offered Rate
Portion, and each part of the Euro-Rate Portion specified in such notice,
together with interest on each such principal amount to such date, shall be due
and payable.
2.7 OPTIONAL PREPAYMENTS. The Borrower shall have the
right at its option from time to time and at any time to prepay its Loans in
whole or part without premium or penalty (subject, however, to Section 2.11(b)
hereof). Any such prepayment shall be made in accordance with Section 2.6
hereof.
2.8 MANDATORY PREPAYMENTS.
(a) REVOLVING CREDIT COMMITTED AMOUNTS. If at any time the
aggregate Revolving Credit Exposure of the Lenders exceeds the aggregate
Revolving Credit Committed Amounts, the Borrower shall immediately prepay the
Revolving Credit Loans (and then, to the extent of undrawn Letters of Credit,
provide cash collateralization thereof in accordance with the terms hereof) in
an aggregate principal amount not less than the amount of such excess together
with interest on such principal amount. Prepayments of the Revolving Credit
Loans under this Section 2.8 shall be applied (i) first, to interest on the
principal amount of each Revolving Credit Loan being prepaid, (ii) second, to
the principal amount of the Base Rate Portion of the Loans then outstanding,
(iii) third, to the principal amount of the Offered Rate Portion of the Loans
then outstanding, (iv) fourth, to the principal amount of the Euro-Rate Portion
of the Loans then outstanding, and (v) fifth, to the cash collateralization of
undrawn Letters of Credit then issued.
(b) APPLICABILITY OF CERTAIN PROVISIONS. Prepayments required
by this Section 2.8 are subject to all of the terms and conditions applicable to
prepayments generally pursuant to Section 2.6 hereof and Section 2.11(b) hereof
and to all of the terms and conditions applicable to optional prepayments
pursuant to Section 2.7 hereof, except that Section 2.6(c) hereof shall not
apply to such prepayments to the extent necessary to comply with this Section
2.8. If the Borrower is required to give notice of a prepayment but for any
reason fails to give a notice in accordance with the provisions
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<PAGE> 32
of this Agreement, the amount as to which the Borrower is required to have given
notice of prepayment shall nevertheless be deemed due and payable as of the date
required to have been prepaid (for purposes of calculating interest on such
amounts pursuant to Section 2.10(c) hereof and otherwise); PROVIDED, HOWEVER,
that failure to give notice of a prepayment in accordance with the terms of this
Agreement shall not be deemed to be an Event of Default if the Borrower prepays
when due all amounts required to be prepaid hereunder.
2.9 INTEREST PAYMENT DATES. Except to the extent
expressly provided otherwise herein, interest on the Base Rate Portion and the
Offered Rate Portion shall be due and payable monthly in arrears on the first
day of each calendar month. Except to the extent expressly provided otherwise
herein, interest on each Funding Segment of the Euro-Rate Portion shall be due
and payable in arrears on the last day of the corresponding Euro-Rate Funding
Period and, if such Euro-Rate Funding Period is longer than three (3) months,
also every third (3rd) month anniversary during such Euro-Rate Funding Period.
After maturity of any part of the Loans (by acceleration or otherwise),
interest on such part of the Loans shall be due and payable on demand.
2.10 PRO RATA TREATMENT; PAYMENTS GENERALLY; INTEREST ON
OVERDUE AMOUNTS.
(a) PRO RATA TREATMENT. Each borrowing and conversion and
renewal of interest rate Options hereunder shall be made, and all payments made
in respect of principal, interest and Revolving Credit Commitment Fees and
Letter of Credit Fees due from the Borrower hereunder or under the Notes shall
be applied, Pro Rata from and to each Lender, except for (i) payments of
interest involving an Affected Lender as provided in Section 2.4(e) hereof, (ii)
payments to a Lender subject to a withholding deduction under Section 2.12(c)
hereof, and (iii) borrowings of, conversions to and payments in respect of Loans
bearing interest at the Offered Rate prior to the occurrence of an Event of
Default (or thereafter with respect to such Loans that have been converted under
Section 2.4(d) to the extent the Lenders fail to comply with the provisions of
Section 2.4(d)), in which case such borrowings and conversions shall be made,
and such payments shall be applied, solely from and to Mellon. The failure of
any Lender to make a Loan shall not relieve any other Lender of its obligation
to lend hereunder, but neither the Agent nor any Lender shall be responsible for
the failure of any other Lender to make a Loan.
(b) PAYMENTS GENERALLY. All payments and prepayments to be
made by the Borrower in respect of principal, interest, fees, indemnity,
expenses or other amounts due from the Borrower hereunder or under any Loan
Document shall be payable in Dollars at 12:00 o'clock Noon, Pittsburgh time, on
the day when due without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived, and an action therefor shall immediately
accrue, without setoff, counterclaim, withholding or other deduction of any kind
or nature, except for payments to a Lender subject to a withholding deduction
under Section 2.12(c) hereof. Except for payments under Sections 2.11 and 10.6
hereof, such payments shall be made to the Agent at the Agent's Office in
Dollars in funds immediately available at such Agent's Office, and payments
under Sections 2.11 and 10.6 hereof shall be made to the applicable Lender at
such domestic account as it shall specify to the Borrower from time to time in
funds immediately available at such account. Any payment or prepayment received
by the Agent or such Lender after 12:00 o'clock Noon, Pittsburgh time, on any
day shall be deemed to have been received on the next succeeding Business Day.
The Agent shall distribute to the Lenders all such payments received by it from
the Borrower on the same day as such payments are deemed to have been received
hereunder.
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<PAGE> 33
(c) INTEREST ON OVERDUE AMOUNTS. To the extent permitted by
law, after there shall have become due (by acceleration or otherwise) principal,
interest, fees, indemnity, expenses or any other amounts due from the Borrower
hereunder or under any other Loan Document, such amounts shall bear interest for
each day until paid (before and after judgment), payable on demand, at a rate
per annum (in each case based on a year of three hundred sixty (360) days and
actual days elapsed) which for each day shall be equal to the following:
(i) In the case of any part of the Euro-Rate
Portion of any Loans, (A) until the end of the applicable then-current
Euro-Rate Funding Period at a rate per annum two percent (2%) above the
rate otherwise applicable to such part, and (B) thereafter in
accordance with the following clause (ii); and
(ii) In the case of any other amount due from the
Borrower hereunder or under any Loan Document, two percent (2%) above
the then-current Base Rate Option.
To the extent permitted by law, interest accrued on any amount which has become
due hereunder or under any Loan Document shall compound on a day-by-day basis,
and hence shall be added daily to the overdue amount to which such interest
relates.
2.11 ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES.
(a) INCREASED COSTS OR REDUCED RETURN RESULTING FROM TAXES,
RESERVES, CAPITAL ADEQUACY REQUIREMENTS, EXPENSES, ETC. If any Law or guideline
or interpretation or application thereof by any Governmental Authority charged
with the interpretation or administration thereof or compliance with any request
or directive of any Governmental Authority (whether or not having the force of
law) now existing or hereafter adopted:
(i) subjects any Lender or any Notional Euro-Rate
Funding Office to any tax or changes the basis of taxation with respect
to this Agreement, the Notes, the Loans or payments by the Borrower of
principal, interest, commitment fee or other amounts due from the
Borrower hereunder or under the Notes (except for taxes on the overall
net income or overall gross receipts of such Lender or such Notional
Euro-Rate Funding Office imposed by the jurisdictions (federal, state
and local) in which the Lender's principal office or Notional Euro-Rate
Funding Office is located),
(ii) imposes, modifies or deems applicable any
reserve, special deposit or similar requirement against credits or
commitments to extend credit extended by, assets (funded or contingent)
of, deposits with or for the account of, other acquisitions of funds
by, such Lender or any Notional Euro-Rate Funding Office (other than
requirements expressly included herein in the determination of the
Euro-Rate hereunder),
(iii) imposes, modifies or deems applicable any
capital adequacy or similar requirement (A) against assets (funded or
contingent) of, or credits or commitments to extend credit extended by,
any Lender or any Notional Euro-Rate Funding Office, or (B) otherwise
applicable to the obligations of any Lender or any Notional Euro-Rate
Funding Office under this Agreement, or
27
<PAGE> 34
(iv) imposes upon any Lender or any Notional
Euro-Rate Funding Office any other condition or expense with respect to
this Agreement, the Notes or its making, maintenance or funding of any
Loan,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Lender, any Notional Euro-Rate Funding Office or, in the case of clause (iii)
hereof, any Person controlling a Lender, with respect to this Agreement, the
Notes or the making, maintenance or funding of any Loan (or, in the case of any
capital adequacy or similar requirement, to have the effect of reducing the rate
of return on such Lender's or controlling Person's capital, taking into
consideration such Lender's or controlling Person's policies with respect to
capital adequacy) by an amount which such Lender deems to be material (such
Lender being deemed for this purpose to have made, maintained or funded each
Funding Segment of the Euro-Rate Portion from a Corresponding Source of Funds),
such Lender may from time to time notify the Borrower of the amount determined
in good faith (using any averaging and attribution methods) by such Lender
(which determination shall be conclusive absent manifest error) to be necessary
to compensate such Lender or such Notional Euro-Rate Funding Office for such
increase, reduction or imposition. Such amount shall be due and payable by the
Borrower to such Lender ten (10) Business Days after such notice is given,
together with an amount equal to interest on such amount from the date two (2)
Business Days after the date of such notice until such due date at the Base Rate
Option. A certificate by such Lender as to the amount due and payable under this
Section 2.11(a) from time to time and the method of calculating such amount,
together with a brief explanation thereof, shall be conclusive absent manifest
error. Each Lender agrees that it will use good faith efforts to notify the
Borrower of the occurrence of any event that would give rise to a payment under
this Section 2.11(a); PROVIDED, HOWEVER, that any failure of such Lender to give
any such notice shall have no effect on the Borrower's obligations hereunder
(other than by virtue of the fact that such amount is not due and payable
hereunder until ten (10) Business Days after such Lender gives such notice).
(b) FUNDING BREAKAGE. In addition to all other amounts payable
hereunder, if and to the extent for any reason any part of any Funding Segment
of any Euro-Rate Portion of the Loans becomes due (by acceleration or
otherwise), or is paid, prepaid or converted to another interest rate Option
(whether or not such payment, prepayment or conversion is mandatory or automatic
and whether or not such payment or prepayment is then due), on a day other than
the last day of the corresponding Euro-Rate Funding Period (the date such amount
so becomes due, or is so paid, prepaid or converted, being referred to as the
"Funding Breakage Date"), the Borrower shall pay each Lender an amount ("Funding
Breakage Indemnity"), determined by such Lender, equal to the present value as
of the Funding Breakage Date (discounted at the Treasury Rate as of such Funding
Breakage Date, and calculated on the basis of a year of three hundred sixty-five
(365) or three hundred sixty-six (366) days, as the case may be, and actual days
elapsed) of (A) the principal amount of such Funding Segment of the Loans owing
to such Lender which so became due, or which was so paid, prepaid or converted,
TIMES (B) the greater of (x) zero (0) or (y) the rate of interest applicable to
such principal amount on the Funding Breakage Date MINUS the Treasury Rate as of
the Funding Breakage Date, TIMES (C) the number of days from and including the
Funding Breakage Date to but not including the last day of such Euro-Rate
Funding Period, TIMES (D) 1/360. The amount described in the preceding sentence
shall be assumed for purposes of such present value calculation to be payable on
the last day of the corresponding Euro-Rate Funding Period. Such Funding
Breakage Indemnity shall be due and payable on demand, and each Lender shall,
upon making such demand, notify the Agent of the amount so demanded. In
addition, the Borrower shall, on the due date for payment of any Funding
Breakage Indemnity, pay to such Lender an additional amount equal to interest on
such Funding Breakage
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<PAGE> 35
Indemnity from the Funding Breakage Date to but not including such due date at
the Base Rate Option (calculated on the basis of a year of three hundred sixty
(360) days and actual days elapsed). The amount payable to each Lender under
this Section 2.11(b) shall be determined in good faith by such Lender, and such
determination shall be conclusive absent manifest error.
2.12 TAXES.
(a) PAYMENTS NET OF TAXES. All payments made by the Borrower
under this Agreement or any other Loan Document shall be made free and clear of,
and without reduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, and all liabilities with respect
thereto, EXCLUDING
(i) in the case of the Agent and each Lender,
income or franchise taxes imposed on the Agent or such Lender by the
jurisdiction under the laws of which the Agent or such Lender is
organized or any political subdivision or taxing authority thereof or
therein or as a result of a connection between such Lender and any
jurisdiction other than a connection resulting solely from this
Agreement and the transactions contemplated hereby, and
(ii) in the case of each Lender, income or franchise
taxes imposed by any jurisdiction in which such Lender's lending
offices which make or book Loans are located or any political
subdivision or taxing authority thereof or therein
(all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes"). If any Taxes are required to be
withheld or deducted from any amounts payable to the Agent or any Lender under
this Agreement or any other Loan Document, the Borrower shall pay the relevant
amount of such Taxes and the amounts so payable to the Agent or such Lender
shall be increased to the extent necessary to yield to the Agent or such Lender
(after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
other Loan Documents. Whenever any Taxes are paid by the Borrower with respect
to payments made in connection with this Agreement or any other Loan Document,
as promptly as possible thereafter, the Borrower shall send to the Agent for its
own account or for the account of such Lender, as the case may be, a certified
copy of an original official receipt received by the Borrower showing payment
thereof.
(b) INDEMNITY. The Borrower hereby indemnifies the Agent and
each of the Lenders for the full amount of all Taxes attributable to payments by
or on behalf of the Borrower to the Agent or such Lender hereunder or under any
of the other Loan Documents, any non-refunded Taxes paid by the Agent or such
Lender, as the case may be, and any present or future claims, liabilities or
losses with respect to or resulting from any omission to pay or delay in paying
any Taxes (including any incremental Taxes, interest or penalties that may
become payable by the Agent or such Lender as a result of any failure to pay
such Taxes), whether or not such Taxes were correctly or legally asserted, other
than claims, liabilities or losses incurred by the Agent or such Lender as a
result of its gross negligence or willful misconduct. Such indemnification shall
be made within thirty (30) days from the date such Lender or the Agent, as the
case may be, makes written demand therefor.
(c) WITHHOLDING AND BACKUP WITHHOLDING. Each Lender
that is incorporated or organized under the laws of any jurisdiction other
than the United States or any State thereof agrees
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that, on or prior to the date any payment is due to be made to it hereunder or
under any other Loan Document, it will furnish to the Borrower and the Agent
(i) two (2) valid, duly completed copies of United
States Internal Revenue Service Form 4224 or United States Internal
Revenue Form 1001 or successor applicable form, as the case may be,
certifying in each case that such Lender is entitled to receive
payments under this Agreement and the other Loan Documents without
deduction or withholding of any United States federal income taxes, and
(ii) a valid, duly completed Internal Revenue
Service Form W-8 or W-9 or successor applicable form, as the case may
be, to establish an exemption from United States backup withholding
tax.
Each Lender which so delivers to the Borrower and the Agent a Form 1001 or 4224
and Form W-8 or W-9, or successor applicable forms, agrees to deliver to the
Borrower and the Agent two (2) further copies of the said Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or otherwise is required to be resubmitted as a
condition to obtaining an exemption from withholding tax, or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it, and such extensions or renewals thereof as may reasonably be
requested by the Borrower and the Agent, certifying in the case of a Form 1001
or Form 4224 that such Lender is entitled to receive payments under this
Agreement or any other Loan Document without deduction or withholding of any
United States federal income taxes, unless in any such cases an event (including
any changes in Law) has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or which
would prevent such Lender from duly completing and delivering any such letter or
form with respect to it and such Lender advises the Borrower and the Agent that
it is not capable of receiving payments without any deduction or withholding of
United States federal income tax, and in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding tax.
2.13 FUNDING BY BRANCH, SUBSIDIARY OR AFFILIATE.
(a) NOTIONAL FUNDING. Each Lender shall have the right from
time to time, prospectively or retrospectively, without notice to the Borrower,
to deem any branch, subsidiary or affiliate of such Lender to have made,
maintained or funded any part of the Euro-Rate Portion at any time. Any branch,
subsidiary or affiliate so deemed shall be known as a "Notional Euro-Rate
Funding Office." Such Lender shall deem any part of the Euro-Rate Portion of the
Loans or the funding therefor to have been transferred to a different Notional
Euro-Rate Funding Office if such transfer would avoid or cure an event or
condition described in Section 2.4(e)(ii) hereof or would lessen compensation
payable by the Borrower under Section 2.11(a) hereof, and if such Lender
determines in its sole discretion that such transfer would be practicable and
would not have a material adverse effect on such part of the Loans, such Lender
or any Notional Euro-Rate Funding Office (it being assumed for purposes of such
determination that each part of the Euro-Rate Portion is actually made or
maintained by or funded through the corresponding Notional Euro-Rate Funding
Office). Notional Euro-Rate Funding Offices may be selected by such Lender
without regard to such Lender's actual methods of making, maintaining or funding
Loans or any sources of funding actually used by or available to such Lender.
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(b) ACTUAL FUNDING. Each Lender shall have the right from time
to time to make or maintain any part of the Euro-Rate Portion by arranging for a
branch, subsidiary or affiliate of such Lender to make or maintain such part of
the Euro-Rate Portion. Such Lender shall have the right to (i) hold any
applicable Note payable to its order for the benefit and account of such branch,
subsidiary or affiliate or (ii) request the Borrower to issue one (1) or more
promissory notes in the principal amount of such Euro-Rate Portion, in
substantially the form attached hereto as Exhibit A, with the blanks
appropriately filled, payable to such branch, subsidiary or affiliate and with
appropriate changes reflecting that the holder thereof is not obligated to make
any additional Loans to the Borrower. If additional promissory notes are issued
pursuant to subsection (ii) of this Section 2.13(b), the Borrower shall issue a
new promissory note substantially in the form attached hereto as Exhibit A to
such requesting Lender in the principal amount equal to (y) the principal amount
of the old promissory note held by such requesting Lender MINUS (z) the
principal amount of such additional promissory notes. The Borrower agrees to
comply promptly with any request under subsection (ii) of this Section 2.13(b).
If any Lender causes a branch, subsidiary or affiliate to make or maintain any
part of the Euro-Rate Portion hereunder, all terms and conditions of this
Agreement shall, except where the context clearly requires otherwise, be
applicable to such part of the Euro-Rate Portion and to any note payable to the
order of such branch, subsidiary or affiliate to the same extent as if such part
of the Euro-Rate Portion were made or maintained and such note were a Revolving
Credit Note payable to such Lender's order.
ARTICLE 3
THE LETTER OF CREDIT SUBFACILITY
3.1 THE LETTER OF CREDIT SUBFACILITY.
(a) GENERAL. Subject to the terms and conditions of this
Agreement and the Letter of Credit Agreement, and relying upon the
representations and warranties herein and therein set forth and upon the
agreements of the Lenders set forth in Sections 3.3 and 3.4 hereof, the Issuing
Bank may issue for the account of the Borrower standby letters of credit (each,
as amended, modified or supplemented from time to time, a "Standby Letter of
Credit") and merchandise letters of credit (each, as amended, modified, or
supplemented from time to time, a "Merchandise Letter of Credit") (Standby
Letters of Credit and Merchandise Letters of Credit being collectively referred
to as "Letters of Credit") at any time or from time to time on or after the date
hereof. The Borrower shall not request any Letter of Credit to be issued except
within the following limitations: (i) no Letter of Credit shall be issued later
than thirty (30) days before the Revolving Credit Maturity Date, (ii) at the
time any Letter of Credit is issued, the aggregate Revolving Credit Exposures of
the Lenders (after giving effect to issuance of the requested Letter of Credit)
shall not exceed the sum of the Revolving Credit Committed Amounts of the
Lenders at such time, and (iii) on the date of issuance of any Letter of Credit
(and after giving effect to such issuance) the aggregate Letter of Credit
Exposure shall not exceed Twelve Million Five Hundred Thousand Dollars
($12,500,000).
(b) TERMS OF LETTERS OF CREDIT. The Borrower shall not request
any Letter of Credit to be issued except within the following limitations. Each
Letter of Credit (other than the IRB Letter of Credit) (i) shall have an
expiration date no later than the earlier of (A) twelve (12) months after the
date of issuance thereof or (B) twenty (20) days prior to the Revolving Credit
Maturity Date, (ii) shall be denominated in Dollars, and (iii) shall be payable
only against sight drafts, unless otherwise approved by the Issuing Bank. The
IRB Letter of Credit (i) shall have an expiration date no later than thirty (30)
days prior to the Revolving Credit Maturity Date, (ii) shall be denominated in
Dollars, and (iii) shall be payable only against sight drafts, unless otherwise
approved by the Issuing
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Bank. In addition, the face amount of the IRB Letter of Credit shall reduce
simultaneously with and by the amount of the principal payments made under the
IRB Facility such that the Undrawn Availability for "principal draws" thereunder
shall at all times equal the unpaid principal amount of the bonds issued under
the IRB Facility. In addition to all of the other conditions for the issuance of
Letters of Credit hereunder, the issuance of the IRB Letter of Credit also shall
be subject to the condition that all of the terms and conditions of the IRB
Facility and the documentation and reports (including, but not limited to, any
environmental reports) related thereto shall be acceptable to the Agent, the
Issuing Bank and the Lenders, in their sole discretion. Notwithstanding the
foregoing, a Letter of Credit may, in the sole discretion of the Required
Lenders, have an expiration date not later than one hundred eighty (180) days
after the Revolving Credit Maturity Date (any such Letter of Credit being
referred herein as an "Extended Letter of Credit"). In the event that an
Extended Letter of Credit is issued hereunder, Borrower shall pay, or shall
cause to be paid, to the Agent in Dollars and in immediately available funds an
amount equal to (i) not later than ten (10) days prior to the Revolving Credit
Maturity Date the then Undrawn Availability of with respect to such Extended
Letter of Credit PLUS the amount of all fees which would otherwise be due
hereunder with respect to such Extended Letter of Credit during the period
commencing on the Revolving Credit Maturity Date and ending on the expiration
date of such Extended Letter of Credit, and (ii) on the Revolving Credit
Maturity Date the then aggregate amount of all Unreimbursed Draws with respect
to such Extended Letter of Credit. All amounts referred to in clause (i) of the
immediately preceding sentence shall be deposited by the Agent for the benefit
of the Lenders into the LC Collateral Account, and all amounts referred to in
clause (ii) of the immediately preceding sentence shall be paid by the Agent to
the Issuing Bank. In addition, notwithstanding anything to the contrary set
forth herein or in any of the other Loan Documents, if any Extended Letter of
Credit shall be issued hereunder and if all of the payments in respect of such
Extended Letter of Credit shall have been made by Borrower to the Agent in
accordance with the terms set forth above in this Section 3.1(b), all of the
provisions of this Agreement (including, but not limited to, Article 3 of this
Agreement) and the other Loan Documents which govern or otherwise relate to
Letters of Credit shall remain in full force and effect after the Revolving
Credit Maturity Date until all Extended Letters of Credit shall have expired and
all Reimbursement Obligations in respect of such Extended Letters of Credit (and
all fees and interest thereon) shall have been paid in full. In the event that
the payments referred to above in respect of an Extended Letter of Credit shall
not have been made by Borrower, an Event of Default shall be deemed to have
occurred entitling the Agent, the Issuing Bank and the Lenders to exercise all
of their respective rights and remedies, whether under this Agreement, at law,
in equity or otherwise.
(c) PURPOSES OF LETTERS OF CREDIT. Each Letter of Credit shall
be satisfactory in form, substance and beneficiary to the Issuing Bank in its
sole discretion. Each Standby Letter of Credit (including each Standby Letter of
Credit which is also an Extended Letter of Credit) shall be used by the Borrower
as a standby letter of credit (i) to provide credit enhancement for workers'
compensation obligations, contract performance guarantees, leasing arrangements
and like bonding requirements, all in the ordinary course of business of the
Borrower, (ii) to provide credit enhancement for the IRB Facility, and (iii)
subject to the limitations set forth in the next sentence, to provide credit
support for Indebtedness or other direct or indirect financing arrangements of
the Borrower or any other Person. Except with respect to the IRB Facility, the
aggregate Undrawn Availability for all Standby Letters of Credit (including each
Standby Letter of Credit which is also an Extended Letter of Credit) issued to
provide credit support for any Indebtedness or other direct or indirect
financing arrangements of the Borrower or any other Person shall at no time
exceed Two Million Dollars ($2,000,000). Each Merchandise Letter of Credit
(including each Merchandise Letter of Credit which is also an Extended Letter of
Credit) shall be used by the Borrower as a means of payment for goods to be used
by the Borrower, all in the ordinary course of business of the Borrower. The
provisions of
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this Section 3.1(c) represent only an obligation of the Borrower to the Issuing
Bank and the Lenders; the Issuing Bank shall have no obligation to the Lenders
to ascertain the purpose of any Letter of Credit, and the rights and obligations
of the Lenders and the Issuing Bank among themselves shall not be impaired or
affected by a breach of this Section 3.1(c).
(d) LETTER OF CREDIT FEE. The Borrower shall pay to the Agent
for the Pro Rata account of each Lender a fee (the "Letter of Credit Fee") equal
to the percentage set forth below (based on a year of three hundred sixty (360)
days and actual days elapsed), for each outstanding Letter of Credit for each
day from and including the date of issuance thereof to and including the date of
expiration or termination thereof, on the Undrawn Availability of such
outstanding Letter of Credit on such day:
(i) On each day other than a day on which
Financial Test B or Financial Test C is satisfied, 0.875%;
(ii) On each day on which Financial Test B is
satisfied, 0.750%; and
(iii) On each day on which Financial Test C is
satisfied, 0.625%.
Such Letter of Credit Fee shall be due and payable for the preceding period for
which such fee has not been paid on each of the following dates: (i) each
Regular Payment Date subsequent to the date of issuance of such Letter of
Credit, (ii) the date of each drawing on such Letter of Credit, and (iii) the
date of expiration or termination of such Letter of Credit.
(e) [INTENTIONALLY OMITTED]
(f) FACING FEE; ADMINISTRATION FEES. The Borrower shall pay to
the Agent, for the sole account of the Issuing Bank, for each Standby Letter of
Credit, on the date of issuance of such Letter of Credit, a fee (the "Letter of
Credit Facing Fee") equal to 0.125% per annum (based on a year of three hundred
sixty (360) days and actual days elapsed), for each day from and including the
date of issuance of such Letter of Credit to and including the date of
expiration of such Letter of Credit, of the Stated Amount of such Letter of
Credit. Such fee shall be payable on each Regular Payment Date, on the date of
each drawing under such Letter of Credit and on the date of the expiration of
such Letter of Credit, for the preceding period for which such fee has not been
paid. In addition, the Borrower shall pay to the Agent, for the sole account of
the Issuing Bank, such other administration, maintenance, amendment, drawing and
negotiation fees as may be customarily charged by the Issuing Bank from time to
time in connection with letters of credit.
(g) PRIOR LETTERS OF CREDIT. The letters of credit issued by
Mellon or any Affiliate of Mellon under the Revolving Credit Facility and
outstanding on the Closing Date, as listed on Schedule 3.1(g) hereof ("Prior
Letters of Credit"), shall, as of the Closing Date, automatically and without
further action be deemed to be Letters of Credit issued under this Agreement and
the Letter of Credit Agreement. The Borrower hereby represents and warrants that
such Prior Letters of Credit will comply with the limitations set forth in
Sections 3.1(a) and 3.1(b) hereof as of the Closing Date as if issued hereunder
on the Closing Date and that such Prior Letters of Credit are Standby Letters of
Credit. Fees with respect to such Prior Letters of Credit for each day to and
including the Closing Date shall accrue at the rates set forth under the
Revolving Credit Facility and shall be payable on the Closing Date, and fees
with respect to such Prior Letters of Credit for each day after the Closing Date
shall accrue and be payable as provided for Letters of Credit in this Agreement.
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(h) THIRD PARTY REIMBURSEMENT AGREEMENTS. In the event that,
to the extent permitted by this Agreement, a Letter of Credit shall be issued
hereunder for the account of the Borrower to provide credit support for any
Indebtedness of any Person other than the Borrower, such Person shall,
simultaneously with the issuance of such Letter of Credit, execute and deliver
to the Borrower a reimbursement agreement with respect to such Letter of Credit
in favor of the Borrower ("Third Party Reimbursement Agreement") in form and
substance satisfactory to the Borrower, the Agent and each Lender. Each Third
Party Reimbursement Agreement shall be assigned and pledged to the Agent, for
its benefit and for the ratable benefit of the Lenders, pursuant to the terms of
the Pledge Agreement, and the original thereof shall be delivered to the Agent.
3.2 PROCEDURE FOR ISSUANCE AND AMENDMENT OF LETTERS OF
CREDIT.
(a) REQUEST FOR ISSUANCE. The Borrower may from time to time
request, upon notice delivered at least three (3) Business Days' prior to the
proposed date of issuance, that the Issuing Bank issue (or cause another
Affiliate of the Issuing Bank selected by the Issuing Bank to issue) a Letter of
Credit by:
(i) delivering to the Issuing Bank (or such
Affiliate as the Issuing Bank may from time to time designate) and the
Agent a written request to such effect, specifying the date on which
such Letter of Credit is to be issued, the expiration date thereof, and
the Stated Amount thereof, and
(ii) delivering to the Issuing Bank an application,
in the form attached as Exhibit B-1 for Standby Letters of Credit (the
"Standby Letter of Credit Application") or Exhibit B-2 for Merchandise
Letters of Credit (the "Merchandise Letter of Credit Application" and,
together with the Standby Letter of Credit Application, the "Letter of
Credit Applications"), completed to the satisfaction of the Issuing
Bank, together with such other certificates, documents and other papers
and information as the Issuing Bank may request.
Upon receipt of the foregoing, the Issuing Bank shall promptly notify the Agent
(by telephone or otherwise), and the Issuing Bank shall furnish the Agent with
the proposed form of Letter of Credit to be issued. The Agent shall, promptly
upon receiving such notice, notify the Lenders of such proposed Letter of Credit
(which notice shall specify the Stated Amount and term of such proposed Letter
of Credit), and shall determine, as of the close of business on the Business Day
before such proposed issuance, whether such proposed Letter of Credit complies
with the limitations set forth in Sections 3.1(a), 3.1(b) and 3.1(c) hereof.
Unless (A) such limitations are not satisfied, (B) the Required Lenders shall
have given notice to the Agent to cease issuing Letters of Credit pursuant to
Section 3.2(c)(iii) hereof, or (C) with respect to an Extended Letter of Credit,
the Required Lenders shall have given notice to the Agent not to issue such
Extended Letter of Credit pursuant to Section 3.2(c)(iii) hereof, the Agent
shall notify the Issuing Bank (in writing or by telephone promptly confirmed in
writing) that the Issuing Bank is authorized to issue such Letter of Credit and,
unless any other applicable condition specified in this Article 3, the Letter of
Credit Agreement or the Letter of Credit Application has not been satisfied or
unless any applicable condition set forth in Article 5 hereof has not been
satisfied, the Issuing Bank shall issue the Letter of Credit on the date
requested by the Borrower pursuant to Section 3.2(a)(i) hereof. The Issuing Bank
shall deliver the original of such Letter of Credit to the beneficiary thereof
or as the Borrower shall otherwise direct, and shall promptly notify the Agent
thereof and furnish a copy thereof to the Agent.
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(b) REQUEST FOR EXTENSION OR INCREASE. The Borrower may from
time to time request the Issuing Bank to extend the expiration date of an
outstanding Letter of Credit (other than an Extended Letter of Credit) or
increase the Undrawn Availability of such Letter of Credit (other than an
Extended Letter of Credit). Such extension or increase shall for all purposes
hereunder be treated as though the Borrower had requested issuance of a Letter
of Credit hereunder (except only that the Issuing Bank may, if it elects, issue
a notice of extension or increase in lieu of issuing a new Letter of Credit in
substitution for the outstanding Letter of Credit).
(c) LIMITATIONS ON ISSUANCE, EXTENSION AND AMENDMENT.
(i) Except as otherwise set forth herein, as
between the Borrower, on the one hand, and the Issuing Bank, the Agent
and the Lenders, on the other hand, issuance or extension of any Letter
of Credit is within the discretion of the Issuing Bank.
(ii) As between the Issuing Bank, on the one hand,
and the Agent and the Lenders, on the other hand, the Issuing Bank
shall be justified and fully protected in issuing a Letter of Credit
after receiving authorization from the Agent as provided in Section
3.2(a) hereof, notwithstanding any subsequent notices to the Issuing
Bank, any knowledge of an Event of Default or Potential Default, any
knowledge of failure of any condition specified in Section 5.2 hereof
to be satisfied, any other knowledge of the Issuing Bank, or any other
event, condition or circumstance whatever. The Issuing Bank may amend,
modify or supplement Letters of Credit or Letter of Credit
Applications, or waive compliance with any condition of issuance or
payment, without the consent of, and without liability to, the Agent or
any Lender, provided that any such amendment, modification or
supplement that extends the expiration date or increases the Letter of
Credit Undrawn Availability of an outstanding Letter of Credit shall be
subject to Section 3.2(b) hereof, and provided further than in no event
shall the Issuing Bank amend, modify or supplement any Extended Letter
of Credit (or any Letter of Credit Application therefor) or issue a new
Letter of Credit in substitution thereof.
(iii) As between the Agent, on the one hand, and the
Lenders, on the other hand, the Agent shall not authorize issuance of
any Letter of Credit if the Agent shall have received, at least two (2)
Business Days before authorizing such issuance, from the Required
Lenders (A) an unrevoked written notice that any condition precedent
set forth in Section 5.2 will not be satisfied and expressly requesting
that the Agent direct the Issuing Bank to cease to issue Letters of
Credit, or (B) in the case of an Extended Letter of Credit, an
unrevoked written notice not to issue such Extended Letter of Credit.
Absent any such notice, or unless the Agent determines that the
applicable limitations set forth in Sections 3.1(a), 3.1(b) and 3.1(c)
hereof are not satisfied or if the Agent has actual knowledge of an
Event of Default or Potential Default or any knowledge of failure of
any condition specified in Section 5.2 hereof to be satisfied, the
Agent shall be justified and fully protected, as against the Lenders,
in authorizing the Issuing Bank to issue such Letter of Credit,
notwithstanding any subsequent notices to the Agent, any other
knowledge of the Agent, or any other event, condition or circumstance
whatever.
3.3 LETTER OF CREDIT PARTICIPATING INTERESTS.
(a) GENERALLY. Concurrently with the issuance of each Letter
of Credit, the Issuing Bank automatically shall be deemed, irrevocably and
unconditionally, to have sold, assigned, transferred and conveyed to each other
Lender, and each other Lender automatically shall be deemed,
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irrevocably and unconditionally, severally to have purchased, acquired, accepted
and assumed from the Issuing Bank, without recourse to, or representation or
warranty by, the Issuing Bank, an undivided interest, in a proportion equal to
such Lender's Pro Rata share, in all of the Issuing Bank's rights and
obligations in, to or under such Letter of Credit, the related Letter of Credit
Application, the Letter of Credit Agreement, the Reimbursement Obligations and
all collateral, guarantees and other rights from time to time directly or
indirectly securing the foregoing (such interest of each Lender being referred
to herein as a "Letter of Credit Participating Interest"). Amounts other than
Letter of Credit Reimbursement Obligations and Letter of Credit Fees payable
from time to time under or in connection with the Letter of Credit Agreement or
a Letter of Credit or Letter of Credit Application shall be for the sole account
of the Issuing Bank. On the date that any Purchasing Lender becomes a party to
this Agreement in accordance with Section 10.14 hereof, Letter of Credit
Participating Interests in any outstanding Letters of Credit held by the Lender
from which such Purchasing Lender acquired its interest hereunder shall be
proportionately reallotted between such Purchasing Lender and such transferor
Lender.
(b) OBLIGATIONS ABSOLUTE. Notwithstanding any other provision
hereof, each Lender hereby agrees that its obligation to participate in each
Letter of Credit issued in accordance herewith, its obligation to make the
payments specified in Section 3.4 hereof, and the right of the Issuing Bank to
receive such payments in the manner specified therein, are each absolute,
irrevocable and unconditional and shall not be affected by any event, condition
or circumstance whatever. The failure of any Lender to make any such payment
shall not relieve any other Lender of its funding obligation hereunder on the
date due, but no Lender shall be responsible for the failure of any other Lender
to meet its funding obligations hereunder.
3.4 LETTER OF CREDIT DRAWINGS AND REIMBURSEMENTS.
(a) BORROWER'S REIMBURSEMENT OBLIGATION. If the Issuing Bank
makes a payment under any Letter of Credit, the Issuing Bank shall promptly
notify the Agent (which notice may be by telephone) and the Agent shall promptly
notify the Borrower (which notice may be by telephone) of such payment. The
Borrower hereby agrees to reimburse the Issuing Bank, by making payment to the
Agent for the account of the Issuing Bank in accordance with Section 2.10(b)
hereof, on the day after notice of such payment made by the Issuing Bank under
any Letter of Credit, without further notice, protest or demand, all of which
are hereby waived, and an action therefor shall immediately accrue. To the
extent such payment is not timely made, the Borrower hereby agrees to pay to the
Agent, for the account of the Issuing Bank, on demand, interest on any
Unreimbursed Draws for each day from and including the date of such payment by
the Issuing Bank until paid (before and after judgment) in accordance with
Section 2.10(c) hereof, at the rate per annum set forth in Section 2.10(c)(ii)
hereof.
(b) PAYMENT BY LENDERS ON ACCOUNT OF UNREIMBURSED DRAWS. If
the Issuing Bank makes a payment under any Letter of Credit and is not
reimbursed in full therefor on the date when due in accordance with Section
3.4(a) hereof, the Issuing Bank will promptly notify the Agent thereof (which
notice may be by telephone), and the Agent shall forthwith notify each Lender
(which notice may be by telephone) thereof. No later than the Agent's close of
business on the date such notice is given if such notice is given before 11:00
a.m., Pittsburgh time, or the next Business Day, if such notice is given after
11:00 a.m., Pittsburgh time, each such Lender will pay to the Agent, for the
account of the Issuing Bank, in immediately available funds, an amount equal to
such Lender's Pro Rata share of the unreimbursed portion of such payment by the
Issuing Bank. If and to the extent that any Lender fails to make such payment to
the Issuing Bank on such date, such Lender shall pay such amount on demand,
together with interest, for the Issuing Bank's own account, for each day from
and
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including the date such payment is due to and including the date of repayment to
the Issuing Bank (before and after judgment) at the following rates per annum:
(x) for each day from and including the date of such payment by the Issuing Bank
to and including the second (2nd) Business Day thereafter, at the Federal Funds
Effective Rate plus one-half of one percent (0.50%) for each such day, and (y)
for each day thereafter, at the rate applicable to Unreimbursed Draws for each
such day.
(c) DISTRIBUTIONS TO PARTICIPANTS. If, at any time, after the
Issuing Bank has made an Unreimbursed Draw and has received from any Lender such
Lender's share of such Letter of Credit Unreimbursed Draw, and the Issuing Bank
receives any payment or makes any application of funds on account of the
Reimbursement Obligation arising from such Unreimbursed Draw, the Issuing Bank
will pay to the Agent, for the account of such Lender, such Lender's Pro Rata
share of such payment.
(d) RESCISSION. If any amount received by the Issuing Bank on
account of any Reimbursement Obligation shall be avoided, rescinded or otherwise
returned or paid over by the Issuing Bank for any reason at any time, whether
before or after the termination of this Agreement (or the Issuing Bank believes
that such avoidance, rescission, return or payment is required, whether or not
such matter has been adjudicated), each such Lender will, promptly upon notice
from the Agent or the Issuing Bank, pay over to the Agent for the account of the
Issuing Bank its Pro Rata share of such amount, together with its Pro Rata share
of any interest or penalties payable with respect thereto.
(e) EQUALIZATION. If any Lender receives any payment or makes
any application on account of its Letter of Credit Participating Interest, such
Lender shall forthwith pay over to the Issuing Bank, in Dollars and in like kind
of funds received or applied by it the amount in excess of such Lender's Pro
Rata share of the amount so received or applied.
3.5 OBLIGATIONS ABSOLUTE. The payment obligations of the
Borrower under Section 3.4 shall be unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of this
Agreement, any Letter of Credit, the Letter of Credit Agreement or
any other Loan Document,
(b) the existence of any claim, set-off, defense or other
right which the Borrower or any other Person may have at any time
against any beneficiary or transferee of any Letter of Credit (or any
Persons for whom any such beneficiary or transferee may be acting), the
Issuing Bank, any Lender, or any other Person, whether in connection
with this Agreement, the transactions contemplated hereby or any
unrelated transaction;
(c) any draft, certificate, statement or other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; PROVIDED, HOWEVER, that payment by
the Issuing Bank under such Letter of Credit against presentation of
such draft, certificate, statement or other document shall not have
constituted gross negligence or willful misconduct;
(d) payment by the Issuing Bank under any Letter of
Credit against presentation of a draft or certificate which does not
comply with the terms of such Letter of Credit, or payment by the
Issuing Bank under the Letter of Credit in any other circumstances in
which
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conditions to payment are not met, except any such payment resulting
solely from the gross negligence or willful misconduct of such Issuing
Bank; or
(e) any other event, condition or circumstance whatever,
whether or not similar to any of the foregoing; PROVIDED, HOWEVER, that
payment by the Issuing Bank of any Letter of Credit in light of such
event, condition or circumstance shall not have constituted gross
negligence or willful misconduct.
The Borrower bears the risk of, and none of the Agent, the Lenders or the
Issuing Bank, nor any of their respective directors, officers, employees,
attorneys or agents, shall be liable or responsible for any of the foregoing
matters, the use which may be made of any Letter of Credit, or acts or omissions
of the beneficiary or any transferee in connection therewith.
3.6 ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES. Without
limitation of any provision of Section 2.11(a) hereof, each Issuing Bank and
each Lender shall be entitled to the benefit of Section 2.11(a) hereof, and the
Borrower shall pay additional compensation to each Issuing Bank and each Lender
in accordance with such Section 2.11(a) in respect of this Agreement, the
Letters of Credit and Letter of Credit Participating Interests, to the same
extent and in the same manner as if the word "Lender," in each place in which it
occurs in such Section 2.11(a), were replaced with "Lender or Issuing Bank," and
the word "Loan," in each place in which it occurs in such Section 2.11(a), were
replaced with "Loan," "Letter of Credit" or "Letter of Credit Participating
Interest."
3.7 FURTHER ASSURANCES. The Borrower hereby agrees, from time
to time, to do and perform any and all acts and to execute any and all further
instruments reasonably requested by the Issuing Bank more fully to effect the
purposes of this Agreement, the Letter of Credit Agreement, the Letter of Credit
Applications and the issuance of the Letters of Credit hereunder.
3.8 LETTER OF CREDIT AGREEMENT AND APPLICATIONS. The
representations, warranties and covenants by the Borrower, and the rights and
remedies of the Issuing Bank, under the Letter of Credit Agreement and a Letter
of Credit Application relating to any Letter of Credit are in addition to, and
not in limitation or derogation of, representations, warranties and covenants by
the Borrower, and the rights and remedies of the Issuing Bank and the Lenders,
under this Agreement, the other Loan Documents and applicable Law. The Borrower
acknowledges and agrees that all rights of the Issuing Bank under the Letter of
Credit Agreement and any Letter of Credit Application shall inure to the benefit
of each Lender to the extent of its Commitment Percentage as fully as if such
Lender was a party to the Letter of Credit Agreement and such Letter of Credit
Application. In the event of any inconsistency between the terms of this
Agreement and the Letter of Credit Agreement or any Letter of Credit
Application, this Agreement shall prevail.
3.9 CASH COLLATERAL FOR LETTERS OF CREDIT.
(a) The Borrower agrees that without limitation of other
rights and remedies under this Agreement or any other Loan Document or at law or
in equity, following the occurrence of any Event of Default, it shall,
immediately upon request from time to time by the Agent delivered at the request
of the Required Lenders (or, in case of an Event of Default referred to in
Section 8.1(o) or (p) hereof, automatically upon the occurrence of such Event of
Default without any such notice under this Section 3.9(a)) pay to the Agent in
Dollars and in immediately available funds an amount equal to the excess of the
aggregate Letter of Credit Exposure at such time over the balance in the LC
Collateral Account. Any amounts so received by the Agent shall be deposited by
the Agent into the LC
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Collateral Account. In addition, all amounts referred to in Section 3.1(b) shall
be deposited into the LC Collateral Account in accordance with the terms
thereof.
(b) LC COLLATERAL ACCOUNT.
(i) The Agent shall maintain in its own name (in
its capacity as Agent) a non-interest bearing deposit account (the "LC
Collateral Account") over which the Agent shall have sole dominion and
control, and the Borrower shall have no right to withdraw or to cause
the Agent to withdraw early, funds deposited therein. The Agent shall
deposit into the LC Collateral Account such funds as this Agreement
requires or permits to be paid therein pursuant to Section 3.9(a) and
Section 3.1(b) hereof.
(ii) The Agent shall apply funds in the LC
Collateral Account: (A) on account of Reimbursement Obligations as and
when the same become due and payable if and to the extent that the
Borrower fails directly to pay the same, and (B) if no Reimbursement
Obligations are due and payable and the balance of the LC Collateral
Account exceeds the aggregate Letter of Credit Exposure, the excess
shall be applied on account of the Obligations as the same become due
and payable in accordance with Section 8.2 hereof. In the event that
the Event of Default which triggered the Borrower's obligation to
deposit funds in the LC Collateral Account shall have been waived in
accordance with the terms hereof, the Agent shall release to the
Borrower all remaining funds in the LC Collateral Account promptly
following demand by the Borrower. In addition, if all Obligations have
been paid in full, all Commitments have been terminated and all Letters
of Credit have expired, promptly following demand by the Borrower the
Agent shall release to the Borrower all remaining funds in the LC
Collateral Account.
(iii) The provisions of this Section 3.9 shall
survive the payment of the Loans, termination of this Agreement and all
other events whatever and shall continue in effect until all Letters of
Credit (including any Extended Letters of Credit) shall have expired
and all Reimbursement Obligations in respect of all Letters of Credit
(and all fees and interest thereon) shall have been paid in full.
3.10 INDEMNIFICATION OF ISSUING BANK. The Borrower hereby
agrees to indemnify and hold the Issuing Bank and its officers, directors,
employees, attorneys and agents ("LC Indemnified Parties") harmless from and
against any and all claims, damages, losses, liabilities, costs or expenses of
any nature whatsoever (including without limitation reasonable attorneys' fees)
which at any time may be imposed upon, incurred by, or asserted against such LC
Indemnified Party in any way arising from or relating to the execution, delivery
or use or transfer of, or payment of, or failure to pay under, or use of
proceeds of, any Letter of Credit, except for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused by
the Issuing Bank's gross negligence or willful misconduct in connection with the
matters referred to in Sections 3.5(c), (d) and (e) hereof. Without limiting the
foregoing obligation, each Lender agrees to reimburse and indemnify the Issuing
Bank, Pro Rata, for and against any and all amounts required to be reimbursed by
the Borrower pursuant to the preceding sentence but not so reimbursed. The
agreements in this Section 3.10 shall survive the payment of the Loans,
termination of this Agreement and all other events whatever.
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3.11 THE ISSUING BANK AND THE LENDERS.
(a) The Issuing Bank may consult with legal counsel (including
counsel for the Borrower or for any other party in interest), independent public
accountants and any other experts selected by it and shall not be liable to the
Lenders for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts.
(b) The Issuing Bank shall have no duties or responsibilities
except those expressly set forth in this Agreement and in the other Loan
Documents. The duties of the Issuing Bank shall be mechanical and administrative
in nature; the Issuing Bank shall not by reason of this Agreement or the other
Loan Documents have a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon the Issuing
Bank any obligations in respect of this Agreement or any other Loan Document
(including but not limited to the Letter of Credit Agreement, any Letter of
Credit or Letter of Credit Application) except as expressly set forth herein and
therein. Each Lender expressly acknowledges: (i) that the Issuing Bank has not
made any representations or warranties to it and that no act by the Issuing Bank
hereafter taken, including any review of the affairs of the Borrower, shall be
deemed to constitute any representation or warranty by the Issuing Bank to any
Lender; (ii) that it has made and will make its own independent investigation of
the financial condition and affairs, and its own appraisal of the
creditworthiness, of the Borrower, and its own evaluation of this Agreement and
the other Loan Documents; and (iii) that the Issuing Bank shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information except as otherwise provided herein,
whether coming into its possession before the issuance of any Letter of Credit
hereunder or at any time or times thereafter, except for notices, reports or
other documents which this Agreement or another Loan Document expressly requires
to be furnished to the Lenders by the Issuing Bank hereunder or thereunder.
Without limitation, each Lender hereby acknowledges that the Issuing Bank has
not made, will not make and hereby expressly excludes any representations or
warranties concerning the execution, delivery, legality, validity or
enforceability of this Agreement or any of the other Loan Documents, or any
recital, representation, warranty, document, certificate, report or statement
made he rein or in any of the other Loan Documents or made or furnished under or
in connection with this Agreement or any of the other Loan Documents.
(c) The Issuing Bank shall handle all matters concerning the
Letters of Credit in accordance with its usual practice in managing its own
affairs in the ordinary course of its business; but notwithstanding any other
provision of this Agreement, neither the Issuing Bank nor any of its directors,
officers, employees, attorneys or agents shall be liable to any Lender for any
action taken or omitted to be taken by it or them hereunder or under any of the
other Loan Documents (including but not limited to the Letter of Credit
Agreement, Letters of Credit and Letter of Credit Applications) or in connection
herewith or therewith, unless caused by its own gross negligence or willful
misconduct. The Issuing Bank shall not in any circumstances (i) be responsible
in any manner to any of the Lenders for the execution, delivery, legality,
validity or enforceability of this Agreement or any of the other Loan Documents,
or for any recital, representation, warranty, document, certificate, report or
statement made herein or in any of the other Loan Documents or made or furnished
under or in connection with this Agreement or any of the other Loan Documents,
(ii) be under any obligation to any of the Lenders to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions in
this Agreement or any of the other Loan Documents on the part of the Borrower,
or the financial condition of the Borrower, or the existence or possible
existence of any Event of Default or Potential Default.
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(d) The Issuing Bank shall not be under any obligation to any
of the Lenders to ascertain or to inquire as to the existence or possible
existence of any Event of Default or Potential Default, or to give notice of any
such of which it is aware.
(e) The Issuing Bank shall be entitled to rely upon any
writing, telegram, telex or teletype message, resolution, notice, consent,
certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and correct
and to have been signed, sent or made by the proper party or parties, and upon
opinions of counsel and other professional advisers selected by the Issuing
Bank. The Issuing Bank shall be fully justified in failing or refusing to take
any action hereunder unless it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
(f) The Issuing Bank shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
the Issuing Bank, and the terms "Lenders" or "holders of Notes" shall include
the Issuing Bank in its individual capacity. The Issuing Bank and its affiliates
may, without liability to account, make loans to, accept deposits from, act as
trustee under indentures of, and generally engage in any kind of banking or
trust business with, the Borrower and its Subsidiaries and their respective
stockholders and affiliates as though it were not acting as Issuing Bank
hereunder. The parties hereto intend that the Letter of Credit Participating
Interests represent commercial transactions, and not investments or securities
for purposes of any securities law.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower hereby represents and warrants to the Agent and
each Lender as follows:
4.1 CORPORATE STATUS. The Borrower and each Subsidiary of the
Borrower is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation. The Borrower and each
Subsidiary of the Borrower has corporate power and authority to own its property
and to transact the business in which it is engaged or presently proposes to
engage. The Borrower and each Subsidiary of the Borrower is duly qualified to do
business as a foreign corporation and is in good standing in all jurisdictions
in which the ownership of its properties or the nature of its activities or both
makes such qualification necessary or advisable or where the failure to be so
qualified could reasonably be expected to have a Material Adverse Effect.
Schedule 4.1 hereof states as of the date hereof the jurisdiction of
incorporation of the Borrower and each Subsidiary of the Borrower, and the
jurisdictions in which the Borrower and each Subsidiary of the Borrower is
qualified to do business as a foreign corporation.
4.2 CORPORATE POWER AND AUTHORIZATION. The Borrower and each
Subsidiary of the Borrower has corporate power and authority to execute,
deliver, perform, and take all actions contemplated by, each Loan Document to
which it is a party, and all such action has been duly and validly authorized by
all necessary corporate proceedings on its part. Without limitation of the
foregoing, the Borrower has the corporate power and authority to borrow and
request Letters of Credit to be issued pursuant to the Loan Documents to the
fullest extent permitted hereby and thereby from time to time, and has taken all
necessary corporate action to authorize such borrowings and requests for
issuance of Letters of Credit.
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4.3 EXECUTION AND BINDING EFFECT. This Agreement and each
other Loan Document to which the Borrower or any Subsidiary of the Borrower is a
party and which is required to be delivered on or before the Closing Date
pursuant to Section 5.1 hereof has been duly and validly executed and delivered
by the Borrower or such Subsidiary, as the case may be. This Agreement and each
such other Loan Document constitutes, and each other Loan Document when executed
and delivered by the Borrower each applicable Subsidiary of the Borrower will
constitute, the legal, valid and binding obligation of the Borrower and each
Subsidiary of the Borrower which is a party hereto or thereto, as the case may
be, enforceable against the Borrower or such Subsidiary in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditor's rights generally and by general equitable principles (whether
enforcement thereof is sought by proceedings at law or in equity).
4.4 GOVERNMENTAL APPROVALS AND FILINGS. No approval,
order, consent, authorization, certificate, license, permit or validation of,
or exemption or other action by, or filing, recording or registration with, or
notice to, any Governmental Authority (collectively, "Governmental Action") is
or will be necessary or advisable in connection with execution and delivery of
any Loan Document, consummation of the transactions herein or therein
contemplated, performance of or compliance with the terms and conditions hereof
or thereof or to ensure the legality, validity, binding effect, enforceability
or admissibility in evidence hereof or thereof, except for matters set forth in
Schedule 4.4 hereof. Except as otherwise set forth in Schedule 4.4, each
Governmental Action referred to in such Schedule 4.4 has been duly obtained or
made, as the case may be, and is in full force and effect, and there is no
action, suit, proceeding or investigation pending or (to the best knowledge of
the Borrower after due inquiry) threatened which seeks or may result in the
reversal, rescission, termination, modification or suspension of any such
Governmental Action. Except as set forth in Schedule 4.4, no Governmental
Action referred to in such Schedule 4.4 requires any further act to be
performed or condition to be satisfied by any Person as a condition to
continued effectiveness thereof. With respect to the each of the matters set
forth in such Schedule 4.4, the Agent and each Lender has received a true,
correct and complete copy of (a) such Governmental Action (including each
amendment, modification or supplement thereto) and (b) all applications
therefor and all exhibits thereto.
4.5 ABSENCE OF CONFLICTS. Neither the execution and
delivery of any Loan Document, nor consummation of the transactions herein or
therein contemplated, nor performance of or compliance with the terms and
conditions hereof or thereof does or will
(a) violate or conflict with any Law, or
(b) violate, conflict with or result in a breach of any
term or condition of, or constitute a default under, or result in
(or give rise to any right, contingent or otherwise, of any Person
to cause) any termination, cancellation, prepayment or acceleration of
performance of, or result in the creation or imposition of (or give
rise to any obligation, contingent or otherwise, to create or impose)
any Lien upon any of property of the Borrower or any Subsidiary of the
Borrower pursuant to, or otherwise result in (or give rise to any
right, contingent or otherwise, of any Person to cause) any change in
any right, power, privilege, duty or obligation of the Borrower or any
Subsidiary of the Borrower under or in connection with
(i) the articles of incorporation or by-laws
(or other constituent documents) of the Borrower or any
Subsidiary of the Borrower,
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(ii) any agreement or instrument creating,
evidencing or securing any Indebtedness or Guaranty Equivalent
to which the Borrower or any Subsidiary of the Borrower is a
party or by which any of them or any of their respective
properties (now owned or hereafter acquired) may be subject or
bound, the violation of, conflict with, breach of or default
under which would have a Material Adverse Effect, or
(iii) any other agreement or instrument or
arrangement to which the Borrower or any Subsidiary of the
Borrower is a party or by which any of them or any of their
respective properties (now owned or hereafter acquired) may be
subject or bound, the violation of, conflict with, breach of
or default under which would have a Material Adverse Effect,
except, in the case of the foregoing clause (b)(iii), for matters set forth in
Schedule 4.5 hereof. Schedule 4.5 hereof sets forth each consent, waiver,
amendment or agreement which has been obtained by or on behalf of the Borrower
or any Subsidiary of the Borrower in respect of any matter which would, absent
such consent, waiver, amendment or agreement, be within the scope of the
foregoing clause (b), and the Agent and each Lender has received a true, correct
and complete copy of each such consent, waiver, amendment or agreement and of
each of the underlying agreements or instruments to which it relates.
4.6 AUDITED FINANCIAL STATEMENTS. The Borrower has heretofore
furnished to the Agent and each Lender consolidated balance sheets of the
Borrower and its Subsidiaries as of the last day of Fiscal Year 1993 and 1994
and the related consolidated statements of income, cash flows and changes in
stockholders' equity for such Fiscal Years then ended, as examined and audited
by Arthur Andersen, LLP, independent certified public accountants for the
Borrower, who delivered an unqualified opinion in respect thereof. Such
financial statements (including the notes thereto) present fairly the financial
condition of the Borrower and its Subsidiaries as of the end of each such Fiscal
Year and the results of their operations and their cash flows for the Fiscal
Years then ended, all in conformity with GAAP.
4.7 INTERIM FINANCIAL STATEMENTS. The Borrower has heretofore
furnished to the Agent and each Lender interim consolidated balance sheets of
the Borrower and its Subsidiaries as of the end of each of the first, second and
third fiscal quarters of Fiscal Year 1995, together with the related
consolidated statements of income and cash flows for the applicable fiscal
periods ending on each such date. Such financial statements (including the notes
thereto) present fairly the financial condition of the Borrower and its
Subsidiaries as of the end of each such fiscal quarter and the results of their
operations and their cash flows for the fiscal periods then ended, all in
conformity with GAAP, subject to normal and recurring year-end audit
adjustments.
4.8 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Borrower
nor any Subsidiary of the Borrower has any liability or obligation of any nature
whatever (whether absolute, accrued, contingent or otherwise, whether or not
due), forward or long-term commitments or unrealized or anticipated losses from
unfavorable commitments, except (w) as disclosed in the financial statements
referred to in Sections 4.6 and 4.7 hereof, (x) matters that, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect, (y) as disclosed in Schedule 4.8 hereof and (z) liabilities,
obligations, commitments and losses incurred after the last day of Fiscal Year
1994 in the ordinary course of business and consistent with past practices.
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4.9 ABSENCE OF MATERIAL ADVERSE CHANGES. Except for the
matters set forth in Schedule 4.9 hereto, since September 30, 1995 there has
been no event, circumstance or condition which amounts to, entails, constitutes
or could reasonably be expected to cause a Material Adverse Effect.
4.10 ACCURATE AND COMPLETE DISCLOSURE. All information
heretofore, contemporaneously or hereafter provided (orally or in writing by an
officer of the Borrower) by or on behalf of the Borrower or any Subsidiary of
the Borrower to the Agent or any Lender pursuant to or in connection with any
Loan Document or any transaction contemplated hereby or thereby is or will be
(as the case may be) true and accurate in all material respects on the date as
of which such information is dated (or, if not dated, when received by the Agent
or such Lender, as the case may be) and does not or will not (as the case may
be) omit to state any material fact necessary to make such information not
misleading at such time in light of the circumstances in which it was provided.
The Borrower has disclosed to the Agent and each Lender in writing every fact or
circumstance known to the Borrower which has, or which could reasonably be
expected to have a Material Adverse Effect.
4.11 PROJECTIONS. The Borrower has furnished to the Agent and
each Lender projections prepared by the Borrower demonstrating the projected
consolidated financial condition and results of operations of the Borrower and
its Subsidiaries (the "Pro Forma Activities"), for the period commencing on the
first day of Fiscal Year 1995 and ending on the last day of Fiscal Year 1995
which projections are accompanied by a written statement of the assumptions and
estimates underlying such projections. Such projections were prepared on the
basis of such assumptions and estimates. Such projections, assumptions and
estimates, as of the date of preparation thereof and as of the date hereof, are
reasonable, are made in good faith, are consistent with the Loan Documents, and
represent the Borrower's best judgment as to such matters. Nothing has come to
the attention to the Borrower which would lead the Borrower to believe that such
projections will not be attained or exceeded. Nothing contained in this Section
shall constitute a representation or warranty that such future financial
performance or results of operations will in fact be achieved.
4.12 SOLVENCY. On and as of the Closing Date, after giving
effect to all Loans and other obligations and liabilities being incurred on such
date in connection therewith, and on the date of each subsequent Loan or other
Credit Extension hereunder and after giving effect to application of the
proceeds thereof in accordance with the terms of the Loan Documents, the
Borrower and each Subsidiary of the Borrower is and will be Solvent.
4.13 MARGIN REGULATIONS. No part of the proceeds of any Loan
hereunder will be used for the purpose of buying or carrying any "margin stock,"
as such term is used in Regulations G and U of the Board of Governors of the
Federal Reserve System, as amended from time to time, or to extend credit to
others for the purpose of buying or carrying any "margin stock." Neither the
Borrower, any Subsidiary of the Borrower nor any Subsidiary of any Subsidiary of
the Borrower is engaged in the business of extending credit to others for the
purpose of buying or carrying "margin stock." Neither the Borrower nor any
Subsidiary of the Borrower owns any "margin stock." Neither the making of any
Loan nor any use of proceeds of any such Loan will violate or conflict with the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System, as amended from time to time.
4.14 SUBSIDIARIES. Schedule 4.14 hereof states as of the date
of this Agreement the authorized capitalization of each Subsidiary of the
Borrower, the number of shares of each class of capital stock issued and
outstanding of each such Subsidiary, and the number and percentage of
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outstanding shares of each such class of capital stock owned by the Borrower and
by each such Subsidiary. The outstanding shares of each Subsidiary of the
Borrower have been duly authorized and validly issued and are fully paid and
nonassessable. The Borrower and each Subsidiary of the Borrower owns
beneficially and of record and has good title to all of the shares it is listed
as owning in such Schedule 4.14, free and clear of any Lien. There are no
options, warrants, calls, subscriptions, conversion rights, exchange rights,
preemptive rights or other rights, agreements or arrangements (contingent or
otherwise) which may in any circumstances now or hereafter obligate any
Subsidiary to issue any shares of its capital stock or any other securities,
except for matters set forth in Schedule 4.14 hereof. The Borrower has no
Subsidiaries other than KST.
4.15 PARTNERSHIPS, ETC. Neither the Borrower nor any
Subsidiary of the Borrower is a partner (general or limited) of any partnership,
is a party to any joint venture or owns (beneficially or of record) any equity
or similar interest in any Person (including but not limited to any interest
pursuant to which the Borrower or such Subsidiary has or may in any circumstance
have an obligation to make capital contributions to, or be generally liable for
or on account of the liabilities, acts or omissions of such other Person),
except for (x) capital stock of Subsidiaries referred to in Section 4.14 hereof
and (y) matters set forth in Schedule 4.15 hereof.
4.16 LITIGATION. There is no pending or (to the best
knowledge of the Borrower after due inquiry) threatened action, suit,
proceeding or investigation by or before any Governmental Authority or other
Person against or affecting the Borrower or any Subsidiary of the Borrower,
except for (x) matters set forth in Schedule 4.16 hereof, (y) matters described
in the financial statements referred to in Section 4.6 hereof and (z) matters
that if adversely decided, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
4.17 ABSENCE OF EVENTS OF DEFAULT. No event has occurred
and is continuing and no condition exists which constitutes an Event of Default
or Potential Default.
4.18 ABSENCE OF OTHER CONFLICTS. Neither the Borrower
nor any Subsidiary of the Borrower is in violation of or conflict with, or is
subject to any contingent liability on account of any violation of or conflict
with:
(a) any Law,
(b) its articles of incorporation or by-laws (or other
constituent documents), or
(c) any agreement or instrument or arrangement to which
it is party or by which it or any of its properties (now owned or
hereafter acquired) may be subject or bound,
except for (x) matters set forth in Schedule 4.18 hereof and (y) matters that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
4.19 INSURANCE. The Borrower and each Subsidiary of the
Borrower maintains with financially sound and reputable insurers not related to
or affiliated with the Borrower insurance with respect to its properties and
business and against at least such liabilities, casualties and contingencies and
in at least such types and amounts as is customary in the case of corporations
engaged in the same or a similar business or having similar properties similarly
situated. Schedule 4.19 hereof sets forth a list of all insurance currently
maintained by or in respect of the Borrower and each Subsidiary of the Borrower,
setting forth the identity of the insurance carrier, the type of coverage, the
amount of
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coverage and the deductible. There are no claims, actions, suits, proceedings
against, arising under or based upon any of such insurance policies, except as
set forth in such Schedule 4.19.
4.20 TITLE TO PROPERTY. The Borrower and each Subsidiary of
the Borrower has good and marketable title in fee simple to all real property
owned or purported to be owned by it and good title to all other property of
whatever nature owned or purported to be owned by it, including but not limited
to all property reflected in the most recent audited balance sheet referred to
in Section 4.6 hereof or submitted pursuant to Section 6.1(a) hereof, as the
case may be (except as sold or otherwise disposed of in the ordinary course of
business after the date of such balance sheet), in each case free and clear of
all Liens, except for the Permitted Liens.
4.21 INTELLECTUAL PROPERTY. The Borrower and each Subsidiary
of the Borrower owns, or is licensed or otherwise has the right to use, all the
patents, trademarks, service marks, names (trade, service, fictitious or
otherwise), copyrights, technology (including but not limited to computer
programs and software), processes, data bases and other rights, free from unduly
burdensome restrictions, necessary to own and operate its properties and to
carry on its business as presently conducted and presently planned to be
conducted without conflict with the rights of others, except for such conflicts
that, individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.
4.22 TAXES. All tax and information returns required to be
filed by or on behalf of the Borrower or each Subsidiary of the Borrower have
been properly prepared, executed and filed. All taxes, assessments, fees and
other governmental charges upon the Borrower or each Subsidiary of the Borrower
or upon any of their respective properties, incomes, sales or franchises which
are due and payable have been paid other than those not yet delinquent and
payable without premium or penalty, and except for those being diligently
contested in good faith by appropriate proceedings, and in each case adequate
reserves and provisions for taxes have been made on the books of the Borrower
and each Subsidiary of the Borrower. The reserves and provisions for taxes on
the books of the Borrower and each Subsidiary of the Borrower are adequate for
all open years and for its current fiscal period. Neither the Borrower nor any
Subsidiary of the Borrower knows of any proposed additional assessment or basis
for any material assessment for additional taxes (whether or not reserved
against). The federal, state, local and foreign income tax liabilities of the
Borrower and each of its Subsidiaries have been finally determined by the
Internal Revenue Service and other relevant taxing authorities, or the time for
audit has expired, for all fiscal periods ending on or prior to the last day of
Fiscal Year 1991 and all such liabilities (including all deficiencies assessed
following audit) have been satisfied. Neither the Borrower nor any Subsidiary of
the Borrower has at any time filed a consolidated tax return with any Person
other than the Borrower and its Subsidiaries. Schedule 4.22 hereof describes all
tax sharing arrangements or agreements to which the Borrower or any Subsidiary
of the Borrower is subject or bound.
4.23 EMPLOYEE BENEFITS. A copy of the most recent Annual
Report (5500 Series Form) including all attachments thereto as filed with the
Internal Revenue Service for each Plan has been provided to Agent and each
Lender and fairly presents the funding status of each Plan. There has been no
material deterioration in any Plan's funding status since the date of such
Annual Report. Schedule 4.23 hereof sets forth as of the date hereof a list of
all Plans and Multiemployer Plans, and all information available to the Borrower
with respect to the direct, indirect or potential withdrawal liability to any
Multiemployer Plan of any Loan Party or any Controlled Group Member. Except as
set forth in Schedule 4.23 hereof, neither the Borrower nor any Subsidiary of
the Borrower has any liability (contingent or otherwise) for or in connection
with, and none of their respective properties is
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subject to a Lien in connection with, any Pension-Related Event. Neither the
Borrower nor any Subsidiary of the Borrower has any liability (contingent or
otherwise) for or in connection with, any Postretirement Benefits. The PBGC
premiums and contributions required to meet the minimum funding requirements of
ERISA and the Code for all Plans have not exceeded Twenty-Five Thousand Dollars
($25,000) on an annual basis for any of the past three (3) years. The amount of
unfunded benefit liabilities (as defined in Section 4001(a)(16) of ERISA), as
certified to by the Plan's actuary, for any Plan do not exceed Twenty-Five
Thousand Dollars ($25,000) and for all Plans do not exceed Twenty-Five Thousand
Dollars ($25,000).
4.24 ENVIRONMENTAL MATTERS.
(a) The Borrower and each Subsidiary of the Borrower and, to
the best knowledge of the Borrower after due inquiry, each of their respective
Environmental Affiliates is and has been in full compliance with all applicable
Environmental Laws, except for (x) matters set forth in Schedule 4.24 hereof and
(y) matters which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. There are (to the best knowledge of
the Borrower after due inquiry) no circumstances that may prevent or interfere
with such full compliance in the future.
(b) The Borrower and each Subsidiary of the Borrower and, to
the best knowledge of the Borrower after due inquiry, their respective
Environmental Affiliates have all Environmental Approvals necessary for the
ownership and operation of their respective properties, facilities and
businesses as presently owned and operated and as presently proposed to be owned
and operated, except for (x) matters set forth in Schedule 4.24 hereof and (y)
matters which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
(c) There is no Environmental Claim pending or (to the best
knowledge of the Borrower after due inquiry) threatened, and (to the best
knowledge of the Borrower after due inquiry) there are no past or present acts,
omissions, events or circumstances (including but not limited to any dumping,
leaching, deposition, removal, abandonment, escape, emission, discharge or
release of any Environmental Concern Material at, on or under any facility or
property now or previously owned, operated or leased by the Borrower or any
Subsidiary of the Borrower or any of their respective Environmental Affiliates)
that could form the basis of any Environmental Claim, against the Borrower or
any Subsidiary of the Borrower or, to the best knowledge of the Borrower after
due inquiry, any of their respective Environmental Affiliates, except for (x)
matters set forth in Schedule 4.24 hereof and (y) matters which, if adversely
decided, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(d) Except for matters set forth in Schedule 4.24 hereto, no
facility or property now or previously owned, operated or leased by the Borrower
or Subsidiary of the Borrower or, to the best knowledge of the Borrower after
due inquiry, any of their respective Environmental Affiliates is an
Environmental Cleanup Site. Neither the Borrower nor any Subsidiary of the
Borrower nor, to the best knowledge of the Borrower after due inquiry, any of
their respective Environmental Affiliates has directly transported or directly
arranged for the transportation of any Environmental Concern Materials to any
Environmental Cleanup Site. No Lien exists, and no condition exists which is
reasonably likely to result in the filing of a Lien, against any property of the
Borrower or any Subsidiary of the Borrower or, to the best knowledge of the
Borrower after due inquiry, any of their respective Environmental Affiliates,
under any Environmental Law.
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4.25 REGULATORY RESTRICTIONS. Neither the Borrower nor any
Subsidiary of the Borrower is (a) an "investment company" or a company
"controlled" by an investment company within the meaning of the Investment
Company Act of 1940, as amended, (b) a "holding company" or a "subsidiary
company" of a "holding Company" or an "affiliate" of either a "holding company"
or a "subsidiary company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, (c) subject to regulation under the Federal
Power Act, the Interstate Commerce Act, or the Investment Company Act of 1940,
as amended, or (d) subject to any other Law which purports to restrict or
regulate its ability to borrow money or obtain credit.
4.26 CONSUMMATION OF MERGERS. The Mergers and the other
transactions contemplated by the Merger Documents have been consummated in
accordance with the respective terms thereof, without any amendment, waiver,
modification or termination of any provision thereof and in accordance with all
applicable laws. Each party to the respective Mergers has performed all
obligations and conditions required of it prior to or as a condition to the
consummation of the Mergers and the other transactions contemplated by the
Merger Documents.
ARTICLE 5
CONDITIONS OF CREDIT EXTENSIONS
-------------------------------
5.1 CONDITIONS TO INITIAL CREDIT EXTENSION. The obligation of
each Lender to make Loans on the Closing Date and the willingness of the Issuing
Bank to issue any Letter of Credit on the Closing Date is subject to the
satisfaction, immediately prior to or concurrently with the making of such Loan
or issuance of such Letter of Credit, of the following conditions precedent. In
addition to the conditions precedent set forth in Section 5.2 hereof:
(a) AGREEMENT; NOTES; SCHEDULES; LETTER OF CREDIT AGREEMENT.
The Agent shall have received an executed counterpart of this Agreement
(and executed Revolving Credit Notes conforming to the requirements
hereof) for each Lender, duly executed by the Borrower. The Schedules
attached hereto shall be approved by the Agent and each of the Lenders.
The Agent shall have received an executed counterpart of the Letter of
Credit Agreement in the form attached as Exhibit B-3 hereto (the
"Letter of Credit Agreement") for the Issuing Bank, duly executed by
the Borrower.
(b) GOVERNMENTAL APPROVALS AND FILINGS. The Agent shall have
received, with copies and executed counterparts for each Lender, true
and correct copies (in each case certified as to authenticity on such
date on behalf of the Borrower) of all items referred to in Schedule
4.4 hereof and such items shall be satisfactory in form and substance
to the Agent and each Lender and shall be in full force and effect.
(c) OTHER CONFLICTS. The Agent shall have received, with
copies for each Lender, true and correct copies (in each case certified
as to authenticity on such date on behalf of the Borrower) of all items
referred to in Schedule 4.5 hereof and such items shall be satisfactory
in form and substance to the Agent and each Lender and shall be in full
force and effect.
(d) CORPORATE PROCEEDINGS. The Agent shall have received, with
a counterpart for each Lender, certificates by the Secretary of the
Borrower, dated as of the Closing Date as to (i) true copies of the
articles of incorporation and by-laws (or other constituent documents)
of the Borrower in effect on such date (which, in the case of articles
of incorporation or other constituent documents filed or required to be
filed with the Secretary of State or other
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Governmental Authority in its jurisdiction of incorporation, shall be
certified to be true, correct and complete by such Secretary of State
or other Governmental Authority not more than thirty (30) days before
the Closing Date), (ii) true copies of all corporate action taken by
the Borrower relative to this Agreement and the other Loan Documents
and (iii) the incumbency and signature of the officers of the Borrower
executing this Agreement and the other Loan Documents, as the case may
be, together with satisfactory evidence of the incumbency of such
Secretary. The Agent shall have received, with a copy for each Lender,
certificates from the appropriate Secretaries of State or other
applicable Governmental Authorities dated not more than thirty (30)
days before the Closing Date showing the good standing of the Borrower
in its state or other jurisdiction of incorporation and each state or
other jurisdiction in which the Borrower is qualified to do business as
described in Schedule 4.1.
(e) FINANCIAL STATEMENTS, PROJECTIONS. The Agent shall
have received, with a counterpart for each Lender, copies of the
consolidated financial statements and projections referred to in
Sections 4.6, 4.7 and 4.11 hereof.
(f) LEGAL OPINION OF COUNSEL TO THE BORROWER. The Agent
shall have received with an executed counterpart for each Lender, an
opinion addressed to the Agent and each Lender, dated the Closing
Date, of Jones, Day, Reavis & Pogue, counsel to the Borrower, in
substantially the form attached hereto as Exhibit C.
(g) OFFICERS' CERTIFICATES. The Agent shall have
received, with an executed counterpart for each Lender, certificates
from such officers of the Borrower as to such matters
as the Agent or any Lender may request.
(h) FEES, EXPENSES, ETC. All fees and other compensation
required to be paid to the Agent or the Lenders pursuant hereto or
pursuant to any other written agreement on or prior to the Closing Date
shall have been paid or received.
(i) TERMINATION AND REPAYMENT OF REVOLVING CREDIT
FACILITY AND RELEASE OF LIENS RELATING THERETO. The Agent and the
Borrower agree that the occurrence of the first Credit Extension
pursuant to this Agreement shall operate as a termination of the
Revolving Credit Facility, and thereafter no party to the Revolving
Credit Facility shall have any obligation to any other party thereto,
except with respect to any of the terms and provisions which are
stated therein to survive the termination of the Revolving Credit
Facility.
(j) LIEN SEARCHES. The Agent shall have received
contemporaneous "UCC-11 All Lien" searches, which shall have revealed
no filings or recordings evidencing or relating to any Liens with
respect to any property of the Borrower or any of its Subsidiaries
other than with respect to Permitted Liens.
(k) NO LITIGATION. There shall not be pending or (to
the best knowledge of the Borrower after due inquiry) threatened any
action, suit, proceeding or investigation by or before any
Governmental Authority or other Person seeking to challenge, prevent,
enjoin or declare illegal the transactions contemplated hereby.
(l) NO MATERIAL ADVERSE EFFECT. There shall not have
occurred, or be threatened, any event, circumstance or condition
which amounts to, entails, causes or constitutes a Material Adverse
Effect since September 30, 1995.
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(m) MERGER DOCUMENTS. The Agent shall have received
true and correct copies (in each case certified as to authenticity as
of the Closing Date on behalf of the Borrower) of all Merger
Documents, and such Merger Documents shall be reasonably satisfactory
in form and substance to the Agent and each Lender.
(n) ADDITIONAL MATTERS. The Agent shall have received
such other certificates, opinions, documents and instruments as may be
reasonably requested by any Lender. All corporate and other
proceedings, and all documents, instruments and other matters in
connection with the transactions contemplated by this Agreement and
the other Loan Documents shall be satisfactory in form and substance
to the Agent and each Lender.
5.2 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of
each Lender to make any Loan and the willingness of the Issuing Bank to issue
any Letter of Credit is subject to performance by each of the Loan Parties of
their respective obligations to be performed hereunder or under the other Loan
Documents on or before the date of such Loan or issuance of such Letter of
Credit, satisfaction of the conditions precedent set forth herein and in the
other Loan Documents and to satisfaction of the following further conditions
precedent:
(a) NOTICE. Appropriate notice of such Loan or Letter of
Credit shall have been given by the Borrower as provided in Article 2
or Article 3 hereof, as the case may be.
(b) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Borrower in Article 4 hereof
shall be true and correct in all material respects on and as of such
date as if made on and as of such date, both before and after giving
effect to the Loans requested to be made and Letters of Credit
requested to be issued on such date, except to the extent that any such
representation or warranty (including any Schedule referred to therein)
relates solely and specifically to a prior date and except to the
extent that any such representation and warranty (including any
Schedule referred to therein) is not true and correct in any material
respect solely and specifically as a result of activities or actions
expressly permitted to be taken by the Borrower or any of its
Subsidiaries pursuant to Article 7 hereof.
(c) NO DEFAULTS. No Event of Default or Potential
Default shall have occurred and be continuing on such date or after
giving effect to the Loans requested to be made or the Letters of
Credit requested to be issued on such date.
(d) NO VIOLATIONS OF LAW, ETC. Neither the making nor
use of the Loans or the Letters of Credit shall cause any Lender to
violate or conflict with any Law.
(e) NO MATERIAL ADVERSE EFFECT. There shall not have
occurred, or be threatened, any event, circumstance or condition
which amounts to, entails, causes or constitutes a Material Adverse
Effect.
Each request by the Borrower for any Loan or Letter of Credit shall constitute a
representation and warranty by the Borrower that the conditions set forth in
this Section 5.2 have been satisfied as of the date of such request. Failure of
the Agent to receive notice from the Borrower to the contrary before such Loan
is made or such Letter of Credit is issued shall constitute a further
representation and warranty by the Borrower that the conditions referred to in
this Section 5.2 have been satisfied as of the date such Loan is made or such
Letter of Credit is issued.
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ARTICLE 6
AFFIRMATIVE COVENANTS
---------------------
The Borrower hereby covenants to the Agent and each Lender as
follows:
6.1 BASIC REPORTING REQUIREMENTS.
(a) ANNUAL AUDIT REPORTS. As soon as practicable, and
in any event within one hundred (100) days after the close of each Fiscal Year
of the Borrower, the Borrower shall furnish to the Agent, with a copy for each
Lender, consolidated and consolidating statements of income, cash flows and
changes in stockholders' equity of the Borrower and its Subsidiaries for such
Fiscal Year and a consolidated and consolidating balance sheet of the Borrower
and its Subsidiaries as of the close of such Fiscal Year, and notes to each,
all in reasonable detail, setting forth in comparative form the corresponding
figures for the preceding Fiscal Year. Such financial statements (other than
the consolidating portion thereof) shall be accompanied by an opinion of (i)
Arthur Andersen, LLP or (ii) such other independent certified public
accountants of recognized national standing selected by the Borrower and
satisfactory to the Required Lenders. Such opinion shall be free of exceptions
or qualifications not acceptable to the Required Lenders and in any event shall
be free of any exception or qualification which is of "going concern" or like
nature. Such opinion in any event shall contain a written statement of such
accountants substantially to the effect that (i) such accountants examined such
financial statements in accordance with generally accepted auditing standards
and accordingly made such tests of accounting records and such other auditing
procedures as such accountants considered necessary in the circumstances and
(ii) in the opinion of such accountants such financial statements present
fairly the financial position of the Borrower and its Subsidiaries as of the
end of such Fiscal Year and the results of their operations and their cash
flows and changes in stockholders' equity for such Fiscal Year, in
conformity with GAAP.
(b) QUARTERLY CONSOLIDATED REPORTS. As soon as
practicable, and in any event within fifty (50) days after the close of each of
the first three (3) fiscal quarters of each Fiscal Year of the Borrower, the
Borrower shall furnish to the Agent, with a copy for each Lender, unaudited
consolidated and consolidating statements of income and cash flows of the
Borrower and its Subsidiaries for such fiscal quarter and for the period from
the beginning of such Fiscal Year to the end of such fiscal quarter and an
unaudited consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as of the close of such fiscal quarter, and notes to each, all in
reasonable detail, setting forth in comparative form the corresponding figures
for the same periods or as of the same date during the preceding Fiscal Year
(except for the consolidated balance sheet, which shall set forth in
comparative form the corresponding balance sheet as of the prior Fiscal Year
end). Such financial statements shall be certified by a Responsible Officer of
the Borrower as presenting fairly the financial position of the Borrower and
its Subsidiaries as of the end of such fiscal quarter and the results of their
operations and their cash flows for such fiscal quarter, in conformity with
GAAP, subject to normal and recurring year-end audit adjustments.
(c) PRO FORMA FINANCIAL STATEMENTS. In connection with
an Acquisition permitted under Section 7.9(b) hereof, within thirty (30) days
prior to such Acquisition, the Borrower shall furnish to the Agent, with a copy
for each Lender, pro forma unaudited consolidated statements of income of the
Borrower and its Subsidiaries, pro forma unaudited consolidated balance sheets
of the Borrower and its Subsidiaries and such other pro forma consolidated
financial statements of the Borrower and its Subsidiaries requested by the
Agent or any Lender, each reflecting such Acquisition and in reasonable detail
as shall be reasonably requested by any Lender or the Agent. Such pro forma
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financial statements shall be accompanied by a statement of the assumptions and
estimates upon which such pro forma financial statements are based. Such
projections, estimates and assumptions, as of the date of preparation thereof,
shall be reasonable, made in good faith, shall be consistent with the Loan
Documents, and shall represent the Borrower's best judgment as to such matters.
(d) COMPLIANCE CERTIFICATES. The Borrower shall deliver
to the Agent, with a copy for each Lender, a Compliance Certificate in
substantially the form set forth as Exhibit D attached hereto ("Compliance
Certificate"), duly completed and signed by a Responsible Officer of the
Borrower concurrently with the delivery of the financial statements referred to
in subsections (a) and (b) of this Section 6.1. In addition, concurrently with
the financial statements referred to in subsection (c) of this Section 6.1, the
Borrower shall deliver to the Agent, with a copy for each Lender, a pro forma
Compliance Certificate showing, INTER ALIA, compliance by the Borrower with the
financial covenants set forth in Article 7 hereof for the four (4) fiscal
quarters immediately following the date of the Acquisition to which such
financial statements relate.
(e) ACCOUNTANTS' CERTIFICATE. Each set of financial
statements delivered pursuant to Section 6.1(a) hereof shall be accompanied by
a certificate or report dated in accordance with standard practice by the
independent certified public accountants who opined on such financial
statements stating in substance that they have reviewed this Agreement and that
in making the examination necessary for their certification of such statements
and balance sheet they did not become aware of any Event of Default or
Potential Default, or if they did become so aware, such certificate or report
shall state the nature and period of existence thereof.
(f) PROJECTIONS. On the Closing Date (with respect to the
then-current Fiscal Year of the Borrower), and as soon as practicable and in any
event not later than December 31 of each subsequent Fiscal Year of the Borrower,
the Borrower shall furnish to the Agent, with a copy for each Lender, a
certificate signed by a Responsible Officer on behalf of the Borrower containing
a consolidated projection of the revenues, expenditures (capital or otherwise)
and results of operations and cash position of the Borrower and its Subsidiaries
as of the end of each quarter in the forthcoming Fiscal Year, together with a
statement of the assumptions and estimates upon which such projections are
based. Such projections, estimates and assumptions, as of the date of
preparation thereof, shall be reasonable, made in good faith, shall be
consistent with the Loan Documents, and shall represent the Borrower's best
judgment as to such matters.
(g) CERTAIN OTHER REPORTS AND INFORMATION. Promptly
upon their becoming available to the Borrower, the Borrower shall deliver to
the Agent, with a copy for each Lender, a copy of (i) all regular or special
reports, registration statements and amendments to the foregoing which the
Borrower or any Subsidiary shall file with the Securities and Exchange
Commission (or any successor thereto) or any securities exchange, (ii) all
reports, proxy statements, financial statements and other information
distributed by the Borrower to its stockholders, bondholders or the financial
community generally and (iii) all accountants' management letters (if any)
pertaining to, all other reports submitted by accountants in connection with
any audit of, and all other reports from outside accountants with respect to,
the Borrower or any of its Subsidiaries.
(h) FURTHER INFORMATION. The Borrower will promptly
furnish to the Agent, with a copy for each Lender, such other information and
in such form as the Agent or any Lender may reasonably request from time to
time.
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(i) NOTICE OF CERTAIN EVENTS. Promptly upon becoming
aware of any of the following, the Borrower shall give the Agent notice
thereof, together with a written statement of a Responsible Officer of the
Borrower setting forth the details thereof and any action with respect thereto
taken or proposed to be taken by the Borrower:
(i) Any Event of Default or Potential Default.
(ii) Any event, circumstance or condition which amounts
to, entails, causes or constitutes a Material Adverse Effect.
(iii) Any pending or threatened action, suit, proceeding or
investigation by or before any Governmental Authority against or
affecting any Loan Party or any Subsidiary of any Loan Party, except
for matters that if adversely decided, individually or in the
aggregate, could not have a Material Adverse Effect.
(iv) Any violation, breach or default by the Borrower or
any Subsidiary of the Borrower or by any other Person of or under any
agreement or instrument material to the business, operations,
condition (financial or otherwise) or prospects of the Borrower or any
of its Subsidiaries.
(v) Any amendment or supplement to, or extension,
renewal, refinancing, or refunding of, or waiver by any other party
thereto of any right under or conditions of, any material agreement or
instrument creating, evidencing or securing any Indebtedness or
Guaranty Equivalent of the Borrower or any Subsidiary or any agreement
or instrument material to the business, operations or condition
(financial or otherwise) of the Borrower or any of its Subsidiaries,
and any substantive negotiations pertaining to any of the foregoing.
(vi) Any Pension-Related Event. Such notice shall be
accompanied by: (A) a copy of any notice, request, return, petition or
other document received by the Borrower, any Subsidiary of the Borrower
or any Controlled Group Member from any Person, or which has been or is
to be filed with or provided to any Person (including without
limitation the Internal Revenue Service, PBGC or any Plan participant,
beneficiary, alternate payee or employer representative), in connection
with such Pension-Related Event, and (B) in the case of any
Pension-Related Event with respect to a Plan, the most recent Annual
Report (5500 Series), with attachments thereto, and the most recent
actuarial valuation report, for such Plan.
(vii) Any Environmental Claim pending or threatened against
the Borrower or any Subsidiary of the Borrower or any of their
respective Environmental Affiliates, or any past or present acts,
omissions, events or circumstances (including but not limited to any
dumping, leaching, deposition, removal, abandonment, escape, emission,
discharge or release of any Environmental Concern Material at, on or
under any facility or property now or previously owned, operated or
leased by the Borrower or any Subsidiary of the Borrower or any of
their respective Environmental Affiliates) that could form the basis of
such Environmental Claim, which Environmental Claim, if adversely
resolved, individually or in the aggregate, could have a Material
Adverse Effect.
(j) NOTICES UNDER OTHER AGREEMENTS. Concurrently with
the Borrower's or its Subsidiary's delivery or receipt thereof, the Borrower
shall provide the Agent with copies of any reports, certificates or notices
furnished by the Borrower or such Subsidiary to any other party to any
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agreement or instrument creating, evidencing or securing any Indebtedness or
Guaranty Equivalent of the Borrower or any Subsidiary of the Borrower or any
agreement or instrument material to the business, operations, condition
(financial or otherwise) or prospects of the Borrower or any of its Subsidiaries
or received by the Borrower or a Subsidiary from any other party to any of the
foregoing.
(k) VISITATION; VERIFICATION. The Borrower shall permit such
Persons as the Agent or any Lender may designate from time to time to visit and
inspect any of the properties of the Borrower and of any Subsidiary of the
Borrower, to examine their respective books and records and take copies and
extracts therefrom and to discuss their respective affairs with their respective
directors, officers, employees and independent accountants, all at such
reasonable times and as often as the Agent or any Lender may reasonably request;
PROVIDED, HOWEVER, that after the occurrence and during the continuation of an
Event of Default or a Potential Default, such Persons shall be permitted to
conduct any of the foregoing activities at any time and as often as the Agent or
any Lender desires, in its sole discretion, without any requirement of the Agent
or any Lender to make a request therefor. The Borrower hereby authorizes such
officers, employees and independent accountants to discuss with the Agent or any
Lender the affairs of the Borrower and its Subsidiaries. The Agent and the
Lenders shall have the right to examine and verify accounts, inventory and other
properties and liabilities of the Borrower and its Subsidiaries from time to
time, and the Borrower shall cooperate, and shall cause each such Subsidiary to
cooperate, with the Agent and the Lenders in such verification.
6.2 INSURANCE. The Borrower shall, and shall cause each
Subsidiary of the Borrower to, (a) maintain with financially sound and reputable
insurers insurance with respect to its properties and business and against such
liabilities, casualties and contingencies and of such types and in such amounts
as is satisfactory from time to time to the Required Lenders, which insurance
shall in any event not provide for a materially lower level of coverage than the
insurance referred to in Section 4.19 hereof, (b) provide that such insurance
cannot terminate, expire, be cancelled or amended in an material respect without
thirty (30) days' prior notice to the Agent, (c) furnish to each Lender from
time to time upon request the policies under which such insurance is issued,
certificates of insurance and such other information relating to such insurance
as such Lender may request, and (d) provide such other insurance and
endorsements as are required by this Agreement and the other Loan Documents.
6.3 PAYMENT OF TAXES AND OTHER POTENTIAL CHARGES AND
PRIORITY CLAIMS. The Borrower shall, and shall cause each Subsidiary of the
Borrower to, pay or discharge:
(a) on or prior to the date on which penalties attach
thereto, all taxes, assessments and other governmental charges
imposed upon it or any of its properties;
(b) on or prior to the date when due, all lawful claims of
materialmen, mechanics, carriers, warehousemen, landlords and other
like Persons which, if unpaid, might result in the creation of a Lien
upon any such property; and
(c) on or prior to the date when due, all other lawful claims
which, if unpaid, might result in the creation of a Lien upon any such
property or which, if unpaid, might give rise to a claim entitled to
priority over general creditors of the Borrower or such Subsidiary in a
case under Title 11 (Bankruptcy) of the United States Code, as amended;
PROVIDED, HOWEVER, that unless and until foreclosure, distraint, levy, sale or
similar proceedings shall have been commenced the Borrower or such Subsidiary
need not pay or discharge any such tax,
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assessment, charge or claim so long as (x) the validity thereof is contested in
good faith and by appropriate proceedings diligently conducted and (y) such
reserves or other appropriate provisions as may be required by GAAP shall have
been made therefor or appropriate indemnities or bonds shall have been obtained
with respect thereto.
6.4 PRESERVATION OF CORPORATE STATUS. The Borrower shall, and
shall cause each of its Subsidiaries to, maintain its status as a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and to be duly qualified to do business as a
foreign corporation and in good standing in all jurisdictions in which the
ownership of its properties or the nature of its business or both make such
qualification necessary or advisable, except for (i) matters that, individually
or in the aggregate, could not have a Material Adverse Effect and (ii) matters
permitted by Section 7.9 hereof.
6.5 GOVERNMENTAL APPROVALS AND FILINGS. The Borrower shall,
and shall cause each Subsidiary of the Borrower to, keep and maintain in full
force and effect all Governmental Actions necessary or advisable in connection
with execution and delivery of any Loan Document, consummation of the
transactions herein or therein contemplated, performance of or compliance with
the terms and conditions hereof or thereof or to ensure the legality, validity,
binding effect or enforceability hereof or thereof.
6.6 MAINTENANCE OF PROPERTIES, FRANCHISES, ETC. The Borrower
shall, and shall cause each Subsidiary of the Borrower to, (a) maintain or cause
to be maintained in good repair, working order and condition the properties now
or hereafter owned, leased or otherwise possessed by it and shall make or cause
to be made all needful and proper repairs, renewals, replacements and
improvements thereto so that the business carried on in connection therewith may
be properly and advantageously conducted at all times, except where a failure to
do so could not have a Material Adverse Effect, and (b) maintain and hold in
full force and effect all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations and other rights, consents and
approvals (whether issued, made or given by a Governmental Authority or
otherwise) necessary to own and operate its properties and to carry on its
business or presently conducted and as presently planned to be conducted, except
where failure to do so could not have a Material Adverse Effect.
6.7 AVOIDANCE OF OTHER CONFLICTS. The Borrower shall
not, and shall not permit any of its Subsidiaries to, violate or conflict with,
be in violation of or conflict with, or be or remain subject to any liability
(contingent or otherwise) on account of any violation or conflict with
(a) any Law,
(b) its articles of incorporation of by-laws (or other
constituent documents), or
(c) any agreement or instrument to which it is party or by
which any of them or any of their respective Subsidiaries is a party or
by which any of them or any of their respective properties (now owned
or hereafter acquired) may be subject or bound,
except for (x) matters set forth in Schedule 4.18 hereof and (y) matters that
could not, individually or in the aggregate, have a Material Adverse Effect.
6.8 FINANCIAL ACCOUNTING PRACTICES. The Borrower shall make
and keep books, records and accounts which, in reasonable detail, accurately
and fairly reflect its transactions and
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dispositions of its assets and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (a) transactions are executed
in accordance with management's general or specific authorization, (b)
transactions are recorded as necessary (i) to permit preparation of financial
statements in conformity with GAAP and any other accounting principles
applicable thereto and (ii) to maintain accountability for assets, (c) access to
assets is permitted only in accordance with management's general or specific
authorization and (d) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Borrower shall cause each of its Subsidiaries to
make and keep books, records and accounts which, in reasonable detail, permit
the Borrower to prepare consolidated financial statements in conformity with
GAAP.
6.9 USE OF PROCEEDS. The Borrower shall apply the proceeds of
all Loans hereunder only for the following purposes: (a) all Loans incurred on
the Closing Date shall be applied to repay in full all amounts outstanding under
the Revolving Credit Facility and (b) after the Closing Date, Loans shall be
used to provide working capital financing, acquisition financing, to provide for
the issuance of Letters of Credit and for other general corporate purposes of
the Borrower, including, without limitation, making capital expenditures. The
Borrower shall not use the proceeds of any Loans hereunder directly or
indirectly for any unlawful purpose, in any manner inconsistent with Section
4.13 hereof, or inconsistent with any other provision of any Loan Document. All
Letters of Credit shall be used for the purposes permitted by Section 3.1(c)
hereof.
6.10 CONTINUATION OF OR CHANGE IN BUSINESS. The Borrower and
each of its Subsidiaries shall continue to engage in its business substantially
as conducted and operated during the present and preceding Fiscal Year, and the
Borrower shall not, and shall not permit any Subsidiary to, engage in any
unrelated business, except for matters permitted by Sections 7.9(a), (b) and (e)
hereof.
6.11 CONSOLIDATED TAX RETURN. The Borrower shall not, and
shall not suffer any of its Subsidiaries to, file or consent to the filing of
any consolidated income tax return with any Person other than the Borrower and
its Subsidiaries, except with respect to (i) the transactions permitted by
Sections 7.9(a), (b) and (e) hereof and (ii) matters disclosed on Schedule 4.22
hereto.
6.12 SUBSIDIARY GUARANTY. Promptly upon any Person being or
becoming a Subsidiary of the Borrower, the Borrower shall forthwith cause such
Subsidiary to execute and deliver to the Agent counterparts of a Subsidiary
Guaranty and a Pledge Agreement, together with a certificate by the Secretary or
an Assistant Secretary of such Subsidiary dated the date of such Subsidiary
Guaranty and Pledge Agreement as to (i) a true copy of the articles of
incorporation and by-laws (or other constituent document) of such Subsidiary in
effect on such date, (ii) a true copy of all corporate action taken by such
Subsidiary relative to the execution, delivery and performance of such
Subsidiary Guaranty and Pledge Agreement and (iii) the incumbency and signature
of the officers of such Subsidiary executing such Subsidiary Guaranty and Pledge
Agreement, together with satisfactory evidence of the incumbency of such
Secretary or Assistant Secretary; PROVIDED, HOWEVER, that notwithstanding the
foregoing, KST shall not be required to execute and deliver any of the foregoing
unless and until the aggregate principal amount of all intercompany loans from
the Borrower to KST shall at any time exceed Two Million Dollars ($2,000,000).
6.13 SOLVENCY. Borrower shall continue to be, and will cause
each of its Subsidiaries to continue to be, Solvent. Borrower shall at all time
have, and will cause each of its Subsidiaries at all times to have, a positive
tangible net worth.
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ARTICLE 7
NEGATIVE COVENANTS
The Borrower hereby covenants to the Agent and each Lender as
follows:
7.1 FINANCIAL COVENANTS.
(a) RATIO OF CONSOLIDATED TOTAL LIABILITIES TO CONSOLIDATED
TANGIBLE NET WORTH. As of the last day of each fiscal quarter of each Fiscal
Year, the ratio of Consolidated Total Liabilities as of the end of such fiscal
quarter to Consolidated Tangible Net Worth as of the end of such fiscal quarter
shall not be more than 1.50 to 1.00.
(b) RATIO OF CONSOLIDATED FUNDED DEBT TO CONSOLIDATED EBITDA.
As of the last day of each fiscal quarter of each Fiscal Year, the ratio of
Consolidated Funded Debt as of the end of such fiscal quarter to Consolidated
EBITDA for the period of four (4) fiscal quarters ending on such day, considered
as a single accounting period, shall not be more than 2.00 to 1.00.
(c) PRE-TAX INTEREST COVERAGE. As of the last day of each
fiscal quarter of each Fiscal Year, the ratio of Consolidated EBIT to
Consolidated Interest Expense for the period of four (4) fiscal quarters ending
on such day, considered as a single accounting period, shall not be less than
3.00 to 1.00.
7.2 LIENS. The Borrower shall not, and shall not permit any
Subsidiary of the Borrower to, at any time create, incur, assume or suffer to
exist any Lien on any of its property (now owned or hereafter acquired), or
agree, become or remain liable (contingently or otherwise) to do any of the
foregoing, except for the following ("Permitted Liens"):
(a) Liens arising from taxes, assessments, charges or claims
described in Section 6.3 hereof that are not yet due or that remain
payable without penalty or to the extent permitted to remain unpaid
under the proviso to such Section 6.3;
(b) Deposits or pledges of cash in the ordinary course of
business to secure (i) worker's compensation, unemployment insurance or
other social security obligations, (ii) performance of bids, tenders,
trade contracts (other than for payment of money) or leases, (iii)
stay, surety or appeal bonds, or (iv) other obligations of a like
nature incurred in the ordinary course of business;
(c) Liens by a Borrower or Subsidiary of the Borrower on
property securing all or part of the purchase price thereof and Liens
(whether or not assumed) existing on property at the time of purchase
thereof by the Borrower or such Subsidiary, PROVIDED that:
(i) such Lien is created before or substantially
simultaneously with the purchase of such property by the Borrower or
such Subsidiary (or is a Lien securing successor obligations incurred
to refinance predecessor obligations allowed under this subsection (c),
PROVIDED that in each case the successor obligation is an obligation of
the same Person subject to the predecessor Indebtedness and is not
greater than (and is not otherwise on terms less advantageous than) the
predecessor obligation immediately before such refinancing, and the
Lien securing the successor obligation does not extend to any property
other than that subject to the Lien securing the predecessor obligation
immediately before such refinancing),
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(ii) such Lien is confined solely to the property so
purchased, improvements thereto and proceeds thereof,
(iii) the aggregate amount secured by all such Liens on any
particular property at the time purchased by the Borrower or such
Subsidiary, as the case may be, shall not exceed the lesser of the
purchase price of such property or the fair market value of such
property at the time of purchase thereof ("purchase price" for this
purpose including the amount secured by each such Lien thereon whether
or not assumed), and
(iv) the aggregate amount secured by all Liens described in
this Section 7.2(c), PLUS the aggregate amount of Capitalized Lease
Obligations described in Section 7.3(d) hereof, shall not at any time
exceed Three Million Dollars ($3,000,000);
(d) Zoning restrictions, easements, minor restrictions on the
use of real property, minor irregularities in title thereto and other
minor Liens that do not secure the payment of money or the performance
of an obligation and that do not in the aggregate materially detract
from the value of a property or asset to, or materially impair its use
in the business of, the Borrower or such Subsidiary;
(e) Liens on property of the Borrower to secure payment
of Indebtedness of the Borrower permitted by Section 7.3(g) hereof; and
(f) Liens existing on the Closing Date and approved by the
Required Lenders, which Liens are listed on Schedule 7.2 hereto (but
not any extension, renewal or replacement of such Liens) and Liens in
favor of the Agent and the Lenders.
"Permitted Lien" shall in no event include any Lien imposed by, or required to
be granted pursuant to, ERISA or any Environmental Law.
7.3 INDEBTEDNESS. The Borrower shall not, and shall not permit
any Subsidiary of the Borrower to, at any time create, incur, assume or suffer
to exist any Indebtedness, or agree, become or remain liable (contingently or
otherwise) to do any of the foregoing, except:
(a) Indebtedness to the Lenders, the Issuing Bank and
the Agent pursuant to this Agreement and the other Loan Documents;
(b) Indebtedness constituting intercompany loans and
advances permitted by subsection (c), (d) or (e) of Section 7.5 hereof;
(c) Indebtedness for borrowed money or for the deferred
purchase price of property secured by a Lien permitted by Section
7.2(c) hereof;
(d) Indebtedness constituting Capitalized Lease Obligations of
the Borrower incurred in the ordinary course of business from time to
time, provided the aggregate amount of all Liens described in Section
7.2(c) hereof PLUS the aggregate amount of all Capitalized Lease
Obligations described in this Section 7.3(d) shall not at any time
exceed Three Million Dollars ($3,000,000);
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(e) Accounts payable to trade creditors arising out of
purchases of goods or services in the ordinary course of business;
(f) Any Restricted Indebtedness;
(g) Indebtedness for borrowed money incurred by the Borrower
from time to time and payable to a Governmental Authority, PROVIDED
that such Indebtedness enables the Borrower to obtain or utilize
favorable tax treatment or bears interest at a rate that is less than
interest rates generally available at such time in the commercial
market for comparable Indebtedness and such Indebtedness is on terms
and conditions (other than applicable interest rates) no more favorable
to the holders thereof than are applicable to the Lenders with respect
to Indebtedness hereunder;
(h) Indebtedness for borrowed money not otherwise permitted
under this Section 7.3 incurred by (i) the Borrower from time to time,
provided that such Indebtedness is unsecured and the aggregate
principal amount of such Indebtedness shall not exceed One Million
Dollars ($1,000,000) at any time, and (ii) KST from time to time,
provided that the aggregate principal amount of such Indebtedness shall
not exceed Three Million Five Hundred Thousand Dollars ($3,500,000) at
any time; and
(i) Indebtedness of the Borrower existing on the Closing Date
and approved by the Required Lenders, which Indebtedness is listed on
Schedule 7.3 hereto (but not any extension, renewal or refinancing of
such Indebtedness).
7.4 GUARANTIES, INDEMNITIES, ETC. The Borrower shall not, and
shall not permit any Subsidiary of the Borrower to, be or become subject to or
bound by any Guaranty Equivalent, or agree, become or remain liable
(contingently or otherwise) to do any of the foregoing, except:
(a) Any Subsidiary Guarantys;
(b) Guaranty Equivalents from time to time entered into by the
Borrower, provided that (i) in each case the Deemed Obligor is a
Subsidiary of the Borrower and (ii) the Assured Obligations of the
Deemed Obligors are (x) fully funded and constitute liabilities on the
consolidated balance sheet of the Borrower or (y) operating leases or
Capitalized Leases or other agreements entered into by a Subsidiary of
the Borrower which, if entered into by the Borrower, would have been
permitted under this Agreement;
(c) Contingent liabilities arising from the endorsement of
negotiable or other instruments for deposit or collection or similar
transactions in the ordinary course of business;
(d) Indemnities by the Borrower or any such Subsidiary of
the liabilities of its directors or officers in their capacities as
such as permitted by Law;
(e) Guaranty Equivalents of the Borrower existing on the
Closing Date and approved by the Required Lenders, which Guaranty
Equivalents are listed on Schedule 7.4 hereto (but not any extension or
renewal of such Guaranty Equivalent);
(f) Indemnities by the Borrower or any Subsidiary of
the Borrower arising from or under contracts and agreements with
unrelated Persons entered into by the Borrower or such
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Subsidiary in the ordinary course of business, PROVIDED that (i) if
required by GAAP, such indemnities shall be reflected on the
consolidated balance sheet of the Borrower and (ii) if such indemnities
are quantifiable as contingent liabilities in accordance with GAAP and
are reflected in the footnotes to the Borrower's consolidated financial
statements, such indemnities shall be considered a Guaranty Equivalent
of the type described in Section 7.4(g) hereof and shall be included in
determining compliance with such Section and Section 7.1(a).
(g) Other Guaranty Equivalents from time to time entered into
by the Borrower, provided that the maximum aggregate potential
obligation of Borrower under Guaranty Equivalents described in this
Section 7.4(g) shall not at any time exceed Five Hundred Thousand
Dollars ($500,000).
7.5 LOANS, ADVANCES AND INVESTMENTS. The Borrower shall not,
and shall not permit any Subsidiary of the Borrower to, at any time make or
suffer to exist or remain outstanding any loan or advance to, OR purchase,
acquire or own (beneficially or of record) any stock, bonds, notes or securities
of, or any partnership interest (whether general or limited) in, or any other
interest in, OR make any capital contribution to or other investment in, any
other Person, or agree, become or remain liable (contingently or otherwise) to
do any of the foregoing, except:
(a) Loans and investments existing on the date hereof and
listed in Schedule 7.5 hereof (and extensions, renewals and
refinancings thereof on terms no less favorable than those existing
immediately before such extension, renewal or refinancing), investments
by the Borrower in publicly traded securities not exceeding at any time
One Million Dollars ($1,000,000) in the aggregate (determined by
reference to the consideration paid by the Borrower for such
securities) and investments in securities obtained by the Borrower or
any Subsidiary of the Borrower in settlement of, or as a direct result
of, any action, claim or proceeding by the Borrower or such Subsidiary;
(b) Receivables owing to the Borrower or any such
Subsidiary arising from sales of inventory under usual and customary
terms in the ordinary course of business;
(c) Loans and advances to officers and employees of the
Borrower and its Subsidiaries and in amounts at any time outstanding
not exceeding Five Hundred Thousand Dollars ($500,000) in the
aggregate;
(d) Loans and advances from a Subsidiary of the Borrower to
the Borrower (it being agreed that the Borrower shall, at the request
of the Required Lenders from time to time, forthwith cause each such
Subsidiary to subordinate all such loans and advances, then existing or
thereafter arising, to the Obligations upon terms and conditions
satisfactory to the Required Lenders);
(e) Loans from the Borrower to KST, PROVIDED that the
aggregate principal amount of all such loans at any time to KST shall
not exceed Two Million Dollars ($2,000,000); and PROVIDED FURTHER that
both immediately before and after giving effect to any such loan, no
Potential Default or Event of Default has occurred and is continuing or
will occur;
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(f) The capital stock of a Subsidiary of the Borrower owned on
the date hereof and listed on Schedule 4.14 hereto and capital stock
obtained in a transaction permitted by Section 7.9 hereof; and
(g) Cash Equivalent Investments and, with respect to KST only,
(i) obligations fully backed by the full faith and credit of the
Kingdom of Sweden maturing not in excess of three (3) months from the
date of acquisition, (ii) commercial paper having a rating under a
recognized Swedish rating agency equivalent to "P-1" by Moody's
Investors Service or "A-1" by Standard & Poor's Corporation, (iii)
investments in Swedish money market funds having a rating under a
recognized Swedish rating agency equivalent to at least AAAm or AAAm G
by Standard & Poor's Corporation or Aaa by Moody's Investors Service,
and (iv) the following obligations of any Swedish commercial bank
having capital surplus in excess of U.S. $500,000,000, which has a
commercial paper rating meeting the requirements specified in clause
(ii) above: (A) time deposits, certificates of deposit and acceptances
maturing not in excess of nine (9) months from the date of acquisition,
or (B) repurchase obligations with a term of not more than seven (7)
days for underlying securities of the type referred to in clause (i)
above, but only to the extent any of the foregoing is acquired for
investment and not with a view to achieving trading profits.
The loans permitted under Section 7.5(e) above may be further limited by the
Required Lenders from time to time based on ordinary and customary credit
standards, including, without limitation, the limitation of such loans if the
amount thereof loaned to a Subsidiary referred to therein would cause such
Subsidiary to have a negative tangible net worth, as determined by the Required
Lenders.
7.6 DIVIDENDS AND RELATED DISTRIBUTIONS. The Borrower shall
not, and shall not permit any Subsidiary of the Borrower to, declare or make any
Stock Payment, or agree, become or remain liable (contingently or otherwise) to
do any of the foregoing, except as follows:
(a) A Subsidiary of the Borrower may declare and make Stock
Payments if all of the capital stock of such Subsidiary is owned by the
Borrower or by a direct or indirect wholly-owned Subsidiary of the
Borrower;
(b) The Borrower may from time to time declare and make Stock
Payments if such Stock Payments are payable solely in shares of capital
stock (or options, warrants or rights therefor) of the Borrower; and
(c) The Borrower may from time to time declare and make annual
Stock Payments (in cash) in an amount not to exceed an amount equal to
ten percent (10%) of the Borrower's after-tax earnings for the Fiscal
Year immediately preceding the year in which such annual Stock Payment
is proposed to be made, determined with reference to the financial
statements required to be delivered under Section 6.1(a) hereof for
such immediately preceding Fiscal Year.
7.7 SALE-LEASEBACKS. The Borrower shall not, and shall not
permit any Subsidiary of the Borrower to, at any time enter into or suffer to
remain in effect any transaction to which the Borrower or such Subsidiary is a
party involving the sale, transfer or other disposition by the Borrower or any
Subsidiary of any property (now owned or hereafter acquired), with a view
directly or indirectly to the leasing back of any part of the same property or
any other property used for the
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same or a similar purpose or purposes, or agree, become or remain liable
(contingently or otherwise) to do any of the foregoing.
7.8 LEASES. The Borrower shall not, and shall not permit any
Subsidiary of the Borrower to, at any time enter into or suffer to remain in
effect any lease, as lessee, of any property, or agree, become or remain liable
(contingently or otherwise) to do any of the foregoing, except:
(a) Operating leases of real or personal property, provided
that (i) as of December 31 of each year, the Consolidated Lease Expense
on account of such leases for such year shall not exceed One Million
Dollars ($1,000,000) and (ii) such leases are not cancelable by any
party thereto;
(b) Capitalized Leases permitted under Section 7.3(d)
hereof; and
(c) Operating leases of real or personal property, provided
that such leases are cancelable by the Borrower or one (1) of its
Subsidiaries without penalty on not more than thirty (30) days prior
notice.
7.9 MERGERS, ACQUISITIONS, ETC. The Borrower shall not, and
shall not permit any Subsidiary of the Borrower to (v) merge with or into or
consolidate with any other Person, (w) liquidate, wind up, dissolve or divide,
(x) acquire all or any substantial portion of the properties or assets of any
going concern or going line of business, (y) acquire all or any substantial
portion of the properties, assets, capital stock or other equity interests in or
of any other Person other than in the ordinary course of business, or (z) agree,
become or remain liable (contingently or otherwise) to do any of the foregoing,
except:
(a) Another Person or Persons may merge with the Borrower,
PROVIDED that (i) the Borrower shall be the surviving corporation, (ii)
the business of such other Person or Persons shall be within the
Borrower's line of business or a related line of business or shall use
production or manufacturing technology used in the Borrower's line of
business, and (iii) no Event of Default or Potential Default shall
occur and be continuing or shall exist at such time or after giving
effect to such transaction;
(b) The Borrower may (w) acquire all or substantially all of
the properties or assets of any going concern or going line of
business, (x) acquire all or substantially all of the properties or
assets of any other Person, (y) acquire all or substantially all of the
capital stock or other equity interests in or of any other Person, or
(z) agree, become or remain liable (contingently or otherwise) to do
any of the foregoing (collectively, "Acquisitions") PROVIDED that (i)
no Event of Default or Potential Default shall occur and be continuing
or shall exist at such time or after giving effect to such transaction,
(ii) the business or properties so acquired shall be within the
Borrower's line of business or a related line of business or shall use
production or manufacturing technology used in the Borrower's line of
business, (iii) as of the date of the consummation of such Acquisition,
the aggregate consideration (determined in accordance with GAAP) paid
by the Borrower in connection with all Acquisitions for the twelve (12)
month period ending on such date (including the consideration paid with
respect to the Acquisition in question) shall not exceed Seven Million
Five Hundred Thousand Dollars ($7,500,000), (iv) the Borrower shall
have delivered the proforma financial statements required pursuant to
Section 6.1(c) hereof and no Event of Default or potential Event of
Default is disclosed or suggested in such statements, (v) the Borrower
shall have delivered the
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Compliance Certificate required under the last sentence of Section
6.1(d), and (vi) the Person acquired by the Borrower in connection with
such Acquisition shall have executed and delivered a Subsidiary
Guaranty and a Pledge Agreement each in form and substance satisfactory
to the Agent and the Lenders;
(c) A wholly-owned Subsidiary of the Borrower or any of its
Subsidiaries may merge with or into or consolidate with any other
wholly-owned Subsidiary of the Borrower or any of its Subsidiaries,
PROVIDED that (i) no Event of Default or Potential Default shall occur
and be continuing or shall exist at such time or after giving effect to
such transaction and (ii) prior to such merger or consolidation, the
Borrower shall have obtained the prior written consent of the Required
Lenders;
(d) A wholly-owned Subsidiary of the Borrower or any of its
Subsidiaries may merge with the Borrower, PROVIDED that (i) the
Borrower shall be the surviving corporation, (ii) no Event of Default
or Potential Default shall occur and be continuing or shall exist at
such time or after giving effect to such transaction, and (iii) prior
to such merger, the Borrower shall have obtained the prior written
consent of the Required Lenders; and
(e) The Borrower may enter into a single joint venture or
otherwise acquire less than fifty-one percent (51%) of the voting power
of the equity securities of a Person in connection with the prospective
transaction with an unrelated Person disclosed to the Agent and the
Lenders in writing prior to the date of this Agreement, provided that
(i) such prospective transaction shall be deemed to be an "Acquisition"
for purposes of determining compliance with Section 7.9(b) hereof, (ii)
no Event of Default or Potential Default shall occur and be continuing
or shall exist at such time or after giving effect to such transaction
and (iii) the business or properties of such joint venture or
acquisition shall be within the Borrower's line of business or a
related line of business or shall use production or manufacturing
technology used in the Borrower's line of business.
7.10 DISPOSITIONS OF PROPERTIES. The Borrower shall not, and
shall not permit any Subsidiary of the Borrower to, sell, convey, assign, lease,
transfer, abandon or otherwise dispose of, voluntarily or involuntarily, any of
its properties, or agree, become or remain liable (contingently or otherwise) to
do any of the foregoing, except:
(a) The Borrower and each Subsidiary of the Borrower may
sell inventory in the ordinary course of business;
(b) The Borrower and each Subsidiary of the Borrower may
dispose of equipment which is obsolete or no longer useful in the
business of the Borrower or such Subsidiary; and
(c) The Borrower and each Subsidiary of the Borrower may sell
or otherwise dispose of plant, property and equipment, PROVIDED that
the aggregate consideration received by the Borrower and its
Subsidiaries in connection with such sale or disposition during any
calendar year does not exceed Two Million Dollars ($2,000,000).
7.11 ISSUANCE OF SUBSIDIARY STOCK. The Borrower shall not
suffer any of its Subsidiaries to issue, sell, otherwise dispose or suffer to
remain outstanding, voluntarily or involuntarily, any shares of such
Subsidiary's capital stock, or any options, warrants, calls, subscriptions,
conversion rights, exchange rights, preemptive rights or other rights,
agreements or
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arrangements (contingent or otherwise) which may in any circumstances now or
hereafter obligate any Subsidiary to issue any shares of its capital stock,
except (i) shares of capital stock outstanding on the date of this Agreement and
set forth on Schedule 4.14 hereof and (ii) in connection with transactions
permitted by Section 7.9 hereof.
7.12 DEALINGS WITH AFFILIATES. The Borrower shall not, and
shall not permit any Subsidiary of the Borrower to, enter into or carry out any
transaction with (including, without limitation, purchase or lease property or
services from, sell or lease property or services to, loan or advance to, or
enter into, suffer to remain in existence or amend (other than automatic
renewals or extensions pursuant to the terms thereof) any contract, agreement or
arrangement with) any Affiliate of the Borrower (excluding for these purposes
Affiliates of the Borrower which are Subsidiaries of the Borrower), directly or
indirectly, or agree, become or remain liable (contingently or otherwise) to do
any of the foregoing, except:
(a) The existence and performance of contracts, agreements and
arrangements in existence as of the date of this Agreement and approved
by the Required Lenders, which contracts, agreements and arrangements
are set forth in Schedule 7.12 hereof;
(b) Directors and officers of the Borrower and its
Subsidiaries may be compensated for services rendered in such capacity
to the Borrower or such Subsidiary (which compensation may be fixed
pursuant to the terms of a written agreement with such directors or
officers or an amendment thereto), PROVIDED that the board of directors
of the Borrower (including a majority of the directors having no direct
or indirect interest in such transaction) approve the same as to the
"named executive officers" identified in the Borrower's annual report;
(c) Transactions in the ordinary course of business and
consistent with past practices between a Subsidiary of the Borrower, on
the one hand, and the Borrower or another Subsidiary of the Borrower,
on the other hand, in good faith and on terms no less favorable to the
Borrower or either Subsidiary than those that could have been obtained
in a comparable transaction on an arm's-length basis from an unrelated
Person;
(d) Loans and advances permitted by Section 7.5(c) and
Section 7.5(e) hereof; and
(e) Other transactions with Affiliates not exceeding in any
Fiscal Year Five Hundred Thousand Dollars ($500,000) in the aggregate.
7.13 LIMITATIONS ON MODIFICATION OF CERTAIN AGREEMENTS AND
INSTRUMENTS. The Borrower shall not, and shall not permit any Subsidiary of the
Borrower to, amend, modify or supplement in any material respect its articles of
incorporation or bylaws (or similar constituent documents).
7.14 LIMITATION ON PAYMENTS AND MODIFICATION OF RESTRICTED
INDEBTEDNESS. The Borrower shall not, and shall not permit any Subsidiary of the
Borrower to, directly or indirectly, pay, prepay, purchase, redeem, retire,
defease or acquire, OR make any payment (on account of principal, interest,
premium or otherwise) of, OR grant or suffer the existence of any Lien on any of
its property (now owned or hereafter acquired) to secure any indebtedness,
obligation or liability with respect to, OR amend, modify or supplement any of
the terms and conditions of, any Restricted Indebtedness, OR agree, become or
remain liable (contingently or otherwise) to do any of the foregoing.
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7.15 LIMITATION ON OTHER RESTRICTIONS ON DIVIDENDS BY
SUBSIDIARIES, ETC. The Borrower shall not permit any Subsidiary of the Borrower
to be or become subject to any restriction of any nature (whether arising by
operation of Law, by agreement, by its articles of incorporation, by its bylaws
or other constituent documents of such Subsidiary, or otherwise) on the right of
such Subsidiary from time to time to (w) declare and pay Stock Payments with
respect to capital stock owned by the Borrower or any Subsidiary of the
Borrower, (x) pay any indebtedness, obligations or liabilities from time to time
owed to the Borrower or any Subsidiary of the Borrower, (y) make loans or
advances to the Borrower or any Subsidiary of the Borrower, or (z) transfer any
of its properties or assets to the Borrower or any Subsidiary of the Borrower,
except:
(a) Restrictions pursuant to the Loan Documents;
(b) Legal restrictions of general applicability under the
corporation law under which such Subsidiary is incorporated, and
fraudulent conveyance or similar laws or general applicability for the
benefit of creditors of such Subsidiary generally; and
(c) With respect to clause (z) above: (i) non-assignment
provisions of any contract or of any lease by the Borrower or such
Subsidiary as lessee, and (ii) restrictions on transfer of property
subject to a Permitted Lien under Sections 7.2(b) and 7.2(c) hereof for
the benefit of the holder of such Permitted Lien.
7.16 LIMITATION ON OTHER RESTRICTIONS ON LIENS. The Borrower
shall not, and shall not permit any Subsidiary of the Borrower to, enter into,
become or remain subject to any agreement or instrument to which the Borrower or
such Subsidiary is a party or by which either of them or any of their respective
properties (now owned or hereafter acquired) may be subject or bound that would
prohibit the grant of any Lien upon any of its properties (now owed or hereafter
acquired), except:
(a) The Loan Documents; and
(b) Restrictions pursuant to nonassignment provisions of any
contract or of any lease by the Borrower or such Subsidiary as lessee.
7.17 LIMITATION ON OTHER RESTRICTIONS ON AMENDMENT OF THE LOAN
DOCUMENTS, ETC. The Borrower shall not, and shall not permit any Subsidiary of
the Borrower to, enter into, become or remain subject to any agreement or
instrument to which the Borrower or such Subsidiary is a party or by which
either of them or any of their respective properties (now owned or hereafter
acquired) may be subject or bound that would prohibit or require the consent of
any Person to any amendment, modification or supplement to any of the Loan
Documents, except for (i) the Loan Documents and (ii) the agreements and
instruments set forth on Schedule 7.17 hereto.
ARTICLE 8
DEFAULTS
8.1 EVENTS OF DEFAULT. An "Event of Default" shall mean the
occurrence or existence of one (1) or more of the following events or conditions
(for any reason, whether voluntary, involuntary or effected or required by Law):
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(a) The Borrower shall fail to pay when due principal of any
Loans, any Reimbursement Obligation or any required cash
collateralization of outstanding Letters of Credit.
(b) The Borrower or any Subsidiary of the Borrower, as the
case may be, shall fail to pay when due interest on any Loan, any fees,
indemnity or expenses, or any other amount due hereunder or under any
other Loan Document, and such failure shall have continued for a period
of five (5) days after notice to the Borrower.
(c) Any representation or warranty made or deemed made by the
Borrower or any Subsidiary of the Borrower in or pursuant to or in
connection with any Loan Document, or any statement made by the
Borrower or any Subsidiary of the Borrower in any financial statement,
certificate, report, exhibit or document furnished by the Borrower or
any Subsidiary of the Borrower to the Agent, the Issuing Bank or any
Lender pursuant to or in connection with any Loan Document, shall prove
to have been false or misleading in any material respect as of the time
when made or deemed made (including by omission of material information
necessary to make such representation, warranty or statement not
misleading).
(d) The Borrower shall default in the performance or
observance of any covenant contained in Article 7 hereof or any of the
covenants contained in Sections 2.8 or 6.1(i)(i) hereof.
(e) The Borrower or any Subsidiary of the Borrower shall
default in the performance or observance of any other covenant,
agreement or duty under this Agreement or any other Loan Document and
(i) in the case of a default under Section 6.1 hereof (other than as
referred to in subsection (i)(i) thereof) such default shall have
continued for a period of five (5) days and (ii) in the case of any
other default such default shall have continued for a period of thirty
(30) days after notice from the Agent to the Borrower.
(f) Any Cross-Default Event shall occur with respect to any
Cross-Default Obligation; PROVIDED, HOWEVER, that if a Cross-Default
Event would have occurred with respect to a Cross-Default Obligation
but for the grant of a waiver or similar indulgence, a Cross-Default
Event shall nevertheless be deemed to have occurred if the Borrower or
any Subsidiary of the Borrower directly or indirectly gave or agreed to
give any consideration for such waiver or indulgence (including but not
limited to a reduction in maturity, an increase in rates or the
granting of collateral). As used herein. "Cross-Default Obligation"
shall mean any Indebtedness for borrowed money (or set of related
indebtedness for borrowed money) of the Borrower or any Subsidiary of
the Borrower in excess of Five Hundred Thousand Dollars ($500,000) in
aggregate principal amount and any Indebtedness or Guaranty Equivalent
of the Borrower or any Subsidiary of the Borrower, or any agreement or
instrument creating, evidencing or securing such Indebtedness or
Guaranty Equivalent. As used herein, "Cross-Default Event" with respect
to a Cross-Default Obligation shall mean (i) the occurrence of any
default, event or condition which causes or which would permit any
Person or Persons to cause or which would, with the giving of notice or
the passage of time or both, permit any Person or Persons to cause all
or any part of such Cross Default Obligation to become due (by
acceleration, mandatory prepayment or repurchase, or otherwise) before
its otherwise stated maturity, or (ii) failure to pay all or any part
of such Cross-Default Obligation at its stated maturity and any failure
to pay any monetary obligation under any Cross-Default Obligation when
due, or (iii) any other default by the Borrower or any Subsidiary of
the Borrower under
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any Cross-Default Obligation shall continue unremedied (and unwaived)
beyond any applicable period of grace or for a period of thirty (30)
calendar days if no grace exists for such default under the terms of
such Cross-Default Obligation (or such longer period of time as the
Borrower or such Subsidiary is contesting or attempting to cure in good
faith such other default, but in no event for more than ninety (90)
calendar days).
(g) One (1) or more judgments for the payment of money shall
have been entered against the Borrower or any Subsidiary of the
Borrower, which judgment or judgments exceed Five Hundred Thousand
Dollars ($500,000) in the aggregate, and such judgment or judgments
shall have remained undischarged and unstayed for a period of thirty
(30) consecutive days.
(h) One or more writs or warrants of attachment, garnishment,
execution, distraint or similar process exceeding in value the
aggregate amount of Five Hundred Thousand Dollars ($500,000) shall have
been issued against the Borrower or any Subsidiary of the Borrower or
any of their respective properties and shall have remained undischarged
and unstayed for a period of thirty (30) consecutive days.
(i) Any Governmental Action now or hereafter made by or with
any Governmental Authority in connection with any Loan Document is not
obtained or shall have ceased to be in full force and effect or shall
have been modified or amended or shall have been held to be illegal or
invalid, and the Required Lenders shall have determined in good faith
(which determination shall be conclusive) that such event or condition
could reasonably be expected to have a Material Adverse Effect.
(j) Any Loan Document or term or provision thereof shall cease
to be in full force and effect (except in accordance with the express
terms of such Loan Document), or the Borrower or any Subsidiary of the
Borrower shall, or shall purport to, terminate (except in accordance
with the terms of such Loan Document), repudiate, declare voidable or
void or otherwise contest, any Loan Document or term or provision
thereof or any obligation or liability of the Borrower or any such
Subsidiary thereunder.
(k) The Required Lenders shall have determined (which
determination shall be conclusive) that an event, circumstance or
condition has occurred which amounts to, entails, causes or constitutes
a Material Adverse Effect.
(l) Any one (1) or more Pension-Related Events referred to in
subsection (a)(ii), (b) or (e) of the definition of "Pension-Related
Event" shall have occurred; or any one (1) or more other
Pension-Related Events shall have occurred and the Required Lenders
shall determine in good faith (which determination shall be conclusive)
that such other Pension-Related Events, individually or in the
aggregate, could have a Material Adverse Effect.
(m) Any one (1) or more of the events or conditions set forth
in the following clauses (i) or (ii) shall have occurred in respect of
the Borrower or any Subsidiary of the Borrower or any of their
respective Environmental Affiliates, and the Required Lenders shall
determine in good faith (which determination shall be conclusive) that
such events or conditions, individually or in the aggregate, could have
a Material Adverse Effect: (i) any past or present violation of any
Environmental Law by such Person, (ii) existence of any pending or
threatened Environmental Claim against any such Person, or existence of
any past or
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present acts, omissions, events or circumstances that could form the
basis of any Environmental Claim against any such Person.
(n) A Change of Control shall have occurred.
(o) A proceeding shall have been instituted in respect of
the Borrower or any Subsidiary of the Borrowe
(i) seeking to have an order for relief entered in
respect of such Person, or seeking a declaration or entailing
a finding that such Person is insolvent or a similar
declaration or finding, or seeking dissolution, winding-up,
charter revocation or forfeiture, liquidation, reorganization,
arrangement, adjustment, composition or other similar relief
with respect to such Person, its assets or its debts under any
Law relating to bankruptcy, insolvency, relief of debtors or
protection of creditors, termination of legal entities or any
other similar Law now or hereafter in effect, or
(ii) seeking appointment of a receiver, trustee,
liquidator, assignee, sequestrator or other custodian for such
Person or for all or any substantial part of its property.
(p) The Borrower or any Subsidiary of the Borrower shall cease
to be Solvent; shall fail to pay, become unable to pay, or state that
it is or will be unable to pay, its debts as they become due; shall
voluntarily suspend transaction of its business; shall make a general
assignment for the benefit of creditors; shall institute (or fail to
controvert in a timely and appropriate manner) a proceeding described
in Section 8.1(o)(i) hereof, or (whether or not any such proceeding has
been instituted) shall consent to or acquiesce in any such order for
relief, declaration, finding or relief described therein; shall
institute (or fail to controvert in a timely and appropriate manner) a
proceeding described in Section 8.1(0)(ii) hereof, or (whether or not
any such proceeding has been instituted) shall consent to or acquiesce
in any such appointment or to the taking of possession by any such
custodian of all or any substantial part of its property; shall
dissolve, windup, revoke or forfeit its charter (or other constituent
documents) or liquidate itself or any substantial part of its property
(except to the extent expressly permitted by Section 7.10 hereof); or
shall take any action in furtherance of any of the foregoing.
(q) Any material uninsured damage to, or loss, theft or
destruction of, any of the property or assets of the Borrower or any of
its Subsidiaries material to its business or operations shall occur.
(r) The Borrower or any of its Subsidiaries shall be enjoined,
restrained, or in any way prevented by the order of any Governmental
Authority, the effect of which restricts the Borrower or any of its
Subsidiaries from conducting all or any part of its business.
(s) Any strike, lockout, labor dispute, embargo, condemnation,
act of God or public enemy, or casualty which is not adequately covered
by insurance, shall cause the cessation or curtailment of production or
other revenue producing activities at any facility of the Borrower or
any of its Subsidiaries for more than thirty (30) consecutive days and
shall have a Material Adverse Effect.
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8.2 CONSEQUENCES OF AN EVENT OF DEFAULT.
(a) If an Event of Default specified in subsections (a)
through (n) of Section 8.1 hereof or subsections (q), (r) or (s) of Section 8.1
hereof shall occur and be continuing or shall exist, then, in addition to all
other rights and remedies which the Agent or any Lender may have, at law, in
equity or otherwise, the Lenders shall be under no further obligation to make
Loans hereunder, and the Agent may, and upon the written request of the Required
Lenders shall, by notice to the Borrower, from time to time do any or all of the
following:
(i) Declare the Commitments terminated, whereupon the
Commitments will terminate and any fees hereunder shall be immediately
due and payable without presentment, demand, protest or further notice
of any kind, all of which are hereby waived, and an action therefor
shall immediately accrue; and/or
(ii) Declare the unpaid principal amount of the Loans,
interest accrued thereon and all other Obligations to be immediately
due and payable without presentment, demand, protest or further notice
of any kind, all of which are hereby waived, and an action therefor
shall immediately accrue.
(b) If an Event of Default specified in subsection (o) or (p)
of Section 8.1 hereof shall occur or exist, then, in addition to all other
rights and remedies which the Agent or any Lender may have, at law, in equity or
otherwise, the Commitments shall automatically terminate and the Lenders shall
be under no further obligation to make Loans, and the unpaid principal amount of
the Loans, interest accrued thereon and all other Obligations (including, but
not limited to, the obligation to cash collateralize outstanding Letters of
Credit) shall become immediately due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby waived, and an action
therefor shall immediately accrue.
ARTICLE 9
THE AGENT
9.1 APPOINTMENT. Each Lender hereby irrevocably appoints
Mellon to act as Agent for such Lender under this Agreement and the other Loan
Documents. Each Lender hereby irrevocably authorizes the Agent to take such
action on behalf of such Lender under the provisions of this Agreement and the
other Loan Documents, and to exercise such powers and to perform such duties, as
are expressly delegated to or required of the Agent by the terms hereof or
thereof, together with such powers as are incidental thereto. Mellon hereby
agrees to act as Agent on behalf of the Lenders on the terms and conditions set
forth in this Agreement and the other Loan Documents, subject to its right to
resign as provided in Section 9.10 hereof. Each Lender hereby irrevocably
authorizes the Agent to execute and deliver each of the Loan Documents and to
accept delivery of such of the other Loan Documents as may not require execution
by the Agent. Each Lender agrees that the rights and remedies granted to the
Agent under the Loan Documents shall be exercised exclusively by the Agent, and
that no Lender shall have any right individually to exercise any such right or
remedy, except to the extent expressly provided herein or therein.
9.2 GENERAL NATURE OF AGENT'S DUTIES. Notwithstanding
anything to the contrary elsewhere in this Agreement or in any other Loan
Document:
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(a) The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other Loan
Documents, and no implied duties or responsibilities on the part of the
Agent shall be read into this Agreement or any Loan Document or shall
otherwise exist;
(b) The duties and responsibilities of the Agent under this
Agreement and the other Loan Documents shall be mechanical and
administrative in nature, and the Agent shall not have a fiduciary
relationship in respect of any Lender;
(c) The Agent is and shall be solely the agent of the Lenders.
The Agent does not assume, and shall not at any time be deemed to have,
any relationship of agency or trust with or for, or any other duty or
responsibility to, the Borrower, any of its Subsidiaries or any other
Person (except only for its relationship as agent for, and its express
duties and responsibilities to, the Lenders as provided in this
Agreement and the other Loan Documents); and
(d) The Agent shall be under no obligation to take any action
hereunder or under any other Loan Document if the Agent believes in
good faith that taking such action may conflict with any Law or any
provision of this Agreement or any other Loan Document, or may require
the Agent to qualify to do business in any jurisdiction where it is not
then so qualified.
9.3 EXERCISE OF POWERS. The Agent shall take any action of the
type specified in this Agreement or any other Loan Document as being within the
Agent's rights, powers or discretion in accordance with directions from the
Required Lenders (or, to the extent this Agreement or such Loan Document
expressly requires the direction or consent of some other Person or set of
Persons, then instead in accordance with the directions of such other Person or
set of Persons). In the absence of such directions, the Agent shall have the
authority (but under no circumstances shall be obligated), in its sole
discretion, to take any such action, except to the extent this Agreement or such
Loan Document expressly requires the direction or consent of the Required
Lenders (or some other Person or set of Persons), in which case the Agent shall
not take such action absent such direction or consent. Any action or inaction
pursuant to such direction, discretion or consent shall be binding on all the
Lenders. The Agent shall not have any liability to any Person as a result of (x)
the Agent acting or refraining from acting in accordance with the directions of
the Required Lenders (or other applicable Person or set of Persons), (y) the
Agent refraining from acting in the absence of instructions to act from the
Required Lenders (or other applicable Person or set of Persons), whether or not
the Agent has discretionary power to take such action, or (z) the Agent taking
discretionary action it is authorized to take under this Section (subject, in
the case of this clause (z), to the provisions of Section 9.4(a) hereof).
9.4 GENERAL EXCULPATORY PROVISIONS. Notwithstanding
anything to the contrary elsewhere in this Agreement or any other Loan Document:
(a) The Agent shall not be liable for any action taken or
omitted to be taken by it under or in connection with this Agreement or
any other Loan Document, unless caused by its own gross negligence or
willful misconduct;
(b) The Agent shall not be responsible for (i) the execution,
delivery, effectiveness, enforceability, genuineness, validity or
adequacy of this Agreement or any other Loan Document, (ii) any
recital, representation, warranty, document. certificate, report or
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statement in, provided for in, or received under or in correction with,
this Agreement or any other Loan Document or (iii) any failure of the
Borrower or any Subsidiary of the Borrower or Lender to perform any of
their respective obligations under this Agreement or any other Loan
Document;
(c) The Agent shall not be under any obligation to ascertain,
inquire or give any notice relating to (i) the performance or
observance of any of the terms or conditions of this Agreement or any
other Loan Document on the part of the Borrower or any Subsidiary of
the Borrower, (ii) the business, operations, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries,
individually and taken as a whole, or any other Person, or (iii) except
to the extent set forth in Section 9.5(f) hereof, the existence of any
Event of Default or Potential Default; and
(d) The Agent shall not be under any obligation, either
initially or on a continuing basis to provide any Lender with any
notices, reports or information of any nature, whether in its
possession presently or hereafter, except for such notices, reports and
other information expressly required by this Agreement or any other
Loan Document to be furnished by the Agent to such Lender.
9.5 ADMINISTRATION BY THE AGENT.
(a) The Agent may rely upon any notice or other communication
of any nature (written or oral, including but not limited to telephone
conversations, whether or not such notice or other communication is made in a
manner permitted or required by this Agreement or any Loan Document) purportedly
made by or on behalf of the proper party or parties, and the Agent shall not
have any duty to verify the identity or authority of any Person giving such
notice or other communication.
(b) The Agent may consult with legal counsel (including,
without limitation, in-house counsel for the Agent or in-house or other counsel
for the Borrower or any Subsidiary of the Borrower), independent public
accountants and any other experts selected by it from time to time, and the
Agent shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts.
(c) The Agent may conclusively rely upon the truth of the
statements and the correctness of the opinions expressed in any certificates or
opinions furnished to the Agent in accordance with the requirements of this
Agreement or any other Loan Document. Whenever the Agent shall deem it necessary
or desirable that a matter be proved or established with respect to the Borrower
or any Subsidiary of the Borrower or Lender, such matter may be established by a
certificate of the Borrower, such Subsidiary or Lender, as the case may be, and
the Agent may conclusively rely upon such certificate (unless other evidence
with respect to such matter is specifically prescribed in this Agreement or
another Loan Document).
(d) The Agent may fail or refuse to take any action unless it
shall be indemnified to its satisfaction from time to time against any and all
amounts, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature which
may be imposed on, incurred by or asserted against the Agent by reason of taking
or continuing to take any such action.
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(e) The Agent may perform any of its duties under this
Agreement or any other Loan Document by or through agents or attorneys-in-fact.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care; PROVIDED,
HOWEVER, that the Agent shall pursue on behalf of the Lenders any rights or
remedies which the Lenders may have against such agents or attorneys-in-fact as
a result of the negligence or misconduct of such agents or attorneys-in-fact.
(f) The Agent shall not be deemed to have any knowledge or
notice of the occurrence of any Event of Default or Potential Default unless the
Agent has received notice from a Lender, the Borrower or any Subsidiary of the
Borrower referring to this Agreement, describing such Event of Default or
Potential Default, and stating that such notice is a "notice of default". If the
Agent receives such a notice, the Agent shall give prompt notice thereof to each
Lender.
9.6 LENDER NOT RELYING ON AGENT OR OTHER LENDERS. Each Lender
acknowledges as follows: (a) Neither the Agent nor any other Lender has made any
representations or warranties to it, and no act taken hereafter by the Agent or
any other Lender shall be deemed to constitute any representation or warranty by
the Agent or such other Lender to it; (b) It has, independently and without
reliance upon the Agent or any other Lender, and based upon such documents and
information as it has deemed appropriate, made its own credit and legal analysis
and decision to enter into this Agreement and the other Loan Documents; and (c)
It will, independently and without reliance upon the Agent or any other Lender,
and based upon such documents and information as it shall deem appropriate at
the time, make its own decisions to take or not take action under or in
connection with this Agreement and the other Loan Documents.
9.7 INDEMNIFICATION OF AGENT BY LENDERS. Each Lender agrees to
reimburse and indemnify the Agent and its directors, officers, employees,
attorneys and agents (to the extent not reimbursed by the Borrower or any
Subsidiary of the Borrower and without limitation of the obligations of the
Borrower and such Subsidiaries to do so), Pro Rata, from and against any and all
amounts, losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements of any kind or nature
(including, without limitation, the fees and disbursements of counsel for the
Agent or such other Person in connection with any investigative, administrative
or judicial proceeding commenced or threatened, whether or not the Agent or such
other Person shall be designated a party thereto) that may at any time be
imposed on, incurred by or asserted against the Agent or such other Person as a
result of, or arising out of, or in any way related to or by reason of, this
Agreement, any other Loan Document, any transaction from time to time
contemplated hereby or thereby, or any transaction financed in whole or in part
or directly or indirectly with the proceeds of any Loan or Letter of Credit,
PROVIDED that no Lender shall be liable for any portion of such amounts, losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements resulting solely from the gross
negligence or willful misconduct of the Agent or such other Person, as finally
determined by a court of competent jurisdiction. Payments under this Section
shall be due and payable on demand.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
Commitments and the Obligations owing to it, the Agent shall have the same
rights and powers under this Agreement and each other Loan Document as any other
Lender and may exercise the same as though it were not the Agent, and the terms
"Lenders," "holders of Notes," "Issuing Bank" and like terms shall include the
Agent in its individual capacity as such. The Agent and its Affiliates may,
without liability to account but subject to the terms of this Agreement, make
loans to, accept deposits from, acquire debt or equity interests in, act as
trustee under indentures of, and engage in any other business with, the Borrower
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and any stockholder, Subsidiary or Affiliate of the Borrower, as though the
Agent were not the Agent hereunder.
9.9 HOLDERS OF NOTES. The Agent may deem and treat the Lender
which is payee of a Note as the owner and holder of such Note for all purposes
hereof unless and until a Transfer Supplement with respect to the assignment or
transfer thereof shall have been filed with the Agent in accordance with Section
10.14 hereof. Any authority, direction or consent of any Person who at the time
of giving such authority, direction or consent is shown in the Register as being
a Lender shall be conclusive and binding on each present and subsequent holder,
transferee or assignee of any Note or Notes payable to such Lender or of any
Note or Notes issued in exchange therefor.
9.10 SUCCESSOR AGENT. The Agent may resign at any time by
giving thirty (30) days' prior written notice thereof to the Lenders and the
Borrower. The Agent may be removed by the Required Lenders at any time by giving
thirty (30) days' prior written notice thereof to the Agent, the other Lenders
and the Borrower. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed and consented to, and shall have accepted such
appointment, within thirty (30) days after such notice of resignation or
removal, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent. Each successor Agent shall be a commercial bank or trust
company organized under the laws of the United States of America or any State
thereof and having a combined capital and surplus of at least $1,000,000,000.
Upon the acceptance by a successor Agent of its appointment as Agent hereunder,
such successor Agent shall thereupon succeed to and become vested with all the
properties, rights, powers, privileges and duties of the former Agent, without
further act, deed or conveyance. Upon the effective date of resignation or
removal of a retiring Agent, such Agent shall be discharged from its duties
under this Agreement and the other Loan Documents, but the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted by it
while it was Agent under this Agreement. If and so long as no successor Agent
shall have been appointed, then any notice or other communication required or
permitted to be given by the Agent shall be sufficiently given if given by the
Required Lenders, all notices or other communications required or permitted to
be given to the Agent shall be given to each Lender, and all payments to be made
to the Agent shall be made directly to the Borrower or Lender for whose account
such payment is made.
9.11 ADDITIONAL AGENTS. If the Agent shall from time to time
deem it necessary or advisable, for its own protection in the performance of its
duties hereunder or in the interest of the Lenders, the Agent and the Borrower
shall (and the Borrower shall cause its Subsidiaries to) execute and deliver a
supplemental agreement and all other instruments and agreements necessary or
advisable, in the opinion of the Agent, to constitute another commercial bank or
trust company, or one or more other Persons approved by the Agent, to act as
co-Agent or agent, with such powers of the Agent as may be provided in such
supplemental agreement, and to vest in such bank, trust company or Person as
such co-Agent or separate agent, as the case may be, any properties, rights,
powers, privileges and duties of the Agent under this Agreement or any other
Loan Document.
9.12 CALCULATIONS. The Agent shall not be liable for any
calculation, apportionment or distribution of payments made by it in good faith.
If such calculation, apportionment or distribution is subsequently determined to
have been made in error, the sole recourse of any Lender to whom payment was due
but not made shall be to recover from the other Lenders any payment in excess of
the amount to which they are determined to be entitled or, if the amount due was
not paid by the Borrower or any of its Subsidiaries, as the case may be, to
recover such amount from such Person.
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9.13 FUNDING BY AGENT. Unless the Agent shall have been
notified in writing by any Lender not later than the close of business on the
day before the day on which Loans are requested by the Borrower to be made that
such Lender will not make its Pro Rata share of such Loans, the Agent may assume
that such Lender will make its Pro Rata share of the Loans, and in reliance upon
such assumption the Agent may (but in no circumstances shall be required to)
make available to the Borrower a corresponding amount. If and to the extent that
any Lender fails to make such payment to the Agent on such date, such Lender
shall pay such amount on demand (or, if such Lender fails to pay such amount on
demand, the Borrower shall pay such amount on demand), together with interest,
for the Agent's own account, for each day from and including the date of the
Agent's payment to and including the date of repayment to the Agent (before and
after judgment) at the rate or rates per annum applicable to such Loans. All
payments to the Agent under this Section shall be made to the Agent at the
Agent's Office in Dollars in funds immediately available at such Agent's Office,
without set-off, withholding, counterclaim or other deduction of any nature.
ARTICLE 10
MISCELLANEOUS
10.1 HOLIDAYS. Whenever any payment or action to be made or
taken hereunder or under any other Loan Document shall be stated to be due on a
day which is not a Business Day, such payment or action shall be made or taken
on the next following Business Day and such extension of time shall be included
in computing interest or fees, if any, in connection with such payment or
action.
10.2 RECORDS. The unpaid principal amount of the Loans owing
to each Lender, the unpaid interest accrued thereon, the interest rate or rates
applicable to such unpaid principal amount, the duration of such applicability,
each Lender's Revolving Credit Committed Amount and the accrued and unpaid fees
owing to each Lender and the Issuing Bank shall at all times be ascertained from
the records of the Agent, which shall be conclusive absent manifest error. The
unpaid Reimbursement Obligations, the unpaid interest accrued thereon and the
interest rate on rates applicable thereto shall at all times be ascertained from
the records of the Issuing Bank, which shall be conclusive absent manifest
error.
10.3 AMENDMENTS AND WAIVERS. Neither this Agreement nor any
Loan Document may be amended, modified or supplemented except in accordance with
the provisions of this Section. Subject to the fourth sentence of this Section
10.3, the Agent (acting at the direction of the Required Lenders) and the
Borrower may from time to time amend, modify or supplement the provisions of
this Agreement or any other Loan Document for the purpose of amending, adding
to, or waiving any provisions or changing in any manner the rights and duties of
the Borrower or any Subsidiary of the Borrower, as the case may be, the Agent or
any Lender. Any such amendment, modification or supplement made by Borrower and
the Agent in accordance with the provisions of this Section shall be binding
upon the Borrower, each Lender and the Agent. The Agent shall enter into such
amendments, modifications or supplements from time to time as directed by the
Required Lenders, and only as so directed, PROVIDED, that no such amendment,
modification or supplement may be made which will
(a) Increase the Revolving Credit Committed Amount of any
Lender over the amount thereof then in effect, or extend the Revolving
Credit Maturity Date, without the written consent of each Lender
affected thereby;
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(b) Reduce the principal amount of or extend the time for any
payment of principal of any Loan, or reduce the rate of interest or
extend the time for payment of interest borne by any Loan or
Reimbursement Obligation (other than as a result of waiving the
applicability of any increase in interest rates applicable to overdue
amounts), or extend the time for payment of or reduce the amount of any
Revolving Credit Commitment Fee or Letter of Credit Fee, or reduce or
postpone the date for payment of any other fees, expenses, indemnities
or amounts payable under any Loan Document, without the written consent
of each Lender affected thereby;
(c) Change the definition of "Required Lenders" or amend
this Section 10.3, without the written consent of all the Lenders;
(d) Amend or waive any of the provisions of Article 10 hereof,
or impose additional duties upon the Agent or otherwise adversely
affect the rights, interests or obligations of the Agent, without the
written consent of the Agent; or
(e) Amend or waive any of the provisions of Article 3, or
impose additional duties on the Issuing Bank or otherwise adversely
affect the rights, interests or obligations of the Issuing Bank without
the consent of Mellon;
and PROVIDED, FURTHER, that Transfer Supplements may be entered into in the
manner provided in Section 10.14 hereof. Any such amendment, modification or
supplement must be in writing and shall be effective only to the extent set
forth in such writing. Any Event of Default or Potential Default waived or
consented to in any such amendment, modification or supplement shall be deemed
to be cured and not continuing to the extent and for the period set forth in
such waiver or consent, but no such waiver or consent shall extend to any other
or subsequent Event of Default or Potential Default or impair any right
consequent thereto.
10.4 NO IMPLIED WAIVER; CUMULATIVE REMEDIES. No course of
dealing and no delay or failure of the Agent or any Lender in exercising any
right, power or privilege under this Agreement or any other Loan Document shall
affect any other or future exercise thereof or exercise of any other right,
power or privilege; nor shall any single or partial exercise of any such right,
power or privilege or any abandonment or discontinuance of steps to enforce such
a right. power or privilege preclude any further exercise thereof or of any
other right, power or privilege. The rights and remedies of the Agent and the
Lenders under this Agreement and any other Loan Document are cumulative and not
exclusive of any rights or remedies which the Agent or any Lender would
otherwise have hereunder or thereunder, at law, in equity or otherwise.
10.5 NOTICES.
(a) Except to the extent otherwise expressly permitted
hereunder or thereunder, all notices, requests, demands, directions and other
communications (collectively "notices") under this Agreement or any Loan
Document shall be in writing (including telexed and telecopied communication)
and shall be sent by first-class mail, or by nationally-recognized next-day
courier, or by telex or telecopier (with confirmation in writing mailed
first-class or sent by such an overnight courier), or by personal delivery. All
notices shall be sent to the applicable party at the address stated on the
signature pages hereof or in accordance with the last unrevoked written
direction from such party to the other parties hereto, in all cases with postage
or other charges prepaid. Any such properly given notice to the Borrower, the
Agent or any Lender shall be effective on the earliest to occur of
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receipt, telephone confirmation of receipt of telex or telecopy communication,
one Business Day after delivery to a nationally-recognized next-day courier, or
five (5) Business Days after deposit in the mail.
(b) Any Lender giving any notice to the Borrower or any other
party to a Loan Document shall simultaneously send a copy thereof to the Agent,
and the Agent shall promptly notify the other Lenders of the receipt by it of
any such notice.
(c) The Agent and each Lender may rely on any notice (whether
or not such notice is made in a manner permitted or required by this Agreement
or any Loan Document) purportedly made by or on behalf of the Borrower or any
Subsidiary of the Borrower, and neither the Agent nor any Lender shall have any
duty to verify the identity or authority of any Person giving such notice.
10.6 EXPENSES; TAXES; INDEMNITY.
(a) Except to the extent otherwise agreed to in writing
between the Agent and the Borrower prior to the date of this Agreement, the
Borrower agrees to pay or cause to be paid and to save the Agent and each of the
Lenders harmless against liability for the payment of all out-of-pocket costs
and expenses (including but not limited to fees and expenses of counsel,
including local counsel, auditors, consulting engineers, appraisers, and all
other professional, accounting, evaluation and consulting costs) incurred by the
Agent or any Lender from time to time arising from or relating to (i) the
negotiation, preparation, execution, delivery, administration and performance of
this Agreement and the other Loan Documents, (ii) any requested amendments,
modifications, supplements, waivers or consents (whether or not ultimately
entered into or granted) to this Agreement or any Loan Document, and (iii) the
enforcement or preservation of rights under this Agreement or any Loan Document
(including but not limited to any such costs or expenses arising from or
relating to (A) collection or enforcement of an outstanding Loan or any other
amount owing hereunder or thereunder by the Agent or any Lender and (B) any
litigation, proceeding, dispute, workout, restructuring or rescheduling related
in any way to this Agreement or the Loan Documents).
(b) The Borrower hereby agrees to pay all stamp, document,
transfer, recording, filing, registration, search, sales and excise fees and
taxes and all similar impositions now or hereafter determined by the Agent or
any Lenders to be payable in connection with this Agreement or any other Loan
Documents or any other documents, instruments or transactions pursuant to or in
connection herewith or therewith, and the Borrower agrees to save the Agent and
each Lender harmless from and against any and all present or future claims,
liabilities or losses with respect to or resulting from any omission to pay or
delay in paying any such fees, taxes or impositions.
(c) The Borrower hereby agrees to reimburse and indemnify each
of the Indemnified Parties from and against any and all losses, liabilities,
claims, damages, expenses, obligations, penalties, actions, judgments, suits,
costs or disbursements of any kind or nature whatsoever (including, without
limitation, the fees and disbursements of counsel for such Indemnified Party in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnified Party shall be
designated a party thereto) that may at any time be imposed on, asserted against
or incurred by such Indemnified Party as a result of, or arising out of, or in
any way related to or by reason of, this Agreement or any other Loan Document,
any transaction from time to time contemplated hereby or thereby, or any
transaction financed in whole or in part or directly or indirectly with the
proceeds of any Loan (and without in any way limiting the
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generality of the foregoing, including any violation or breach of any
Environmental Law or any other Law by the Borrower or any Subsidiary of the
Borrower or any Environmental Affiliate of any of them; any Environmental Claim
arising out of the management, use, control, ownership or operation of property
by any of such Persons, including all on-site and off-site activities involving
Environmental Concern Materials; or any exercise by the Agent or any Lender of
any of its rights or remedies under this Agreement or any other Loan Document);
but excluding any such losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements
resulting solely from the gross negligence or willful misconduct of such
Indemnified Party, as finally determined by a court of competent jurisdiction.
If and to the extent that the foregoing obligations of the Borrower under this
subsection (c), or any other indemnification obligation of the Borrower
hereunder or under any other Loan Document, are unenforceable for any reason,
the Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable Law.
10.7 SEVERABILITY. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
10.8 PRIOR UNDERSTANDINGS. This Agreement and the other Loan
Documents supersede all prior and contemporaneous understandings and agreements,
whether written or oral, among the parties hereto relating to the transactions
provided for herein and therein, except for the obligation of the Borrower to
pay the Agent fees in accordance with separate written agreements between the
Borrower and the Agent.
10.9 DURATION; SURVIVAL. All representations and warranties of
each Loan Party contained herein or in any other in the Loan Document or made in
connection herewith or therewith shall survive the making of, and shall not be
waived by the execution and delivery, of this Agreement or any other Loan
Document, any investigation by or knowledge of the Agent or any Lender, the
making of any Loan, the issuance of any Letter of Credit or any other event or
condition whatever. All covenants and agreements of each Loan Party contained
herein or in any other Loan Document shall continue in full force and effect
from and after the date hereof so long as the Borrower may borrow hereunder and
until payment in full of all Obligations. Without limitation, all obligations of
the Borrower hereunder or under any other Loan Document to make payments to or
indemnify the Agent or any Lender shall survive the payment in full of all other
Obligations, termination of the Borrower's right to borrow hereunder, and all
other events and conditions whatever. In addition, all obligations of each
Lender to make payments to or indemnify the Agent shall survive the payment in
full by the Borrower of all Obligations, termination of the Borrower's right to
borrow hereunder, and all other events or conditions whatever.
10.10 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
10.11 LIMITATION ON PAYMENTS. The parties hereto intend to
conform to all applicable Laws in effect from time to time limiting the maximum
rate of interest that may be charged or collected. Accordingly, notwithstanding
any other provision hereof or of any other Loan Document, the Borrower shall not
be required to make any payment to or for the account of any Lender, and each
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Lender shall refund any payment made by the Borrower, to the extent that such
requirement or such failure to refund would violate or conflict with nonwaivable
provisions of applicable Laws limiting the maximum amount of interest which may
be charged or collected by such Lender.
10.12 SET-OFF. The Borrower hereby agrees that if any
Obligation of the Borrower shall be due and payable (by acceleration or
otherwise), each Lender shall have the right, without notice to the Borrower, to
set-off against and to appropriate and apply to such Obligation any
indebtedness, liability or obligation of any nature owing to the Borrower by
such Lender, including but not limited to all deposits (whether time or demand,
general or special, provisionally credited or finally credited, whether or not
evidenced by a certificate of deposit) now or hereafter maintained by the
Borrower with such Lender. Such right shall be absolute and unconditional in all
circumstances and, without limitation, shall exist whether or not such Lender or
any other Person shall have given notice or made any demand to the Borrower or
any other Person, whether such indebtedness, obligation or liability owed to the
Borrower is contingent, absolute, matured or unmatured (it being agreed that
such Lender may deem such indebtedness, obligation or liability to be then due
and payable at the time of such set-off), and regardless of the existence or
adequacy of any collateral, guaranty or any other security, right or remedy
available to any Lender or any other Person. The Borrower hereby agrees that any
Participant and any branch, subsidiary or affiliate of any Lender or any
Participant shall have the same rights of set-off as a Lender as provided in
this Section 10.12 (regardless of whether such Participant, branch, subsidiary
or affiliate would otherwise be deemed in privity with or a direct creditor of
the Borrower). The rights provided by this Section 10.12 are in addition to all
other rights of set-off and banker's lien and all other rights and remedies
which any Lender (or any such Participant, branch, subsidiary or affiliate) may
otherwise have under this Agreement, any other Loan Document, at law or in
equity, or otherwise, and nothing in this Agreement or any Loan Document shall
be deemed a waiver or prohibition of or restriction on the rights of set-off or
bankers' lien of any such Person.
10.13 SHARING OF COLLECTIONS. The Lenders hereby agree among
themselves that if any Lender shall receive (by voluntary payment, realization
upon security, set-off or from any other source) any amount on account of the
Loans, interest thereon, or any other Obligation contemplated by this Agreement
or the other Loan Documents to be made by the Borrower Pro Rata to all Lenders
in greater proportion than any such amount received by any other Lender, then
the Lender receiving such proportionately greater payment shall notify each
other Lender and the Agent of such receipt, and equitable adjustment will be
made in the manner stated in this Section 10.13 so that, in effect, all such
excess amounts will be shared ratably among all of the Lenders. The Lender
receiving such excess amount shall purchase (which it shall be deemed to have
done simultaneously upon the receipt of such excess amount) for cash from the
other Lenders a participation in the applicable Obligations owed to such other
Lenders in such amount as shall result in a ratable sharing by all Lenders of
such excess amount (and to such extent the receiving Lender shall be a
Participant). If all or any portion of such excess amount is thereafter
recovered from the Lender making such purchase, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, together with
interest or other amounts, if any, required by Law to be paid by the Lender
making such purchase. The Borrower hereby consents to and confirms the foregoing
arrangements. Each Participant shall be bound by this Section as fully as if it
were a Lender hereunder.
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10.14 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; ASSIGNMENTS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Lenders, all future holders
of the Notes, the Agent and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights hereunder or interests
herein without the prior written consent of all the Lenders and the Agent, and
any purported assignment without such consent shall be void.
(b) PARTICIPATIONS. Any Lender may, in the ordinary course of
its commercial banking business and in accordance with applicable Law, at any
time sell participations to one (1) or more commercial banks or other Persons
(each a "Participant") in all or a portion of its rights and obligations under
this Agreement and the other Loan Documents (including, without limitation, all
or a portion of its Commitments and the Loans owing to it and any Note held by
it); PROVIDED, that:
(i) any such Lender's obligations under this Agreement and
the other Loan Documents shall remain unchanged;
(ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations;
(iii) the parties hereto shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents;
(iv) such Participant shall be bound by the provisions of
Section 10.13 hereof, and the Lender selling such participation shall
obtain from such Participant a written confirmation of its agreement to
be so bound; and
(v) no Participant (unless such Participant is an affiliate
of such Lender, or is itself a Lender) shall be entitled to require
such Lender to take or refrain from taking action under this Agreement
or under any other Loan Document, except that such Lender may agree
with such Participant that such Lender will not, without such
Participant's consent, take action of the type described in subsections
(a), (b) or (c) of Section 10.3 hereof.
The Borrower agrees that any such Participant shall be entitled to the benefits
of Sections 2.11, 2.12 and 10.6 hereof with respect to its participation in the
Commitments and the Loans outstanding from time to time; PROVIDED, that no such
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 to such Participant had
no such transfer occurred.
(c) ASSIGNMENTS. Any Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable Law, at any time
assign all or a portion of its rights and obligations under this Agreement and
the other Loan Documents (including, without limitation, all or any portion of
its Commitments and Loans owing to it and any Note held by it) to any Lender,
any affiliate of a Lender or to one (1) or more additional commercial banks or
other Persons (each a "Purchasing Lender"); PROVIDED, that:
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(i) the aggregate amount of the Revolving Credit Commitment
of the transferor Lender subject to each such assignment to any
Purchasing Lender shall not be less than Three Million Dollars
($3,000,000) and in increments of One Hundred Thousand Dollars
($100,000);
(ii) each such assignment shall be of a constant, and not a
varying, percentage of each Commitment of the transferor Lender and of
all of the transferor Lender's rights and obligations under this
Agreement and the other Loan Documents; and
(iii) each such assignment shall be made pursuant to a
Transfer Supplement in substantially the form of Exhibit F to this
Agreement, duly completed (a "Transfer Supplement").
In order to effect any such assignment, the transferor Lender and the Purchasing
Lender shall execute and deliver to the Agent a duly completed Transfer
Supplement with respect to such assignment, together with any Note or Notes
subject to such assignment (the "Transferor Lender Notes") and a processing and
recording fee of Two Thousand Dollars ($2,000) plus out-of-pocket expenses; and,
upon receipt thereof, the Agent shall accept such Transfer Supplement. Upon
receipt of the Purchase Price Receipt Notice (as defined in the Transfer
Supplement), the Agent shall record such acceptance in the Register. Upon such
execution, delivery, acceptance and recording, from and after the close of
business at the Agent's Office on the Transfer Effective Date specified in such
Transfer Supplement:
(x) the Purchasing Lender shall be a party hereto and, to the
extent provided in such Transfer Supplement, shall have the rights and
obligations of a Lender hereunder, and
(y) the transferor Lender thereunder shall be released from
its obligations under this Agreement to the extent so transferred (and,
in the case of an Transfer Supplement covering all or the remaining
portion of a transferor Lender's rights and obligations under this
Agreement, such transferor Lender shall cease to be a party to this
Agreement) from and after the Transfer Effective Date.
On or prior to the Transfer Effective Date specified in an Transfer Supplement,
the Borrower shall execute and deliver to the Agent (for delivery to the
Purchasing Lender) new Notes evidencing such Purchasing Lender's assigned
Commitments or Loans and (for delivery to the transferor Lender) replacement
Notes in the principal amount of the Loans or Commitments retained by the
transferor Lender (such Notes to be in exchange for, but not in payment of,
those Notes then held by such transferor Lender). Each such Note shall be dated
the date and be substantially in the form of the predecessor Note. The Agent
shall mark the predecessor Notes "exchanged" and deliver them to the Borrower.
Pending such delivery, the Agent shall hold the predecessor Notes in trust for
the benefit of the Borrower. Accrued interest and accrued fees shall be paid to
the Purchasing Lender at the same time or times provided in the predecessor
Notes and this Agreement.
(d) REGISTER. The Agent shall maintain at its office a copy of
each Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive absent manifest error and the
Borrower, the Agent and the Lenders may treat each person whose name is recorded
in the Register as a Lender hereunder for all purposes of the Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
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(e) FINANCIAL AND OTHER INFORMATION. The Borrower authorizes
the Agent and each Lender to disclose to any Participant or Purchasing Lender
(each a "transferee") and any prospective transferee any and all financial and
other information in such Person's possession concerning any Loan Party and
their respective Subsidiaries and Affiliates which has been or may be delivered
to such Person by or on behalf of any Loan Party in connection with this
Agreement or any other Loan Document or such Person's credit evaluation of any
Loan Party and their respective Subsidiaries and affiliates. Each such
transferree shall agree to be bound to the terms of Section 10.15 hereof. At the
request of any Lender, the Borrower shall provide (to the extent such documents
are not available from the transferor Lender or the Agent) to each prospective
transferee conformed copies of the documents referred to in Section 4 of the
form of Transfer Supplement.
(f) ASSIGNMENTS TO FEDERAL RESERVE BANK. Any Lender may at any
time assign all or any portion of its rights under this Agreement, including
without limitation any Loans owing to it, and any Note held by it to a Federal
Reserve Bank. No such assignment shall relieve the transferor Lender from its
obligations hereunder. Assignments pursuant to this Section 10.14(f) shall not
require the payment of the processing and recording fee specified in Section
10.14(c) hereof.
10.15 CONFIDENTIALITY. The Agent and the Lenders shall hold
all Nonpublic Information (as defined below) obtained pursuant to this Agreement
or any other Loan Document in accordance with its customary procedures for
handling confidential information of this nature. The Agent or any Lender may
make disclosures requested or required by any governmental agency or
representative thereof or pursuant to legal process or as required in connection
with the exercise of any remedy under this Agreement or other Loan Documents or
as requested or required by any potential participant in or assignee of any of
the Loans hereunder. "Nonpublic Information" shall mean information other than
(i) information that is publicly available, (ii) information that becomes
available to the Agent or any Lender from a source other than Borrower or any of
its outside professionals, agents or representatives and not in contravention of
any other confidentiality obligations and of which the Agent or any Lender has
actual knowledge, or (iii) information that was available to the Agent or any
Lender on a non-confidential basis prior to its disclosure by Borrower to the
Agent or any Lender.
10.16 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; LIMITATION OF LIABILITY.
(A) GOVERNING LAW. THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS
(EXCEPT TO THE EXTENT, IF ANY, OTHERWISE EXPRESSLY STATED IN SUCH OTHER LOAN
DOCUMENTS) SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO CHOICE OF LAW
PRINCIPLES.
(B) CERTAIN WAIVERS. EACH OF THE BORROWER, THE LENDERS, THE
ISSUING BANK AND THE AGENT HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(I) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION, OR EVENT OCCURRING
IN CONNECTION HEREWITH OR THEREWITH (COLLECTIVELY, "RELATED
LITIGATION") MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION SITTING IN ALLEGHENY COUNTY, PENNSYLVANIA, SUBMITS TO THE
JURISDICTION
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OF SUCH COURTS, AND TO THE FULLEST EXTENT PERMITTED BY LAW
AGREES THAT IT WILL NOT BRING ANY RELATED LITIGATION IN ANY
OTHER FORUM);
(II) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO
THE LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH
COURT, WAIVES ANY CLAIM THAT ANY SUCH RELATED LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH
RESPECT TO ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, THAT SUCH
COURT DOES NOT HAVE JURISDICTION OVER THE BORROWER;
(III) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR
CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO THE PARTIES IN ACCORDANCE WITH
SECTION 9.5 HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL
CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING
HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN
ANY OTHER MANNER PERMITTED BY LAW); AND
(IV) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED
LITIGATION.
(C) LIMITATION OF LIABILITY. TO THE FULLEST EXTENT PERMITTED
BY LAW, NO CLAIM MAY BE MADE BY THE BORROWER AGAINST THE AGENT, ANY LENDER OR
ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, ATTORNEY OR AGENT OF ANY OF THEM FOR
ANY PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM ARISING FROM OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY STATEMENT, COURSE OF CONDUCT, ACT,
OMISSION, OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH (WHETHER FOR
BREACH OF CONTRACT, TORT OR ANY OTHER THEORY OF LIABILITY). THE BORROWER HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES,
WHETHER SUCH CLAIM PRESENTLY EXISTS OR ARISES HEREAFTER AND WHETHER OR NOT SUCH
CLAIM IS KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
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<PAGE> 89
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed and delivered this Agreement as of the
date first above written.
<TABLE>
<CAPTION>
<S> <C>
ATTEST: SINTER METALS, INC.
By: /s/ Ronald G. Campbell By: /s/ Michael T. Kestner
--------------------------------------- -------------------------------------
Ronald G. Campbell Michael T. Kestner
Title: Assistant Treasurer Title: Chief Financial Officer
Address for Notices:
Terminal Tower
50 Public Square, Suite 3200
Cleveland, Ohio 44113
Attn: Chief Financial Officer
Telephone: (216) 771-6700
Telecopier: (216) 344-7631
MELLON BANK, N.A, individually and
as Agent
By: /s/ Jack Ligday
-------------------------------------
Jack Ligday
Title: Assistant Vice President
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Initial Revolving Credit
Committed Amount: $18,000,000
Commitment Percentage: 60.00%
Address for Notices:
Two Mellon Bank Center
Room 270
Pittsburgh, PA 15259-0001
Attn: David Molnar
Telephone: (412) 234-8838
Telecopier: (412) 234-9010
</TABLE>
83
<PAGE> 90
<TABLE>
<CAPTION>
<S> <C>
SOCIETY NATIONAL BANK
By: /s/ Rich C. Pohle
---------------------------------
Rich C. Pohle
Title: Vice President
Initial Revolving Credit
Committed Amount: $12,000,000
Commitment Percentage: 40.00%
Address for Notices:
Society Center
127 Public Square
Cleveland, Ohio 44115
Attn: Matthew Tuohey
Telephone: (216) 689-0598
Telecopier: (216) 689-4981
</TABLE>
84
<PAGE> 91
Exhibit A
to
CREDIT AGREEMENT
SINTER METALS, INC.
REVOLVING CREDIT NOTE
$__________ ___________, 199__
FOR VALUE RECEIVED, the undersigned, SINTER METALS, INC., a
Delaware corporation (the "Borrower"), promises to pay to the order of [NAME OF
LENDER] (the "Lender") on or before the Revolving Credit Maturity Date, and at
such earlier dates as may be required by the Agreement (as defined below), the
lesser of (i) the principal sum of________________ ($________) or (ii) the
aggregate unpaid principal amount of all Revolving Credit Loans made by the
Lender to the Borrower from time to time pursuant to the Agreement. The Borrower
further promises to pay to the order of the Lender interest on the unpaid
principal amount hereof from time to time outstanding at the rate or rates per
annum determined pursuant to the Agreement, payable on the dates set forth in
the Agreement.
This Note is one of the "Revolving Credit Notes" as referred
to in, and is entitled to the benefits of, the Credit Agreement, dated as of
January 18, 1996, by and among the Borrower, the Lenders party thereto from time
to time, the Issuing Bank referred to therein and Mellon Bank, N.A., a national
banking association, as Agent for the Lenders (as the same has heretofore been
and may be amended, modified or supplemented from time to time, the
"Agreement"), which among other things provides for the acceleration of the
maturity hereof upon the occurrence of certain events and for prepayments in
certain circumstances and upon certain terms and conditions. Terms defined in
the Agreement have the same meanings herein.
The Borrower hereby expressly waives presentment, demand,
notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this Note and the
Agreement, and an action for amounts due hereunder or thereunder shall
immediately accrue.
This Note shall be governed by, construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
principles of choice of law.
THE BORROWER AUTHORIZES AND EMPOWERS THE PROTHONOTARY OR ANY
ATTORNEY OF ANY COURT OF RECORD WITHIN THE UNITED STATES OR ELSEWHERE, UPON THE
OCCURRENCE OF ANY EVENT OF DEFAULT UNDER THE AGREEMENT, UNDER THIS REVOLVING
CREDIT NOTE OR UNDER ANY OF THE OTHER LOAN DOCUMENTS, TO APPEAR FOR AND CONFESS
JUDGMENT AGAINST THE BORROWER AS OF ANY TERM IN FAVOR OF THE LENDER OR ANY
HOLDER OF THIS REVOLVING CREDIT NOTE, FOR ALL SUMS DUE AND UNPAID UNDER THIS
REVOLVING CREDIT NOTE, WHETHER BY ACCELERATION OR NOT, WITH OR WITHOUT
DECLARATION, WITH COST OF SUIT, RELEASE OF ALL ERRORS, WITHOUT STAY OF EXECUTION
AND WITH TEN PERCENT (10%) ADDED FOR COLLECTION FEE. THE BORROWER ALSO WAIVES
THE RIGHT OF INQUISITION OF ANY REAL ESTATE LEVIED ON, VOLUNTARILY CONDEMNS THE
SAME, AUTHORIZES THE PROTHONOTARY OR
<PAGE> 92
CLERK TO ENTER THE WRIT OF EXECUTION ON SAID VOLUNTARY CONDEMNATION, AGREES THAT
SAID REAL ESTATE MAY BE SOLD ON A WRIT OF EXECUTION, AND ALSO WAIVES AND
RELEASES ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY
STATE NOW IN FORCE OR ENACTED IN THE FUTURE. IF A COPY OF THIS REVOLVING CREDIT
NOTE, VERIFIED BY AFFIDAVIT OF THE LENDER OR ANY SUCH HOLDER OF THIS REVOLVING
CREDIT NOTE OR SOMEONE AUTHORIZED TO ACT ON THE BEHALF OF THE LENDER OR ANY SUCH
HOLDER, HAS BEEN FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE
ORIGINAL REVOLVING CREDIT NOTE AS A WARRANT OF ATTORNEY. THE AUTHORITY AND POWER
TO APPEAR FOR AND ENTER JUDGMENT AGAINST THE BORROWER WILL NOT BE EXHAUSTED BY
ANY SINGLE EXERCISE OF THE AUTHORIZED POWER, AND THE SAME MAY BE EXERCISED FROM
TIME TO TIME AS OFTEN AS THE HOLDER DEEMS NECESSARY OR DESIRABLE; AND THIS
INSTRUMENT WILL BE A SUFFICIENT WARRANT.
WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO
NOTICE AND COURT TRIAL. A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR
PRIOR KNOWLEDGE AND THE POWER OF A COURT CAN BE USED TO COLLECT FROM YOU
REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED
GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THIS AGREEMENT OR ANY
OTHER CAUSE.
IN WITNESS WHEREOF, and intending to be legally bound, the
Borrower has executed, issued and delivered this Revolving Credit Note as of
__________, 199__.
ATTEST: SINTER METALS, INC.
__________________________ By: __________________
Secretary Title:
2
<PAGE> 93
ACKNOWLEDGMENT
STATE OF ___________)
) S.S.
COUNTY OF __________)
On this ___ day of ________, 199_, before me,
___________________ the undersigned authority in and for said County and State,
personally appeared _______________ who acknowledged himself to be the
_______________ of Sinter Metals, Inc., a Delaware corporation, and that he as
such _______________, being authorized to execute the foregoing Revolving Credit
Note on behalf of Sinter Metals, Inc., executed the foregoing Revolving Credit
Note on behalf of Sinter Metals, Inc. for the purposes set forth in the
foregoing Revolving Credit Note by signing the name of the corporation by
himself as _______________.
IN WITNESS WHEREOF, I hereunto set my official hand and seal.
____________________________
Notary Public
(Notarial Seal)
My Commission Expires:
181\24470AAH.101
3
<PAGE> 94
Exhibit D
to
CREDIT AGREEMENT
FORM OF COMPLIANCE CERTIFICATE
I, _________________, ___________________________ of SINTER
METALS, INC., a Delaware corporation (the "Company"), hereby certify to MELLON
BANK, N.A. ("Mellon"), as Agent for the Lenders under that certain Credit
Agreement, dated as of November ___, 1995 (the "Credit Agreement"), by and among
the Company, Mellon, as Agent, the Lenders party thereto from time to time, and
the Issuing Bank referred to therein, that the attached [financial
statement/projection] dated _______________________ for
__________________________ is accurate, complete and fairly presents the matters
stated therein and has been prepared on a basis consistent with such [financial
statements/projections] prepared for prior periods and in accordance with
generally accepted accounting principles. I further certify that no Potential
Default or Event of Default (as each such term is defined in the Credit
Agreement) currently exists. In addition, attached hereto as Exhibit A, is all
of the information and calculations required in order to establish whether the
Company was in compliance with the financial covenants set forth in Section 7.1
of the Credit Agreement at the end of the period covered by the financial
statements furnished herewith.
SINTER METALS, INC.
By: _________________________
Title: ______________________
Date: _______________________
181\24470AAH.101
<PAGE> 95
Exhibit E
to
CREDIT AGREEMENT
[FORM OF SUBSIDIARY GUARANTY]
GUARANTY AND SURETYSHIP AGREEMENT
THIS GUARANTY AND SURETYSHIP AGREEMENT, dated as of
________________, 19__, made by [NAME OF SUBSIDIARY], a [STATE OR COUNTRY OF
INCORPORATION] corporation (the "Guarantor"), in favor of MELLON BANK, N.A., as
Agent for
the Credit Agreement referred to below (in such capacity, together with its
successors, the "Agent") for the Issuing Bank and the Lenders (as defined in the
Credit Agreement).
Recitals:
A. The Guarantor is a direct or indirect subsidiary of
SINTER METALS, INC., a Delaware corporation (the "Borrower").
B. The Borrower has entered into a Credit Agreement dated as
of January 18, 1996 (as amended, modified or supplemented from time to time, the
"Credit Agreement") with the Lenders parties thereto from time to time, the
Issuing Bank referred to therein and Mellon Bank, N.A., as Agent. The Guarantor,
as a Subsidiary (as defined in the Credit Agreement) of the Borrower, has and
will derive substantial direct and indirect benefit from the transactions
contemplated by the Credit Agreement.
C. It is a condition precedent to the continuing extension of
credit under the Credit Agreement that the Guarantor execute and deliver this
Agreement. This Agreement is made by the Guarantor among other things to induce
the Agent, the Issuing Bank and the Lenders to extend and continue to extend
credit under the Credit Agreement.
D. The Guarantor acknowledges that the Agent, the Issuing Bank
and the Lenders have relied and will rely on the Guarantor executing this
Agreement in entering into the Credit Agreement and in extending credit, and
continuing to extend credit, under the Credit Agreement. The Guarantor further
acknowledges that it has, independently and without reliance upon the Agent, the
Issuing Bank or the Lenders or any representation by or other information from
the same, made its own credit analysis and decision to enter into this
Agreement.
NOW, THEREFORE, in consideration of the premises, and
intending to be legally bound, the Guarantor hereby agrees as follows:
Article 1
Definitions
1.1 DEFINITIONS. Capitalized terms not otherwise defined
herein shall have the meanings given in the Credit Agreement. In addition to the
other terms defined elsewhere in this Agreement, as used herein the following
terms shall have the following meanings:
"Adjusted Net Worth" shall mean, as of any date of
determination thereof, the excess of (i) the amount of the "present
fair saleable value" of the assets of the Guarantor as of the date of
such determination, over (ii) the amount of all liabilities of the
Guarantor, contingent
<PAGE> 96
or otherwise, as of the date of such determination, as such terms are
determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors. In determining
the Adjusted Net Worth of the Guarantor for purposes of calculating the
Maximum Guaranteed Amount for the Guarantor, the liabilities of such
Guarantor to be used in the determination pursuant to clause (ii) of
the preceding sentence shall in any event include any amounts
guaranteed by the Guarantor pursuant to clause (i) of the definition of
Maximum Guaranteed Amount.
"Guaranteed Obligations" shall mean all obligations from time
to time of the Borrower to the Agent, the Issuing Bank or the Lenders
under or in connection with any Loan Document, including all
obligations to pay principal, interest, reimbursement obligations,
fees, indemnities or other amounts, in each case whether such
obligations are direct or indirect, secured or unsecured, joint or
several, absolute or contingent, due or to become due, whether for
payment or performance, now existing or hereafter arising (including
interest and other obligations arising or accruing after the
commencement of any bankruptcy, insolvency, reorganization, dissolution
or similar proceeding with respect to the Borrower, any other Loan
Party or any other Person, or which would have arisen or accrued but
for the commencement of such proceeding, even if such obligation or the
claim thereof is not enforceable or allowable in such proceeding).
"Maximum Guaranteed Amount" shall mean, as of any date of
determination thereof, the sum of (i) the aggregate amount of the
Loans, to the extent the proceeds thereof are used to make a Valuable
Transfer to the Guarantor plus (ii) the greater of (A) the Adjusted Net
Worth of the Guarantor at the date of the execution of this Guaranty
and (B) the Adjusted Net Worth of the Guarantor at the earlier of (I)
the date of the commencement of a case under Title 11 of the United
States Code in which the Guarantor is a debtor and (II) the date
enforcement hereunder is obtained.
"Valuable Transfer" shall mean (i) all loans, advances or
capital contributions made to the Guarantor with proceeds of the Loans,
(ii) all debt securities or other obligations of the Guarantor acquired
from the Guarantor or retired by such Guarantor with proceeds of the
Loans, (iii) the fair market value of all property acquired with
proceeds of the Loans and transferred, absolutely and not as
collateral, to the Guarantor, (iv) all equity securities of the
Guarantor acquired from the Guarantor with proceeds of the Loans and
(v) the value of any quantifiable economic benefits not included in
clauses (i) through (iv) above, but includable in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, accruing to the Guarantor as a result of the
Loans.
Article 2
Guaranty and Suretyship
2.1 GUARANTY AND SURETYSHIP. The Guarantor hereby absolutely,
unconditionally and irrevocably guarantees and becomes surety for the full and
punctual payment and performance of the Guaranteed Obligations as and when such
payment or performance shall become due (at scheduled maturity, by acceleration
or otherwise) in accordance with the terms of the Loan Documents; PROVIDED,
HOWEVER, that, anything herein or in any other document, instrument, or
agreement executed and delivered in connection herewith to the contrary
notwithstanding, the maximum liability of the Guarantor hereunder shall in no
event exceed the Guarantor's Maximum Guaranteed Amount. This Agreement is an
agreement of suretyship as well as of guaranty, is a guarantee of payment and
2
<PAGE> 97
performance and not merely of collectibility, is in no way conditioned upon any
attempt to collect from or proceed against the Borrower, any other Loan Party or
any other Person or any other event or circumstance, is a continuing and
irrevocable obligation of the Guarantor, and shall be binding upon and against
the Guarantor without regard to the legality, validity, enforceability or
allowability of any of the Guaranteed Obligations or Loan Documents. The
obligations of the Guarantor under this Agreement are direct and primary
obligations of the Guarantor and are independent of the Guaranteed Obligations,
and a separate action or actions may be brought against the Guarantor regardless
of whether action is brought against the Borrower, any other Loan Party or any
other Person or whether the Borrower, any other Loan Party or any other Person
is joined in any such action or actions. Without limitation of the foregoing, if
for any reason the Borrower or any other Loan Party shall fail or be unable
duly, punctually and fully to pay or shall become payable or performable in
accordance with the terms of the Loan Documents, whether or not such failure or
inability shall constitute an Event of Default or Potential Default under the
Credit Agreement, the Guarantor will forthwith pay and perform or cause to be
paid or performed the Guaranteed Obligations or such part thereof.
2.2 OBLIGATIONS ABSOLUTE AND UNCONDITIONAL. The Guarantor
agrees that the Guaranteed Obligations will be paid and performed strictly in
accordance with the terms of the Loan Documents, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting the
Guaranteed Obligations, any of the terms of the Loan Documents or the rights of
the Agent, the Issuing Bank, the Lenders or any other Person with respect
thereto. The obligations of the Guarantor under this Agreement shall be
absolute, unconditional and irrevocable, shall remain in full force and effect,
and shall not be released, discharged or in any way affected by any event or
circumstance (whether or not the Guarantor, the Borrower, any other Loan Party,
or any other Person shall have knowledge or notice thereof), irrespective of any
of the following:
(a) any lack of genuineness, legality, validity,
enforceability or allowability (in a bankruptcy, insolvency,
reorganization, dissolution or similar proceeding, or otherwise), or
any avoidance or subordination, in whole or in part, of any Loan
Document or any of the Guaranteed Obligations;
(b) any increase, decrease, addition or change in the amount,
nature, type or purpose of any of the Guaranteed Obligations (whether
or not contemplated by the Loan Documents as presently constituted);
any change in the time, manner, method or place of payment or
performance of, or in any other term of, any of the Guaranteed
Obligations; any execution or delivery of any Loan Documents; or any
amendment, modification, supplement, waiver, consent, compromise,
settlement, release, accord and satisfaction or other change, addition,
deletion or supplement of or to, any forbearance or indulgence with
respect to, or any refinancing, renewal or refunding of (in whole or in
part), any Loan Document or any of the Guaranteed Obligations;
(c) any impairment by the Agent, the Issuing Bank, the Lenders
or any other Person of any recourse of the Guarantor against the
Borrower, any other Loan Party or any other Person; any waiver of or
failure to assert any breach of or default under any Loan Document or
any of the Guaranteed Obligations (including, but not limited to,
failure to enforce any condition to extending, or continuing to extend,
credit); any extensions, or continued extensions, of credit in excess
of the amount committed, required or permitted to be advanced, issued
or made under or contemplated by the Loan Documents, or in
circumstances in which any condition to such extensions of credit has
not been satisfied; any impairment by the exercise or non-exercise, or
any other failure, omission, breach, default, delay or wrongful
3
<PAGE> 98
action in connection with any exercise or non-exercise, of any right or
remedy against the Borrower, any other Loan Party or any other Person
under or in connection with any Loan Document or any of the Guaranteed
Obligations; any refusal of payment or performance of any of the
Guaranteed Obligations, whether or not with any reservation of rights
against the Guarantor; or any application of any collections
(including, but not limited to, payments resulting from enforcement,
realization, liquidation or collection of, or exercise of remedies
against, any direct or indirect security for the Guaranteed
Obligations) to other obligations, if any, not entitled to the benefits
of this Agreement, in preference to Guaranteed Obligations entitled to
the benefits of this Agreement, or if any collections are applied to
Guaranteed Obligations, any application to particular Guaranteed
Obligations;
(d) any furnishing, acceptance, alteration, substitution,
taking, exchange, amendment, termination, modification, supplement,
subordination, waiver, release, loss or impairment of, OR any failure
to protect, perfect, or preserve the value of, OR any enforcement,
liquidation or collection of, realization upon, or exercise of rights
or remedies under or in connection with, OR any failure, omission,
breach, default, delay or wrongful action by the Agent, the Issuing
Bank, the Lenders or any other Person in connection with the
enforcement, liquidation or collection of, realization upon, or
exercise of rights or remedies under or in connection with, OR any
other action or inaction by the Agent, the Issuing Bank, the Lenders or
any other Person in respect of, any direct or indirect security for any
of the Guaranteed Obligations. As used in this Agreement, "direct or
indirect security" for the Guaranteed Obligations, and similar phrases,
includes any collateral security, guaranty, suretyship, letter of
credit, capital maintenance agreement, put option, subordination
agreement or other right or arrangement of any nature providing direct
or indirect assurance of payment or performance of any of the
Guaranteed Obligations, made or on behalf of any Person;
(e) any voluntary or involuntary merger, consolidation,
liquidation, dissolution, winding-up, charter revocation, forfeiture,
sale, lease, transfer, or other disposition of any assets or
marshalling of assets or liabilities, or other change in, restructuring
or termination of the corporate structure or existence of, the
Borrower, any other Loan Party or any other Person; any bankruptcy,
insolvency, receivership, conservatorship, assignment for the benefit
of creditors, reorganization, dissolution, arrangement, compromise with
creditors, readjustment of debts or similar proceeding or agreement
with respect to the Guarantor, the Borrower, any other Loan Party or
any other Person; or any action taken or election made by the Agent,
the Issuing Bank or the Lenders (including any election under Section
1111(b)(2) of the United States Bankruptcy Code), the Borrower, any
other Loan Party or any other Person in connection with any such
proceeding;
(f) any defense, set-off or counterclaim (including any
defense of failure of consideration, breach of warranty, statute of
frauds, bankruptcy, lack of legal capacity, statute of limitations,
lender liability, accord and satisfaction or usury, and excluding only
the defense of full, strict and indefeasible payment and performance),
which may at any time be available to or asserted by the Borrower, any
other Loan Party or any other Person with respect to any Loan Document
or any of the Guaranteed Obligations against the Agent, the Issuing
Bank and the Lenders; or any discharge by operation of law or release
of the Borrower, any other Loan Party or any other Person from the
performance or observance of any Loan Document or any of the Guaranteed
Obligations;
4
<PAGE> 99
(g) any assignment or transfer from time to time of any
interest by the Agent, the Issuing Bank or the Lenders in any
Guaranteed Obligation, this Agreement or any other Loan Document;
(h) any law now or hereafter in effect in any jurisdiction; or
(i) any other event or circumstance, whether similar or
dissimilar to the foregoing, and whether known or unknown, which might
otherwise constitute a legal, equitable or other defense or discharge
available to, or limit the liability of, the Borrower, any other Loan
Party, the Guarantor a guarantor or a surety, excepting only full,
strict and indefeasible payment and performance of the Guaranteed
Obligations.
2.3 WAIVERS, ETC. The Guarantor hereby knowingly, expressly
and unconditionally waives any defense to or limitation on its obligations under
this Agreement arising out of or based on any event or circumstance referred to
in Section 2.2 (including, but not limited to, any set-off, counterclaim,
deduction, diminution, abatement, recoupment, suspension, deferment, reduction
in respect to its obligations under this Agreement and whether or not such event
or circumstance impairs, releases or otherwise adversely affects any rights of
the Guarantor to subrogation, contribution, exoneration or reimbursement, or any
other rights of the Guarantor to proceeds against the Borrower, any other Loan
Party or any other Person, or any direct or indirect security for any of the
Guaranteed Obligations). Without limitation, the Guarantor knowingly,
intelligently, expressly and unconditionally waives each of the following:
(a) all notices, disclosures and demands of any nature which
otherwise might be required from time to time to preserve intact any
rights against the Guarantor, including (i) any notice of any event or
circumstance described in Section 2.2, (ii) any notice required by any
law, regulation or order now or hereafter in effect in any
jurisdiction, (iii) any notice of nonpayment, nonperformance, dishonor,
protest or otherwise under any Loan Document or any of the Guaranteed
Obligations, (iv) any notice of the extension, or continuing extension,
of credit or incurrence of any other Guaranteed Obligation, (v) any
proof of notice of nonpayment or nonperformance under or in connection
with this Agreement, any Loan Document, any of the Guaranteed
Obligations or any direct or indirect security for any of the
Guaranteed Obligations; (vi) any notice of any default or any failure
on the part of the Borrower, any other Loan Party or any other Person
to perform and comply with any Loan Document or any of the Guaranteed
Obligations or any direct or indirect security for any of the
Guaranteed Obligations, and (vii) any notice of any information
pertaining to the business, operations, condition (financial or
otherwise) or prospects of the Borrower, any other Loan Party or any
other Person (including, but not limited to, any of their respective
subsidiaries or affiliates now or hereafter known to the Agent, the
Issuing Bank or the Lenders);
(b) any right to any marshalling of assets, to the filing of
any claim against the Borrower, any other Loan Party or any other
Person in the event of any bankruptcy, insolvency, reorganization,
dissolution or similar proceeding, or to the enforcement, assertion or
exercise against the Borrower, any other Loan Party or any other Person
of any other right, power, privilege or remedy under or in connection
with any Loan Document or any of the Guaranteed Obligations or any
direct or indirect security for any of the Guaranteed Obligations; any
requirement of promptness or diligence on the part of the Agent, the
Issuing Bank, the Lenders or any other Person; any requirement to
exhaust any remedies under or in connection with, or to mitigate the
damages resulting from default under, any Loan Document
5
<PAGE> 100
or any of the Guaranteed Obligations or any direct or indirect security
for any of the Guaranteed Obligations; and any requirement of
acceptance of this Agreement, and any requirement that the Guarantor
receive notice of such acceptance;
(c) any defense or other right arising by reason of any law
now or hereafter in effect in any jurisdiction pertaining to election
of remedies (including anti-deficiency laws, "one action" laws or
similar laws), or by reason of any election of remedies or other action
or inaction by the Agent, the Issuing Bank or the Lenders, which
results in denial or impairment of the right of the Lender to seek a
deficiency against the Borrower or any other Person, or which otherwise
discharges or impairs any of the Guaranteed Obligations or any recourse
of the Guarantor against the Borrower or any other Person; and
(d) any and all other events and circumstances, whether
similar or dissimilar to any of the above, and whether known or
unknown, which might otherwise constitute a legal, equitable or other
discharge, release or defense of the guarantor or surety or which might
otherwise limit recourse against the Guarantor, excepting only full,
strict and indefeasible payment and performance of the Guaranteed
Obligations.
Without limitation of the foregoing, the Guarantor hereby represents, warrants
and agrees that the Guarantor is now and at all times will be completely
familiar with the business, operations, condition (financial or otherwise) and
prospects of the Borrower and its Subsidiaries, taken as a whole, and with the
Loan Documents, the Guaranteed Obligations and all direct and indirect security
for the Guaranteed Obligations, and the Guarantor hereby waives any duty on the
part of the Agent, the Issuing Bank and the Lenders now or hereafter to disclose
any matter relating to any of the foregoing now known to the Agent, the Issuing
Bank or the Lenders.
2.4 REINSTATEMENT. This Agreement shall continue to be
effective, or be automatically reinstated, as the case may be, if at any time
payment, in whole or in part, of any of the Guaranteed Obligations is avoided,
rescinded or must otherwise be returned by the Agent, the Issuing Bank or the
Lenders for any reason (including without limitation, as a preference,
fraudulent conveyance or otherwise), all as though such payment had not been
made.
2.5 NO STAY. Without limitation of any other provision of this
Agreement, if any declaration of default, acceleration of the time for payment
or performance of any Guaranteed Obligation, or any condition to any such
acceleration, or other exercise or condition to exercise of rights or remedies
under or with respect to any Guaranteed Obligation shall at any time be stayed,
enjoined or prevented for any reason (including but not limited to stay or
injunction resulting from the pendency against the Borrower, any other Loan
Party or any other Person of a bankruptcy, insolvency, reorganization,
dissolution or similar proceeding), the Guarantor agrees that, for purposes of
this Agreement and its obligations hereunder, such Guaranteed Obligation shall
be deemed to have been declared in default or accelerated, and such other
exercise or conditions to exercise or acceleration shall be deemed to have been
taken or met, with the same effect as if the Guaranteed Obligations had been
declared in default and accelerated in accordance with their terms, and the
Guarantor shall forthwith pay the amounts specified to be paid thereunder in
accordance with their terms and all other obligations without notice and demand.
2.6 PAYMENTS. All payments to be made by the Guarantor
pursuant to this Agreement shall be made at the times and in the manner
prescribed for payments in Section 2.10(b) of the Credit Agreement, without
set-off, counterclaim, withholding or other deduction of any nature.
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<PAGE> 101
2.7 SUBROGATION, ETC. THE GUARANTOR HEREBY KNOWINGLY,
UNCONDITIONALLY AND IRREVOCABLY WAIVES AND RELEASES ANY AND ALL RIGHTS IT NOW
HAS OR HEREAFTER MAY HAVE (WHETHER KNOWN OR UNKNOWN AND WHETHER ARISING BY
OPERATION OF LAW, AGREEMENT OR OTHERWISE) TO ASSERT ANY CLAIM AGAINST THE
BORROWER, ANY OTHER LOAN PARTY OR ANY OTHER PERSON ON ACCOUNT OF THE OBLIGATION
OF THE GUARANTOR UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, INCLUDING WITHOUT LIMITATION ANY AND ALL RIGHTS OF SUBROGATION,
REIMBURSEMENT, EXONERATION, CONTRIBUTION OR INDEMNITY AND ANY AND ALL RIGHTS
THAT WOULD RESULT IN THE GUARANTOR BEING DEEMED A "CREDITOR" UNDER THE UNITED
STATES BANKRUPTCY CODE OF THE BORROWER, AND OTHER LOAN PARTY OR ANY OTHER
PERSON.
If, notwithstanding the foregoing, the Guarantor is permitted
to exercise any rights which the Guarantor may have or acquire by way of
subrogation, reimbursement, exoneration, contribution or indemnity, and any
similar rights (whether arising by operation of law, by agreement or otherwise),
against the Borrower, any other Loan Party or any other Person arising from the
existence, payment, performance or enforcement of any of the obligations of the
Guarantor under or in connection with this Agreement, such rights of the
Guarantor shall be subordinate in right of payment to the Guaranteed
Obligations, and the Guarantor shall not exercise any such rights until all
Guaranteed Obligations and all other obligations under this Agreement have been
paid in full and all commitments to extend credit under the Loan Documents shall
have terminated. If, notwithstanding the foregoing, any amount shall be received
by the Guarantor on account of any such rights at any time prior to the time at
which all Guaranteed Obligations and all other obligations under this Agreement
shall have been paid in full and all commitments to extend, or continue to
extend, credit under the Loan Documents shall have terminated, such amount shall
be held by the Guarantor in trust for the benefit of the Agent, the Issuing Bank
and the Lenders, segregated from other funds held by the Guarantor, and shall be
forthwith delivered to the Agent, the Issuing Bank and the Lenders in the exact
form received by the Guarantor (with any necessary endorsement), to be applied
to the Guaranteed Obligations, whether matured or unmatured, in such order as
Agent, Issuing Bank and the Lenders may elect, or to be held by the Agent,
Issuing Bank or the Lenders as security for the Guaranteed Obligations and
disposed of by the Agent, the Issuing Bank or the Lenders in any lawful manner,
all as the Agent, the Issuing Bank and the Lenders may elect.
2.8 CONTINUING AGREEMENT. This Agreement is a continuing
guaranty and shall continue in full force and effect, and shall not be
terminated, revoked or discharged (notwithstanding that the Guaranteed
Obligations may have been reduced to zero from time to time) until all
Guaranteed Obligations and all other amounts payable under this Agreement have
been paid and performed in full, and all commitments to extend, or continue to
extend, credit under the Loan Documents have terminated, subject in any event to
reinstatement in accordance with Section 2.4 of this Agreement.
2.9 LIMITATION ON PAYMENTS. The parties hereto intend to
conform to all applicable laws limiting the maximum rate of interest that may be
charged or collected by the Agent, the Issuing Bank or the Lenders from the
Guarantor. Accordingly, notwithstanding any other provision hereof, the
Guarantor shall not be required to make any payment to or for the account of the
Agent, the Issuing Bank or the Lenders, and the Agent, the Issuing Bank or the
Lenders shall refund any payment made by the Guarantor, to the extent that such
requirement or such failure to refund would violate or conflict with mandatory
and nonwaivable provisions of applicable law limiting the maximum amount
7
<PAGE> 102
of interest which may be charged or collected by the Agent, the Issuing Bank or
the Lenders from the Guarantor. In any action, suit or proceeding pertaining to
this Agreement, the burden of proof, by clear and convincing evidence, shall be
on the Person claiming that this Section 2.9 applies to limit any obligation of
the Guarantor under this Agreement or to require the Agent, the Issuing Bank or
the Lenders to make any refund, or claiming that this Agreement conflicts with
any applicable law limiting the maximum rate of interest that may be charged or
collected by the Agent, the Issuing Bank and the Lenders from the Guarantor, as
to each element of such claim. For purposes of the definitions of "Guaranteed
Obligations" and "Loan Documents" as used in this Agreement, any provisions in
the Loan Documents which have the effect of limiting the obligations of the
Borrower in order to conform to applicable laws limiting the maximum rate of
interest that may be charged or collected by the Agent, the Issuing Bank or the
Lenders from the Borrower shall be ignored.
Article 3
Representations and Warranties
The Guarantor hereby represents and warrants to the Agent, the
Issuing Bank and the Lenders as follows:
3.1 CREDIT AGREEMENT. The provisions of Article 4 of the
Credit Agreement are hereby incorporated by reference (together with all related
definitions and cross-references), insofar as such provisions relate to the
Guarantor or Subsidiaries of the Guarantor. The Guarantor hereby represents and
warrants to the Agent, Issuing Bank and the Lenders as provided therein.
3.2 REPRESENTATIONS AND WARRANTIES REMADE AT EACH EXTENSION OF
CREDIT. Each request (including any deemed request) by the Borrower for any
extension, or continuing extension, of credit under any Loan Document shall be
deemed to constitute a representation and warranty by the Guarantor to the
Agent, the Issuing Bank and the Lenders that the representations and warranties
made by the Guarantor in this Article 3 are true and correct on and as of the
date of such request with the same effect as though made on and as of such date.
Failure by the Agent, the Issuing Bank or the Lenders to receive notice from the
Guarantor to the contrary before the Agent, Issuing Bank or the Lenders make any
extension of credit under any Loan Document shall constitute a further
representation and warranty by the Guarantor to the Agent, the Issuing Bank and
the Lenders that the representations and warranties made by the Guarantor in
this Article 3 are true and correct on and as of the date of such extension of
credit with the same effect as though made on and as of such date.
Article 4
Covenants
4.1 CREDIT AGREEMENT. The provisions of Articles 6 and 7 of
the Credit Agreement are hereby incorporated by reference (together with all
related definitions and cross-references), insofar as such provisions relate to
the Guarantor or Subsidiaries of the Guarantor. The Guarantor hereby covenants
to the Agent, the Issuing Bank and the Lenders as provided therein. To the
extent such provisions impose upon the Borrower a duty to cause the Guarantor to
do or refrain from doing certain acts or things or to meet or refrain from
meeting certain conditions, the Guarantor hereby covenants and agrees that it
shall do or refrain from doing such acts or things, or meet or refrain from
meeting such conditions, as the case may be. To the extent such provisions
impose upon the Borrower a duty to cause any Subsidiary of the Guarantor to do
or refrain from doing certain acts or things or to meet or refrain from meeting
certain conditions, the guarantor hereby covenants and agrees that it shall
8
<PAGE> 103
cause such Subsidiary of the Guarantor to do or refrain from doing such acts or
things, or to meet or refrain from meeting such conditions, as the case may be.
Article 5
Miscellaneous
5.1 AMENDMENTS, ETC. No amendment to, or waiver, discharge or
termination of, any provision of this Agreement, and no consent to any departure
by the Guarantor herefrom, shall in any event be effective unless in a writing
manually signed by or on behalf of the Agent, the Issuing Bank and the Lender.
Any such amendment, waiver discharge, termination or consent shall be effective
only in the specific instance and for the specific purpose for which given.
5.2 NO IMPLIED WAIVER; REMEDIES CUMULATIVE. No delay or
failure of the Agent, the Issuing Bank or the Lenders in exercising any right or
remedy under this Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy. The
rights and remedies of the Agent, the Issuing Bank and the Lenders under this
Agreement are cumulative and not exclusive of any other rights or remedies
available hereunder, under any other agreement, at law, or otherwise.
5.3 NOTICES. Except to the extent, if any, otherwise expressly
provided herein, all notices and other communications (collectively "notices")
under this Agreement shall be in writing (including facsimile transmission) and
shall be sent by first-class mail, by nationally-recognized overnight courier,
by personal delivery, or by facsimile transmission in all cases with charges
prepaid. All notices shall be sent, if to the Guarantor, to its address
specified on the signature page hereof, or if to the Agent, the Issuing Bank,
the Lenders, the Borrower or any other Loan Party, to its address specified in
the Credit Agreement, or, in any case, to such other address as shall have been
designated by the applicable party by notice to the other party or parties
hereto. Any properly given notice shall be effective when received, except that
properly given notices to the Guarantor shall be effective at the following
time, if earlier: if given by telephone, when telephoned; if by first-class
mail, three Business Days after deposit in the mail; if by overnight courier,
one Business Day after pickup by such courier; and if by facsimile transmission,
upon transmission. The Agent, the Issuing Bank and the Lenders may rely on any
notice (whether or not made in a manner contemplated by this Agreement)
purportedly made by or on behalf of the Guarantor, and the Agent, the Issuing
Bank and the Lenders shall have no duty to verify the identity or authority of
the Person giving such notice.
5.4 EXPENSES. The Guarantor agrees to pay upon demand all
reasonable expenses (including reasonable fees and expenses of counsel) which
the Agent, the Issuing Bank or the Lenders may incur from time to time arising
from or relating to the administration of, or exercise, enforcement or
preservation of rights or remedies under, this Agreement.
5.5 SET-OFF. In the event that any obligation of the Guarantor
now or hereafter existing under this Agreement or any other Loan Document shall
have become due and payable (by acceleration, at scheduled maturity or
otherwise), the Agent, the Issuing Bank or the Lenders shall have the right from
time to time, in additional to all other rights and remedies available to them
hereunder, under any other Loan Document, at law, in equity or otherwise,
without notice to the Guarantor, to set-off against and to appropriate and apply
to such due and payable amounts any obligation of any nature of the Agent, the
Issuing Bank or the Lenders to the Guarantor, including, without limitation, all
deposits (whether time or demand, general or special, provisionally or finally
credited, or otherwise, however evidenced) now or hereafter maintained by the
Guarantor with the
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<PAGE> 104
Agent, the Issuing Bank or the Lenders. Such right shall exist whether or not
the Agent, the Issuing Bank or the Lenders have given notice or made any demand
hereunder or under any other Loan Document, and shall be absolute and
unconditional in all circumstances and, without limitation, shall exist whether
such obligation to the Guarantor is matured or unmatured. Nothing in this
Agreement or any other Loan Document shall be deemed a waiver of or restriction
on any right of set-off or banker's lien available to the Agent, the Issuing
Bank or the Lenders. The Guarantor hereby agrees that any affiliate of the
Agent, the Issuing Bank or the Lenders, and any holder of a participation in any
obligation of the Guarantor under this Agreement, shall have the same rights of
set-off as the Agent, the Issuing Bank and the Lenders as provided in this
Section 5.5 (regardless of whether such affiliate or participant otherwise would
be deemed a creditor of the Guarantor). The Guarantor hereby consents to and
confirms the foregoing arrangements and confirms the rights of banker's lien and
set-off of the Agent, the Issuing Bank and the Lenders.
5.6 CONSTRUCTION. In this Agreement, unless the context
otherwise clearly requires, references to the plural include the singular, the
singular, the plural and the part the whole; "or" is not exclusive; and
"include" means include without limitation (and similarly for similar terms).
This Agreement has been fully negotiated between the applicable parties, each
party having the benefit of legal counsel, and accordingly neither any doctrine
of construction of guaranties or suretyships in favor of the guarantor or
surety, nor any doctrine of construction of ambiguities against the party
controlling the drafting, shall apply to this Agreement. Section and other
references in this Agreement are to this Agreement unless otherwise specified.
5.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Guarantor, its successors and assigns, and shall inure to the benefit
of and be enforceable by the Agent, the Issuing Bank and the Lenders and their
successors and assigns.
5.8 CERTAIN LEGAL MATTERS.
(a) GOVERNING LAW. This Agreement, and any and all issues,
disputes, actions, suits, proceedings or litigation in any way related to this
Agreement, any other Loan Document, statement, course of conduct, act, omission
or event in connection with any of the foregoing (whether for breach of
contract, tort or any other theory of liability), shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
exclusive of choice of law principles.
(B) SUBMISSION TO JURISDICTION AND VENUE; CONSENT TO
SERVICE OF PROCESS; WAIVER OF JURY TRIAL; ETC. THE GUARANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(I) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY
PERSON ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR STATEMENT, COURSE OF CONDUCT, ACT, OMISSION OR EVENT IN
CONNECTION WITH ANY OF THE FOREGOING (COLLECTIVELY, "RELATED
LITIGATION") MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION SITTING IN ALLEGHENY COUNTY, PENNSYLVANIA, SUBMITS TO THE
JURISDICTION OF SUCH COURTS, AND AGREES NOT TO BRING ANY RELATED
LITIGATION IN ANY OTHER FORUM;
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<PAGE> 105
(II) ACKNOWLEDGES THAT SUCH COURTS WILL BE THE MOST
CONVENIENT FORUM FOR ANY RELATED LITIGATION, WAIVES ANY OBJECTION TO
THE LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH
COURT, WAIVES ANY CLAIM THAT ANY RELATED LITIGATION BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, AND WAIVES ANY RIGHT
TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION, THAT SUCH COURT DOES
NOT HAVE JURISDICTION OVER IT;
(III) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY
REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO IT AT THE
ADDRESS FOR NOTICES DESCRIBED IN THIS AGREEMENT, AND CONSENTS AND
AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND
EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR
EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW);
AND
(IV) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED
LITIGATION.
(c) LIMITATION OF LIABILITY. No claim may be made by the
Guarantor against the Agent, the Issuing Bank or the Lenders, or any affiliate,
director, officer, employee, attorney or agent of the Agent, the Issuing Bank or
the Lenders for any punitive damages in respect of any claim arising from or
relating to this Agreement or any other Loan Document or any statement, course
of conduct, act, omission or event in connection with any of the foregoing
(whether for breach of contract, tort or any other theory of liability); and the
Guarantor hereby waives, releases and agrees not to sue upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist.
(d) FULL RECOURSE. The obligations of the Guarantor herein
constitute full recourse obligations of the Guarantor enforceable against the
Guarantor to the full extent of all of the Guarantor's assets and properties.
(e) SEVERABILITY; MODIFICATION TO CONFORM TO LAW. The
Guarantor hereby irrevocably and unconditionally:
(i) agrees that it is the intention of the parties that
this Agreement be enforceable to the fullest extent permissible under
applicable law, but that the unenforceability (or modification to
conform to law) of any provision or provisions hereof shall not render
unenforceable, or impair, the remainder hereof, and that if any
provision of this Agreement shall be held invalid or unenforceable in
whole or in part in any jurisdiction, this Agreement shall, as to such
jurisdiction, be deemed amended to modify or delete, as necessary, the
offending provision or provisions and to alter the bounds thereof in
order to render it or them valid and enforceable to the maximum extent
permitted by applicable law, without in any manner affecting the
validity or enforceability of such provision or provisions in any other
jurisdiction or the remaining provisions hereof in any jurisdiction;
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<PAGE> 106
(ii) agrees that, without limitation of the preceding
subsection (i), to the extent that mandatory and nonwaivable provisions
or applicable law (including but not limited to applicable laws
pertaining to fraudulent conveyance) otherwise would render the full
amount of the Guarantor's obligations hereunder and under the other
Loan Documents invalid or unenforceable or otherwise would render the
full amount of the Guarantor's obligations hereunder and under the
other Loan Documents void or voidable (as a fraudulent conveyance or
otherwise), the Guarantor's obligations hereunder and under the other
Loan Documents shall be limited to the maximum amount which does not
result in such invalidity, unenforceability, voidness or voidability;
and
(iii) agrees that, notwithstanding subsections (i) and (iii)
of this Section 5.8(e), the Guarantor's obligations under this
Agreement and the other Loan Documents shall presumptively be construed
as is subsections (i) and (ii) of this Section 5.8(e) were not part of
this Agreement, and that to the fullest extent permitted by law, in any
action, suit or proceeding pertaining to this Agreement or any other
Loan Document the burden of proof, by clear and convincing evidence,
shall be on the party asserting the invalidity, unenforceability,
voidness or voidability of the Guarantor's obligations hereunder or
under any other Loan Document, or asserting that subsection (i) and
(ii) of this Section 5.8(e) apply to limit any of the Guarantor's
obligations hereunder or under any other Loan Document, as to each
element of such assertion.
(f) ENTIRE AGREEMENT. This Agreement and the other Loan
Documents, as may be amended or supplemented from time to time in writing in
accordance with their terms and conditions, constitute the entire agreement of
the Guarantor and the Agent, the Issuing Bank and the Lenders with respect to
the subject matter hereof and supersedes all prior and contemporaneous
negotiations, agreements, understandings and communications. No representation,
understanding, promise or condition concerning the subject matter hereof shall
be binding upon the Agent, the Issuing Bank or the Lenders unless expressed
herein or therein. No course of dealing, course of performance, trade usage or
parol evidence of any nature, whether based on actions, omissions or
circumstances occurring or existing heretofore or hereafter, may be used in any
way to alter or supplement the terms hereof.
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<PAGE> 107
IN WITNESS WHEREOF, the Guarantor has caused this Agreement to
be duly executed and delivered as of the date first above written.
______________________________
By: __________________________
Name: ________________________
Title: _______________________
Address for Notices:
Attn:
Telephone:
Fax:
ACCEPTED AND AGREED:
MELLON BANK, N.A., as Agent
By __________________________
Name: ________________________
Title: _______________________
181\24470AAH.101
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Exhibit F
to
CREDIT AGREEMENT
TRANSFER SUPPLEMENT
THIS TRANSFER SUPPLEMENT, dated as of the date specified in
Item I of Schedule I hereto, among the Transferor Lender specified in Item 2 of
Schedule I hereto (the "Transferor Lender"), each Purchasing Lender specified in
Item 3 of Schedule I hereto (each a "Purchasing Lender") and Mellon Bank, N.A.,
as Agent for the Lenders under the Credit Agreement described below.
Recitals:
A. This Transfer Supplement is being executed and delivered in
accordance with Section 10.14(c) of the Credit Agreement, dated as of January
18, 1996 by and among SINTER METALS, INC., a Delaware corporation (the
"Borrower"), the Lenders parties thereto from time to time, the Issuing Bank
referred to therein and Mellon Bank, N.A., a national banking association, as
Agent for the Lenders (as the same may be amended, modified or supplemented from
time to time, the "Credit Agreement"). Capitalized terms used herein without
definition have the meaning specified in the Credit Agreement.
B. Each Purchasing Lender (if it is not already a Lender)
wishes to become a Lender party to the Credit Agreement.
C. The Transferor Lender is selling and assigning to each
Purchasing Lender, and each Purchasing Lender is purchasing and assuming, a
certain portion of the Transferor Lender's rights and obligations under the
Credit Agreement, including, without limitation, the Transferor Lender's
Commitments and Loans owing to it and any Notes held by it (the "Transferor
Lender's Interests").
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. TRANSFER EFFECTIVE NOTICE. Upon receipt by the Agent of
five (5) counterparts this Transfer Supplement (to each of which is attached a
fully completed Schedule I and Schedule II), and each of which has been executed
by the Transferor Lender, by each Purchasing Lender and by any other Person
required by Section 10.14(c) of the Credit Agreement to execute this Transfer
Supplement, the Agent will transmit to the Borrower, the Transferor Lender and
each Purchasing Lender a transfer effective notice, substantially in the form of
Schedule III to this Transfer Supplement (a "Transfer Effective Notice"). The
date specified in such Transfer Effective Notice as the date on which the
transfer effected by this Transfer Supplement shall become effective (the
"Transfer Effective Date") shall be the fifth (5th) Business Day following the
date of such Transfer Effective Notice or such other date as shall be agreed
upon among the Transfer Lender, the Purchasing Lender, the Agent and the
Borrower. From and after the close of business at the Agent's Office on the
Transfer Effective Date, each Purchasing Lender (if not already a Lender party
to the Credit Agreement) shall be a Lender party to the Credit Agreement for all
purposes thereof having the respective interests in the Transferor Lender's
interests reflected in this Transfer Supplement.
2. PURCHASE PRICE; SALE. At or before 12:00 Noon, local
time at the Transferor Lender's office specified in Schedule III, on the
Transfer Effective Date, each Purchasing Lender shall pay to the Transferor
Lender, in immediately available funds, an amount equal to the purchase price,
<PAGE> 109
as agreed between the Transferor Lender and such Purchasing Lender (the
"Purchase Price"), of the portion being purchase by such Purchasing Lender (such
Purchasing Lender's "Purchased Percentage") of the Transferor Lender's Interest.
Effect: upon receipt by the Transferor Lender of the Purchase Price from a
Purchasing Lender, the Transfer Lender hereby irrevocably sells, assigns and
transfers to such Purchasing Lender, without recourse, representation or
warranty (express or implied) except as set forth in Section 6 hereof, and each
Purchasing Lender hereby irrevocably purchases, takes and assumes from the
Transferor Lender such Purchasing Lender's Purchased Percentage of the
Transferor Lender's Interests. The Transferor Lender shall promptly notify the
Agent of the receipt of the Purchase Price from a Purchasing Lender ("Purchase
Price Receipt Notice"). Upon receipt by the Agent of such Purchase Price Receipt
Notice, the Agent shall record in the Register the information with respect to
such sale and purchase as contemplated by Section 10.14(d) of the Credit
Agreement.
3. PRINCIPAL, INTEREST AND FEES. All principal payments,
interest, fees and other amounts that would otherwise be payable from and after
the Transfer Effective Date to or for the account of the Transferor Lender in
respect of the Transferor Lender's Interests shall, instead, be payable to or
for the account of the Transferor Lender and the Purchasing Lenders, as the case
may be, in accordance with their respective interests as reflected in this
Transfer Supplement.
4. CLOSING DOCUMENTS. Concurrently with the execution and
delivery hereof, the Transferor Lender will provide or request the Agent to
provide to each Purchasing Lender (if it is not already a Lender party to the
Credit Agreement) conformed copies of all documents delivered to such Transferor
Lender on the Closing Date in satisfaction of conditions precedent set forth in
the Credit Agreement or, to the extent such documents are not available from the
Transferor Lender or the Agent, request that the Borrower provide conformed
copies of such documents.
5. FURTHER ASSURANCES. Each of the parties to this Transfer
Supplement agrees that at any time and from time to time upon the written
request of any other party, it will execute and deliver such further documents
and do such further acts and things as such other party may reasonably request
in order to effect the purposes of this Transfer Supplement.
6. CERTAIN REPRESENTATIONS AND AGREEMENTS. By executing and
delivering this Transfer Supplement, the Transferor Lender and each Purchasing
Lender confirm to and agree with each other and the Agent and the Lenders as
follows:
(a) Other than the representation and warranty that
it is the legal and beneficial owner of the interest being
assigned hereby free and clear of any adverse claim, the
Transferor Lender makes no representation or warranty and
assumes no responsibility with respect to (i) the execution,
delivery, effectiveness, enforceability, genuineness, validity
or adequacy of the Credit Agreement or any other Loan
Document, (ii) any recital, representation, warranty,
document, certificate, report or statement in, provided for
in, received under or in connection with, the Credit Agreement
or any other Loan Document, or (iv) the existence, validity,
enforceability, perfection, recordation, priority, adequacy or
value, now or hereafter, of any Lien or other direct or
indirect security afforded or purported to be afforded by any
of the Loan Documents or otherwise from time to time.
(b) The Transferor Lender makes no representation or
warranty and assumes no responsibility with respect to (i) the
performance or observance of any of the terms or conditions of
the Credit Agreement or any other Loan Document on the
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<PAGE> 110
part of any Loan Party, (ii) the business, operations,
condition (financial or otherwise) or prospects of any Loan
Party or any other Person, or (iii) the existence of any Event
of Default or Potential Default.
(c) Each Purchasing Lender confirms that it has
received a copy of the Credit Agreement and each of the other
Loan Documents, together with copies of the financial
statements referred to in Sections 4.6 and 4.7 thereof, the
most recent financial statements delivered pursuant to Section
6.1 thereof, if any, and such other documents and information
as it has deemed appropriate to make its own credit and legal
analysis and decision to enter into this Transfer Supplement.
Each Purchasing Lender confirms that it has made such analysis
and decision independently and without reliance upon the
Agent, the Transferor Lender or any other Lender.
(d) Each Purchasing Lender, independently and without
reliance upon the Agent, the Transferor Lender or any other
Lender, and based on such documents and information as it
shall deem appropriate at the time, will make its own
decisions to take or not take action under or in connection
with the Credit Agreement or any other Loan Document.
(e) Each Purchasing lender irrevocably appoints the
Agent to act as Agent for such Purchasing Lender under the
agreement and the other Loan Documents, all in accordance with
Article 9 of the Credit Agreement and the other provisions of
the Credit Agreement and the other Loan Documents.
(f) Each Purchasing Lender agrees that it will
perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement and the other Loan
Documents are required to be performed by it as a Lender.
7. SCHEDULE II. Schedule II hereto sets forth the revised
Commitments of the Transferor Lender and each Purchasing Lender as well as
administrative information with respect to each Purchasing Lender.
8. GOVERNING LAW. This Transfer Supplement shall be governed
by, construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania, without regard to principles of choice of law.
9. COUNTERPARTS. This Transfer Supplement may be executed
on any number of counterparts and by the different parties hereto on separate
counterparts each of which , when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Transfer Supplement to be executed by their respective duly authorized officers
on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
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<PAGE> 111
Schedule I
to
TRANSFER SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR TRANSFER SUPPLEMENT
Re: Credit Agreement, dated as of January 18, 1996, by and among SINTER
METALS, INC., a Delaware corporation (the "Borrower"), the Lenders
parties thereto from time to time, the Issuing Bank named therein and
Mellon Bank, N.A., a national banking association, as Agent for the
Lenders (as amended, modified or supplemented from time to time, the
"Credit Agreement")
<TABLE>
<S> <C>
Item 1 (Date of Assignment of [Insert date of Assignment Supplement]
Supplement):
[Insert name of Transferor Lender]
Item 2 (Transferor Lender):
[Insert name(s) of Purchasing Lender(s)]
Item 3 (Purchasing
Lender[s]):
Item 4 (Signatures of
Parties to Transfer
Supplement):
</TABLE>
[NAME OF TRANSFEROR LENDER]
as Transferor Lender
By: ______________________________
Title:
[NAME OF PURCHASING LENDER]
as Purchasing Lender
By: ______________________________
Title:
[NAME OF PURCHASING LENDER]
as Purchasing Lender
By: ______________________________
Title:
<PAGE> 112
[Following two consents required
only when Purchasing Lender is not
already a Lender or an affiliate of
a Lender]
CONSENTED TO AND ACKNOWLEDGED:
Sinter Metals, Inc.
By: ______________________________
Title:
Mellon Bank, N.A., as Agent
By: ______________________________
Title:
ACCEPTED FOR RECORDATION
IN PURCHASING LENDER REGISTER:
Mellon Bank, N.A., as Agent
By: ______________________________
Title:
2
<PAGE> 113
Schedule II
to
TRANSFER SUPPLEMENT
-------------------
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITTED AMOUNTS
---------------------------------
<TABLE>
<S> <C>
[Name of Transferor
Lender] REVISED COMMITMENT AND LOAN AMOUNTS
Revolving Credit
Committed Amount
$-----
REVISED COMMITMENT PERCENTAGE:
------
[Name of Purchasing
Lender] NEW COMMITMENT AND LOAN AMOUNTS:
Revolving Credit
Committed Amount
$-----
NEW COMMITMENT PERCENTAGE:
------
</TABLE>
Administrative Information
for Purchasing Lender:
Address: _______________
_______________
Attention: _______________
Telephone: _______________
Telecopier: _______________
<PAGE> 114
Schedule III
to
TRANSFER SUPPLEMENT
TRANSFER EFFECTIVE NOTICE
To: [Insert Name of Borrower, Transferor
Lender and each Purchasing Lender]
The undersigned, as Agent under the Credit Agreement, dated as
of January 18, 1996, by and among SINTER METALS, INC., a Delaware corporation,
the Lenders parties thereto from time to time, the Issuing Bank referred to
therein and Mellon Bank, N.A., a national banking association, as Agent for the
Lenders (as the same may be amended, modified or supplemented from time to time,
the "Credit Agreement"), acknowledges receipt of five (5) executed counterparts
of a completed Transfer Supplement, dated ______________, 199___, from [name of
Transferor Lender] to [name of each Purchasing Lender] (the "Transfer
Supplement"). Terms defined in the Transfer Supplement are used herein as
therein defined.
1. Pursuant to the Transfer Supplement, you are advised that
the Transfer Effective Date will be _______, 199__. [Insert fifth (5th) Business
Day following date of Transfer Effective Notice or other date agree to among the
Transferor Lender, the Purchasing Lender, the Agent and the Borrower.]
2. Pursuant to Section 10.14(c) of the Credit Agreement, the
Transferor Lender has delivered to the Agent the Transferor Lender Notes.
3. Section 10.14(c) of the Credit Agreement provides that the
Borrower is to deliver to the Agent on or before the Assignment Effective Date
the following Notes, each dated the date of the Note it replaces.
[Describe each new Revolving Credit Note for Transferor Lender
and Purchasing Lender as to date (as required by the Credit Agreement),
principal amount and payer.]
4. The Transfer Supplement provides that each Purchasing
Lender is to pay its Purchase Price to the Transferor Lender at or before 12:00
o'clock Noon, local time at the Transferor Lender's lending office specified in
Schedule II to the Transfer Supplement, on the Transfer Effective Date in
immediately available funds.
Very truly yours,
Mellon Bank, N.A., as Agent
By: _______________________
Title:
<PAGE> 115
Exhibit H
to
CREDIT AGREEMENT
FORM OF PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement"), dated as of ___________,
199_, is made by and between SINTER METALS, INC., a Delaware corporation (the
"Pledgor"), and MELLON BANK, N.A., a national banking association (individually,
and as Agent on behalf of the Lenders) (the "Pledgee").
PRELIMINARY STATEMENT:
A. Pledgor, Pledgee, as Agent, the Lenders party thereto from time to
time and the Issuing Bank referred to therein have entered into that certain
Credit Agreement dated as of January 18, 1996 (as the same has heretofore been
and may hereafter be amended, amended and restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), pursuant to which Lenders
have agreed to make Loans to Pledgor, subject to certain terms and conditions
contained in the Credit Agreement. All capitalized terms used but not elsewhere
defined herein shall have the respective meanings ascribed to such terms in the
Credit Agreement.
B. Subject to the conditions contained in Section 7.5(e) of the Credit
Agreement and contained herein, Pledgor may make unsecured intercompany advances
(hereinafter collectively referred to as "Intercompany Advances" and
individually as an "Intercompany Advance") to its Subsidiaries.
C. Each Intercompany Advance will be evidenced by a discretionary
demand note (hereinafter referred to collectively as the "Intercompany Notes"
and individually as an "Intercompany Note") in the form of Exhibit A attached
hereto, each made by a Subsidiary of the Pledgor payable to the order of the
Pledgor.
D. Pursuant to the Credit Agreement and as a condition precedent to the
Lenders making the Loans and the Issuing Bank issuing Letters of Credit, Pledgee
requires that Pledgor execute and deliver this Agreement to Pledgee in order to
secure the prompt and complete payment and performance of the Obligations (as
hereinafter defined).
NOW, THEREFORE, for and in consideration of these presents and the
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Pledgor hereby states
and agrees as follows:
1. GRANT OF SECURITY INTEREST. To secure the payment and performance
of the Obligations (as hereinafter defined), Pledgor hereby assigns, pledges,
transfers, sets over and grants to Pledgee (individually, and as Agent on
behalf of the Lenders), a first priority security interest in all of Pledgor's
rights and benefits under all Intercompany Notes, now or hereafter executed,
which are payable to Pledgor, including the right to receive all payments of
principal, interest and fees under such Intercompany Notes and the right to
enforce the provisions of such Intercompany Notes. As used
1
<PAGE> 116
herein, the term "Obligations" means all Obligations (as defined in the Credit
Agreement) and all obligations and liabilities under, arising out of or in
connection with this Agreement.
2. DELIVERY OF PLEDGED NOTES. Pledgor shall deliver to Pledgee
simultaneously herewith each original Intercompany Note, endorsed by Pledgor to
Pledgee by an allonge in the form of Exhibit B attached hereto.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. Pledgor represents and
warrants to and covenants with Pledgee that:
(a) each Intercompany Note evidences and will
evidence Intercompany Advances actually made to the maker of
such Intercompany Note by Pledgor;
(b) this Agreement has been duly executed and
delivered by Pledgor and constitutes the legal and validly
binding obligation of Pledgor, enforceable in accordance with
its terms;
(c) the execution, delivery and performance of this
Agreement by Pledgor does not and will not constitute a
violation of any applicable law and does not and will not
conflict with or constitute a default under or breach of any
agreement, instrument, document, judgment, order or other
restriction to which Pledgor is or hereafter shall become a
party or by which Pledgor or any of its property or assets,
including its rights under any Intercompany Notes, are bound
or will be bound;
(d) Pledgor is the sole owner of each Intercompany
Note, free and clear of all liens, claims or rights of others,
except for the lien in such Intercompany Note granted to
Pledgee by this Agreement;
(e) as of the date hereof, no Intercompany Advances
have been made by Pledgor, and no Intercompany Notes have been
executed and delivered to Pledgor;
(f) each Intercompany Advance made after the date
hereof by Pledgor shall be evidenced by the respective
Intercompany Notes, and the interest rate payable under any
such Intercompany Note shall not exceed
-----------------------------------;
(g) Pledgor shall not take any security for the
repayment of any Intercompany Note, and shall not do, or
permit to be done, anything to impair Pledgee's rights
thereunder; and
(h) Pledgor shall observe and perform all of the
terms and provisions of Section 7.5(e) of the Credit Agreement
with respect to each Intercompany Advance made by Pledgor.
4. SUBORDINATION PROVISIONS.
(a) SUBORDINATION. Pledgor acknowledges and agrees that
the payment of any and all Indebtedness evidenced by any of the Intercompany
Notes hereby expressly is subordinated to the prior payment and performance in
full of the Obligations.
2
<PAGE> 117
(b) RESTRICTIONS ON PAYMENTS. Upon the occurrence of an Event
of Default, and notwithstanding any provisions of any Intercompany Note or other
agreement to the contrary, payment of principal, interest or any other amount
due with respect to any Indebtedness evidenced by any of the Intercompany Notes
shall be made directly to the Pledgee and the Pledgor shall have no right to
receive any such payment, and Pledgor shall not exercise any right of set-off or
recoupment with respect to any Indebtedness evidenced by any Intercompany Note
payable to Pledgor, without the prior written consent of the Pledgee, until all
of the Obligations are paid and performed in full.
(c) PROCEEDINGS. In the event of any insolvency, bankruptcy,
receivership, custodianship, liquidation, reorganization, assignment for the
benefit of creditors or other proceeding for the liquidation, dissolution or
other winding up of any Subsidiary of the Pledgor or its respective properties,
(i) all Obligations first shall be paid in full in cash before any payment of or
with respect to any Indebtedness evidenced by any Intercompany Note shall be
made; (ii) any payment which, but for the terms hereof, otherwise would be
payable or deliverable in respect of any Indebtedness evidenced by any
Intercompany Note shall be paid or delivered directly to Pledgee until all
Obligations are paid in full in cash, and Pledgor irrevocably authorizes,
empowers and directs (A) all receivers, trustees, liquidators, custodians,
conservators and others having authority in the premises to effect all such
payments and deliveries, and (B) Pledgee to demand, sue for, collect and receive
every such payment or distribution; (iii) Pledgor further agrees to execute and
deliver to Pledgee or its representative all such further instruments confirming
the authorization referred to in the foregoing clause (ii), and agrees to take
all such other actions in order to enable Pledgee to enforce all claims upon or
in respect of the Intercompany Notes and the Indebtedness evidenced thereby, and
(iv) Pledgor hereby irrevocably authorizes, empowers and appoints Pledgee, its
agent and attorney-in-fact to (A) execute, verify, deliver and file any proofs
of claim in respect of the Intercompany Notes and the Indebtedness evidenced
thereby in connection with any such proceeding and (B) vote such proofs of claim
in any such proceeding.
(d) INCORRECT PAYMENTS. If any payment under any Indebtedness
evidenced by any Intercompany Note is received by Pledgor in violation of the
provisions of Sections 4(b) and 4(c) hereof before all of the Obligations are
paid and performed in full in cash, such payment (i) shall not be commingled
with the property or assets of Pledgor, (ii) shall be held in trust by Pledgor
for the benefit of Pledgee and (iii) shall be paid to Pledgee or its
representative for the application (in accordance with the terms of the Credit
Agreement) to the Obligations, until all Obligations are paid and performed in
full.
(e) SALE, TRANSFER, ETC. Pledgor shall not sell, assign,
dispose of or otherwise transfer all or any portion of the Indebtedness
evidenced by any Intercompany Note without the prior written consent of Pledgee.
In the event of a permitted sale, assignment, disposition or other transfer, the
Pledgor, prior to the consummation of any such action, shall cause the
transferee thereof to execute and deliver to Pledgee an agreement substantially
identical to this Agreement, providing for the continued subordination and
forbearance of the Indebtedness evidenced by such Intercompany Note to the
Obligations as provided herein and for the continued effectiveness of all of the
rights of Pledgee arising under this Agreement. Notwithstanding the failure to
execute or deliver any such agreement, the subordination effected hereby shall
survive any sale, assignment, disposition or other transfer of all or any
portion of the Indebtedness evidenced by the Intercompany Notes, and the terms
of this Agreement shall be binding upon the successors and assigns of Pledgor.
(f) LEGENDS. Until the Obligations are paid in full in cash,
each Intercompany Note at all times shall contain in a conspicuous manner the
following legend.
3
<PAGE> 118
"This Note and the indebtedness evidenced hereby are
subordinated, and the payment hereof and the exercise by the
Payee of all rights and remedies hereunder are restricted, in
the manner and to the extent set forth in the Note Pledge
Agreement (as the same may hereafter by amended or otherwise
modified from time to time, the "Pledge Agreement") dated as
of __________, 199_, by and among Payee and Mellon Bank, N.A.
("Mellon"), to the indebtedness (including interest) owed by
the Undersigned and Holder to Mellon, and each subsequent
holder of this Note, and, by Holder's acceptance hereof,
Holder, shall be bound by the provisions of the Pledge
Agreement."
(g) RESTRICTION ON ACTION BY PLEDGOR.
(i) Until the Obligations are paid in full in cash
and notwithstanding anything contained in any Intercompany
Note, the Credit Agreement, the other Loan Documents or any
other agreement to the contrary, Pledgor, without the prior
written consent of Pledgee, shall not agree to any amendment,
modification or supplement to any Intercompany Note payable to
Pledgor.
(ii) Until the Obligations are paid in full in cash,
Pledgor, without the prior written consent of Pledgee, shall
not exercise any of the remedies with respect to or take any
action to collect the Indebtedness evidenced by any
Intercompany Note payable to Pledgor that may be available
under such Intercompany Note, at law or in equity.
5. SECURITY. This Agreement is for collateral security purposes
only. So long as no Event of Default has occurred, Pledgor shall retain its
right to receive and retain all payments as and when due under the Intercompany
Notes to which Pledgor is a party.
6. EVENT OF DEFAULT; REMEDIES UPON AN EVENT OF DEFAULT.
(a) EVENT OF DEFAULT. A Potential Default or an Event of
Default under the Credit Agreement shall constitute an Event of Default
under this Agreement.
(b) REMEDIES UPON AN EVENT OF DEFAULT. Upon the occurrence of
any Event of Default, Pledgee, at its option, without in any way
waiving such Event of Default and without notice and without regard to
the adequacy of any other security for the Obligations, may exercise
the following rights and remedies:
(i) terminate Pledgor's right to receive and
retain any payments under any of the Intercompany Notes;
(ii) act with respect to the Intercompany Notes
as though Pledgee were the owner thereof;
(iii) exercise any and all rights of collection,
conversion or exchange, and any and all other rights,
privileges, options or powers of Pledgor pertaining or
relating to any Intercompany Note;
4
<PAGE> 119
(iv) sell, assign and deliver the whole, or from
time to time, any part of the Intercompany Notes at any
broker's board or at any private sale or at public auction,
with or without demand for performance or adjournment thereof
or otherwise, and free from any right of redemption (all of
which hereby expressly are waived by Pledgor) for cash, for
credit or for other Property, for immediate or future
delivery, and for such price and on such terms as Pledgee in
its sole discretion may determine; and
(v) exercise any and all other rights available
to Pledgee, in equity or at law.
7. PRIVATE SALES. At any sale made pursuant to clause 6(b)(iv) above,
Pledgee may bid for and purchase, all or any part of the Intercompany Notes that
are offered for sale. Pledgor acknowledges that Pledgee may be unable to effect
a public sale of all or a part of the Intercompany Notes by reason of certain
provisions contained in the Securities Act of 1933 (the "Securities Act") or
otherwise, or that it may be able to do so only after delay which might
adversely affect the value that might be realized upon the sale of such
Intercompany Notes. Accordingly, Pledgor agrees that Pledgee, without the
necessity of attempting to cause any registration of the Intercompany Notes to
be effected under the Securities Act, may sell the Intercompany Notes or any
part thereof in one or more private sales to a restricted group of purchasers
who may be required to agree, among other things, that they are acquiring such
Intercompany Notes for their own account, for investment purposes only and not
with a view toward the distribution or resale thereof. Pledgor agrees that any
such sale may be at prices or on terms less favorable to the owner of such
Intercompany Notes than would be the case if such Intercompany Notes were sold
at public sale, and that any such private sale shall not be deemed not to have
been made in a commercially reasonable manner by virtue of such sale having been
a private sale.
8. PLEDGEE APPOINTED ATTORNEY-IN-FACT. Pledgor hereby appoints Pledgee
as Pledgor's true and lawful attorney-in-fact after any Event of Default has
occurred, with full authority in the place and stead of Pledgor and in the name
of Pledgor or otherwise, from time to time in Pledgee's sole discretion, to take
any action described in Section 6 above or otherwise and to execute any document
or instrument which Pledgee may deem necessary or desirable to accomplish the
purposes of this Agreement, including, without limitation, to receive, endorse
and collect all instruments made payable to Pledgor representing any
distribution in respect of the Intercompany Notes or any part thereof and to
give full discharge for the same. Pledgor acknowledges and agrees that the
appointment of Pledgee as such attorney-in-fact is coupled with an interest and
is irrevocable.
9. CUSTODIAL AGREEMENT. Pledgee shall have no duty to protect,
preserve or enforce rights against any Intercompany Note other than a duty of
reasonable custodial care of the Intercompany Notes in its possession.
10. INDEMNITY. Pledgor hereby indemnifies, defends and holds Pledgee
harmless from and against any and all liability, loss, cost, damage or expense
which may, or might be, incurred by Pledgee, directly or indirectly, under the
Intercompany Notes and from any and all claims and demands whatsoever which may
be asserted against Pledgee by reason of any alleged obligations or undertakings
on Pledgee's part to perform or discharge any of the covenants or agreements
contained in the Intercompany Notes, except to the extent that any such
liability, loss, cost, damage, expense, claim or demand directly arises out of
the gross negligence or willful misconduct of the Pledgee. If Pledgee incurs any
such liability under the Intercompany Notes or in defense of any such claims or
demands, the amount thereof, including all costs, expenses and reasonable
attorneys' fees, shall be
5
<PAGE> 120
added to the Obligations and Pledgor shall reimburse Pledgee therefor
immediately upon demand, and upon the failure of Pledgor to reimburse Pledgee
upon demand, Pledgee, at its option, may declare all of the Obligations
immediately due and payable.
11. FURTHER ASSURANCES. Pledgor agrees that at any time and from time
to time, at its own expense, Pledgor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary, or that Pledgee may request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Pledgee
to exercise and enforce its rights and remedies hereunder with respect to any
Intercompany Note.
12. NOTICES. All notices given to Pledgor or Pledgee with respect to
this Agreement shall be given in accordance with the terms of the Credit
Agreement.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
14. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Pennsylvania,
except that no doctrine of choice of law shall be used to apply the laws of any
other state or jurisdiction.
15. CONSENT TO JURISDICTION. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR
PLEDGEE TO ENTER INTO THIS AGREEMENT AND TO EXTEND CREDIT TO PLEDGOR, PLEDGOR
AGREES THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS
AGREEMENT, ITS VALIDITY OR PERFORMANCE, AT THE OPTION OF PLEDGEE, ITS SUCCESSORS
AND ASSIGNS, AND WITHOUT LIMITATION ON THE ABILITY OF PLEDGEE, ITS SUCCESSORS
AND ASSIGNS, TO EXERCISE ALL RIGHTS AS TO THE INTERCOMPANY NOTES OR TO INITIATE
AND PROSECUTE IN ANY APPLICABLE JURISDICTION ACTIONS RELATED TO REPAYMENT OF THE
OBLIGATIONS, SHALL BE INITIATED AND PROSECUTED AS TO ALL PARTIES AND THEIR
SUCCESSORS AND ASSIGNS AT PITTSBURGH, PENNSYLVANIA. PLEDGEE AND PLEDGOR EACH
CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS PERSON BY ANY
COURT SITUATED AT PITTSBURGH, PENNSYLVANIA HAVING JURISDICTION OVER THE SUBJECT
MATTER, WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL DIRECTED TO PLEDGOR AND
PLEDGEE AT THEIR RESPECTIVE ADDRESSES AS SET FORTH IN THE CREDIT AGREEMENT, THIS
AGREEMENT OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA. PLEDGOR WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND
ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENT TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.
16. WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR
PLEDGEE TO ENTER INTO THIS AGREEMENT AND TO EXTEND CREDIT TO PLEDGOR, PLEDGOR
AND PLEDGEE EACH WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR
PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT AND/OR THE CONDUCT OF
THE RELATIONSHIP BETWEEN PLEDGEE AND PLEDGOR.
6
<PAGE> 121
IN WITNESS WHEREOF, this Agreement has been duly executed by
the Pledgor as of the ____ day of __________, 199_.
Signed and acknowledged SINTER METALS, INC.
in the presence of:
____________________________ By: ____________________________
____________________________ Its: ___________________________
7
<PAGE> 122
STATE OF ________)
)ss:
COUNTY OF ________)
The foregoing agreement was acknowledged before me this _____
day of __________, 199_ by _________________, __________ of Sinter Metals, Inc.,
a Delaware corporation, on behalf of the corporation.
____________________________
Notary Public
Accepted and Acknowledged at Cleveland, Ohio as of _____________, 199_.
MELLON BANK, N.A., for itself
and as Agent for the Lenders
By: ____________________________
Title: _________________________
8
<PAGE> 123
EXHIBIT A
DISCRETIONARY DEMAND NOTE
$__________ _______________, 199_
FOR VALUE RECEIVED, the Undersigned hereby promises to pay to
the order of SINTER METALS, INC., a Delaware corporation, its successors and
assigns (the "Holder") in lawful money of the United States of America, at its
chief executive offices at 50 Public Square, Suite 3200, Cleveland, Ohio 44113
or at such other place as the Holder hereof may direct, on DEMAND, the
principal sum of the lesser of (i) _______________________ DOLLARS ($________)
or (ii) the amount which is advanced pursuant to the terms of this
Discretionary Demand Note (the "Note").
The Undersigned shall have the right to prepay this Note in
full or in part without penalty.
All payments of principal shall be made in immediately
available funds.
The Undersigned shall use the proceeds of this Note for
working capital purposes.
This Note has been assigned to Mellon Bank, N.A. ("Mellon")
pursuant to that certain Pledge Agreement in favor of Mellon dated as of
__________, 199_ (as amended, modified or supplemented from time to time, the
"Pledge Agreement"). This Note and the indebtedness evidenced hereby is
subordinated, and the payment hereof and the exercise by the Holder of all
rights and remedies hereunder are restricted, in the manner and to the extent
set forth in the Pledge Agreement, to the indebtedness (including interest) owed
by the Undersigned and Holder to Mellon, the Lenders and the Issuing Bank (as
each such term is defined in the Pledge Agreement), and each subsequent holder
of this Note, and, by Holder's acceptance hereof, Holder, shall be bound by the
provisions of the Pledge Agreement.
Holder may, without notice and without releasing the liability
of the Undersigned, grant extensions and/or renewals hereof from time to time or
for any term or terms. No delay by Holder or its assignee in exercising any
power or right hereunder, and no partial exercise of such power or right, shall
operate in any way as a waiver of any subsequent exercise thereof. Holder or its
assignee shall not be liable for or prejudiced by failure to collect or lack of
diligence in bringing suit on this Note or any renewal or extension hereof.
This Note shall be governed and construed under the Laws of
the Commonwealth of Pennsylvania.
Demand, presentment, protest, notice of dishonor, and notice
of default and acceleration are hereby waived.
The Undersigned agrees that its liability hereunder shall be
binding upon its successors and assigns.
1
<PAGE> 124
THE UNDERSIGNED HEREBY ACKNOWLEDGES INITIAL: ____
THAT, IN ORDER TO EXPEDITE THE RESOLUTION OF
ANY DISPUTES WHICH MAY ARISE UNDER THIS NOTE
OR UNDER ANY AGREEMENT CONTEMPLATED UNDER THIS
NOTE AND IN LIGHT OF THE COMPLEXITY OF THE
TRANSACTION CONTEMPLATED UNDER THIS NOTE, THE UNDERSIGNED WAIVES THE RIGHT TO
TRAIL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT TO
WHICH IT AND THE HOLDER HEREOF ARE PARTIES, WHETHER ARISING OUT OF, UNDER, OR BY
REASON OF THIS NOTE, OR ANY ASSIGNMENT, ACCOUNT OR OTHER TRANSACTIONS UNDER THIS
NOTE OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER OF ANY KIND OR
NATURE, AND ACKNOWLEDGE THAT SUCH WAIVER HAS BEEN SPECIFICALLY NEGOTIATED AS A
PART OF THIS NOTE.
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT UNDER THE CREDIT
AGREEMENT BY AND AMONG HOLDER, MELLON BANK, N.A., AS AGENT, THE LENDERS PARTY
THERETO AND THE ISSUING BANK, DATED JANUARY 18, 1996, THE PLEDGE AGREEMENT OR A
DEFAULT BY THE UNDERSIGNED UNDER ANY PROVISION OF THIS NOTE, THE UNDERSIGNED
AUTHORIZES AND EMPOWERS THE PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF RECORD
WITHIN THE UNITED STATES OR ELSEWHERE TO APPEAR FOR AND CONFESS JUDGMENT AGAINST
THE UNDERSIGNED FOR SUCH SUMS AS SHALL HAVE BECOME DUE UNDER THIS NOTE, WITH OR
WITHOUT DECLARATION, WITH COSTS OF SUIT AND AN ATTORNEYS' COMMISSION OF TEN
PERCENT (10%), WITH RELEASE OF ERRORS, WITHOUT STAY OF EXECUTION AND WITH SUCH
EXPENSES ADDED AS ARE OR MAY BE INCURRED BY THE HOLDER OR ANY OTHER HOLDER OF
THIS NOTE FOR COLLECTION. THE UNDERSIGNED ALSO WAIVES THE RIGHT OF INQUISITION
OF ANY REAL ESTATE LEVIED ON, VOLUNTARILY CONDEMNS THE SAME, AUTHORIZES THE
PROTHONOTARY OF CLERK TO ENTER A WRIT OF EXECUTION ON SUCH VOLUNTARY
CONDEMNATION, AGREES THAT SUCH REAL ESTATE MAY BE SOLD ON A WRIT OF EXECUTION;
AND ALSO WAIVES AND RELEASE ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR
EXEMPTION LAW OF ANY STATE NOW IN FORCE OR ENACTED IN THE FUTURE TO THE EXTENT
SUCH WAIVER OR RELEASE IS PERMITTED BY LAW. IF A COPY OF THIS NOTE, VERIFIED BY
AFFIDAVIT OF THE HOLDER OR SOMEONE ON THE HOLDER'S BEHALF IS FILED IN SUCH
ACTION, IT WILL NOT BE NECESSARY TO FILE THE ORIGINAL AGREEMENT AS A WARRANT OF
ATTORNEY. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST THE
UNDERSIGNED WILL NOT BE EXHAUSTED BY THE INITIAL EXERCISE OF THE POWER, AND THE
SAME MAY BE EXERCISED FROM TIME TO TIME AND AS OFTEN AS THE BANK DEEMS NECESSARY
OR DESIRABLE; AND THIS INSTRUMENT WILL BE SUFFICIENT WARRANT.
2
<PAGE> 125
WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO
NOTICE AND COURT TRIAL. A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR
PRIOR KNOWLEDGE AND THE POWER OF A COURT CAN BE USED TO COLLECT FROM YOU
REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED
GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THIS AGREEMENT OR ANY
OTHER CAUSE.
WITNESS the due execution hereof on the day and year first
above written.
____________________________________
By: _________________________ (SEAL)
Title: _____________________________
3
<PAGE> 126
EXHIBIT B - FORM OF ALLONGE
---------------------------
Reference is made to that certain Pledge Agreement (the
"Pledge Agreement") dated as of ____________, 199_ among the undersigned and
Mellon Bank, N.A. ("Pledgee"). Pursuant and subject to the terms of the Pledge
Agreement, the undersigned hereby assigns and sets over to Pledgee all of the
undersigned's title and interest in and to the attached Note dated ____________,
199_ made by ____________________ to the undersigned in the original principal
amount of $_____________, which Note is hereby made payable to the order of
Pledgee.
IN WITNESS WHEREOF, the undersigned has executed this Allonge as of
____________, 199_.
SINTER METALS, INC.,
a Delaware corporation
By: ______________________________
Its: _____________________________
<PAGE> 1
================================================================================
LOAN AGREEMENT
between
VILLAGE OF RICHTON PARK, COOK COUNTY, ILLINOIS
and
SINTER METALS, INC.
$7,195,000
VILLAGE OF RICHTON PARK, COOK COUNTY, ILLINOIS
ADJUSTABLE RATE INDUSTRIAL DEVELOPMENT REVENUE BONDS,
SERIES 1996 (SINTER METALS, INC. PROJECT)
Dated as of April 1, 1996
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Prepared by:
Lawrence E. White
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
(312) 701-8283
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INDEX
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(This Index is not a part of the Agreement but rather is for convenience of
reference only)
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Page
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ARTICLE I
DEFINITIONS
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Section 1.1. Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.4. Captions and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1. Representations, Warranties and Covenants of the Issuer . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2. Representations, Warranties and Covenants of the Borrower . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
COMPLETION OF THE PROJECT;
ISSUANCE OF THE PROJECT BONDS
Section 3.1. Acquisition, Construction, Equipping and Installation of the Project . . . . . . . . . . . . . . 8
Section 3.2. Plans and Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.3. Issuance of the Bonds; Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.4. Disbursements from the Project Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.5. Borrower Required to Pay Costs in Event Project Fund Insufficient . . . . . . . . . . . . . . . . 11
Section 3.6. Completion Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.7. Investment and Repayment of Fund Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
LOAN BY ISSUER; REPAYMENT OF THE LOAN;
LOAN PAYMENTS AND ADDITIONAL PAYMENTS
Section 4.1. Loan Repayment; Delivery of Notes and Letter of Credit . . . . . . . . . . . . . . . . . . . . . 12
Section 4.2. Additional Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.3. Place of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.4. Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.5. Assignment of Agreement and Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.6. Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
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Section 5.1. Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.2. Sale, Lease or Grant of Use by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.4. Borrower Not to Adversely Affect Exclusion from Gross Income of Interest on Project Bonds . . . . 16
Section 5.5. Assignment by Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.6. Borrower's Performance Under Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.7. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.8. Taxes, Permits, Utility and Other Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.9. Continued Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.10. Removal of Portions of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.11. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.12. Annual Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.13. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI
REDEMPTION OF PROJECT BONDS
Section 6.1. Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.2. Extraordinary Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.3. Mandatory Redemption of Project Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.4. Actions by Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.5. Required Deposits for Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.2. Remedies on Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.3. No Remedy Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.4. Agreement to Pay Attorneys' Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.5. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.3. Limited Liability of Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.4. Extent of Covenants of the Issuer; No Personal Liability . . . . . . . . . . . . . . . . . . . . 24
Section 8.5. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Section 8.6. Amendments and Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.7. Execution Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
Exhibit A - PROJECT
Exhibit B - PROJECT SITE
Exhibit C - PROJECT NOTE
Exhibit D - FORM OF DISBURSEMENT REQUEST
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of April 1, 1996 between
the Village of Richton Park, Cook County, Illinois, a political subdivision,
body politic and municipal corporation duly organized and validly existing under
the laws of the State of Illinois (the "Issuer"), and Sinter Metals, Inc., a
Delaware corporation (the "Borrower"), under the circumstances summarized in the
following recitals (the capitalized terms not defined above or in the recitals
being used therein as defined in or pursuant to ARTICLE I hereof):
A. Pursuant to the provisions of the Industrial Project Revenue Bond Act
(65 ILCS 5/11-74-1 ET SEQ.) (the "Act"), in order to create or preserve jobs and
employment opportunities and improve the economic welfare of the citizens of the
Issuer, and of the State of Illinois, the Issuer may issue industrial
development revenue bonds to provide funds to pay all or a portion of the costs
of acquiring, constructing, equipping and installing certain projects and to
refund industrial development revenue bonds issued to finance such projects.
B. The Borrower will cause to be financed the acquisition, construction,
improvement and installation of certain land, buildings, machinery, equipment
and related appurtenances (the "Project") to be used in the manufacture of
powder metal parts at the Borrower's manufacturing facility to be located at or
near the intersection of Sauk Trail and Interstate 57, in Richton Park, Cook
County, Illinois.
C. The Issuer has found and determined, and does hereby find and determine,
that the acquisition, construction, improvement and installation of the Project
by the Borrower will create and preserve jobs and employment opportunities and
improve the economic welfare of the citizens of the Issuer, and of the State of
Illinois, advance and promote industrial, commercial and economic development in
the Issuer, and that the Issuer, by assisting with the financing of the Project,
will act in a manner consistent with and in furtherance of the provisions of the
Act.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto covenant, agree and bind themselves as
follows (provided that any obligation of the Issuer created by or arising out of
this Agreement shall not be a general debt on its part but shall be payable
solely out of the Revenues):
ARTICLE I
DEFINITIONS
Section 1.1. USE OF DEFINED TERMS. Words and terms defined in the Indenture
shall have the same meanings when used herein, unless the context or use clearly
indicates another meaning or intent. In addition, the words and terms set forth
in Section 1.2 hereof shall
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have the meanings set forth therein unless the context or use clearly indicates
another meaning or intent.
Section 1.2. DEFINITIONS. As used herein:
"Additional Payments" means the amounts required to be paid by the Borrower
pursuant to the provisions of SECTION 4.2 hereof.
"Agreement" means this Loan Agreement, as amended or supplemented from time
to time.
"Completion Date" means the date of the acquisition, construction,
equipping and installation of the Project evidenced in accordance with the
requirements of SECTION 3.6 hereof.
"Construction Period" means the period between the beginning of the
acquisition, construction, equipping and installation of the Project evidenced
in accordance with the requirements of SECTION 3.6 hereof.
"Engineer" means an individual or firm qualified to practice the profession
of engineering or architecture under the laws of the State.
"Event of Default" means any of the events described as an Event of Default
in SECTION 7.1 hereof.
"Force Majeure" means any of the causes, circumstances or events described
as constituting Force Majeure in SECTION 7.1 hereof.
"Indenture" means the Trust Indenture, dated as of April 1, 1996, between
the Issuer and the Trustee, as amended or supplemented from time to time.
"Loan" means the loan by the Issuer to the Borrower of the proceeds
received from the sale of the Project Bonds.
"Loan Payment Date" means any date on which any of the Loan Payments are
due and payable, whether at maturity, upon acceleration, call for redemption or
prepayment, or otherwise.
"Loan Payments" means the amounts required to be paid by the Borrower in
repayment of the Loan pursuant to the provisions of the Notes and of SECTION 4.1
hereof.
"LOC Bank" means Mellon Bank, N.A., and its successors and assigns.
"Notes" means the Project Note and any Additional Notes.
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"Notice Address" means:
(a) As to the Issuer: Village of Richton Park, Illinois
4455 Sauk Trail
Richton Park, Illinois 60471
Attn: President
(b) As to the Borrower: Sinter Metals, Inc.
Terminal Power
50 Public Square/Suite 3200
Cleveland, Ohio 44113
Attn: Chief Financial Officer
(c) As to the Trustee: Mellon Bank, N.A.
Two Mellon Bank Center, Room 325
Pittsburgh, Pennsylvania 15259
Attn: Mellon Corporate Trust
(d) As to the LOC Bank: Mellon Bank, N.A.
200 Public Square
29th Floor
Cleveland, Ohio 44114-2301
Attn: Letter of Credit Department
(e) If to the Remarketing Agent, at: Banc One Capital Corporation
90 North High Street
Columbus, Ohio 43215
Attn: Municipal Trading Desk
or such additional or different address, notice of which is given under SECTION
8.2 hereof.
"Organizational Documents" means the Borrower's articles of
incorporation, by-laws, Delaware and Illinois good standing certificates, and
resolutions in effect as of the date of delivery of this Agreement.
"Project" means the certain land, buildings, machinery, equipment and
related appurtenances to be acquired, constructed, improved and installed with
the proceeds of the sale of the Bonds, and which are described generally in
EXHIBIT A attached hereto.
"Project Bonds" means the Issuer's Adjustable Rate Industrial
Development Revenue Bonds, Series 1996 (Sinter Metals, Inc. Project), authorized
in the Indenture in the original principal amount of $7,195,000.
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"Project Note" means the promissory note of the Borrower, dated as of
even date with the Project Bonds, in the form attached hereto as EXHIBIT C and
in the principal amount of $7,195,000 evidencing the obligation of the Borrower
to make Loan Payments.
"Project Site" means the real estate and interests in real estate
constituting the site of the Project, as described in EXHIBIT B attached hereto
as a part hereof.
"Reimbursement Agreement" means the Credit Agreement, dated as of
January 18, 1996, by and among the Borrower, the lenders that are party thereto
and the LOC Bank, as issuing bank and agent.
"Remarketing Agreement" means the Remarketing Agreement, dated as of
April 1, 1996, between the Borrower and the Remarketing Agent.
"Tax Regulatory Agreement" means the Tax Regulatory Agreement, dated
as of April 1, 1996, among the Trustee, the Issuer and the Borrower.
"Trustee" means the Trustee at the time acting as such under the
Indenture, originally Mellon Bank, N.A., as Trustee, and any successor Trustee
as determined or designated under or pursuant to the Indenture.
"Unassigned Issuer's Rights" means all of the rights of the Issuer to
receive Additional Payments under SECTION 4.2 hereof, to be held harmless and
indemnified under SECTION 5.3 hereof, to be reimbursed for attorney's fees and
expenses under SECTION 7.4 hereof, to give or withhold consent to amendments,
changes, modifications, alterations and termination of this Agreement under
SECTION 8.6 hereof, and to give and receive notices hereunder and under the
Indenture.
Section 1.3. INTERPRETATION. Any reference herein to the Issuer, to
the Issuing Authority or to any member or officer of either includes entities or
officials succeeding to their respective functions, duties or responsibilities
pursuant to or by operation of law or lawfully performing their respective
functions.
Any reference to a section or provision of the constitution of the
State or the Act, or to a section, provision, chapter or act of the Illinois
Compiled Statutes or to any statute of the United States of America, includes
that section, provision, chapter, act or statute as amended, modified, revised,
supplemented or superseded from time to time; provided, that no amendment,
modification, revision, supplement or superseding section, provision, chapter,
act or statute shall be applicable solely by reason of this provision if it
constitutes in any way an impairment of the rights or obligations of the Issuer,
the Holders, the Trustee, the LOC Bank or the Borrower under this Agreement.
Unless the context indicates otherwise, words importing the singular
number include the plural number, and vice versa; the terms "hereof", "hereby",
"herein", "hereto",
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"hereunder" and similar terms refer to this Agreement; and the term "hereafter"
means after, and the term "heretofore" means before, the date of delivery of
the Project Bonds. Words of any gender include the correlative words of the
other genders, unless the sense indicates otherwise.
Section 1.4. CAPTIONS AND HEADINGS. The captions and headings in this
Agreement are solely for convenience of reference and in no way define, limit or
describe the scope or intent of any Articles, Sections, subsections, paragraphs,
subparagraphs or clauses hereof.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ISSUER.
The Issuer represents and warrants that:
(a) It is a political subdivision, body politic and municipal
corporation duly organized and validly existing under the laws of the State of
Illinois.
(b) It has full legal right, power and authority to carry out and
consummate the transactions contemplated by this Agreement, the Bond Placement
Agreement, the Letter of Representations, the Tax Regulatory Agreement and the
Indenture.
(c) It has duly authorized (i) the execution, delivery and performance
of this Agreement, the Project Bonds, the Bond Placement Agreement, the Letter
of Representations, the Tax Regulatory Agreement and the Indenture and (ii) the
taking of any and all such actions as may be required on the part of the Issuer
to carry out, give effect to and consummate the transactions contemplated by
such instruments.
(d) The Project constitutes an "industrial project" within the meaning
of the Act, and the Issuer, in assisting with the financing of the cost of the
acquisition, renovation, construction and equipping of the Project, will be
acting in compliance with the purposes and provisions of the Act.
(e) No member of the Issuer or officer, agent or employee thereof is,
in his or her own name or in the name of a nominee, an officer, director or
holder of an ownership interest of more than 7 1/2% in any person, association,
trust, corporation, partnership or other entity which is, in its own name or in
the name of a nominee, a party to any contract or agreement related to the
transactions contemplated by this Agreement, the Tax Regulatory Agreement or the
Indenture upon which the member or officer, agent or employee may be called upon
to act or vote. No member of the Issuer or officer, agent or employee thereof
is, in his or her own name or in the name of a nominee, a holder of any direct
or indirect interest in any contract or agreement related to the transactions
contemplated by this Agreement, the Tax Regulatory Agreement or the Indenture
upon which the member or officer, agent or employee may be called upon to act or
vote, except for direct or indirect interests (other than prohibited interests
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described above) (i) which such member, officer, agent or employee has
disclosed to the Village Clerk of the Issuer prior to the taking of final
action by the Issuer with respect to such contract or agreement, which
disclosure has been publicly acknowledged by the Issuer and entered upon the
minutes of the Issuer and (ii) as to which the member, officer, agent or
employee has refrained from voting on such matter or otherwise officially
acting with respect to such matter.
(f) The Issuer hereby finds and determines that the financing of the
Project with the proceeds of the Bonds will further the public purposes stated
in the Act, by providing increased job opportunities and retaining existing
jobs. The Project is located in Cook County, Illinois, which is an area of
critical labor surplus in the State.
(g) This Agreement, the Bond Placement Agreement, the Letter of
Representations, the Tax Regulatory Agreement and the Indenture constitute
legal, valid and binding obligations of the Issuer, enforceable in accordance
with their respective terms, except to the extent that the enforcement thereof
may be limited by laws relating to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditors' rights
generally, by laws relating to fraudulent obligations and transfers, by the
exercise of judicial discretion in accordance with general principles of equity
and by matters of public policy; and this Agreement, the Bond Placement
Agreement, the Letter of Representations, the Tax Regulatory Agreement, the
Indenture and the Project Bonds have been duly authorized and executed by the
Issuer.
(h) There is no action, suit, proceeding, inquiry, or investigation at
law or in equity or before or by any court, public board or body, pending or, to
the best of the knowledge of the Issuer, threatened against the Issuer, which in
any manner questions the validity of the Act, the powers of the Issuer referred
to in paragraph (b) above or the validity of any proceedings taken by the Issuer
in connection with the issuance of the Project Bonds or wherein any unfavorable
decision, ruling or finding could materially adversely affect the transactions
contemplated by this Agreement or which, in any way, would adversely affect the
validity or enforceability of the Project Bonds, the Letter of Representations,
the Indenture, the Bond Placement Agreement, the Tax Regulatory Agreement or
this Agreement (or of any other instrument required or contemplated for use in
consummating the transactions contemplated thereby and hereby).
(i) The execution and delivery by the Issuer of this Agreement, the
Project Bonds, the Bond Placement Agreement, the Letter of Representations and
the Indenture in compliance with the provisions of each of such instruments will
not conflict with or constitute a breach of, or default under, any material
commitment, agreement or other instrument to which the Issuer is a party or by
which it is bound, or under any provision of the Act, the Constitution of the
State or any existing law, rule, regulation, ordinance, judgment, order or
decree to which the Issuer is subject.
(j) The Issuer will do or cause to be done all things necessary, so
far as lawful, to preserve and keep in full force and effect its existence or to
assure the assumption of its
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obligations under this Agreement, the Indenture, the Letter of Representations,
the Tax Regulatory Agreement and the Bonds by any successor public body.
Section 2.2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
BORROWER. The Borrower represents, warrants and covenants that:
(a) The Borrower is a Delaware corporation, duly organized and validly
existing and in good standing under the laws of the State of Delaware, in good
standing, duly qualified, authorized and registered to do business in and under
the laws of the State and each of the other United States where the conduct of
the Borrower's business so requires. The Borrower has full power and authority
to execute, deliver and perform this Agreement, the Bond Placement Agreement,
the Reimbursement Agreement, the Remarketing Agreement, the Tax Regulatory
Agreement and the Project Note and to enter into and carry out the transactions
contemplated by those documents. That execution, delivery and performance do
not, and will not, violate any provision of law applicable to the Borrower or
its Organizational Documents and do not, and will not, conflict with or result
in a default under any agreement or instrument to which the Borrower is a party
or by which the Borrower is bound.
(b) This Agreement, the Bond Placement Agreement, the Remarketing
Agreement, the Reimbursement Agreement, the Tax Regulatory Agreement and the
Project Note, by proper corporate action, have been duly authorized, executed
and delivered by the Borrower and are valid and binding obligations of the
Borrower.
(c) The Project will create and preserve jobs and employment
opportunities within the boundaries of the State and the Issuer, thereby
improving the economic welfare of the State and the Issuer.
(d) Upon completion of the Project, the Borrower intends to employ
approximately 140 persons on an annual basis and the acquisition, renovation,
construction and equipping of the Project will result in the creation of
approximately 50 construction jobs. The Borrower will use reasonable efforts to
complete the Project and to so employ a substantially similar number of persons
during the term of this Agreement.
(e) The acquisition, construction, improvement and installation of the
Project by the Borrower and the operation thereof complies with and will
continue with respect to the Borrower to comply with all applicable zoning,
planning, building, environmental and other regulations of the governmental
authorities having jurisdiction over the Project, and all necessary permits,
licenses, consents and permissions necessary for the Project have been to date
or will be obtained.
(f) The undertaking of the financing of costs of the Project by the
Issuer and the loan of the proceeds of the Bonds constitute an inducement to the
Borrower to acquire, construct, improve, install and operate the Project in
Richton Park, Cook County, Illinois.
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(g) The Borrower is not in default in the payment of principal of, or
interest on, any of the Borrower's indebtedness for borrowed money, or in
default under any instrument under which, or subject to which, any indebtedness
has been incurred, and no event has occurred and is continuing under the
provisions of any agreement involving the Borrower that, with the lapse of time
or the giving of notice, or both, would constitute an event of default
thereunder.
(h) No litigation at law or in equity nor any proceeding before any
governmental agency or other tribunal involving the Borrower is pending or, to
the knowledge of the Borrower, threatened, in which any liability of the
Borrower is not adequately covered by insurance or in which any judgment or
order would have a material and adverse effect upon the business or assets of
the Borrower or would materially and adversely affect the Project, the validity
of this Agreement, the Bond Placement Agreement, the Reimbursement Agreement,
the Remarketing Agreement, the Tax Regulatory Agreement and the Project Note or
the performance of the Borrower's obligations thereunder or the transactions
contemplated hereby.
(i) The Borrower shall not use or operate the Project, or allow any
other person to use or operate the Project, in any way which would affect the
qualification of the Project under the Act or as a facility that would qualify
for financing under Section 144(a)(12) of the Code or otherwise impair the
exclusion from gross income for federal income tax purposes of the interest on
the Project Bonds.
ARTICLE III
COMPLETION OF THE PROJECT;
ISSUANCE OF THE PROJECT BONDS
Section 3.1. ACQUISITION, CONSTRUCTION, EQUIPPING AND INSTALLATION OF
THE PROJECT. The Borrower will acquire, construct, equip and install the Project
with all reasonable dispatch, all on the Project Site and in accordance with the
Plans and Specifications, which is expected to be completed on or about October
31, 1997. The Borrower shall continue to (a) pay when due, if any, all fees,
costs and expenses incurred in connection with the foregoing from funds made
available therefor in accordance with this Agreement, (b) ask, demand, sue for,
levy, recover and receive all those sums of money, debts and other demands
whatsoever which may be due, owing and payable under the terms of any contract,
order, receipt, writing and instruction in connection with the acquisition,
construction, equipping and installation of the Project and (c) enforce the
provisions of any contract, agreement, obligation, bond or other obligation with
respect to the Project.
Section 3.2. PLANS AND SPECIFICATIONS. The Borrower may revise Plans
and Specification from time to time, provided that no revision shall be made
which would change the purposes of the Project to other than purposes permitted
by the Act and to qualify for financing under Section 144(a)(12) the Code.
Section 3.3. ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS. To
provide funds to make the Loan for purposes of assisting the Borrower in the
financing of the Project, the
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Issuer will issue, sell and deliver the Project Bonds upon the order of the
Placement Agent as provided in the Bond Placement Agreement. The Project Bonds
will be issued pursuant to the Indenture in the aggregate principal amount,
will bear interest, will mature and will be subject to redemption and have such
other terms and provisions, as set forth therein. The Borrower hereby approves
the terms and conditions of the Indenture and the Project Bonds, and the terms
and conditions under which the Project Bonds will be issued, sold and
delivered.
The proceeds from the sale of the Project Bonds shall be loaned to the
Borrower and paid over to the Trustee for the benefit of the Borrower and the
Holders of the Bonds and deposited as provided in SECTIONS 5.1 and 5.3 of the
Indenture. Pending disbursement pursuant to SECTION 3.4 hereof, the proceeds
deposited in the Project Fund, together with any investment earnings thereon,
shall constitute a part of the Revenues assigned by the Issuer to the payment of
Bond Service Charges as provided in the Indenture.
At the request of the Borrower, and for the purposes and upon
fulfillment of the conditions specified in the Indenture, the Issuer may provide
for the issuance, sale and delivery of Additional Bonds and loan the proceeds
from the sale thereof to the Borrower.
Section 3.4. DISBURSEMENTS FROM THE PROJECT FUND. Subject to the
provisions below, disbursements from the proceeds of the sale of Project Bonds
which are deposited under the Indenture in the Project Fund shall be made to pay
(or to reimburse the Borrower for payment of) the following Project costs
(subject to the limitations of Section 141 ET SEQ. of the Code):
(a) Costs incurred directly or indirectly for or in connection with
the acquisition, construction, equipping or installation of the Project,
including costs incurred with respect to the Project for preliminary planning
and studies; architectural, legal, engineering, accounting, consulting,
supervisory and other services; labor, services and materials; and recording of
documents and title work;
(b) Premiums attributable to any surety bonds and insurance required
to be taken out and maintained during the Construction Period with respect to
the Project;
(c) Taxes, assessments and other governmental charges in respect to
the Project that may become due and payable during the Construction Period;
(d) Costs incurred directly or indirectly in seeking to enforce any
remedy against any contractor or subcontractor in respect of any actual or
claimed default under any contract relating to the Project;
(e) Financial, legal, accounting, printing and engraving fees, charges
and expenses, and all other fees, charges and expenses incurred in connection
with the authorization, sale, issuance and delivery of the Project Bonds,
including, without limitation, the fees and expenses of the Issuer, Issuer's
counsel and Bond Counsel, the fees and expenses of the Trustee and the
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fees and expenses of the Placement Agent; provided, however, any fees and
expenses incurred in connection with the issuance of the Project Bonds and paid
with Project Bond proceeds shall not exceed 2% of the proceeds of the Project
Bonds within the meaning of Section 147(g) of the Code;
(f) Any other costs, expenses, fees and charges properly chargeable to
the cost of the acquisition, construction, equipping and installation of the
property comprising the Project; and
(g) Interest on the Project Bonds during the Construction Period to be
paid into the Bond Fund.
Any disbursements from the Project Account of the Project Fund
described above shall be made by the Trustee only upon the written order of the
Authorized Borrower Representative approved by the LOC Bank. Each such written
order shall be in substantially the form of the disbursement request attached
hereto as EXHIBIT D and shall be consecutively numbered and accompanied by
invoices or other appropriate documentation supporting the payments or
reimbursements requested. Any disbursement for any item not described in, or the
cost for which item is other than as described in, the information statement
filed by the Issuer in connection with the issuance of the Project Bonds, based
upon a certificate by the Authorized Borrower Representative, shall be
accompanied by an opinion of Bond Counsel to the effect that such disbursement
will not result in the interest on the Project Bonds becoming subject to federal
income taxation. In case any contract provides for the retention by the Borrower
of a portion of the contract price, there shall be paid from the Project Account
of the Project Fund only the net amount remaining after deduction of any such
portion and, only when that retained amount is due and payable, may it be paid
from the Project Fund.
Any moneys in the Project Account of the Project Fund remaining after
the Completion Date and payment, or provision for payment, of the costs of
financing Project facilities described above, at the direction of the Authorized
Borrower Representative with prior written consent of the LOC Bank, promptly
shall be:
(i) used to acquire, construct, equip and install such additional
real or personal property in connection with the Project as is
designated by the Authorized Borrower Representative and approved by
the LOC Bank, and the acquisition, construction, equipping and
installation of which will be permitted under the Act, provided that
any such use shall be accompanied by an opinion of Bond Counsel to the
effect that the acquisition of such additional property will not
result in the interest on the Project Bonds becoming subject to
federal income taxation;
(ii) used to reimburse the LOC Bank for draws on the Letter of
Credit to redeem Project Bonds in accordance with the terms of the
Indenture;
(iii) used for the purchase of Project Bonds in the open market
for the purpose of cancellation; or
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(iv) used to accomplish a combination of the foregoing as is
provided in that direction.
In the event that all of the Project Bonds are either redeemed or
accelerated pursuant to the terms of the Indenture, any remaining funds in the
Project Account of the Project Fund shall be transferred to the Bond Fund and
used to reimburse the LOC Bank for draws under the Letter of Credit.
Section 3.5. BORROWER REQUIRED TO PAY COSTS IN EVENT PROJECT FUND
INSUFFICIENT. If moneys in the Project Account of the Project Fund are not
sufficient to pay costs of Project facilities, the Borrower, nonetheless, will
complete such facilities, unless the LOC Bank consents otherwise, and, unless
Additional Bonds shall have been issued for that purposes, shall pay all such
additional costs from the Borrower's own funds. The Borrower shall not be
entitled to any reimbursement for any such additional costs from the Issuer, the
Trustee or any Holder; nor shall it be entitled to any abatement, diminution or
postponement of its obligation to make the Loan Payments.
THE ISSUER DOES NOT MAKE ANY WARRANTY OR REPRESENTATION, EITHER
EXPRESS OR IMPLIED, THAT THE MONEYS WHICH WILL BE DEPOSITED INTO THE PROJECT
ACCOUNT OF THE PROJECT FUND, AND WHICH UNDER THE PROVISIONS OF THIS AGREEMENT
WILL BE AVAILABLE FOR PAYMENT OF THE COSTS OF THE PROJECT, WILL BE SUFFICIENT TO
PAY ALL OF THE PROJECT COSTS WHICH WILL BE INCURRED IN CONNECTION THEREWITH.
Section 3.6. COMPLETION DATE. The Borrower shall notify the Issuer,
the LOC Bank and the Trustee of the Completion Date by a certificate signed by
the Authorized Borrower Representative stating:
(a) the date on which the facilities were substantially completed,
which date shall be not later than the date as has been approved in writing by
the LOC Bank and as will not, in the opinion of Bond Counsel, cause interest on
the Project Bonds to become includable in gross income for federal income tax
purposes;
(b) that the acquisition, construction, equipping and installation of
the real and personal property has been accomplished in such a manner as to
conform with all applicable planning, building, environmental and other similar
governmental regulations;
(c) that except as provided in subsection (d) of this Section, all
costs of that acquisition, construction, equipping and installation then or
theretofore due and payable have been paid; and
(d) the amounts which the Trustee shall retain in the Project Account
of the Project Fund for the payment of costs not yet due or for liabilities
which the Borrower is contesting or which otherwise should be retained and the
reasons such amounts should be retained.
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That certificate shall state that it is given without prejudice to any
rights against third parties which then exist or subsequently may come into
being. The Authorized Borrower Representative shall include with that
certificate a statement specifically describing all items of personal property
comprising a part of the facilities. The certificate shall be delivered within
30 days after the occurrence of the events and conditions referred to in
subsections (a) through (c) of this section.
Section 3.7. INVESTMENT AND REPAYMENT OF FUND MONEYS. (a) At the
written or oral request (promptly confirmed in writing) of the Authorized
Borrower Representative, any moneys held as part of the Bond Fund (except moneys
held in the Bond Fund from draws on the Letter of Credit for purposes of
defeasing the Project Bonds pursuant to ARTICLE IX of the Indenture), the
Project Fund or the Rebate Fund shall be invested or reinvested by the Trustee
in Eligible Investments. The Issuer and the Borrower each hereby covenants that
it will restrict that investment and reinvestment and the use of the proceeds of
the Project Bonds in such manner and to such extent, if any, as may be
necessary, after taking into account reasonable expectations at the time of
delivery of and payment for the Project Bonds, so that the Project Bonds will
not constitute arbitrage bonds under Section 148 of the Code.
The Borrower shall provide the Issuer with, and the Issuer may base
its certifications as authorized by the Bond Legislation on, a certificate of
the Borrower for inclusion in the transcript of proceedings for the Project
Bonds, setting forth the reasonable expectations of the Borrower on the date of
delivery of and payment for the Project Bonds regarding the amount and use of
the proceeds of the Project Bonds and the facts, estimates and circumstances on
which those expectations are based.
(b) Th Borrower agrees that any amounts remaining in the Bond Fund
shall be distributed as provided in Section 5.8 of the Indenture.
ARTICLE IV
LOAN BY ISSUER; REPAYMENT OF THE LOAN;
LOAN PAYMENTS AND ADDITIONAL PAYMENTS
Section 4.1. LOAN REPAYMENT; DELIVERY OF NOTES AND LETTER OF CREDIT.
Upon the terms and conditions of this Agreement, the Issuer will make the Loan
to the Borrower. In consideration of and in repayment of the Loan, the Borrower
shall make, as Loan Payments, payments sufficient in time and amount to pay when
due all Bond Service Charges, all as more particularly provided in the Project
Note and any Additional Note. The Project Note shall be executed and delivered
by the Borrower concurrently with the execution and delivery of this Agreement.
All Loan Payments shall be paid to the Trustee in accordance with the terms of
the Notes for the account of the Issuer and shall be held and applied in
accordance with the provisions of the Indenture and this Agreement. To the
extent of payments made with respect to Bond Service Charges pursuant to draws
upon the Letter of Credit, the Borrower shall receive
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a credit against its obligation to make Loan Payments under this Agreement and
the Project Note.
In connection with the issuance of any Additional Bonds, the Borrower
shall execute and deliver to the Trustee one or more Additional Notes in a form
substantially similar to the form of the Project Note. All such Additional Notes
shall:
(a) provide for payments of interest equal to the payments of interest
on the corresponding Additional Bonds;
(b) require payments of principal and prepayments and any premium
equal to the payments of principal, redemption payments and sinking fund
payments and any premium on the corresponding Additional Bonds;
(c) require all payments on any such Additional Notes to be made no
later than the due dates for the corresponding payments to be made on the
corresponding Additional Bonds; and
(d) contain by reference or otherwise optional and mandatory
prepayment provisions and provisions in respect of the optional and mandatory
acceleration or prepayment of principal and any premium corresponding with the
redemption and acceleration provisions of the corresponding Additional Bonds.
All Notes shall secure equally and ratably all outstanding Bonds,
except that, so long as no Event of Default described in PARAGRAPH (G) OF
SECTION 7.1 of the Indenture has occurred and is continuing, payments by the
Borrower on the Project Note shall be used by the Trustee to reimburse the LOC
Bank for payments made to the LOC Bank in connection with drawings on the Letter
of Credit used to pay Bond Service Charges on the Project Bonds.
Upon payment in full, in accordance with the Indenture, of the Bond
Service Charges on any series of Bonds, whether at maturity or by redemption or
otherwise, or upon provision for the payment thereof having been made in
accordance with the provisions of the Indenture, (i) the Notes issued
concurrently with those corresponding Bonds, of the same maturity, bearing the
same interest rate and in an amount equal to the aggregate principal amount of
the Bonds so surrendered and canceled or for the payment of which provision has
been made, shall be deemed fully paid, the obligations of the Borrower
thereunder shall be terminated, and any such Notes shall be surrendered by the
Trustee to the Borrower, and shall be canceled by the Borrower, or (ii) in the
event there is only one of those Notes, an appropriate notation shall be
endorsed thereon evidencing the date and amount of the principal payment or
prepayment equal to the Bonds so paid, or with respect to which provision for
payment has been made, and that Note shall be surrendered by the Trustee to the
Borrower for cancellation if all Bonds shall have been paid (or provision made
therefor) and canceled as aforesaid. Unless the Borrower is entitled to a credit
under express terms of this Agreement or the Notes, all payments on each of the
Notes shall be in the full amount required thereunder.
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Except for such interest of the Borrower and the LOC Bank as may
hereafter arise pursuant to SECTION 5.6 or 5.7 of the Indenture, the Borrower
and the Issuer each acknowledge that neither the Borrower nor the Issuer has any
interest in the Bond Fund and any moneys deposited therein shall be in the
custody of and held by the Trustee in trust for the benefit of the Holders and,
to the extent of amounts due under the Reimbursement Agreement, the LOC Bank.
Section 4.2. ADDITIONAL PAYMENTS. The Borrower shall pay to the
Issuer, as Additional Payments hereunder, any and all costs and expenses
incurred or to be paid by the Issuer in connection with the issuance and
delivery of the Project Bonds and Additional Bonds or otherwise related to
actions taken by the Issuer under this Agreement or the Indenture.
The Borrower shall pay to the Trustee, the Registrar and any Paying
Agent or Authenticating Agent, their reasonable fees, charges and expenses,
including counsel fees and expenses, for acting as such under the Indenture.
Section 4.3. PLACE OF PAYMENTS. The Borrower shall make all Loan
Payments directly to the Trustee at its principal corporate trust office.
Additional Payments shall be made directly to the person or entity to whom or to
which they are due.
Section 4.4. OBLIGATIONS UNCONDITIONAL. The obligations of the
Borrower to make Loan Payments, Additional Payments and any payments required of
the Borrower under SECTION 6.3 of the Indenture shall be absolute and
unconditional, and the Borrower shall make such payments without abatement,
diminution or deduction regardless of any cause or circumstances whatsoever
including, without limitation, any defense, set-off, recoupment or counterclaim
which the Borrower may have or assert against the Issuer, the Trustee, any
Paying Agent or Authenticating Agent, the LOC Bank or any other Person; provided
that the Borrower may contest or dispute the amount of any such obligation
(other than Loan Payments) so long as such contest or dispute does not result in
an Event of Default under the Indenture.
Section 4.5. ASSIGNMENT OF AGREEMENT AND REVENUES. To secure the
payment of Bond Service Charges, the Issuer shall assign to the Trustee, by the
Indenture, all its right, title and interest in and to the Revenues, this
Agreement (except for Unassigned Issuer's Rights) and the Project Note. The
Borrower hereby agrees and consents to that assignment.
Section 4.6. LETTER OF CREDIT. Simultaneously with the initial
delivery of the Project Bonds pursuant to the Indenture and the Bond Placement
Agreement, the Borrower shall cause the LOC Bank to issue and deliver the Letter
of Credit to the Trustee. The Letter of Credit may be replaced by an Alternate
Letter of Credit complying with the provisions of SECTION 5.9 of the Indenture
and shall be in substantially the form attached to the Reimbursement Agreement
and made a part thereof. The Borrower shall take whatever action may be
necessary to maintain the Letter of Credit or an Alternate Letter of Credit in
full force and effect during the period required by the Indenture, including the
payment to the LOC Bank of all amounts due and payable under the Reimbursement
Agreement.
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ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
Section 5.1. RIGHT OF INSPECTION. Subject to reasonable security and
safety regulations and upon reasonable notice, the Issuer, the LOC Bank and the
Trustee, and their respective agents, shall have the right during normal
business hours to inspect the Project.
Section 5.2. SALE, LEASE OR GRANT OF USE BY BORROWER. Subject to the
provisions of the Reimbursement Agreement and any other agreement to which the
Borrower is a party or by which it is bound, the Borrower may sell, lease or
grant the right to occupy and use the Project, in whole or in part, to others,
provided that:
(a) No such sale, lease or grant shall relieve the Borrower from the
Borrower's obligations under this Agreement or the Notes;
(b) In connection with any such sale, lease or grant the Borrower
shall retain such rights and interests as will permit the Borrower to comply
with the Borrower's obligations under this Agreement and the Notes;
(c) No such sale, lease or grant shall impair materially the purposes
of the Act to be accomplished by operation of the Project as herein provided or
adversely affect the exclusion from gross income for federal income tax purposes
of the interest on the Bonds.
Section 5.3. INDEMNIFICATION. The Borrower releases the Issuer from,
agrees that the Issuer shall not be liable for, and shall indemnify the Issuer
against, all liabilities, claims, costs and expenses, including attorneys fees
and expenses, imposed upon, incurred or asserted against the Issuer on account
of: (a) any loss or damage to property or injury to or death of or loss by any
person that may be occasioned by any cause whatsoever pertaining to the
acquisition, construction, equipping, installation, maintenance, operation or
use of the Project; (b) any breach or default on the part of the Borrower in the
performance of any covenant or agreement of the Borrower under this Agreement,
the Reimbursement Agreement, the Project Note or any related document, or
arising from any act or failure to act by the Borrower, or any of the Borrower's
agents, contractors, servants, employees or licensees; (c) the authorization,
issuance, sale, trading, redemption or servicing of the Project Bonds, and the
provision of any information or certification furnished in connection therewith
concerning the Project Bonds, the Project or the Borrower including, without
limitation, the Preliminary Placement Memorandum and the Placement Memorandum
(each as defined in the Bond Placement Agreement), any information furnished by
the Borrower for, and included in, or used as a basis for preparation of, any
certifications, information statements or reports furnished by the Issuer, and
any other information or certification obtained from the Borrower to assure the
exclusion of the interest on the Project Bonds from gross income of the Holders
thereof for federal income tax purposes; (d) the Borrower's failure to comply
with any requirement of this Agreement or the Code pertaining to such exclusion
of that interest, including the covenants in
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SECTION 5.4 hereof; and (e) any claim, action or proceeding brought with
respect to the matters set forth in (a), (b), (c), or (d) above.
The Borrower agrees to indemnify the Trustee for, and to hold it
harmless against, all liabilities, claims, costs and expenses, including counsel
fees and expenses, incurred without gross negligence or willful misconduct on
the part of the Trustee on account of any action taken or omitted to be taken by
the Trustee in accordance with the terms of this Agreement, the Bonds, the
Reimbursement Agreement, the Letter of Credit, the Notes or the Indenture, or
any action taken at the request of or with the consent of the Borrower,
including the costs and expenses of the Trustee in defending itself against any
such claim, action or proceeding brought in connection with the exercise or
performance of any of its powers or duties under this Agreement, the Bonds, the
Indenture, the Reimbursement Agreement, the Letter of Credit or the Notes.
In case any action or proceeding is brought against the Issuer or the
Trustee in respect of which indemnity may be sought hereunder, the party seeking
indemnity promptly shall give notice of that action or proceeding to the
Borrower, and the Borrower upon receipt of that notice shall have the obligation
and the right to assume the defense of the action or proceeding; provided, that
failure of a party to give that notice shall not relieve the Borrower from any
of the Borrower's obligations under this Section unless that failure materially
prejudices the defense of the action or proceeding by the Borrower. An
indemnified party at its own expense may employ separate counsel and participate
in the defense. The Borrower shall not be liable for any settlement made without
the Borrower's consent.
The indemnification set forth above is intended to and shall include
the indemnification of all affected members and other officials or officers,
directors, and employees of the Issuer and the Trustee, respectively. That
indemnification is intended to and shall be enforceable by the Issuer and the
Trustee, respectively, to the full extent permitted by law and shall survive the
termination of this Agreement.
Section 5.4. BORROWER NOT TO ADVERSELY AFFECT EXCLUSION FROM GROSS
INCOME OF INTEREST ON PROJECT BONDS. The Borrower hereby represents that the
Borrower has taken and caused to be taken, and covenants that the Borrower will
take and cause to be taken, all actions that may be required of the Borrower,
alone or in conjunction with the Issuer, for the interest on the Project Bonds
to be and remain excluded from gross income for federal income tax purposes, and
represents that the Borrower has not taken or permitted to be taken on the
Borrower's behalf, and covenants that the Borrower will not take or permit to be
taken on the Borrower's behalf, any actions that would adversely affect such
exclusion under the provisions of the Code.
Section 5.5. ASSIGNMENT BY ISSUER. Except for the assignment of this
Agreement to the Trustee, the Issuer shall not attempt to further assign,
transfer or convey its interest in the Revenues or this Agreement or create any
pledge or lien of any form or nature with respect to the Revenues or the
payments hereunder.
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Section 5.6. BORROWER'S PERFORMANCE UNDER INDENTURE. The Borrower has
examined the Indenture and approves the form and substance of, and agrees to be
bound by, its terms. The Borrower, for the benefit of the Issuer and each
Holder, shall do and perform all acts and things required or contemplated in the
Indenture to be done or performed by the Borrower. The Borrower is a third party
beneficiary of certain provisions of the Indenture, and SECTION 8.5 of the
Indenture is hereby incorporated herein by reference.
Section 5.7. COMPLIANCE WITH LAWS. The Borrower shall, throughout the
term of this Agreement, promptly comply or cause compliance in all material
respects with all laws, ordinances, orders, rules, regulations and requirements
of duly constituted public authorities which my be applicable to the Project or
to the repair and alteration thereof, or to the use or manner of use of the
Project or to the Borrower's and any lessee's or other user's operations on the
Project Site. Notwithstanding the foregoing, the Borrower shall have the right
to contest or cause to be contested the legality or the applicability of any
such law, ordinance, order, rule, regulation or requirement so long as, in the
opinion of counsel satisfactory to the Trustee and the LOC Bank, such contest
shall not in any way materially adversely affect or impair the obligations of
the Borrower hereunder or any right or interest of the Trustee or the LOC Bank
in, to and under the Indenture or this Agreement.
Section 5.8. TAXES, PERMITS, UTILITY AND OTHER CHARGES. The Borrower
shall pay and discharge or cause to be paid and discharged, promptly as and when
the same shall become due and payable, all taxes and governmental charges of any
kind whatsoever that may be lawfully assessed against the Issuer, the Trustee,
the LOC Bank or the Borrower with respect to the Project or any portion thereof.
The Borrower may in good faith contest or cause to be contested any such tax or
governmental charge, and in such event may permit such tax or governmental
charge to remain unsatisfied during the period of such contest and may appeal
therefrom unless in the opinion of counsel satisfactory to the Trustee and the
LOC Bank by such action any right or interest of the Trustee or the LOC Bank in,
to and under the Indenture or this Agreement shall be materially endangered or
the Project or any part thereof, shall become subject to imminent loss or
forfeiture, in which event such tax or governmental charge shall be paid prior
to any such loss or forfeiture. The Borrower shall procure or cause to be
procured any and all necessary building permits, other permits, licenses and
other authorizations required for the lawful and proper acquisition,
construction, equipping and installation, which shall also include replacement,
repair and substitution, as the case may be, of the property comprising the
Project and for the lawful and proper use and operation of the Project.
Section 5.9. CONTINUED EXISTENCE. Except as otherwise provided in or
permitted pursuant to the Reimbursement Agreement, or unless otherwise provided
by law, the Borrower shall maintain its existence and continue to be a duly
formed and validly existing corporation in good standing under the laws of the
State of Delaware, and duly authorized and qualified and in good standing as a
foreign corporation to do business within the State of Illinois; and further,
the Borrower agrees that throughout the term of this Agreement it shall operate
the Project and related facilities such that the Project Bonds maintain their
tax-exempt status under of the Code.
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Section 5.10. REMOVAL OF PORTIONS OF THE PROJECT. The Borrower shall
have the right, from time to time, subject to the terms of the Reimbursement
Agreement, to remove, substitute or modify any portion of the Project, provided
that such removal, substitution or modification shall not impair the character
of the Project as a "industrial project" within the meaning of the Act. Any such
substituted or modified property shall be included under the terms of this
Agreement as part of the Project.
Section 5.11. FINANCIAL STATEMENTS. The Borrower agrees to have an
annual audit made by its independent certified public accountants and to furnish
the Trustee (within 60 days after receipt by the Borrower but no later than 120
days after the end of each fiscal year of the Borrower) with a balance sheet and
statement of income and surplus showing the financial condition of the Borrower
and its consolidated subsidiaries, if any, at the close of each fiscal year and
the results of operations of the Borrower and its consolidated subsidiaries, if
any, for each fiscal year, accompanied by the opinion of said accountants. The
Trustee will hold such reports solely for the purpose of making them available
at its principal corporate trust office for examination by the Bondholders, and
is not required to notify the Bondholders of the contents of any such report.
The Borrower further agrees to provide to a nationally recognized municipal
securities information repository such information, if any, as may be required
under Rule 15c2-12 (or any successor regulation) under the Securities Exchange
Act of 1934, as amended.
Section 5.12. ANNUAL CERTIFICATE. The Borrower will furnish to the
Trustee on or before April 1 of each year, commencing April 1, 1997, a
certificate of the Borrower signed by the Authorized Borrower Representative
stating that the Borrower has made a review of its activities during the
preceding calendar year for the purpose of determining whether or not the
Borrower has complied with all of the terms, provisions and conditions of this
Agreement and the Borrower has kept, observed, performed and fulfilled each and
every covenant, provision and condition of this Agreement on its part to be
performed and is not in default in the performance or observance of any of the
terms, covenants, provisions or conditions hereof, or if the Borrower shall be
in default, such certificate shall specify all such defaults and the nature
thereof.
Section 5.13. REPORTS. No later than ninety (90) days following the
Completion Date, the Borrower shall deliver to the Issuer a written report
(which may be prepared in reliance upon information furnished by one or more of
the construction manager, general contractor, or subcontractors) setting forth
in reasonable detail the numbers and types of workers employed in the
construction of the Project. Thereafter, on or before April 1 in each calendar
year, the Borrower shall deliver to the Issuer a written report (which may be
prepared in reliance upon information furnished by any manager at the time
engaged by the Borrower with respect to the Project) setting forth the number of
workers, on a full-time equivalent basis (or other reasonable basis acceptable
to the Issuer), employed at the Project during the preceding calendar year. The
report need not present information with respect to construction workers or
seasonal employees.
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ARTICLE VI
REDEMPTION OF PROJECT BONDS
Section 6.1. OPTIONAL REDEMPTION. Provided no Event of Default shall
have occurred and be continuing at any time and from time to time, the Borrower
may deliver moneys to the Trustee in addition to Loan Payments or Additional
Payments required to be made and direct the Trustee to use the moneys so
delivered for the purpose of purchasing Project Bonds or of reimbursing the LOC
Bank for drawings on the Letter of Credit used to redeem Project Bonds called
for optional redemption in accordance with the applicable provisions of the
Indenture.
Section 6.2. EXTRAORDINARY OPTIONAL REDEMPTION. The Borrower shall
have, subject to the conditions hereinafter imposed, the option to direct the
redemption of the entire unpaid principal balance of the Project Bonds in
accordance with the applicable provisions of the Indenture upon the occurrence
of any of the following events:
(a) The Project shall have been damaged or destroyed to such an extent
that (1) it cannot reasonably be expected to be restored, within a period of
three (3) months, to the condition thereof immediately preceding such damage or
destruction or (2) its normal use and operation is reasonably expected to be
prevented for a period of three (3) consecutive months;
(b) Title to, or the temporary use of, all or a significant part of
the Project shall have been taken under the exercise of the power of eminent
domain (1) to such extent that the Project cannot reasonably be expected to be
restored within a period of three (3) months to a condition of usefulness
comparable to that existing prior to the taking or (2) as a result of the
taking, normal use and operation of the Project is reasonably expected to be
prevented for a period of three (3) consecutive months;
(c) As a result of any changes in the Constitution of the State, the
constitution of the United States of America, or state or federal laws, or as a
result of legislative or administrative action (whether state or federal) or by
final decree, judgment or order of any court or administrative body (whether
state or federal) entered after the contest thereof by the Issuer, the Trustee
or the Borrower in good faith, this Agreement shall have become void or
unenforceable or impossible of performance in accordance with the intent and
purpose of the parties as expressed in this Agreement, or if unreasonable
burdens or excessive liabilities shall have been imposed with respect to the
Project or the operation thereof, including, without limitation, federal, state
or other ad valorem, property, income or other taxes not being imposed on the
date of this Agreement other than ad valorem taxes presently levied upon
privately owned property used for the same general purpose as the Project; or
(d) Changes in the economic availability of raw materials, operating
supplies, energy sources or supplies, or facilities (including, but not limited
to, facilities in connection with the disposal of industrial wastes) necessary
for the operation of the Project shall have occurred or technological or other
changes shall have occurred which the Borrower cannot reasonably
19
<PAGE> 24
overcome or control and which in the Borrower's reasonable judgment render the
operation of the Project uneconomic.
The Borrower also shall have the option, in the event that title to or
the temporary use of a portion of the Project shall be taken under the exercise
of the power of eminent domain, even if the taking is not of such nature as to
permit the exercise of the redemption option upon an event specified in clause
(b) above, to direct the redemption, at a redemption price of 100% of the
principal amount thereof prepaid, plus accrued interest to the redemption date,
of that part of the outstanding principal balance of the Project Bonds as may be
payable from the proceeds received by the Borrower (after the payment of costs
and expenses incurred in the collection thereof) in the eminent domain
proceeding, provided that the Borrower shall furnish to the Issuer and the
Trustee a certificate of an Engineer stating that (1) the property comprising
the part of the Project taken is not essential to continued operations of the
Project in the manner existing prior to that taking, (2) the Project has been
restored to a condition substantially equivalent to that existing prior to the
taking, or (3) other improvements have been acquired or made which are suitable
for the continued operation of the Project.
To exercise any option under this Section, the Borrower within ninety
(90) days following the event authorizing the exercise of that option, or at any
time during the continuation of the condition referred to in clause (d) of the
first paragraph of this Section, shall give notice to the Issuer and to the
Trustee specifying the date of redemption, which date shall be not more than
ninety (90) days from the date that notice is mailed, and shall make
arrangements satisfactory to the Trustee for the giving of the required notice
of redemption.
The rights and options granted to the Borrower in this Section may be
exercised whether or not the Borrower is in default hereunder; provided, that
such default will not relieve the Borrower from performing those actions which
are necessary to exercise any such right or option granted hereunder.
Section 6.3. MANDATORY REDEMPTION OF PROJECT BONDS. If, as provided in
the Project Bonds and the Indenture, the Project Bonds become subject to
mandatory redemption as a result of a Determination of Taxability or termination
of the Letter of Credit or any Alternate Letter of Credit, the Borrower shall
deliver to the Trustee, upon the date requested by the Trustee, moneys
sufficient to pay in full the Project Bonds in accordance with the mandatory
redemption provisions relating thereto set forth in the Indenture.
Section 6.4. ACTIONS BY ISSUER. At the request of the Borrower or the
Trustee, the Issuer shall take all steps required of it under the applicable
provisions of the Indenture or the Bonds to effect the redemption of all or a
portion of the Bonds pursuant to this ARTICLE VI.
Section 6.5. REQUIRED DEPOSITS FOR OPTIONAL REDEMPTION. Except with
the prior written consent of the LOC Bank, the Trustee shall not give notice of
call to the Holders pursuant to the optional redemption provisions of SECTION
4.1 of the Indenture and SECTIONS 6.1 AND 6.2 hereof unless, prior to the date
by which the call notice is to be given, there shall be
20
<PAGE> 25
on deposit with the Trustee Eligible Funds sufficient to redeem at the
redemption price thereof, including premium (if any) and interest accrued to
the redemption date, all Project Bonds for which notice of redemption is to be
given.
All amounts paid by the Borrower pursuant to this Article which are
used to pay principal of, premium, if any, or interest on the Bonds, or to
reimburse the LOC Bank for moneys drawn under the Letter of Credit and used for
such purposes, shall constitute prepaid Loan Payments.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. EVENTS OF DEFAULT. Each of the following shall be an
Event of Default:
(a) The Borrower shall fail to observe and perform any agreement, term
or condition contained in this Agreement and the continuation of such failure
for a period of thirty (30) days after notice thereof shall have been given to
the Borrower by the Issuer or the Trustee, or for such longer period as the
Trustee may agree to in writing; provided, that if the failure is other than the
payment of money and is of such nature that it can be corrected but not within
the applicable period, that failure shall not constitute an Event of Default so
long as the Borrower institutes curative action within the applicable period and
diligently pursues that action to completion; and provided further that no such
failure shall constitute an Event of Default solely because it results in a
Determination of Taxability;
(b) The Borrower shall (i) admit in writing its inability to pay its
debts generally as they become due; (ii) have an order for relief entered in any
case commenced by or against it under the federal bankruptcy laws, as now or
hereafter in effect; (iii) commence a proceeding under any other federal or
state bankruptcy, insolvency, reorganization or similar law, or have such a
proceeding commenced against it and either have an order of insolvency or
reorganization entered against it or have the proceeding remain undismissed and
unstayed for ninety (90) days; (iv) make an assignment for the benefit of
creditors; or (v) have a receiver or trustee appointed for it or for the whole
or any substantial part of its property;
(c) There shall occur an "Event of Default" as defined in SECTION 7.1
of the Indenture.
Notwithstanding the foregoing, if, by reason of Force Majeure, the
Borrower is unable to perform or observe any agreement, term or condition hereof
which would give rise to an Event of Default under subsection (a) hereof
(provided that such failure is other than the payment of money), the Borrower
shall not be deemed in default during the continuance of such inability.
However, the Borrower shall promptly give notice to the Trustee, the LOC Bank
and the Issuer of the existence of an event of Force Majeure and shall use its
best efforts to remove
21
<PAGE> 26
the effects thereof; provided that the settlement of strikes or other
industrial disturbances shall be entirely within the Borrower's discretion.
The term Force Majeure shall mean, without limitation, the following:
(i) acts of God; strikes; lockouts or other industrial disturbances;
acts of public enemies; orders or restraints of any kind of the government of
the United States of America or of the State or any of their departments,
agencies, political subdivisions or officials, or any civil or military
authority; insurrections; civil disturbances; riots; epidemics; landslides;
lightning; earthquakes; fires; hurricanes; tornados; storms; droughts; floods;
arrests; restraint of government and people; explosions; breakage, malfunction
or accident to facilities, machinery, transmission pipes or canals; partial or
entire failure of utilities; shortages of labor, materials, supplies or
transportation; or
(ii) any cause, circumstance or event not reasonably within the
control of the Borrower.
The declaration of an Event of Default under subsection (b) above, and
the exercise of remedies upon any such declaration, shall be subject to any
applicable limitations of federal bankruptcy law affecting or precluding that
declaration or exercise during the pendency of or immediately following any
bankruptcy, liquidation or reorganization proceedings.
Section 7.2. REMEDIES ON DEFAULT. Whenever an Event of Default shall
have happened and be continuing, any one or more of the following remedial steps
may be taken:
(a) If and only if acceleration of the principal amount of the Bonds
has been declared pursuant to SECTION 7.3 of the Indenture, the Trustee shall
declare all Loan Payments and Notes to be immediately due and payable, whereupon
the same shall become immediately due and payable;
(b) The LOC Bank and the Trustee may have access to, inspect, examine
and make copies of the books, records, accounts and financial data of the
Borrower pertaining to the Project; and
(c) The Issuer or the Trustee may pursue all remedies now or hereafter
existing at law or in equity to collect all amounts then due and thereafter to
become due under this Agreement, the Letter of Credit or the Notes or to enforce
the performance and observance of any other obligation or agreement of the
Borrower under those instruments.
Notwithstanding the foregoing, the Issuer shall not be obligated to
take any step which in its opinion will or might cause it to expend time or
money or otherwise incur liability unless and until satisfactory indemnity has
been furnished to the Issuer at no cost or expense to the Issuer. Any amounts
collected as Loan Payments or applicable to Loan Payments and any other amounts
which would be applicable to payment of Bond Service Charges collected pursuant
22
<PAGE> 27
to action taken under this Section shall be paid into the Bond Fund and applied
in accordance with the provisions of the Indenture or, if the outstanding Bonds
have been paid and discharged in accordance with the provisions of the
Indenture, shall be paid as provided in SECTION 5.8 of the Indenture for
transfers of remaining amounts in the Bond Fund.
The provisions of this section are subject to the further limitation
that the rescission by the Trustee of its declaration that all of the Bonds are
immediately due and payable also shall constitute an annulment of any
corresponding declaration made pursuant to paragraph (a) of this Section and a
waiver and rescission of the consequences of that declaration and of the Event
of Default with respect to which that declaration has been made, provided that
no such waiver or rescission shall extend to or affect any subsequent or other
default or impair any right consequent thereon.
Notwithstanding any other provisions of this Agreement, unless an
Event of Default shall have occurred pursuant to Section 7.1(g) or (h) of the
Indenture, no remedy may be exercised pursuant to this Agreement without the
prior written consent of the LOC Bank.
Section 7.3. NO REMEDY EXCLUSIVE. No remedy conferred upon or reserved
to the Issuer or the Trustee by this Agreement is intended to be exclusive of
any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement, the Letter of Credit or any Note, or now or hereafter existing at
law, in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair that right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
the Issuer or the Trustee to exercise any remedy reserved to it in this Article,
it shall not be necessary to give any notice, other than any notice required by
law or for which express provision is made herein.
Section 7.4. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. If an
Event of Default should occur and the Issuer or the Trustee should incur
expenses, including attorneys' fees, in connection with the enforcement of this
Agreement, the Letter of Credit or any Note or the collection of sums due
thereunder, the Borrower shall reimburse the Issuer and the Trustee, as
applicable, for the reasonable expenses so incurred upon demand.
Section 7.5. NO WAIVER. No failure by the Issuer or the Trustee to
insist upon the strict performance by the Borrower of any provision hereof shall
constitute a waiver of their right to strict performance and no express waiver
shall be deemed to apply to any other existing or subsequent right to remedy the
failure by the Borrower to observe or comply with any provision hereof.
23
<PAGE> 28
ARTICLE VIII
MISCELLANEOUS
Section 8.1. TERM OF AGREEMENT. This Agreement shall be and remain in
full force and effect from the date of initial delivery of the Project Bonds
until such time as all of the Bonds shall have been fully paid (or provision
made for such payment) pursuant to the Indenture and all other sums payable by
the Borrower under this Agreement and the Notes shall have been paid, except for
obligations of the Borrower under SECTIONS 4.2, 5.3 AND 7.4 hereof, which shall
survive any termination of this Agreement.
Section 8.2. NOTICES. All notices, certificates, requests or other
communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by first class mail, postage prepaid, and
addressed to the appropriate Notice Address. A duplicate copy of each notice,
certificate, request or other communication given hereunder to the Issuer, the
Borrower, the LOC Bank or the Trustee shall also be given to the others. The
Borrower, the Issuer, the LOC Bank and the Trustee, by notice given hereunder,
may designate any further or different addresses to which subsequent notices,
certificates, requests or other communications shall be sent.
Section 8.3. LIMITED LIABILITY OF ISSUER. (a) The obligations of the
Issuer under this Agreement are special, limited obligations of the Issuer, and
the principal of, premium, if any, and interest on the Bonds are payable solely
from revenues and income to be received in connection with the financing of the
Project and from any other moneys made available to the issuer for such purpose,
including any Letter of Credit. The obligations of the Issuer hereunder shall
never be deemed to constitute an indebtedness or an obligation of the Issuer,
the state or any political subdivision thereof within the purview of any
constitutional limitation or statutory provision, or a charge against the credit
or taxing powers, if any, of any of them.
Section 8.4. EXTENT OF COVENANTS OF THE ISSUER; NO PERSONAL LIABILITY.
All covenants, obligations and agreements of the Issuer contained in this
Agreement or the Indenture shall be effective to the extent authorized and
permitted by applicable law. No such covenant, obligation or agreement shall be
deemed to be a covenant, obligation or agreement of any present or future member
of the Issuing Authority, officer, agent or employee of the Issuer or the
Issuing Authority in other than his or her official capacity, and neither the
members of the Issuing Authority nor any official executing the Bonds shall be
liable personally on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof or by reason of the covenants,
obligations or agreements of the Issuer contained in this Agreement or in the
Indenture.
Section 8.5. BINDING EFFECT. This Agreement shall inure to the benefit
of and shall be binding in accordance with its terms upon the Issuer, the
Borrower and their respective successors and assigns; provided that this
Agreement may not be assigned by the Borrower (except in connection with a sale,
lease or grant of use pursuant to SECTION 5.2 hereof) and may not be assigned by
the Issuer except to the Trustee pursuant to the Indenture or as otherwise may
24
<PAGE> 29
be necessary to enforce or secure payment of Bond service charges. This
Agreement may be enforced only by the parties, their assignees and others who
may, by law, stand in their respective places.
Section 8.6. AMENDMENTS AND SUPPLEMENTS. Except as otherwise expressly
provided in this Agreement, any Note or the Indenture, subsequent to the
issuance of the Project Bonds and prior to all conditions provided for in the
Indenture for release of the Indenture having been met, this Agreement or any
Note may not be effectively amended, changed, modified, altered or terminated
except in accordance with the applicable provisions of ARTICLE XI of the
Indenture.
Section 8.7. EXECUTION COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be regarded as an original and
all of which shall constitute but one and the same instrument.
Section 8.8. SEVERABILITY. If any provision of this Agreement, or any
covenant, obligation or agreement contained herein, is determined by a court of
competent jurisdiction to be invalid or unenforceable, that determination shall
not affect any other provision, covenant, obligation or agreement, each of which
shall be construed and enforced as if the invalid or unenforceable portion were
not contained herein. That invalidity or unenforceability shall not affect any
valid and enforceable application thereof, and each such provision, covenant,
obligation or agreement shall be deemed to be effective, operative, made,
entered into or taken in the manner and to the full extent permitted by law.
Section 8.9. GOVERNING LAW. This Agreement shall be deemed to be a
contract made under the laws of the State and for all purposes shall be governed
by and construed in accordance with the laws of the State.
25
<PAGE> 30
IN WITNESS WHEREOF, the Issuer and the Borrower have caused this
Agreement to be duly executed in their respective names, all as of the date
first above written.
VILLAGE OF RICHTON PARK, COOK COUNTY,
ILLINOIS
(Seal) By:
_______________________________
President
Attest:
______________________________
Village Clerk
SINTER METALS, INC.
By: Donald L. LeVault
------------------------------
Its: President
------------------------------
26
<PAGE> 31
EXHIBIT A
THE PROJECT
The Project consists of the acquisition, construction, and
installation of an approximately 60,000 square foot facility, the equipping of
such facility, including the acquisition of powder blending equipment,
molding/presses equipment, furnaces, maching equipment and finishing and support
equipment, and the acquisition of related appurtenances, such facility to be
used for the manufacture of powder metal parts and to be located at or near the
intersection of Sauk Trail and Interstate 57 in the Village of Richton Park,
Cook County, Illinois.
A-1
<PAGE> 32
EXHIBIT B
PROJECT SITE
B-1
<PAGE> 33
EXHIBIT C
PROJECT NOTE
$7,195,000 April _____, 1996
SINTER METALS, INC., a Delaware corporation (the "Borrower"), for
value received, promises to pay to MELLON BANK, N.A., as Trustee (the
"Trustee"), under the Indenture hereinafter referred to, the principal sum of
SEVEN MILLION ONE HUNDRED NINETY-FIVE THOUSAND DOLLARS
($7,195,000)
and to pay (i) interest on the unpaid balance of such principal sum from and
after the date of this Note at the interest rate or interest rates borne by the
Project Bonds hereinafter referred to and (ii) interest on overdue principal,
and to the extent permitted by law, on overdue interest, at the interest rate
provided under the terms of the Project Bonds.
This Note has been executed and delivered by the Borrower
pursuant to a certain Loan Agreement (the "Agreement"), dated as of April 1,
1996, between the Village of Richton Park, Cook County, Illinois (the "Issuer")
and the Borrower. Terms used but not defined herein shall have the meanings
ascribed to such terms in the Agreement and the Indenture, as defined below.
Under the Agreement, the Issuer has loaned the Borrower the
proceeds received from the sale of its $7,195,000 aggregate principal amount
Adjustable Rate Industrial Development Revenue Bonds, Series 1996 (Sinter
Metals, Inc. Project), dated as of the date of their issuance (the "Project
Bonds"), to be applied to assist in the financing of the Project. The Borrower
has agreed to repay such loan by making Loan Payments at the times and in the
amounts set forth in this Note. The Project Bonds have been issued,
concurrently with the execution and delivery of this Note, pursuant to, and are
secured by, the Trust Indenture (with respect to which undefined terms herein
shall have the meanings therein, the "Indenture"), dated as of April 1, 1996,
by and between the Issuer and the Trustee.
To provide funds to pay the Bond Service Charges on the
Project Bonds as and when due, or to reimburse the LOC Bank for draws under the
Letter of Credit to make such payments, the Borrower hereby agrees to and shall
make Loan Payments as follows: on each Interest Payment Date the amount equal
to interest due on the Project Bonds on such Interest Payment Date, and on each
April 1 the amount, if any, equal to the annual principal due and payable on
the Project Bonds on such date pursuant to the mandatory redemption provisions
of SECTION 4.1 of the Indenture, if any, or upon maturity of the Project Bonds
(each such day being a "Loan Payment Date"). In addition, to provide funds to
pay the Bond Service Charges on the Project Bonds as and when due at any other
time, the Borrower hereby agrees to and shall make
C-1
<PAGE> 34
Loan Payments on any other date on which any Bond Service Charges on the
Project Bonds shall be due and payable, whether at maturity, upon acceleration,
call for redemption or otherwise.
If payment or provision for payment in accordance with the Indenture
is made in respect of the Bond Service Charges on the Project Bonds from moneys
other than Loan Payments, this Note shall be deemed paid to the extent such
payments or provision for payment of Bond Service Charges has been made (but
expressly shall not discharge any obligation to the LOC Bank under the
Reimbursement Agreement). The Borrower shall receive a credit against its
obligation to make Loan Payments hereunder to the extent of the moneys delivered
to the Trustee under and pursuant to the Letter of Credit and any other amounts
on deposit in the Bond Fund and available to pay Bond Service Charges on the
Project Bonds pursuant to the Indenture. Subject to the foregoing, all Loan
Payments shall be in the full amount required hereunder (but expressly shall not
discharge any obligation to the LOC Bank under the Reimbursement Agreement).
All Loan Payments shall be payable in lawful money of the United
States of America and shall be made to the Trustee at its corporate trust office
for the account of the Issuer, deposited (or deemed deposited, as the case may
be) in the Bond Fund and used as provided in the Indenture.
Subject to the next to last paragraph hereof, the obligation of the
Borrower to make the payments required hereunder shall be absolute and
unconditional and the Borrower shall make such payments without abatement,
diminution or deduction regardless of any cause or circumstances whatsoever
including, without limitation, any defense, set-off, recoupment or counterclaim
which the Borrower may have or assert against the Issuer, the Trustee, the LOC
Bank or any other person.
This Note is subject to optional, extraordinary optional and mandatory
prepayment, in whole or in part, upon the same terms and conditions, on the same
dates and at the same prepayment prices, as the Project Bonds are subject to
optional, extraordinary optional and mandatory redemption. Any optional or
extraordinary optional prepayment is also subject to satisfaction of any
applicable notice, deposit or other requirements set forth in the Agreement or
the Indenture.
Whenever an Event of Default under SECTION 7.1 of the Indenture shall
have occurred and, as a result thereof, the principal of and any premium on all
Bonds then outstanding, and interest accrued thereon, shall have been declared
to be immediately due and payable pursuant to SECTION 7.3 of the Indenture, the
unpaid principal amount of and any premium and accrued interest on this Note
also shall be due and payable on the date on which the principal of and premium
and interest on the Project Bonds shall have been declared due and payable;
provided that the annulment of a declaration of acceleration with respect to the
Bonds shall also constitute an annulment of any corresponding declaration with
respect to this Note.
C-2
<PAGE> 35
This Note shall be due and payable according to its tenor and import
without any requirement for presentment, demand, notice of dishonor or
otherwise.
IN WITNESS WHEREOF, the Borrower has signed this Note as of the date
first above written.
SINTER METALS, INC.
By: ________________________________
Its: _______________________________
C-3
<PAGE> 36
EXHIBIT D
FORM OF DISBURSEMENT REQUEST
STATEMENT NO. _____ REQUESTING DISBURSEMENT OF FUNDS FROM THE PROJECT
ACCOUNT OF THE PROJECT FUND PURSUANT TO SECTION 3.4 OF THE LOAN
AGREEMENT BETWEEN THE VILLAGE OF RICHTON PARK, COOK COUNTY, ILLINOIS
AND SINTER METALS, INC.
Pursuant to SECTION 3.4 of the Loan Agreement (the "Agreement")
between the Village of Richton Park, Cook County, Illinois (the "Issuer") and
Sinter Metals, Inc. (the "Borrower") dated as of April 1, 1996, the undersigned
Authorized Borrower Representative hereby requests and authorizes Mellon Bank,
N.A., as Trustee (the "Trustee"), as depository of the Project Fund created by
the Indenture, as defined in the Agreement, to pay to the Borrower or to the
person(s) listed on the Disbursement Schedule attached hereto out of the moneys
deposited in the Project Account of the Project Fund the aggregate sum of
$_________ to pay such person(s) or to reimburse the Borrower in full, as
indicated in the Disbursement Schedule, for advances, payments and expenditures
made by it in connection with the items listed in the Disbursement Schedule.
In connection with the foregoing request and authorization, the
undersigned hereby certifies that:
(a) Each item for which disbursement is requested hereunder is
properly payable out of the Project Account of the Project Fund in accordance
with the terms and conditions of the Agreement and none of those items has
formed the basis for any disbursement heretofore made from the Project Account
of the Project Fund;
(b) Each such item is or was necessary in connection with the
acquisition, construction, equipping and installation of the real and personal
property comprising the Project, as defined in the Agreement;
(c) This statement and all exhibits hereto, including the Disbursement
Schedule, shall be conclusive evidence of the facts and statements set forth
herein and shall constitute full warrant, protection and authority to the
Trustee for its actions taken pursuant hereto;
(d) This statement constitutes the approval of the Borrower of each
disbursement hereby requested and authorized; and
(e) Each such item for which disbursement is requested _______[is]
________[is not] described in the information statement (Form 8038) filed by the
Issuer in connection with the issuance of the Project Bonds, as such term is
defined in the Agreement.
D-1
<PAGE> 37
(f) To the best knowledge of the Borrower, the honoring of this
disbursement request by the Trustee will not cause the interest on the Project
Bonds to become taxable for federal income tax purposes.
IN WITNESS WHEREOF, the Authorized Borrower Representative has set his
hand as of the ______ day of ________
_____________, _____.
__________________________________
Authorized Borrower Representative
Approved by:
MELLON BANK, N.A.
By:______________________________
Title: __________________________
D-2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,883
<SECURITIES> 0
<RECEIVABLES> 13,705
<ALLOWANCES> 113
<INVENTORY> 10,858
<CURRENT-ASSETS> 26,982
<PP&E> 42,601
<DEPRECIATION> 13,277
<TOTAL-ASSETS> 69,297
<CURRENT-LIABILITIES> 17,468
<BONDS> 0
<COMMON> 7
0
0
<OTHER-SE> 43,843
<TOTAL-LIABILITY-AND-EQUITY> 69,297
<SALES> 27,977
<TOTAL-REVENUES> 27,977
<CGS> 21,552
<TOTAL-COSTS> 21,552
<OTHER-EXPENSES> 2,581
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70
<INCOME-PRETAX> 3,774
<INCOME-TAX> 1,375
<INCOME-CONTINUING> 2,399
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,399
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
