EXHIBIT 10.3
SENIOR SECURED REVOLVING CREDIT
AGREEMENT
SENIOR SECURED REVOLVING CREDIT
AGREEMENT
This Senior Secured Revolving Credit
Agreement (the “Agreement”) is dated as of
September 29, 2005 and entered into by and among CALIFORNIA
STEEL INDUSTRIES, INC. (the “Borrower”), a Delaware
corporation , the LENDERS listed on the signature pages hereof
(collectively, the “Lenders”), MIZUHO CORPORATE BANK,
LTD., as administrative agent for the Lenders (the
“Administrative Agent”), MIZUHO CORPORATE BANK, LTD.,
as issuing bank (the “Primary Issuing Bank”), WELLS
FARGO BANK, N.A., as Alternate Issuing Bank (the “Alternate
Issuing Bank”), MIZUHO CORPORATE BANK, LTD., as arranger (the
“Arranger”) and THE BANK OF TOKYO-MITSUBISHI, LTD., as
Syndication Agent.
WHEREAS, the Borrower has requested
that the Lenders extend credit in order to enable the Borrower,
subject to the terms and conditions herein, to borrow on a
revolving basis loans in an aggregate principal amount at any time
outstanding not in excess of $110,000,000, the proceeds of which
will be used to refinance existing indebtedness and for general
corporate purposes;
WHEREAS, the Borrower has agreed to
secure all of the Obligations hereunder and under the other Loan
Documents by granting to the Administrative Agent, for the benefit
of the Lenders and the Issuing Banks, a security interest in all
accounts receivables and inventory, including, without limitation,
all proceeds thereof, of the Borrower and its Subsidiaries;
and
WHEREAS, the Lenders have agreed to
make such amounts available on the terms and conditions of the
Agreement and the other Loan Documents;
NOW, THEREFORE, in consideration of
the premises and the agreements, provisions and covenants herein
contained, the Borrower, the Lenders, the Administrative Agent and
the Issuing Banks agree as follows (with certain terms used herein
being defined in Article 10):
ARTICLE 1
CREDIT FACILITY
Section 1.01 Commitment to
Lend . Upon the terms and subject to the conditions of this
Agreement, each Lender, severally and not jointly, agrees to make,
from time to time during the period from the Agreement Date through
the Maturity Date, one or more Loans to the Borrower in an
aggregate unpaid principal amount not exceeding at any time
(i) in the aggregate with such Lender’s Commitment
Percentage of the Maximum Drawing Amount and Unpaid Reimbursement
Obligations, such Lender’s Commitment at such time and
(ii) in the aggregate with all outstanding Loans and all the
Lenders’ Commitment Percentages of the Maximum Drawing Amount
and Unpaid Reimbursement Obligations, the lesser of (A) the
Total Commitment and (B) the Borrowing Base then in effect.
Subject to Section 1.06 and the other terms and conditions of
this Agreement, the Loans may, at the option of the Borrower, be
made as, and from time to time continued as or converted into, Base
Rate or Eurodollar Rate Loans of any permitted Type, or any
combination thereof. The aggregate amount of the Commitments on the
Agreement Date is $110,000,000.
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Section 1.02 Manner of
Borrowing . (a) The Borrower shall give the Administrative
Agent notice (which shall be irrevocable) no later than 9:30 a.m.
(Los Angeles time) on, in the case of Base Rate Loans, the same
Business Day for which the Base Rate Loan is requested, and, in the
case of Eurodollar Rate Loans, the third Eurodollar Business Day
before, the requested date for the making of such Loans. Each such
notice shall be in the form of Schedule 1.02 and shall
specify (i) the requested date for the making of the requested
Loans, which shall be, in the case of Base Rate Loans, a Business
Day and, in the case of Eurodollar Rate Loans, a Eurodollar
Business Day, (ii) the Type or Types of Loans requested and
(iii) the amount of each such Type of Loan, which amount shall
be, (x)(i) in the case of a Base Rate Loan, in integral multiples
of $500,000, not less than $1,000,000 and (ii) in the case of
a Eurodollar Loan, in integral multiples of $1,000,000, not less
than $5,000,000 or (y) the aggregate amount of the unused
Commitments. Upon receipt of any such notice, the Administrative
Agent shall promptly notify each Lender of the contents thereof and
of the amount and Type of each Loan to be made by such Lender on
the requested date specified therein.
(b) Not later than 11:30 a.m. (Los
Angeles time) on each requested date for the making of Loans, each
Lender shall make available to the Administrative Agent, in Dollars
in funds immediately available to the Administrative Agent at the
Administrative Agent’s Office, the Loans to be made by such
Lender on such date. Any Lender’s failure to make any Loan to
be made by it on the requested date therefor shall not relieve any
other Lender of its obligation to make any Loan to be made by such
other Lender on such date, but such other Lender shall not be
liable for such failure.
(c) Unless the Administrative Agent
shall have received notice from a Lender, in the case of Base Rate
Loans, prior to 10:30 a.m. (Los Angeles time) on the requested date
for the making of any such Loans, and in the case of Eurodollar
Rate Loans, prior to 2:00 p.m. on the Business Day before the
requested date for making any such Loans, that such Lender will not
make available to the Administrative Agent the Loans requested to
be made by such Lender on such requested date, the Administrative
Agent may assume that such Lender has made such Loans available to
the Administrative Agent on such requested date in accordance with
Section 1.02(b) and the Administrative Agent in its sole
discretion may, in reliance upon such assumption, make available to
the Borrower on such requested date a corresponding amount on
behalf of such Lender. If and to the extent such Lender shall not
have so made available to the Administrative Agent the Loans
requested to be made by such Lender on such requested date and the
Administrative Agent shall have so made available to the Borrower a
corresponding amount on behalf of such Lender, such Lender shall,
on demand, pay to the Administrative Agent such corresponding
amount together with interest thereon, for each day from the date
such amount shall have been so made available by the Administrative
Agent to the Borrower until the date such amount shall have been
repaid to the Administrative Agent, at the applicable rate or rates
otherwise applicable to such Loan as provided in
Section 1.03(a). If such Lender does not pay such
corresponding amount promptly upon the Administrative Agent’s
demand therefor, the Administrative Agent shall promptly notify the
Borrower and the Borrower shall immediately repay such
corresponding amount to the Administrative Agent together with
accrued interest thereon at the applicable rate or rates provided
in Section 1.03(a).
(d) All Loans made available to the
Administrative Agent in accordance with Section 1.02(b) shall
be disbursed by the Administrative Agent on the requested date
therefor in
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Dollars in funds immediately
available to the Borrower by credit to an account of the Borrower
at the Administrative Agent’s Office or in such other manner
as may have been specified in the applicable notice and as shall be
acceptable to the Administrative Agent.
Section 1.03 Interest . (a)
Rates . Unless an Event of Default is continuing,
(i) each Loan shall bear interest on the outstanding principal
amount thereof at a rate per annum equal to (A) so long as it
is a Base Rate Loan, the Base Rate as in effect from time to time
plus the Applicable Margin and (B) so long as it is a
Eurodollar Rate Loan, the applicable Adjusted Eurodollar Rate plus
the Applicable Margin and (ii) each other amount due and
payable hereunder shall, to the maximum extent permitted by
Applicable Law, bear interest at a rate per annum equal to the Base
Rate as in effect from time to time. During an Event of Default
(and whether before or after judgment), each Loan (whether or not
due) and, to the maximum extent permitted by Applicable Law, each
other amount due and payable under the Loan Documents shall bear
interest at a rate per annum equal to the applicable Post-Default
Rate.
(b) Payment . Interest shall
be payable, (i) in the case of Base Rate Loans, on each
Interest Payment Date, for the period from the immediately
preceding Interest Payment Date to such Interest Payment Date,
(ii) in the case of a Eurodollar Rate Loan, on the last day of
each applicable Interest Period (and, if an Interest Period is
longer than three months, at intervals of three months after the
first day of such Interest Period), (iii) in the case of any
Loan, when such Loan shall be due (whether at maturity, by reason
of notice of acceleration or otherwise (other than by reason of
notice of prepayment)) but only to the extent then accrued on the
amount then so due, (iv) in the case of a Eurodollar Rate
Loan, when such Loan shall be due (by reason of notice of
prepayment) or converted, but only to the extent then accrued on
the amount then so due or converted, and (v) in the case of
all other amounts due and payable under the Loan Documents, on
demand. Interest at the Post-Default Rate shall be payable on
demand.
(c) Conversion and
Continuation . (i) All or any part of the principal amount of
Loans of any Type may, on any Business Day, be converted into any
other Type or Types of Loans, except that (A) Eurodollar Rate
Loans may be converted only on the last day of an applicable
Interest Period and (B) Base Rate Loans may be converted into
Eurodollar Rate Loans only on a Eurodollar Business Day.
(ii) Base Rate Loans shall continue
as Base Rate Loans unless and until such Loans are converted into
Loans of another Type. Eurodollar Rate Loans of any Type shall
continue as Loans of such Type until the end of the then current
Interest Period therefor, at which time they shall be automatically
converted into Base Rate Loans unless the Borrower shall have given
the Administrative Agent notice in accordance with
Section 1.03(c)(iv) requesting either that such Loans continue
as Loans of such Type for another Interest Period or that such
Loans be converted into Loans of another Type at the end of such
Interest Period.
(iii) Notwithstanding anything to
the contrary contained in Section 1.03(c)(i) or (ii), during a
Default, the Administrative Agent may notify the Borrower that
Loans may only be converted into or continued as Loans of certain
specified Types and, thereafter, until no Default shall continue to
exist, Loans may not be converted into or continued as Loans of any
Type other than one or more of such specified Types.
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(iv) The Borrower shall give the
Administrative Agent notice (which shall be irrevocable) of each
conversion of Loans or continuation of Eurodollar Rate Loans no
later than 9:30 a.m. (Los Angeles time) on, in the case of a
conversion into or a continuation of Base Rate Loans, the Business
Day, and, in the case of a conversion into or continuation of
Eurodollar Rate Loans, the third Eurodollar Business Day, before
the requested date of such conversion or continuation. Each notice
of conversion or continuation shall be in the form of Schedule
1.03(c)(iv) and shall specify (A) the requested date of
such conversion or continuation, (B) the amount and Type and,
in the case of Eurodollar Rate Loans, the last day of the
applicable Interest Period of the Loans to be converted or
continued and (C) the amount and Type or Types of Loans into
which such Loans are to be converted or as which such Loans are to
be continued. Upon receipt of any such notice, the Administrative
Agent shall promptly notify each Lender of (x) the contents
thereof, (y) the amount and Type and, in the case of
Eurodollar Rate Loans, the last day of the applicable Interest
Period of each Loan to be converted or continued by such Lender and
(z) the amount and Type or Types of Loans into which such
Loans are to be converted or as which such Loans are to be
continued.
(d) Maximum Interest Rate .
Nothing contained in the Loan Documents shall require the Borrower
at any time to pay interest at a rate exceeding the Maximum
Permissible Rate. If interest payable by the Borrower on any date
would exceed the maximum amount permitted by the Maximum
Permissible Rate, such interest payment shall automatically be
reduced to such maximum permitted amount, and interest for any
subsequent period, to the extent less than the maximum amount
permitted for such period by the Maximum Permissible Rate, shall be
increased by the unpaid amount of such reduction. Any interest
actually received for any period in excess of such maximum amount
permitted for such period shall be deemed to have been applied as a
prepayment of the Loans.
Section 1.04 Repayment . The
Loans shall mature and become due and payable, and shall be repaid
by the Borrower, on the Maturity Date.
Section 1.05 Prepayments .
(a) Optional Prepayments . The Borrower may, at any time and
from time to time, prepay the Loans in whole or in part, without
premium or penalty, but subject to Section 7.04, except that
any partial prepayment shall be in an aggregate principal amount of
integral multiples of $1,000,000. The Borrower shall give the
Administrative Agent notice of each prepayment no later than 9:30
a.m. (Los Angeles time) on, in the case of a prepayment of Base
Rate Loans, the Business Day, and, in the case of a prepayment of
Eurodollar Rate Loans, the third Eurodollar Business Day, before
the date of such prepayment. Each such notice of prepayment shall
be in the form of Schedule 1.05 and shall specify
(a) the date such prepayment is to be made and (b) the
amount and Type and, in the case of Eurodollar Rate Loans, the last
day of the applicable Interest Period of the Loans to be prepaid.
Upon receipt of any such notice, the Administrative Agent shall
promptly notify each Lender of the contents thereof and the amount
and Type and, in the case of Eurodollar Rate Loans, the last day of
the applicable Interest Period of each Loan of such Lender to be
prepaid. Amounts to be prepaid shall irrevocably be due and payable
on the date specified in the applicable notice of prepayment,
together with interest thereon as provided in
Section 1.03(b).
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(b) Mandatory Prepayments .
If at any time the sum of the outstanding amount of the Loans, the
Maximum Drawing Amount and all Unpaid Reimbursement Obligations
exceeds the lesser of (i) the Total Commitment and
(ii) the Borrowing Base, then the Borrower shall immediately
pay the amount of such excess to the Administrative Agent to be
applied, first, to outstanding Base Rate Loans, second, to
Eurodollar Rate Loans, and third, to the extent of any remaining
amounts, to make a deposit into the Cash Collateral Account to be
held as cash collateral for outstanding Letters of Credit. Any
amounts paid pursuant to this Section 1.05(b) shall be
accompanied by any amounts that may be due pursuant to
Section 7.04 as a result of such payment.
Section 1.06 Limitation on Types
of Loans . Notwithstanding anything to the contrary contained
in this Agreement, the Borrower shall borrow, prepay, convert and
continue Loans in a manner such that (a) the aggregate
principal amount of Eurodollar Rate Loans of the same Type and
having the same Interest Period shall at all times be not less than
$5,000,000, (b) there shall not be, at any one time, more than
eight Interest Periods in effect with respect to Eurodollar Rate
Loans of all Types and (c) no payment of Eurodollar Rate Loans
will have to be made prior to the last day of an applicable
Interest Period in order to repay the Loans on the Maturity
Date.
Section 1.07 Letters of
Credit .
(a) Commitment to Issue Letters
of Credit . (i) Subject to the terms and conditions hereof
and the execution and delivery by the Borrower of a letter of
credit application on the applicable Issuing Bank’s customary
form (a “ Letter of Credit Application ”), such
Issuing Bank on behalf of the Lenders and in reliance upon the
agreement of the Lenders set forth in Section 1.07(a)(iv) and
upon the representations and warranties of the Borrower contained
herein, agrees, in its individual capacity, to issue, extend and
renew for the account of the Borrower one or more standby or
documentary letters of credit (individually, a “ Letter of
Credit ”), in such form as may be requested from time to
time by the Borrower and agreed to by such Issuing Bank;
provided , however , that, after giving effect to
such request, (A) the sum of the aggregate Maximum Drawing
Amount and all Unpaid Reimbursement Obligations shall not exceed
$50,000,000 at any one time, (B) the sum of the Maximum
Drawing Amount and Unpaid Reimbursement Obligations with respect to
Letters of Credit issued, extended or renewed by the Alternate
Issuing Bank shall not exceed $5,000,000 at any one time and
(C) the sum of (i) the Maximum Drawing Amount on all
Letters of Credit, (ii) all Unpaid Reimbursement Obligations,
and (iii) the amount of all Loans outstanding shall not exceed
the lesser of (D) the Total Commitment and (E) the
Borrowing Base; provided , further , that, any
Letters of Credit issued, extended or renewed hereunder shall be
issued, extended or renewed only by the Primary Issuing Bank
unless the Borrower shall have certified to the
Administrative Agent in the Letter of Credit Application that the
intended beneficiary requires a Letter of Credit issued by the
Alternate Issuing Bank. The applicable Issuing Bank shall notify
the Administrative Agent of the Maximum Drawing Amount and other
terms of each proposed Letter of Credit at least two
(2) Business Days prior to the issuance thereof. Upon the
issuance of any Letter of Credit, the applicable Issuing Bank shall
promptly furnish a copy thereof to the Administrative
Agent.
(ii) Letter of Credit
Applications . The Borrower shall give the applicable Issuing
Bank a Letter of Credit Application no later than 9:30 a.m. (Los
Angeles time) on the third Business Day before the requested date
for issuing, extending or renewing a
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Letter of Credit. Promptly
thereafter, the Borrower shall provide a copy of such Letter of
Credit Application to the Administrative Agent. Each Letter of
Credit Application shall be in the form of Schedule 1.07 and
be completed to the satisfaction of such Issuing Bank. In the event
that any provision of any Letter of Credit Application shall be
inconsistent with any provision of this Agreement, then the
provisions of this Agreement shall, to the extent of any such
inconsistency, govern.
(iii) Terms of Letters of
Credit . Each Letter of Credit issued, extended or renewed
hereunder shall, among other things, (A) provide for the
payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the
documents described therein, and (B) have an expiry date no
later than the earlier of (x) one (1) year from the date
of issuance and (y) the date which is thirty (30) days
(or if the Letter of Credit is confirmed by a confirmer or
otherwise provides for one or more nominated persons, forty-five
(45) days) prior to the Maturity Date. Each Letter of Credit
so issued, extended or renewed shall be subject to the Uniform
Customs.
(iv) Reimbursement Obligations of
Lenders . Each Lender severally agrees that it shall be
absolutely liable, without regard to the occurrence of any Default
or Event of Default or any other condition precedent whatsoever, to
the extent of such Lender’s Commitment Percentage, to
reimburse the applicable Issuing Bank on demand for the amount of
each draft paid by such Issuing Bank under each Letter of Credit to
the extent that such amount is not reimbursed by the Borrower
pursuant to Section 1.07(b) (such agreement for a Lender being
called herein the “ Letter of Credit Participation
” of such Lender).
(v) Participation of Lenders
. Each such payment made by a Lender shall be treated as the
purchase by such Lender of a participating interest in the
Borrower’s Reimbursement Obligation under
Section 1.07(b) in an amount equal to such payment. Each
Lender shall share in accordance with its participating interest in
any interest which accrues pursuant to
Section 1.07(b).
(b) Reimbursement Obligation of
the Borrower . In order to induce each Issuing Bank to issue,
extend and renew each Letter of Credit and the Lenders to
participate therein, the Borrower hereby agrees to reimburse or pay
to each Issuing Bank, for the account of such Issuing Bank or (as
the case may be) the Lenders, with respect to each Letter of Credit
issued, extended or renewed by such Issuing Bank
hereunder,
(i) except as otherwise expressly
provided in Section 1.07(b)(ii) and (iii), on each date that
any draft presented under such Letter of Credit is honored by the
such Issuing Bank, or such Issuing Bank otherwise makes a payment
with respect thereto, (A) the amount paid by such Issuing Bank
under or with respect to such Letter of Credit, and (B) the
amount of any taxes, fees, charges or other costs and expenses
whatsoever incurred by such Issuing Bank or any Lender in
connection with any payment made by such Issuing Bank or any Lender
under, or with respect to, such Letter of Credit,
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(ii) upon the reduction (but not
termination) of the Total Commitment to an amount less than the
Maximum Drawing Amount, an amount equal to such difference, which
amount shall be held by the Issuing Banks for the benefit of the
Lenders and the Issuing Banks as cash collateral for all
Reimbursement Obligations, and
(iii) upon the termination of the
Total Commitment, or the acceleration of the Reimbursement
Obligations with respect to all Letters of Credit in accordance
with Article 6, an amount equal to the then Maximum Drawing Amount
on all Letters of Credit, which amount shall be held by the Issuing
Banks for the benefit of the Lenders and the Issuing Banks as cash
collateral for all Reimbursement Obligations.
Each such payment shall be made to the
applicable Issuing Bank at such Issuing Bank’s Office in
immediately available funds. Interest on any and all amounts
remaining unpaid by the Borrower under this Section 1.07 at
any time from the date such amounts become due and payable (whether
as stated in this Section 1.07, by acceleration or otherwise)
until payment in full (whether before or after judgment) shall be
payable to such Issuing Bank on demand at the Post-Default
Rate.
(c) Letter of Credit Payments
. If any draft shall be presented or other demand for payment shall
be made under any Letter of Credit, the applicable Issuing Bank
shall notify the Borrower of the date and amount of the draft
presented or demand for payment and of the date and time when it
expects to pay such draft or honor such demand for payment. If the
Borrower fails to reimburse such Issuing Bank as provided in
Section 1.07(b) on or before the date that such draft is paid
or other payment is made by such Issuing Bank, such Issuing Bank
may at any time thereafter notify the Administrative Agent, who
will promptly notify the Lenders of their respective Commitment
Percentage of the amount of any such Unpaid Reimbursement
Obligation. No later than 11:00 a.m. (Los Angeles time) on the
Business Day next following the receipt of such notice, each Lender
shall make available to such Issuing Bank, at such Issuing
Bank’s Office, in immediately available funds, such
Lender’s Commitment Percentage of such Unpaid Reimbursement
Obligation, together with an amount equal to the product of
(i) the average, computed for the period referred to in clause
(iii) below, of the weighted average interest rate for federal
funds during each day included in such period, times
(ii) the amount equal to such Lender’s Commitment
Percentage of such Unpaid Reimbursement Obligation, times
(iii) a fraction, the numerator of which is the number of days
that elapse from and including the date such Issuing Bank paid the
draft presented for honor or otherwise made payment to the date on
which such Lender’s Commitment Percentage of such Unpaid
Reimbursement obligation shall become immediately available to such
Issuing Bank, and the denominator of which is 360. The
responsibility of such Issuing Bank to the Borrower and the Lenders
shall be only to determine that the documents (including each
draft) delivered under each Letter of Credit in connection with
such presentment shall be in conformity in all material respects
with such Letter of Credit.
(d) Obligations Absolute .
The Borrower’s obligations under this Section 1.07 shall
be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default
or any condition precedent whatsoever or any setoff, counterclaim
or defense to payment which the Borrower may have or have had
against any Issuing Bank, any Lender or any beneficiary of a Letter
of Credit. The Borrower further
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agrees with the Issuing Banks and
the Lenders that the Issuing Banks and the Lenders shall not be
responsible for, and the Borrower’s Reimbursement Obligations
under Section 1.07(b) shall not be affected by, among other
things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove
to be in or all respects invalid, fraudulent or forged, or any
dispute between or among the Borrower, the beneficiary of any
Letter of Credit or any financing institution or other party to
which any Letter of Credit may be transferred or any claims or
defenses whatsoever of the Borrower against the beneficiary of
Letter of Credit or any such transferee. The Issuing Banks and the
Lenders shall not be liable for any error, omission, interruption
or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of
Credit. The Borrower agrees that any action taken or omitted by any
Issuing Bank or any Lender under or in connection with each Letter
of Credit and the related drafts and documents, if done in good
faith, shall be binding upon the Borrower and shall not result in
any liability on the part of the Issuing Bank or Lender to the
Borrower.
(e) Reliance by Issuer . To
the extent not inconsistent with Section 1.07(d), each Issuing
Bank shall be entitled to rely, and shall be fully protected in
relying, upon any Letter of Credit, draft, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, email, statement, order or other document
believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and
statements of legal counsel, independent accountants and other
experts selected by such Issuing Bank. Each Issuing Bank shall be
fully justified in failing or refusing to take any action under
this Agreement unless it shall first have received such advice or
concurrence of the Majority Lenders as it reasonably deems
appropriate or it shall first be indemnified to its reasonable
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. Each Issuing Bank shall in all
cases be fully protected in acting, or in refraining from acting,
under this Agreement in accordance with a request of the Majority
Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Lenders and all future
holders of the Notes or of a Letter of Credit
Participation.
Section 1.08 Fees . (a)
Upfront Fee; Arrangement Fee; Agency Fee . The Borrower
shall pay to the Administrative Agent for the account of the
Lenders the fees separately agreed to under the fee letter dated
the date hereof between the Borrower and the Administrative Agent.
Such fees shall be payable in the amounts and at the times provided
therein.
(b) Commitment Fee; Reduction of
Commitments . The Borrower shall pay to the Administrative
Agent for the account of each Lender a commitment fee for each day,
from the Agreement Date through the Maturity Date, on (i) such
Lender’s Commitment for such day minus (ii) the
amount of such Lender’s Commitment Percentage of the sum of
(A) all outstanding Loans, (B) the Maximum Drawing Amount
and (C) all Unpaid Reimbursement Obligations, in each case, on
such day, at a rate per annum determined on the basis of the
Leverage Ratio as in effect on such day, in accordance with the
Levels and the Commitment Fee rate set forth in the definition of
“ Applicable Margin ”.
The commitment fee is payable
quarterly in arrears on (i) each Payment Date for the period
from the immediately preceding Payment Date to such Payment Date,
(ii) on the Maturity
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Date to the extent accrued and unpaid on the
Maturity Date and (iii) on the date of any reduction of such
Commitment (to the extent accrued and unpaid on the amount of the
reduction). The Borrower may reduce the Commitments by giving the
Administrative Agent notice (which shall be irrevocable) thereof no
later than 10:30 a.m. (Los Angeles time) on the fifth Business Day
before the requested date of such reduction, except that no partial
reduction shall be in an aggregate amount less than integral
multiples of $1,000,000. Upon receipt of any such notice, the
Administrative Agent shall promptly notify each Lender of the
contents thereof and the amount to which such Lender’s
Commitment is to be reduced.
(c) Letter of Credit Fee .
(i) In connection with the issuance or any extension or
renewal of any Letter of Credit, the Borrower shall pay a fee (in
each case, a “ Letter of Credit Fee ”), payable
quarterly in arrears on (i) each Payment Date for the period
from the immediately preceding Payment Date to such Payment Date
and (ii) on the Maturity Date to the extent accrued and unpaid
on the Maturity Date, to the Administrative Agent in respect of
each Letter of Credit in an amount equal to the applicable interest
rate for Eurodollar Rate Loans in effect from time to time applied
to the daily average Maximum Drawing Amount of such Letter of
Credit for the period from such issuance, extension or renewal date
to the stated expiry date, which shall be for the accounts of the
Lenders in accordance with their respective Commitment
Percentages.
(ii) In respect of each Letter of
Credit, the Borrower shall pay to the applicable Issuing Bank for
its own account (A) one quarter of one percent (0.25%) per
annum applied to the daily average Maximum Drawing Amount of such
Letter of Credit for the period from the issuance, extension or
renewal date to the stated expiry date of such Letter of Credit, as
a fronting fee (“ Letter of Credit Fronting Fee
”) payable on (i) each Payment Date for the period from
the immediately preceding Payment Date to such Payment Date and
(ii) on the Maturity Date to the extent accrued and unpaid on
the Maturity Date and (B) at such other time or times as such
charges are customarily made by such Issuing Bank, such Issuing
Bank’s customary issuance, amendment, negotiation or document
examination and other administrative fees (“ Letter of
Credit Administration Fee ”) as in effect from time to
time.
(d) None of the fees payable under
this Section 1.08 shall be refundable in whole or in
part.
Section 1.09 Computation of
Interest and Fees . Interest and fees shall be computed on the
basis of a year of 360 days (or 365/366 days in the case of the
Base Rate Loans) and paid for the actual number of days elapsed or
to be elapsed, as the case may be. Interest and fees for any period
shall be calculated from and including the first day thereof to but
excluding the last day thereof.
Section 1.10 Payments by the
Borrower . (a) Time, Place and Manner . All payments due
to the Administrative Agent or the Issuing Banks under the Loan
Documents shall be made to the Administrative Agent or such Issuing
Bank, as the case may be, at the Administrative Agent’s
Office, or such Issuing Bank’s Office, as the case may be, or
to such other Person or at such other address as the Administrative
Agent or such Issuing Bank may designate by notice to the Borrower.
All payments due to any Lender under the Loan Documents shall, in
the case of payments on account of principal of or interest on the
Loans or commitment fees or any other
9
amounts, be made to the Administrative Agent at
the Administrative Agent’s Office, except that in the case of
the Letter of Credit Fronting Fee, Letter of Credit Administration
Fee and Unpaid Reimbursement Obligations, such payments shall be
made to the applicable Issuing Bank at such Issuing Bank’s
Office. All payments due to any Lender under the Loan Documents,
shall be made for the account of such Lender’s Lending
Office. A payment shall not be deemed to have been made on any day
unless such payment has been received by the required Person, at
the required place of payment, in Dollars in funds immediately
available to such Person, no later than 1:00 p.m. (Los Angeles
time) on such day.
(b) No Reductions . All
payments by the Borrower under the Loan Documents, shall be made
without any reduction or deduction whatsoever, including any
reduction or deduction for any set-off, recoupment, counterclaim
(whether sounding in tort, contract or otherwise) or Tax, except
for any withholding or deduction for Taxes required to be withheld
or deducted under Applicable Law.
(c) Authorization to Charge
Accounts . The Borrower hereby authorizes the Administrative
Agent, each Issuing Bank and each Lender, if and to the extent any
amount payable by the Borrower under the Loan Documents (whether
payable to such Person or to any other Person that is the
Administrative Agent, an Issuing Bank or a Lender) is not otherwise
paid when due, to charge such amount against any or all of the
accounts of the Borrower with such Person or any of its Affiliates
(whether maintained at a branch or office located within or without
the United States), with the Borrower remaining liable for any
deficiency.
(d) Extension of Payment
Dates . Whenever any payment to the Administrative Agent, any
Issuing Bank or any Lender under the Loan Documents would otherwise
be due (except by reason of acceleration) on a day that is not a
Business Day, or, in the case of payments of the principal of
Eurodollar Rate Loans, a Eurodollar Business Day, such payment
shall instead be due on the next succeeding Business or Eurodollar
Business Day, as the case may be, unless, in the case of a payment
of the principal of Eurodollar Rate Loans, such extension would
cause payment to be due in the next succeeding calendar month, in
which case such due date shall be advanced to the next preceding
Eurodollar Business Day. If the date any payment under the Loan
Documents is due is extended (whether by operation of the Loan
Documents, Applicable Law or otherwise), such payment shall bear
interest for such extended time at the rate of interest applicable
hereunder.
(e) Distribution by the
Administrative Agent .
(i) The Administrative Agent shall
promptly distribute to each Lender its ratable share of each
payment received by the Administrative Agent under the Loan
Documents for the account of the Lenders by credit to an account of
such Lender at the Administrative Agent’s Office or by wire
transfer to an account of such Lender at an office of any other
commercial Lender located in the United States.
(ii) Unless the Administrative Agent
shall have received notice from the Borrower prior to the date on
which any payment is due to the Lenders under the Loan Documents
that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such
payment in full to
10
the Administrative Agent on such
date and the Administrative Agent in its sole discretion may, in
reliance upon such assumption, cause to be distributed to each
Lender on such due date a corresponding amount with respect to the
amount then due such Lender. If and to the extent the Borrower
shall not have so made such payment in full to the Administrative
Agent and the Administrative Agent shall have so distributed to any
Lender a corresponding amount, such Lender shall, on demand, repay
to the Administrative Agent the amount so distributed together with
interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such
amount to the Administrative Agent, at the Federal Funds Rate until
(and including) the third Business Day after demand is made and
thereafter at the Base Rate.
Section 1.11 Evidence of
Indebtedness . Each Lender’s Loans and the
Borrower’s obligation to repay such Loans with interest in
accordance with the terms of this Agreement shall be evidenced by
this Agreement, the records of such Lender and, at the request of
any Lender, a single Note payable to the order of such Lender. The
records of each Lender shall be prima facie evidence of such
Lender’s Loans and accrued interest thereon and of all
payments made in respect thereof.
Section 1.12 Pro Rata
Treatment . Except to the extent otherwise provided herein,
(a) Loans shall be made by the Lenders pro rata in accordance
with their respective Commitments, (b) Loans of the Lenders
shall be converted and continued pro rata in accordance with their
respective amounts of Loans of the Type and, in the case of
Eurodollar Rate Loans, having the Interest Period being so
converted or continued, (c) each reduction in the Commitments
shall be made pro rata in accordance with the respective amounts
thereof, (d) each payment of the principal of or interest on
the Loans or of commitment fees shall be made for the account of
the Lenders pro rata in accordance with their respective amounts
thereof then due and payable and (e) each of the Lenders shall
make payments to the applicable Issuing Bank with respect to any
Letters of Credit issued, renewed or extended pro rata in
accordance with their respective Commitment Percentages. All
payments and other allocations to or in respect of the Lenders
pursuant to this Section 1.12 shall be allocated among the
Lenders, in proportion, as nearly as practicable, to the respective
unpaid principal amount of each Lender’s Note or each
Reimbursement Obligation, as the case may be, with adjustments to
the extent practicable to equalize any prior repayments not exactly
in proportion.
Section 1.13 Taxes Payable by the
Borrower . (i) If under Applicable Law any Tax is required
to be withheld or deducted by the Borrower from, or is otherwise
payable by the Borrower in connection with, any payment to the
Administrative Agent, any Issuing Bank or any Lender under the Loan
Documents, the Borrower (A) shall (1), if so required,
withhold or deduct the amount of such Tax from such payment and, in
any case, pay such Tax to the appropriate taxing authority in
accordance with Applicable Law and (2) indemnify the
Administrative Agent, such Issuing Bank and such Lender in
accordance with the provisions of Section 9.02(d) against its
failure so to do and (B) shall, subject to
Section 1.13(iii), pay to the Administrative Agent, such
Issuing Bank or such Lender, as applicable, (1) such
additional amounts as may be necessary so that the net amount
received by the Administrative Agent, such Issuing Bank or such
Lender with respect to such payment, after withholding or deducting
all Taxes required to be withheld or deducted by the Borrower, is
equal to the full amount payable under the Loan Documents and
(2) an amount equal to all Taxes payable by the Administrative
Agent, such Issuing Bank or such Lender as a result of payments
made by the Borrower (whether to a taxing authority or to the
Administrative Agent, such
11
Issuing Bank or such Lender pursuant to this
Section 1.13(i). If any Tax is withheld or deducted from, or
is otherwise payable by the Borrower in connection with, any
payment payable to the Administrative Agent, any Issuing Bank or
any Lender under the Loan Documents, the Borrower shall, as soon as
possible after the date of such payment, furnish to the
Administrative Agent, such Issuing Bank or such Lender, as
applicable, the original or a certified copy of a receipt for such
Tax from the applicable taxing authority. If any payment due to the
Administrative Agent, any Issuing Bank or any Lender under the Loan
Documents is or is expected to be made without withholding or
deducting therefrom, or otherwise paying in connection therewith,
any Tax payable to any taxing authority, the Borrower shall, within
thirty (30) days after any request from the Administrative
Agent, such Issuing Bank or such Lender, as applicable, furnish to
the Administrative Agent, such Issuing Bank or such Lender a
certificate from such taxing authority, or an opinion of counsel
acceptable to the Administrative Agent, such Issuing Bank or such
Lender, in either case stating that no Tax payable to such taxing
authority was or is, as the case may be, required to be withheld or
deducted from, or otherwise paid by the Borrower in connection
with, such payment.
(ii) Taxes Payable by the
Administrative Agent, any Issuing Bank or any Lender . The
Borrower shall, promptly upon request by the Administrative Agent,
any Issuing Bank or any Lender for the payment thereof, but subject
to Section 1.13(iii) pay to the Administrative Agent, such
Issuing Bank or such Lender, as the case may be, (A) all Taxes
and (B) all Taxes payable by the Administrative Agent, such
Issuing Bank or such Lender as a result of payments made by the
Borrower (whether made to a taxing authority or to the
Administrative Agent, such Issuing Bank or such Lender) pursuant to
this Section 1.13(ii).
(iii) Limitations .
Notwithstanding anything to the contrary contained herein, the
Borrower shall not be required to pay any additional amount in
respect of Bank Taxes payable by the Administrative Agent, such
Issuing Bank or such Lender, as the case may be, with respect to
any payment due to the Administrative Agent, such Issuing Bank or
such Lender under the Loan Documents.
(iv) Exemption from U.S.
Withholding Taxes . There shall be submitted to the Borrower,
the Administrative Agent and the Issuing Banks, (A) on or
before the first date that interest or fees are payable or
creditable to such Lender under the Loan Documents, (1) if at
the time the same are applicable, (aa) by each Lender that is not a
United States Person, two duly completed and signed copies of
Internal Revenue Service Form W-8BEN or W-8ECI, in either case
entitling such Lender to a complete exemption from withholding of
any United States federal income taxes on all amounts to be
received by such Lender under the Loan Documents, or (bb) by each
Lender that is a Non-US Bank, (x) a duly completed Internal
Revenue Service Form W-8BEN and (y) a certification in the
form of Schedule 1.13(d) that such Lender is a Non-US Bank
or (2) if at the time any of the foregoing are inapplicable,
duly completed and signed copies of such form (including Internal
Revenue Service Form W-81MY, if applicable), if any, as entitles
such Lender to exemption from withholding of United States federal
income taxes to the maximum extent to which such Lender is then
entitled under Applicable Law, and (B) from time to time
thereafter, prior to the expiration or obsolescence of any
previously delivered form or upon any previously delivered form
becoming inaccurate or inapplicable, such further duly completed
and signed copies of such
12
form, if any, as entitles such
Lender to exemption from withholding of United States federal
income taxes to the maximum extent to which such Lender is then
entitled under Applicable Law. Each Lender shall promptly notify
the Borrower, the Administrative Agent and the Issuing Banks if
(A) it is required to withdraw or cancel any form or
certificate previously submitted by it or any such form or
certificate has otherwise become ineffective or inaccurate or
(B) payments to it are or will be subject to withholding of
United States federal income taxes to a greater extent than the
extent to which payments to it were previously subject. Upon the
request of the Borrower, the Administrative Agent or any Issuing
Bank, each Lender that is a United States Person shall from time to
time submit to the Borrower, the Administrative Agent and the
Issuing Banks a certificate to the effect that it is such a United
States Person and a duly completed Internal Revenue Service Form
W-9.
Section 1.14 Borrowing Base .
The Borrowing Base shall be determined monthly by the
Administrative Agent by reference to the Borrowing Base Report,
commercial finance examination by the Administrative Agent and
collateral audit reports and other information obtained by or
provided to the Administrative Agent. The Administrative Agent
shall give to the Borrower written notice of any change in the
Borrowing Base determined by the Administrative Agent. In the case
of a reduction in the lending formula with respect to Eligible
Accounts Receivable or Eligible Inventory, such notice shall be
effective five (5) days after its receipt by the Borrower and
in the case of any change in the general criteria for Eligible
Accounts Receivable or Eligible Inventory, such notice shall be
effective upon its receipt by the Borrower. Prior to the time that
such notice becomes effective the Borrowing Base shall be computed
as it would have been computed in the absence of such
notice.
ARTICLE 2
CONDITIONS TO
LOANS
Section 2.01 Conditions to
Initial Loans . The obligation of each Lender to make its
initial Loan and of each Issuing Bank to issue any initial Letters
of Credit is subject to the receipt by the Administrative Agent and
each Issuing Bank of each of the following, in form and substance
and, in the case of the materials referred to in clauses (a), (b),
(c), (f) and (g), certified in a manner satisfactory to each
of the Administrative Agent and the Issuing Banks:
(a) a certificate of the Secretary
or an Assistant Secretary of the Borrower, dated the requested date
for the making of such Loan, substantially in the form of
Schedule 2.01(a) , to which shall be attached a copy of the
resolutions of the Board of Directors and by-laws referred to in
such certificate;
(b) a copy of the organizational
documents, including all amendments thereto, of the Borrower,
certified, as of a recent date, by the Secretary of State or other
appropriate official of the Borrower’s jurisdiction of
organization;
(c) a good standing certificate with
respect to the Borrower and any Subsidiary (where possible), issued
as of a recent date by the Secretary of State or other appropriate
official of such Person’s jurisdiction of organization,
together with a supplemental certificate from such Secretary of
State or other official, updating the information in such
certificate;
13
(d) an opinion of Winston &
Strawn LLP, counsel for the Borrower, dated the requested date for
the making of such Loan, in the form of Schedule 2.01(d) ,
with such changes as the Administrative Agent and the Issuing Banks
shall approve;
(e) an opinion of counsel for the
Administrative Agent, dated the requested date for the making of
such Loan, in the form of Schedule 2.01(e) ;
(f) a copy of each Governmental
Approval and other third-party consents or approvals;
(g) a certificate of the president
or chief financial officer of the Borrower, dated the requested
date for the making of such Loan, setting forth the manner and
degree of detail in which the Borrower will make the calculations
required by paragraph 3 and 4 of Schedules 5.01(a) and
5.01(b) and setting forth the Leverage Ratio based on the
most recent financial statements as set forth on Schedule
5.02(a) ;
(h) a duly executed Note for each
Lender which has requested the same and a duly executed copy of
each of the other Loan Documents, the Agency Account Agreement, the
Customs Agent Agreement and the Termination and Release
Documents;
(i) payment of all fees,
disbursements and expenses of the Administrative Agent, the Issuing
Banks, the Arranger and the Lenders, payable at the closing based
on invoices presented at or prior to closing;
(j) either (i) such UCC-1
financing statements and other documents as the Administrative
Agent may request, the filing or recordation of which is necessary
or appropriate in the Administrative Agent’s determination to
create or perfect a security interest in the Collateral under
Applicable Law, or (ii) evidence of the filing or recordation
of the same in such offices as the Administrative Agent shall have
specified;
(k) UCC lien search
reports;
(l) such instruments and other
documents as the Administrative Agent may request, the possession
of which is necessary or appropriate in the Administrative
Agent’s determination to create or perfect a security
interest in the Collateral under Applicable Law;
(m) the Base Financial Statements
and the most recent, unaudited, consolidated balance sheet of the
Borrower and its Subsidiaries and the related statements of income
and retained earnings;
(n) a duly completed Internal
Revenue Service Form W-9 with respect to the Borrower;
and
(o) any other information or
documents as the Administrative Agent, any Issuing Bank or any of
the Lenders may request.
14
Section 2.02 Conditions to Each
Loan . The obligation of each Lender to make each Loan
requested to be made by it, including its initial Loan, and of each
Issuing Bank to issue, extend or renew any Letter of Credit,
including the initial Letter of Credit, as the case may be, is
subject to the satisfaction of the following conditions:
(a) the Administrative Agent shall
have received a notice of borrowing with respect to such Loan
complying with the requirements of Section 1.02 or the
applicable Issuing Bank shall have received a Letter of Credit
Application with respect to such Letter of Credit complying with
the requirements of Section 1.07;
(b) each Loan Document
Representation and Warranty shall be true and correct at and as of
the time such Loan is to be made or such Letter of Credit is to be
issued, extended or renewed, both with and without giving effect to
such Loan or such Letter of Credit, as the case may be, and all
other Loans to be made or Letters of Credit to be issued, extended
or renewed, as the case may be, at such time and to the application
of the proceeds thereof;
(c) no Default shall have occurred
and be continuing at the time such Loan is to be made or such
Letter of Credit is to be issued, extended or renewed, as the case
may be, or would result from the making of such Loan or the
issuance, extension or renewal of such Letter of Credit, as the
case may be, and all other Loans to be made or Letters of Credit to
be issues, extended or renewed, as the case may be, at such time or
from the application of the proceeds thereof;
(d) such Loan or Letter of Credit,
as the case may be, will not contravene any Applicable Law
applicable to such Lender or such Issuing Bank; and
(e) the Administrative Agent shall
have received the most recent Borrowing Base Report required to be
delivered to the Administrative Agent in accordance with
Section 5.01(f).
The Borrower shall be deemed to have made a
Representation and Warranty as of the time of the making of such
Loans or the issuance, renewal or extension of such Letters of
Credit that the conditions specified in such clauses have been
fulfilled as of such time.
ARTICLE 3
CERTAIN REPRESENTATIONS AND
WARRANTIES
In order to induce each Lender and
each Issuing Bank to enter into this Agreement and to make each
Loan requested to be made or issue, extend or renew each Letter of
Credit requested to be issued, extended or renewed, as the case may
be, the Borrower represents and warrants as follows:
Section 3.01 Organization; Power;
Qualification . (i) The Borrower is a corporation a) duly
organized, validly existing and in good standing under the laws of
Delaware, (b) having the corporate power and authority to own
and lease its properties (as applicable) and to carry on its
business as now being and hereafter proposed to be conducted and
(c) is duly qualified and in
15
good standing as a foreign corporation and is
duly authorized to do business, in all jurisdictions in which the
character of its properties or the nature of its businesses
requires such qualification or authorization, except for
qualifications and authorizations the lack of which, singly or in
the aggregate, has not had and will not have a Material Adverse
Effect.
(ii) Each of its Subsidiaries is a
corporation (a) duly organized, validly existing and in good
standing under the laws of its respective state of incorporation,
(b) having the corporate power and authority to own and lease
its properties (as applicable) and to carry on its business as now
being and hereafter proposed to be conducted and (c) is duly
qualified and in good standing as a foreign corporation and is duly
authorized to do business, in all jurisdictions in which the
character of its properties or the nature of its businesses
requires such qualification or authorization, except for
qualifications and authorizations the lack of which, singly or in
the aggregate, has not had and will not have a Material Adverse
Effect.
Section 3.02 Subsidiaries .
(i) Schedule 3.02 sets forth, as of the Agreement Date, all
of the Subsidiaries, their jurisdictions of incorporation and the
percentages of the various classes of their Capital Securities
owned by the Borrower or another Subsidiary. The Borrower has the
unrestricted right to vote, and (subject to limitations imposed by
Applicable Law) to receive dividends and distributions on, all
Capital Securities indicated on Schedule 3.02 as owned by
the Borrower. All such Capital Securities have been duly authorized
and issued and are fully paid and nonassessable. Except as set
forth on Schedule 3.02 , neither the Borrower nor any
Subsidiary is engaged in any joint venture or partnership with any
other Person.
Section 3.03 Authorization;
Enforceability; Required Consents; Absence of Conflicts . The
Borrower has the power, and has taken or caused to be taken all
necessary action to authorize the Borrower, to execute, deliver and
perform in accordance with their respective terms of the Loan
Documents and to borrow hereunder in the unused amount of the
Commitments. This Agreement has been, and each of the other Loan
Documents when delivered to the Administrative Agent will have
been, duly executed and delivered by the Borrower and is, or when
so delivered will be, a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its
terms, except as enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors’ rights generally and (ii) general principles
of equity. The execution, delivery and performance in accordance
with their respective terms by the Borrower of this Agreement and
the other Loan Documents and each borrowing hereunder, whether or
not in the amount of the unused Commitments, do not and (absent any
change in any Applicable Law or applicable Contract) will not
(a) require any Governmental Approval or third-party permit,
license or approval, including any consent or approval of any
Subsidiary or any consent or approval of the shareholders of the
Borrower or the shareholders of its Subsidiaries, other than
Governmental Approvals and other consents and approvals that have
been obtained, are final and not subject to review on appeal or to
collateral attack, are in full force and effect and, in the case of
any such required under any Applicable Law or Contract as in effect
on the Agreement Date, are listed on Schedule 3.03 , or
(b) violate, conflict with, result in a breach of, constitute
a default under, or result in or require the creation of any Lien
(other than the Security Interest) upon any assets of the Borrower
or any Subsidiary under (i) any Contract or by which the
Borrower or any Subsidiary or any of their respective properties
may be bound or (ii) Applicable Law.
16
Section 3.04 Compliance with Law,
Permits, Consents, Contracts, etc; No Additional Permits
Required . (a) Except as set forth in Schedule 3.04 ,
(i) the Borrower and its Subsidiaries are in compliance with
all (x) Contracts and (y) laws, rules or regulations,
orders, judgments, writs, injunctions, decrees, determinations,
awards of all Governmental Authority and all Governmental
Approvals, except in each case where non-compliance would not
reasonably be expected to result in a Material Adverse
Effect.
(b) No additional Governmental
Approvals are necessary in order to carry on the business of the
Borrower or its Subsidiaries, except where the failure to obtain
such Governmental Approval would not reasonably be expected to
result in a Material Adverse Effect.
(c) Each of the Borrower and its
Subsidiaries possesses all franchises, patents, copyrights,
trademarks, trade names, licenses and permits, and rights in
respect of the foregoing, adequate for the conduct of its business
substantially as now conducted without known conflict with any
rights of others.
Section 3.05 Litigation .
Except as set forth on Schedule 3.05 , there are not, in any
court or before any arbitrator of any kind or before or by any
governmental or non-governmental body, any actions, suits or
proceedings pending (nor, to the knowledge of the Borrower and any
Subsidiary, threatened) against or in any other way relating to or
affecting (a) the Borrower or any Subsidiary or their
respective businesses or properties, (b) this Agreement or the
other Loan Documents or (c) as to which there is a reasonable
possibility of an adverse determination and which, if adversely
determined, could, individually or in the aggregate, result in a
Material Adverse Effect.
Section 3.06 Environmental
Matters . The Borrower and its Subsidiaries are in compliance
with all applicable Environmental Laws and safety matters, the
noncompliance with which would reasonably be expected to result in
a Material Adverse Effect. Except as disclosed on Schedule
3.06 , (i) neither the Borrower nor any Subsidiary has
received any communication, whether from a Governmental Authority,
employee or otherwise, that alleges past actions, activities,
circumstances, conditions, events or incidents, including the
release, emission, discharge, presence or disposal of any
Environmentally Regulated Material, in each case, that could
reasonably be expected to form the basis of any Environmental
Claims against the Borrower or any Subsidiary and that would
reasonably be expected to have a Material Adverse Effect and
(ii) no notices of violations, citations or other similar
governmental orders remain uncorrected (or will remain uncorrected
beyond any period of time for the correction thereof permitted
under all applicable Environmental Laws).
Section 3.07 Contracts;
Applicable Law . Neither the Borrower nor any Subsidiary is a
party to or bound by any Contract or Applicable Law, compliance
with which could reasonably be expected to have a Material Adverse
Effect.
Section 3.08 No Adverse Change or
Event . Since December 31, 2004, no change in the
business, assets, operations or financial condition of the Borrower
or any Subsidiary has occurred, and no event has occurred or failed
to occur, that has had or could reasonably be expected to have,
either alone or in conjunction with all other such changes, events
and failures, a Material Adverse Effect. Such an adverse change may
have occurred, and such an event may
17
have occurred or failed to occur, at any
particular time notwithstanding the fact that at such time no
Default shall have occurred and be continuing.
Section 3.09 Collateral . The
Borrower has good title or valid rights to (i) the interests
in the tangible and intangible personal property forming the
Collateral purported to be covered by the Security Agreement,
subject only to Permitted Liens as listed on Schedule
4.08(b) and (ii) except where the failure to do so could
not reasonably be expected to result in a Material Adverse Effect,
the interests in all other properties held by the Borrower, subject
only to Permitted Liens as listed on Schedule 4.08(a)
.
Section 3.10 Tax Returns .
Each of the Borrower and its Subsidiaries has filed or caused to be
filed all Federal, state and local tax returns required to be filed
by it and has paid or caused to be paid all taxes shown to be due
and payable on such returns or on any assessments received by it,
except taxes that are subject to a good faith contest and for which
adequate reserves have been established in accordance with
Generally Accepted Accounting Principles.
Section 3.11 Compliance with
ERISA . Each Plan (and each related trust, insurance contract
or fund) is in substantial compliance with its terms and with all
applicable laws, including, without limitation, ERISA and the Code;
each Plan (and each related trust, if any) which is intended to be
qualified under Section 401(a) of the Code has received a
determination letter from the Internal Revenue Service to the
effect that it meets the requirements of Sections 401(a) and 501(a)
of the Code; no Reportable Event has occurred with respect to a
Plan; no Plan which is a Multiemployer Plan is insolvent (within
the meaning of Section 4245 of ERISA) or in reorganization
(within the meaning of Section 4241 of ERISA); no Plan has any
Unfunded Current Liability; no Plan which is subject to
Section 412 of the Code or Section 302 of ERISA has an
“accumulated funding deficiency” (within the meaning of
such sections of the Code or ERISA) or, has applied for or received
a waiver of an accumulated funding deficiency or an extension of
any amortization period, within the meaning of Section 412 of
the Code or Section 303 or 304 of ERISA; all contributions
required to be made with respect to each Plan, each Multiemployer
Plan has been timely made or accrued or otherwise properly reserved
on the Borrower’s or its Subsidiaries’ balance sheets;
neither the Borrower nor any Subsidiary nor any ERISA Affiliate has
incurred, any liability (including any indirect, contingent or
secondary liability) to or on account of any Plan or Multiemployer
Plan pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29),
4971 or 4975 of the Code or is reasonably likely to incur any such
liability under any of the foregoing sections with respect to any
Plan or Multiemployer Plan; except as set forth on Schedule
3.11 , no condition exists that presents a risk to the Borrower
or any Subsidiary or any ERISA Affiliate of incurring a liability
to or on account of any Plan or Multiemployer Plan pursuant to the
foregoing provisions of ERISA and the Code; no proceedings have
been instituted to terminate or appoint a trustee to administer any
Plan that is subject to Title IV of ERISA (other than a standard
termination pursuant to Section 4041(b) of ERISA); no action,
suit, proceeding, hearing, audit or investigation with respect to
the administration, operation or the investment of assets of any
Plan (other than routine claims for benefits) is pending or, to the
Borrower’s best knowledge, expected or threatened; each group
health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code) which covers or has covered
employees or former employees of the Borrower, any Subsidiary or
any ERISA Affiliate has at all times been operated in material
compliance with the provisions of Part 6 of subtitle B of Title I
of ERISA and Section
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4980B of the Code; and no lien imposed under the
Code or ERISA on the assets of the Borrower or any Subsidiary or
any ERISA Affiliate exists or is reasonably likely to arise on
account of any Plan or Multiemployer Plan. Using actuarial
assumptions and computation methods consistent with Part 1 of
subtitle E of Title IV of ERISA, the aggregate liabilities of the
Borrower and its Subsidiaries and its ERISA Affiliates to all Plans
which are multiemployer plans (as defined in
Section 4001(a)(3) of ERISA) in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal
year of each such Plan ended prior to the date of the most recent
Credit Event, is not reasonably likely to have a Material Adverse
Effect; and the Borrower and any Subsidiary do not maintain or
contribute to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) which provides benefits to retired
employees or other former employees (other than as required by
Section 601 of ERISA) or any Plan the obligations with respect
to which could reasonably be expected to have a Material Adverse
Effect on the ability of the Borrower to perform its obligations
under this Agreement.
Section 3.12 Federal Reserve
Regulation . (a) The Borrower is not engaged principally, or as
one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin
Stock.
(b) None of the proceeds of any of
the Loans shall be used, and none of any Letters of Credit shall be
obtained, to purchase or carry, or to reduce or retire or refinance
any credit incurred to purchase or carry, any margin stock (within
the meaning of Regulations U and X of the Board of Governors of the
Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
Section 3.13 Investment Company
Act; Public Utility Holding Company Act . Neither the Borrower
nor any of its Subsidiaries is (i) an “investment
company” as such term is defined or subject to regulation
under in the Investment Company Act of 1940, (ii) a
“holding company,” as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935
(“PUCHA”) or (iii) subject to any other Applicable
Law (including PUHCA) which purports to restrict or regulate its
ability to incur debt or grant Liens on its property.
Section 3.14 Use of Proceeds
. The Borrower will use the proceeds of the Loans and obtain
Letters of Credit, only for the purposes of refinancing certain
Indebtedness and for general corporate purposes.
Section 3.15 Additional Adverse
Facts . Except for facts and circumstances disclosed on
Schedule 3.05 or Schedule 3.15 or in the notes to the
financial statements referred to in Section 5.02(a), no fact
or circumstance is known to the Borrower or its Subsidiary, that,
either alone or in conjunction with all other such facts and
circumstances, has had or could reasonably be expected to have (so
far as the Borrower and any Subsidiary can reasonably foresee) a
Material Adverse Effect.
Section 3.16 Existing
Indebtedness . The Borrower has no outstanding Indebtedness on
the date hereof, except as set forth on Schedule 4.06
.
Section 3.17 Title to
Properties . Except as indicated on Schedule 3.17 , the
Borrower and its Subsidiaries own all of the assets reflected in
the consolidated balance sheet of the
19
Borrower and its Subsidiaries as of
December 31, 2004 or acquired since that date (except property
and assets sold or otherwise disposed of in the ordinary course of
business since that date), subject to no rights of others,
including any mortgages, leases, conditional sales agreements,
title retention agreements, liens or other encumbrances except
Permitted Liens.
Section 3.18 Fiscal Year .
The Borrower and each of its Subsidiaries has a fiscal year which
is twelve months ending on December 31 of each calendar
year.
Section 3.19 No Event of
Default . No Default or Event of Default has occurred and is
continuing.
Section 3.20 Perfection of
Security Interest . All filings, assignments, pledges and
deposits of documents or instruments have been made and all other
actions have been taken that are necessary or advisable in the
reasonable opinion of Borrower’s counsel, under applicable
law, to establish the Administrative Agent’s rights with
respect to the Collateral. The Collateral and the Administrative
Agent’s rights with respect to the Collateral are not subject
to any setoff, claims, withholdings or other defenses. The Borrower
is the owner of the Collateral free from any lien, security
interest, encumbrance and any other claim or demand, except for
Permitted Liens.
Section 3.21 Bank Accounts .
(a) Schedule 3.21(a) sets forth the account numbers and
location of all bank accounts of the Borrower and its Subsidiaries
(the “ Local Accounts ”).
(b) Schedule 3.21(b) sets
forth the account number and location of the Receivables Account of
the Borrower and its Subsidiaries.
Section 3.22 Projections .
The projections of the annual operating budgets, balance sheets and
cash flow statements of the Borrower and its Subsidiaries on a
consolidated basis, copies of which have been delivered to each
Lender, disclose all assumptions made with respect to general
economic, financial and market conditions used in formulating such
projections. To the knowledge of the Borrower or any of its
Subsidiaries, no facts exist that (individually or in the
aggregate) would result in any material change in any such
projections. The projections are based upon reasonable estimates
and assumptions, have been prepared on the basis of the assumptions
stated therein and reflect the reasonable estimates of the Borrower
and its Subsidiaries of the results of operations and other
information projected therein.
ARTICLE 4
CERTAIN COVENANTS
From the Agreement Date and until
the Repayment Date,
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A.
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The Borrower
shall and shall cause any Subsidiary to :
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Section 4.01 Preservation of
Existence and Properties, Scope of Business, Compliance with Law,
Payment of Taxes and Claims, Preservation of Enforceability
.
(a) preserve and maintain its
corporate existence and all of its other franchises, licenses,
rights and privileges;
(b) preserve, protect and obtain all
Intellectual Property, and preserve and maintain in good repair,
working order and condition all other properties and equipment,
required for the conduct of its business;
(c) engage only in businesses now
conducted by them and in related businesses;
(d) comply with all Applicable Law,
including, without limitation, environmental laws and regulations
and ERISA and all material contractual obligations, except where
the failure to comply with any of the foregoing would not
reasonably be expected to result in a Material Adverse
Effect;
(e) pay all other obligations of the
Borrower and any Subsidiary promptly and in accordance with their
terms and pay and discharge when due all Taxes, Liabilities,
assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its property before the
same shall become delinquent or in default; and
(f) take all action and obtain all
consents and Governmental Approvals required so that its
obligations under the Loan Documents will at all times be legal,
valid and binding and enforceable in accordance with their
respective terms, except that this Section 4.01 (other than
clauses (a), in so far as it requires the Borrower to preserve its
corporate existence, (c) and (f)) shall not apply in any
circumstance where noncompliance, together with all other
non-compliances with this Section 4.01, would not reasonably
be expected to have a Material Adverse Effect.
Section 4.02 Insurance .
Maintain insurance with respect to its properties and business with
financially sound and reputable insurance companies against at
least such risks and in at least such amounts as is customarily
maintained by similar businesses in similar geographic areas, or as
may be required by Applicable Law.
Section 4.03 Use of Proceeds
. Use the proceeds of the Loans and will obtain Letters of Credit
for purposes of refinancing certain Indebtedness and for general
corporate purposes.
Section 4.04 Maintenance of
Collateral . Make from time to time all filings and recordings
necessary or advisable to perfect the Administrative Agent’s
rights and interest with respect to the Collateral and in and to
such rights, to perfect and maintain for the benefit of the Lenders
a first priority security interest provided for in the Security
Documents.
Section 4.05 Bank Accounts .
(a)(i) On or prior to the Agreement Date, cause the financial
institution at which the Receivables Account is maintained to enter
into an account control agreement and, if applicable lock box
agreement (collectively to the extent complying with the following,
an “ Agency Account Agreement ”) in form and
substance satisfactory to the Administrative Agent (which shall
provide for, among other things, the right of the Administrative
Agent to require such financial institution to transfer any
deposits held by such financial institution to a cash collateral
account at and under the Administrative Agent (the
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“ Collateral Account ”) upon
written notice from the Administrative Agent after the occurrence
and continuation of a Default or Event of Default), (ii) cause
all payments on or cash proceeds of Account Receivables to be made
to and deposited in only the Collateral Account or the Receivables
Account, and (iii) at all times ensure that immediately upon
the receipt of any funds constituting cash proceeds of any
Collateral, all such amounts shall have been deposited in the
Collateral Account or the Receivables Account.
(b) The Borrower hereby agrees that
all amounts received by the Administrative Agent in the Collateral
Account will be held as Collateral for the Obligations.
(c) The Borrower shall have the
right to withdraw and make use of all cash Collateral deposited in
the Receivables Account until such time as the Administrative Agent
has given notice of the occurrence and continuation of a Default or
Event of Default, all in accordance with the Agency Account
Agreement.
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B.
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The Borrower
shall not, and shall not permit any Subsidiary to, directly or
indirectly :
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Section 4.06 Indebtedness .
Be obligated, at any time, in respect of Indebtedness other
than:
(a) Indebtedness under any of the
Loan Documents;
(b) Endorsements for collection,
deposit or negotiation and warranties of products or services, in
each case incurred in the ordinary course of business;
(c) Indebtedness incurred in
connection with the acquisition after the date hereof of any
property by the Borrower or any Subsidiary or under any Capitalized
Lease, provided that the aggregate principal amount of such
Indebtedness of the Borrower and its Subsidiaries shall not exceed
the aggregate amount of $25,000,000 at any one time;
(d) Indebtedness existing on the
date hereof and set forth on Schedule 4.06 and any
extensions, renewals or replacements thereof which are, in each
case, on terms and conditions no less favorable to the Borrower and
the interest of the Administrative Agent and the
Lenders;
(e) Other Indebtedness not otherwise
permitted by this Section 4.06, provided that the combined sum
of the aggregate outstanding principal amount of all such
Indebtedness of the Borrower and its Subsidiaries permitted
pursuant to this Section 4.06(e) and the aggregate outstanding
principal amount of Indebtedness permitted under
Section 4.06(c) shall not exceed $50,000,000 at any time;
and
(f) Indebtedness in respect of
Derivative Contracts designed to protect the Borrower and its
Subsidiaries against fluctuations in electricity and natural gas
prices, provided that the aggregate outstanding amount of
Indebtedness permitted pursuant to this Section 4.06(f) shall
not exceed $10,000,000 at any time.
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Section 4.07 Sale and Lease-Back
Transactions . Enter into any Sale and Lease-Back Transaction
unless (i) the consideration received in such Sale and
Lease-Back Transaction is at least equal to the fair market value
of the property sold, and (ii) the Borrower or its
Subsidiaries could incur the attributable Indebtedness in respect
of the such Sale and Lease-Back Transaction in compliance with
Section 4.06.
Section 4.08 Liens . Permit
to exist, at any time, any Lien upon any of its properties or
assets of any character, whether now owned or hereafter acquired,
or upon any income or profits therefrom, except that this
Section 4.08 shall not apply to Permitted Liens.
Section 4.09 Investments .
Permit to exist, at any time, any Investment except Investments
in:
(a) marketable direct or guaranteed
obligations of the United States of America that mature within one
(1) year from the date of purchase by the Borrower;
(b) demand deposits, certificates of
deposit, bankers acceptances and time deposits of the United States
of America banks having total assets in excess of
$1,000,000,000;
(c) securities commonly known as
“commercial paper” issued by a corporation organized
and existing under the laws of the United States of America or any
state thereof that at the time of purchase have been rates and the
ratings for which are not less than “P 1” if rated by
Moody’s Investors Service, Inc., and not less that “A
1” if rated by Standard & Poor’s Rating
Services;
(d) Investments existing on the date
hereof as set forth on Schedule 4.09 ;
(e) Investments with respect to
Indebtedness permitted by paragraph (F) of the definition of
“Permitted Liens” so long as such entities remain
Subsidiaries of the Borrower;
(f) Investments consisting of
Investments by the Borrower in Subsidiaries of the Borrower
existing on the Agreement Date;
(g) Investments consisting of
promissory notes received as proceeds as asset dispositions
permitted by Section 4.13;
(h) Investments consisting of loans
and advances to employees for moving, entertainment, travel and
other similar expenses in the ordinary course of business not to
exceed $250,000 in the aggregate at any time outstanding;
and
(i) Investments in partnerships,
joint ventures or other entities (excluding Subsidiaries), in an
aggregate amount at any one time outstanding not to exceed the
greater of (i) $60.0 million and (ii) 15% of the
Borrower’s Consolidated Assets, provided that (x) such
entity is in a steel related business or develops technology which
is applicable to the production of steel or (y) such
Investment is made to acquire or develop raw materials or
technology used in steelmaking.
23
Section 4.10 Distributions .
(a) Make any Distributions, provided, however, so long as no
Default or Event of Default exists or would result therefrom and
the requirements of subsections (b) and (c) below have
been satisfied, the Borrower may:
(i) make semi-annual Distributions,
the aggregate amount of all such Distributions not to exceed
(A) 50% of the cumulative Consolidated Net Income of the
Borrower for the period beginning on the first day of the first
fiscal quarter of 2005 and ending on the last day of the last
fiscal quarter ending prior to the date of the Distribution
plus (B) $40,000,000, and
(ii) make Distributions to the
preferred shareholders of the Borrower not to exceed $3,000,000 per
year.
(b) The Distributions referenced in
subsection (a)(i)(A) above shall be permitted only if the ratio of
(y) Consolidated EBITDA for the four fiscal quarters most
recently ended to (z) Consolidated Interest Expense plus
$3,000,000 for such period is not less than 2.00:1.00. The
Distributions referenced in subsection (a)(i)(B) above shall be
permitted only if the ratio of (y) Consolidated EBITDA for the
four fiscal quarters most recently ended to (z) Consolidated
Interest Expense plus $3,000,000 for such period is not less than
3.00:1.00.
(c) The Distributions permitted
pursuant to subsection (a)(i) above shall further be subject to the
following requirements: (i) such Distributions are made after
delivery to the banks of the financial statements required by
Sections 5.01(a) and (b), and (ii) the Borrower has delivered
calculations to the Administrative Agent, demonstrating in a format
satisfactory to the Administrative Agent that (A) the making
of such Distributions will not cause a Default or Event of Default
on a projected basis for the next two fiscal quarters of the
Borrower, (B) the ratio of (y) Consolidated EBITDA for
the four fiscal quarters most recently ended to
(z) Consolidated Interest Expense plus $3,000,000 for such
period is not less than 2.00:1.00, and (C) during the thirty
(30) days prior to the making of such Distributions and
immediately thereafter, the lesser of the Borrowing Base and the
Total Commitment shall exceed the sum of the Loans, the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations by not less
than $10,000,000.
Section 4.11 Material
Documents . Amend, terminate, modify or waive any right under
the Borrower’s organizational documents, or the other
material agreements if such amendment, termination, modification or
waiver could reasonably be expected to result in a Material Adverse
Effect.
Section 4.12 Merger or
Consolidation . Merge or consolidate with any Person, or agree
to or effect any asset acquisition (excluding Capital Expenditures)
or stock acquisition, other than: (a) the acquisition of
assets in the ordinary course of business consistent with the
Borrower’s steel business, (b) the merger of one or more
of the Subsidiaries of the Borrower with and into the Borrower,
(c) the merger or consolidation of two or more Subsidiaries of
the Borrower, (d) the acquisition of all or any portion of any
property subject to the #2 Continuous Galvanizing Line Lease
Agreement, dated September 30,1998, between the Borrower and
State Street Bank and Trust Company of California, so long as
(i) the aggregate purchase price paid by the Borrower or its
Subsidiaries shall not exceed $19,500,000, (ii) prior to and
after giving effect to such acquisition there shall be no Default
of Event of Default, (iii) the Borrower has
delivered
24
to the Administrative Agent prior notice of such
proposed acquisition accompanied by calculations demonstrating in a
format satisfactory to the Administrative Agent that the
consummation of such acquisition will not cause a Default or Event
of Default on a projected basis for the next two fiscal quarters of
the Borrower, and (iv) such acquisition is otherwise permitted
under this Agreement and (e) other stock and asset
acquisitions so long as (i) the aggregate purchase price paid
by the Borrower or its Subsidiaries shall not exceed $20,000,000
from the Agreement Date, (ii) after giving effect to any such
acquisition the Borrowing Base shall exceed the outstanding amount
of Loans plus Maximum Drawing Amount and all Unpaid Reimbursement
Obligations by at least $15,000,000, (iii) any such
acquisitions of a substantial portion of the assets of any Person
have been approved by not less than a majority of the Board of
Directors of the target Person (consisting of directors who were
directors of said Person for the twelve (12) month period
preceding such acquisition), (iv) prior to and after giving
effect to such acquisition there shall be no Default or Event of
Default, (v) the Borrower has demonstrated to the reasonable
satisfaction of the Administrative Agent that, after giving effect
to such acquisition, the Borrower shall be in compliance, on a pro
forma basis, with the financial covenants contained in Sections
4.22 and 4.23 for the twelve (12) months following such
acquisition, and (vi) the acquisition is of a business which
is in the steel related business or is made to acquire or develop
raw materials used in steel making.
Section 4.13 Disposition of
Assets . Agree to or effect any disposition of assets other
than (a) the sale of inventory, the licensing of intellectual
property and the disposition of obsolete assets, in each case in
the ordinary course of the business consistent with the
Borrower’s steel business and (b) dispositions of assets
not in the ordinary course of business which does not exceed, in
the aggregate, $20,000,000, valued on a net book value basis,
provided that such assets are or are to be no longer used in the
Borrower’s business.
Section 4.14 Environmental Laws;
ERISA . (a) Conduct any activity or use any property in any
manner so as to violate any Environmental Law or bring such
property in violation of any Environmental Law; and
(b) Permit, engage or take any
action which would result in non-compliance with ERISA.
Section 4.15 Taxes of Other
Persons . (a) File a consolidated tax return with any other
Person other than, in the case of the Borrower, any Subsidiary and,
in the case of its Subsidiary, the Borrower, or (b) except as
required by Applicable Law, pay or enter into any Contract to pay
any Taxes owing by any Person other than the Borrower or its
Subsidiaries.
Section 4.16 Transactions with
Affiliates . Effect any transaction with any Affiliate on a
basis less favorable than would at the time be obtainable for a
comparable transaction in arms-length dealing with an unrelated
third party.
Section 4.17 Business
Activities . Engage directly or indirectly in any type of
business other than the businesses conducted by them on the
Agreement Date and in related businesses.
Section 4.18 Fiscal Year .
(i) Change the date of the end of its fiscal year from that set
forth in Section 3.18 and (ii) change its capital
structure from that set forth on Schedule 3.02 .
25
Section 4.19 Existing Bonds .
Prepay, redeem or repurchase the Existing Bonds unless
(a) prior to and after giving effect to such prepayment,
redemption or repurchase, there shall be no Default or Event of
Default, (b) the Borrower has delivered to the Administrative
Agent not less than five (5) Business Days prior notice of
such proposed prepayment, redemption or repurchase accompanied by
calculations demonstrating, in a format satisfactory to the
Administrative Agent, that (i) the making of such prepayments,
redemption or repurchase will not cause a Default or Event of
Default on a projected basis for the next two fiscal quarters of
the Borrower and (ii) during the thirty (30) days prior
to the making of such prepayment, redemption or repurchase and
immediately thereafter, the lesser of the Borrowing Base and the
Total Commitment shall exceed the sum of Loans, the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations by not less than
$25,000,000, and (c) such prepayment, redemption or repurchase
is otherwise permitted under the Indenture.
Section 4.20 Bank Accounts .
(i) Establish any bank accounts other than the Local Accounts
without the prior written consent of the Administrative Agent
(ii) designate any bank accounts as Receivables Accounts other
than as set forth on Schedule 3.21(b) without the prior written
consent of the Administrative Agent and the Borrower shall cause
the financial institution at which such Receivables Account is to
be maintained to enter into an Agency Account Agreement and
(iii) violate directly or indirectly the Agency Account
Agreement or other bank agency agreement in favor of the
Administrative Agent for the benefit of the Lenders and Issuing
Banks with respect to such accounts.
Section 4.21 Inventory .
Permit at any time the percentage of inventory held on consignment
to exceed five percent (5%) of the total inventory of the
Borrower and its Subsidiaries.
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C.
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The Borrower
shall not :
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Section 4.22 Consolidated
Tangible Net Worth . Permit at any time the Consolidated
Tangible Net Worth to be less than (i) $250,000,000 plus
(ii) 25% of positive Consolidated Net Income of each fiscal
year commencing with the fiscal year ending December 31, 2005
(such increase in respect of each such fiscal year to be effective
as of the first day of the immediately succeeding fiscal year),
plus (iii) the proceeds received by the Borrower in connection
with the sale of equity securities after the Agreement Date of the
Borrower or its Subsidiaries minus (iv) $3,000,000 for each
fiscal year commencing with the fiscal year ending
December 31, 2005, such reduction to be effective for each
year on, in the case of 2005, the Agreement Date, and thereafter,
the first day of each fiscal year.
Section 4.23 Interest Coverage
Ratio . Permit the ratio of Consolidated EBITDA to Consolidated
Interest Expense plus $3,000,000 to be less than 2.00:1.00, as
determined on a four consecutive quarter basis, for any quarter
during which the lesser of the applicable Borrowing Base and the
Total Commitment for any month exceeds for such month the average
ending daily balance of the sum of Loans, the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations by less than
$30,000,000.
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ARTICLE 5
FINANCIAL STATEMENTS AND
INFORMATION
Section 5.01 Financial Statements
and Information to Be Furnished . From the Agreement Date and
until the Repayment Date, the Borrower shall furnish to the
Administrative Agent, each Issuing Bank and each Lender:
(a) Quarterly Financial
Statements; Officer’s Certificate . As soon as available
and in any event within forty-five (45) days after the close
of each quarterly accounting periods in each fiscal year of the
Borrower, commencing with the quarterly period ending
September 30, 2005.
(i) consolidated balance sheets of
the Borrower and its Subsidiaries as at the end of such quarterly
period and the related consolidated statements of income, retained
earnings and cash flows of the Borrower and its Subsidiaries for
such quarterly period and for the elapsed portion of the fiscal
year ended with the last day of such quarterly period, setting
forth in each case in comparative form the figures for the
corresponding periods of the previous fiscal year; and
(ii) a certificate with respect
thereto of the president or chief financial officer of the Borrower
in the form of Schedule 5.01(a) .
(b) Year-End Financial
Statements; Accountants’ and Officer’s Certificates
. As soon as available and in any event within ninety
(90) days after the end of each fiscal year of the Borrower,
commencing with the fiscal year December 31, 2005:
(i) consolidated balance sheets of
the Borrower and its Subsidiaries as at the end of such fiscal year
and the related consolidated statements of income, retained
earnings and cash flows of the Borrower and its Subsidiaries for
such fiscal year, setting forth in comparative form the figures as
at the end of and for the previous fiscal year;
(ii) an audit report of
PriceWaterhouseCoopers, or other independent certified public
accountants of recognized standing satisfactory to the Majority
Lenders, on such of the financial statements referred to in clause
(i) as are consolidated financial statements, which report
shall be in scope and substance satisfactory to the Majority
Lenders;
(iii) a written statement from such
accountants to the effect that they have read a copy of this
Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default of
Event of Default, of, if such accountants shall have obtained
knowledge of any then existing Default of Event of Default they
shall disclose in such statement any such Default of Event of
Default, provided that such accountants shall not be liable
to the Lenders for the failure to obtain knowledge of any Default
of Event of Default; and
(iv) a certificate of the president
or chief financial officer of the Borrower in the form of
Schedule 5.01(b) .
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(c) Reports and Filings;
Requested Information . (i) Promptly upon receipt thereof,
copies of all material reports, if any, submitted to the Borrower
or its Subsidiaries, or the Board of Directors of the Borrower or
any of its Subsidiaries, by its independent certified public
accountants, including any management letter.
(ii) From time to time and promptly
upon request of the Administrative Agent, any Issuing Bank or any
Lender, such Information regarding the Loan Documents, the Loans or
the business, assets, Liabilities, financial condition, results of
operations or business prospects of the Borrower or any Subsidiary
as the Administrative Agent, such Issuing Bank or such Lender may
request, in each case in form and substance and certified in a
manner satisfactory to the requesting Lender. Subject to any notice
requirements provided in Section 5.03(d)(D), the Borrower
hereby authorizes and directs each Person with whom the
Administrative Agent, any Issuing Bank or any Lender is authorized
to contact pursuant to this Agreement to furnish to the
Administrative Agent, Issuing Banks and Lenders any Information
regarding such matters that the Administrative Agent, Issuing Banks
or Lenders may request from such Person.
(d) Notice of Defaults, Material
Adverse Effects and Other Matters . Prompt notice of:
(i) any Default, (ii) the acquisition or formation of a
new Subsidiary and, in the case of each such new Subsidiary, its
name, jurisdiction of organization and the percentages of the
various classes of its Capital Securities owned by the Borrower or
another Subsidiary, (iii) any change in the name of any
Subsidiary, its jurisdiction of organization or the percentages of
the various classes of its Capital Securities owned by the Borrower
or another Subsidiary, (iv) the threatening or commencement
of, or the occurrence or nonoccurrence of any change or event
relating to, any action, suit or proceeding that would cause the
Representation and Warranty contained in Section 3.05 to be
incorrect if made at such time, (v) the occurrence or
nonoccurrence of any change or event that would cause the
Representation and Warranty contained in Section 3.08 to be
incorrect if made at such time, (vi) the occurrence or
nonoccurrence of any change or event the impact of which on the
Borrower or its Subsidiaries or on the transactions contemplated
hereby would reasonably be expected to result in a Material Adverse
Effect, including but not limited to matters relating to
litigation, investigations, environmental and ERISA matters,
(vii) any amendment of the certificate of organization,
by-laws or ownership structure of the Borrower and (viii) any
matter or event that has had, or could reasonably be expected to
have, a Material Adverse Effect on Collateral.
(e) Material Financial
Information . (i) Contemporaneously with the filing or mailing
thereof, copies of all material financial information filed with
the Securities and Exchange Commission, and (ii) at any time
when the Borrower is no longer required to file information with
the Securities Exchange Commission, contemporaneously with the
mailing thereof, copies of all material financial information
distributed to the shareholders of the Borrower, except to the
extent that the Borrower has already furnished any such materials
pursuant to Sections 5.01(a) or (b).
(f) Borrowing Base Report .
Within ten (10) days after the end of each calendar month or
at such earlier time as the Administrative Agent may reasonably
request, a Borrowing Base Report setting forth the Borrowing Base
as at the end of such calendar month or other date so requested by
the Administrative Agent.
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(g) Accounts Receivable Aging
Report . Within ten (10) days after the end of each
quarterly accounting period in each fiscal year of the Borrower, an
Accounts Receivable aging report.
(h) Projections . From time
to time, not to exceed once per calendar year, upon the request of
the Administrative Agent, projections of the Borrower and its
Subsidiaries updating those projections delivered to the Lenders
and referred to in Section 3.22 or, if applicable, updating
any later such projections delivered in response to a request
pursuant to this Section 5.01(h).
Section 5.02 Accuracy
o
