EXHIBIT 10.12
LOAN AND SECURITY AGREEMENT
Dated as of March 12, 2001
among
EACH OF THE FINANCIAL INSTITUTIONS PARTY HERETO,
as the Lenders,
BANK OF AMERICA, NATIONAL ASSOCIATION,
as the Administrative Agent,
PNC BANK, NATIONAL ASSOCIATION,
as the Documentation Agent,
and
METALS USA, INC.
and
CERTAIN OF ITS SUBSIDIARIES PARTY HERETO,
as the Borrowers
BANK OF AMERICA, NATIONAL ASSOCIATION
PNC BANK, NATIONAL ASSOCIATION
Co-Lead Arrangers and Co-Syndication Agents
TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION OF THIS AGREEMENT..................................1
Section 1.1 Definitions.................................................1
Section 1.2 Accounting Terms...........................................33
Section 1.3 Interpretive Provisions....................................33
ARTICLE 2 - LOANS AND LETTERS OF CREDIT......................................34
Section 2.1 Total Facility.............................................34
Section 2.2 Revolving Loans............................................35
Section 2.3 Letters of Credit and Credit Support.......................42
Section 2.4 Bank Products..............................................49
ARTICLE 3 - INTEREST AND FEES................................................50
Section 3.1 Interest...................................................50
Section 3.2 Conversion and Continuation Elections......................51
Section 3.3 Maximum Interest Rate......................................52
Section 3.4 Unused Line Fee............................................54
Section 3.5 Letter of Credit Fee.......................................54
Section 3.6 Other Fees.................................................54
ARTICLE 4 - PAYMENTS AND PREPAYMENTS.........................................54
Section 4.1 Revolving Loans............................................54
Section 4.2 Reduction of Commitments; Termination of Facility..........55
Section 4.3 Prepayments from Asset Dispositions........................55
Section 4.4 Other Required Prepayments.................................56
Section 4.5 Payments by the Borrowers..................................57
Section 4.6 Payments as Revolving Loans................................57
Section 4.7 Apportionment, Application, and Reversal of Payments. ....57
Section 4.8 Indemnity for Returned Payments............................58
Section 4.9 The Agent's and the Lenders' Books and Records;
Monthly Statements.........................................58
ARTICLE 5 - TAXES, YIELD PROTECTION, AND ILLEGALITY..........................59
Section 5.1 Taxes......................................................59
Section 5.2 Illegality.................................................60
Section 5.3 Increased Costs and Reduction of Return....................60
Section 5.4 Funding Losses.............................................61
Section 5.5 Inability to Determine Rates...............................61
Section 5.6 Certificates of Lenders....................................62
Section 5.7 Survival...................................................62
Section 5.8 Claims Under Section 5.1 and Section 5.3...................62
Section 5.9 Replacement of Affected Lender.............................62
ARTICLE 6 - COLLATERAL.......................................................63
Section 6.1 Grant of Security Interest............................63
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Section 6.2 Perfection and Protection of Security Interest.............64
Section 6.3 Location of Collateral.....................................66
Section 6.4 Title to, Liens on, and Sale and Use of Collateral.........66
Section 6.5 Appraisals.................................................67
Section 6.6 Access and Examination; Confidentiality....................67
Section 6.7 Collateral Reporting.......................................68
Section 6.8 Accounts...................................................69
Section 6.9 Collection of Accounts; Payments...........................70
Section 6.10 Inventory; Perpetual Inventory.............................71
Section 6.11 Equipment and Real Estate..................................71
Section 6.12 Documents, Instruments, and Chattel Paper..................72
Section 6.13 Right to Cure..............................................72
Section 6.14 Power of Attorney..........................................72
Section 6.15 The Agent's and the Lenders' Rights, Duties, and
Liabilities................................................73
Section 6.16 Site Visits, Observations and Testing......................73
Section 6.17 Guaranties; Third Party Joinder............................74
Section 6.18 Voting Rights, Distributions, Etc. in Respect of
Investment Property........................................74
Section 6.19 RPA Seller Notes...........................................75
Section 6.20 Revised UCC Article 9......................................75
ARTICLE 7 - BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES................77
Section 7.1 Books and Records..........................................77
Section 7.2 Financial Information......................................77
Section 7.3 Notices to the Lenders.....................................79
Section 7.4 Revisions or Updates to Schedules..........................82
ARTICLE 8 - GENERAL WARRANTIES AND REPRESENTATIONS...........................82
Section 8.1 Authorization, Validity, and Enforceability
of this Agreement and the Loan Documents; No Conflicts.....82
Section 8.2 Validity and Priority of Security Interest.................83
Section 8.3 Organization and Qualification.............................83
Section 8.4 Corporate Name; Prior Transactions.........................83
Section 8.5 Subsidiaries...............................................83
Section 8.6 Financial Statements and Projections.......................84
Section 8.7 Solvency...................................................84
Section 8.8 Debt.......................................................84
Section 8.9 Distributions..............................................84
Section 8.10 Title to Property..........................................84
Section 8.11 Real Estate; Leases........................................85
Section 8.12 Proprietary Rights.........................................85
Section 8.13 Trade Names................................................85
Section 8.14 Litigation.................................................85
Section 8.15 Restrictive Agreements.....................................85
Section 8.16 Labor Matters..............................................85
Section 8.17 Environmental Matters......................................86
Section 8.18 No Violation of Law........................................87
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Section 8.19 No Default.................................................87
Section 8.20 ERISA Compliance...........................................87
Section 8.21 Taxes......................................................88
Section 8.22 Regulated Entities.........................................88
Section 8.23 Use of Proceeds; Margin Regulations........................88
Section 8.24 No Material Adverse Change.................................88
Section 8.25 Full Disclosure............................................88
Section 8.26 Material Agreements........................................89
Section 8.27 Bank Accounts..............................................89
Section 8.28 Governmental Authorization.................................89
Section 8.29 Investment Property........................................89
Section 8.30 Common Enterprise..........................................89
ARTICLE 9 - AFFIRMATIVE AND NEGATIVE COVENANTS...............................90
Section 9.1 Taxes and Other Obligations................................90
Section 9.2 Existence and Good Standing................................90
Section 9.3 Compliance with Law and Agreements; Maintenance of
Licenses...................................................90
Section 9.4 Maintenance of Property....................................91
Section 9.5 Insurance..................................................91
Section 9.6 Condemnation...............................................92
Section 9.7 Environmental Laws.........................................92
Section 9.8 Compliance with ERISA......................................93
Section 9.9 Mergers, Consolidations, Sales, Acquisitions...............93
Section 9.10 Distributions; Capital Change; Restricted Investments......94
Section 9.11 Transactions Affecting Collateral or Obligations...........94
Section 9.12 Guaranties.................................................94
Section 9.13 Debt.......................................................94
Section 9.14 Prepayment of Debt.........................................95
Section 9.15 Transactions with Affiliates...............................95
Section 9.16 Investment Banking and Finder's Fees.......................95
Section 9.17 Business Conducted.........................................96
Section 9.18 Liens......................................................96
Section 9.19 Sale and Leaseback Transactions............................96
Section 9.20 New Subsidiaries...........................................96
Section 9.21 Fiscal Year................................................96
Section 9.22 Capital Expenditures.......................................96
Section 9.23 Operating Lease Obligations................................97
Section 9.24 Fixed Charge Coverage Ratio...............................97
Section 9.25 Adjusted Tangible Net Worth...............................97
Section 9.26 Minimum Availability......................................97
Section 9.27 Use of Proceeds...........................................97
Section 9.28 Further Assurances........................................97
Section 9.29 Bank and Documentation Agent as Depository................97
Section 9.30 Interest Rate Protection..................................98
Section 9.31 RPA Seller Notes..........................................98
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ARTICLE 10 - CONDITIONS OF LENDING............................................98
Section 10.1 Conditions Precedent to Making of Revolving Loans on the
Closing Date...............................................98
Section 10.2 Conditions Precedent to Each Revolving Loan...............102
ARTICLE 11 - DEFAULT REMEDIES................................................103
Section 11.1 Events of Default.........................................103
Section 11.2 Remedies..................................................106
ARTICLE 12 - TERM AND TERMINATION............................................109
Section 12.1 Term and Termination......................................109
ARTICLE 13 - AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS;
SUCCESSORS...................................................................109
Section 13.1 No Waivers; Cumulative Remedies...........................109
Section 13.2 Amendments and Waivers; Release of Building Products
Borrowers.................................................110
Section 13.3 Assignments; Participations...............................112
ARTICLE 14 - THE AGENT.......................................................114
Section 14.1 Appointment and Authorization.............................114
Section 14.2 Delegation of Duties......................................115
Section 14.3 Liability of the Agent....................................115
Section 14.4 Reliance by the Agent.....................................115
Section 14.5 Notice of Default.........................................116
Section 14.6 Credit Decision...........................................116
Section 14.7 Indemnification...........................................116
Section 14.8 The Agent in Individual Capacity..........................117
Section 14.9 Successor Agent...........................................117
Section 14.10 Withholding Tax...........................................118
Section 14.11 Co-Agents.................................................119
Section 14.12 Collateral Matters........................................119
Section 14.13 Restrictions on Actions by Lenders; Sharing of Payments...120
Section 14.14 Agency for Perfection.....................................121
Section 14.15 Payments by the Agent to the Lenders......................121
Section 14.16 Concerning the Collateral and the Related Loan Documents..121
Section 14.17 Field Audit and Examination Reports; Disclaimer by
Lenders...................................................121
Section 14.18 Relation Among Lenders....................................122
ARTICLE 15 - MISCELLANEOUS...................................................122
Section 15.1 Cumulative Remedies; No Prior Recourse to Collateral......122
Section 15.2 Severability..............................................123
Section 15.3 Governing Law; Choice of Forum............................123
Section 15.4 Waiver of Jury Trial......................................124
Section 15.5 Survival of Representations and Warranties................124
Section 15.6 Other Security and Guaranties.............................124
Section 15.7 Fees and Expenses.........................................124
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Section 15.8 Notices...................................................125
Section 15.9 Waiver of Notices.........................................126
Section 15.10 Binding Effect............................................126
Section 15.11 Indemnity of the Agent and the Lenders by the Borrowers...126
Section 15.12 Limitation of Liability...................................128
Section 15.13 Final Agreement...........................................128
Section 15.14 Counterparts..............................................128
Section 15.15 Captions..................................................128
Section 15.16 Right of Set-off..........................................128
Section 15.17 Joint and Several Liability...............................129
Section 15.18 Contribution and Indemnification among the Borrowers......130
Section 15.19 Agency of the Parent for Each Other Borrower..............130
Section 15.20 Additional Borrowers......................................131
Section 15.21 Express Waivers By Borrowers In Respect of Cross
Guaranties and Cross Collateralization....................131
Section 15.22 Designated Senior Debt....................................132
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Schedules:
Schedule 1.1(A) - Permitted Liens
Schedule 1.1(B) - Permitted Investments
Schedule 6.3 - Location of Collateral
Schedule 8.3 - Organization and Qualification
Schedule 8.4 - Corporate Names
Schedule 8.5 - Subsidiaries
Schedule 8.8 - Debt
Schedule 8.11 - Real Estate; Leases
Schedule 8.12 - Proprietary Rights
Schedule 8.13 - Trade Names
Schedule 8.14 - Litigation
Schedule 8.16 - Labor Matters
Schedule 8.17 - Environmental Matters
Schedule 8.20 - ERISA Matters
Schedule 8.26 - Material Agreements
Schedule 8.27 - Bank Accounts
Schedule 8.29 - Investment Property
Exhibits:
Exhibit A - Form of Revolving Note
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Notice of Borrowing
Exhibit D - Form of Notice of Conversion/Continuation
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Compliance Certificate
vi
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement, dated as of March 12, 2001, among the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), Bank of America, National Association with an office located at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, as administrative agent for the
Lenders (in its capacity as administrative agent, the "Agent"), and Metals USA,
Inc., a Delaware corporation, and each of its Subsidiaries party hereto.
W I T N E S S E T H
A. The Borrowers have requested the Lenders to make available to the
Borrowers a revolving line of credit for loans and letters of credit in an
aggregate amount of $350,000,000 which extensions of credit the Borrowers will
use for the purposes set forth in Section 9.27.
B. The Lenders have agreed to make available to the Borrowers such credit
facility upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Lenders, the Agent, and the
Borrowers hereby agree as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
Section 1.1 Definitions. As used herein:
"Account" means, with respect to a Person, any of such Person's now owned
and hereafter acquired or arising accounts, as defined in the UCC, including any
rights to payment for the sale or lease of goods or rendition of services,
whether or not they have been earned by performance, and "Accounts" means, with
respect to any such Person, all of the foregoing.
"Account Debtor" means each Person obligated on an Account.
"ACH Transactions" means any cash management or related services including
the automated clearing house transfer of funds by the Bank or the Documentation
Agent for the account of any Borrower pursuant to agreement or overdrafts.
"Adjusted Net Income" means, as applied to any Person (the "subject
Person"), the Net Income of the subject Person for the period in question,
provided that there shall be excluded:
LOAN AND SECURITY AGREEMENT - Page 1
(a) the net income (or net loss) of any Person accrued prior to the
date it becomes a Subsidiary of, or is merged into or consolidated with,
the subject Person or a consolidated Subsidiary of the subject Person;
(b) any net gains or losses on the sale or other disposition, not in
the ordinary course of business, of investments and other capital assets,
provided that there shall also be excluded any related charges for taxes
thereon;
(c) any net gain arising from the collection of the proceeds of any
insurance policy;
(d) any write-up or write-down of any asset; and
(e) any other extraordinary item, as determined according to GAAP.
"Adjusted Tangible Assets" means, as applied to any Person, all of such
Person's assets except: (a) patents, copyrights, trademarks, trade names,
franchises, goodwill, and other similar intangibles; (b) Restricted Investments;
(c) unamortized debt discount and expense; (d) assets constituting Intercompany
Accounts; and (e) fixed assets to the extent of any write-up in the book value
thereof resulting from a revaluation effective after the Closing Date.
"Adjusted Tangible Net Worth" means, as applied to any Person, at any date
and determined in accordance with GAAP (a) the book value (after deducting
related depreciation, obsolescence, amortization, valuation, and other proper
reserves) at which the Adjusted Tangible Assets would be shown on a balance
sheet of such Person at such date, less (b) the amount at which such Person's
liabilities would be shown on such balance sheet, including as liabilities all
reserves for contingencies and other potential liabilities which would be
required to be shown on such balance sheet.
"Adjusted Tangible Net Worth Requirement" means, as of the end of each
Fiscal Quarter ending after the Closing Date, an amount equal to the amount
specified corresponding to the applicable Fiscal Quarter end in the table below,
respectively:
================================================================================
Fiscal Quarter End Adjusted Tangible Net Worth
Requirement
================================================================================
Fiscal Quarter ending March 31, 2001 $62,000,000
--------------------------------------------------------------------------------
Fiscal Quarter ending June 30, 2001 $63,000,000
--------------------------------------------------------------------------------
Fiscal Quarter ending September 30, 2001 $66,000,000
--------------------------------------------------------------------------------
Fiscal Quarter ending December 31, 2001 $70,000,000
--------------------------------------------------------------------------------
LOAN AND SECURITY AGREEMENT - Page 2
================================================================================
Fiscal Quarter End Adjusted Tangible Net Worth
================================================================================
Fiscal Quarter ending March 31, 2002 and $70,000,000, plus the cumulative
each Fiscal Quarter ending thereafter amount of all Adjusted Tangible
Net Worth Requirement Increases.
================================================================================
"Adjusted Tangible Net Worth Requirement Increase" means an amount,
determined for the Parent and its Subsidiaries on a consolidated basis as of the
end of any Fiscal Quarter of the Parent, commencing with the Fiscal Quarter
ending March 31, 2002, equal to the sum of (a) seventy-five percent (75.0%) of
the amount (not less than zero) of Net Income for such Fiscal Quarter, plus (b)
fifty percent (50.0%) of the net amount of all equity proceeds received during
such Fiscal Quarter.
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or which owns, directly or indirectly, ten percent (10.0%) or more
of the outstanding equity interest of such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means the Bank, solely in its capacity as the administrative agent
for the Lenders, and any successor administrative agent.
"Agent Advances" has the meaning specified in Section 2.2(i).
"Agents' Letter" means that certain letter agreement, dated as of the
Closing Date, among the Borrowers, the Agent, and the Documentation Agent, as
such letter agreement may be amended, restated, or otherwise modified from time
to time.
"Agent's Liens" means the Liens in the Collateral granted to the Agent,
for the benefit of the Lenders, the Bank, the Documentation Agent, and the
Agent, pursuant to this Agreement and the other Loan Documents.
"Agent-Related Persons" means the Agent, together with its Affiliates, and
the officers, directors, employees, agents, and attorneys-in-fact of the Agent
and its Affiliates.
"Aggregate Revolver Outstandings" means, at any time: the sum of (a) the
unpaid balance of Revolving Loans, (b) the aggregate amount of Pending Revolving
Loans, (c) one hundred percent (100%) of the aggregate undrawn amount of all
outstanding Letters of Credit and Credit Support, and (d) the aggregate amount
of any unpaid reimbursement obligations in respect of Letters of Credit and
Credit Support.
LOAN AND SECURITY AGREEMENT - Page 3
"Agreement" means this Loan and Security Agreement as it may be amended
or otherwise modified from time to time.
"Anniversary Date" means an anniversary of the Closing Date.
"Applicable Margin" means, as of the Closing Date,
(a) with respect to Base Rate Revolving Loans outstanding under the
Equipment Sublimit, one-half percent (0.50%),
(b) with respect to Base Rate Revolving Loans (other than amounts
outstanding under the Equipment Sublimit) and all other Obligations (other
than LIBOR Rate Revolving Loans), zero percent (0.00%),
(c) with respect to LIBOR Rate Revolving Loans outstanding under the
Equipment Sublimit, three and one-quarter percent (3.25%), and
(d) with respect to LIBOR Rate Revolving Loans (other than amounts
outstanding under the Equipment Sublimit), two and three-quarters percent
(2.75%),
in each case subject to adjustment from time to time thereafter to the
applicable percentage specified corresponding to the Fixed Charge Coverage
Ratio, as set forth below, respectively:
==============================================================================================================
Fixed Charge Coverage Base Rate Base Rate LIBOR Rate LIBOR Rate
Ratio Revolving Revolving Revolving Revolving
Loans under Loans (other Loans under Loans (other
the Equipment than under the the Equipment than under
Sublimit Equipment Sublimit the
Sublimit) and Equipment
all other Sublimit)
Obligations
other than
LIBOR Rate
Loans
==============================================================================================================
Less than 1.00 to 1.00 0.50% 0.00% 3.25% 2.75%
--------------------------------------------------------------------------------------------------------------
Greater than or equal to 0.25% 0.00% 3.00% 2.50%
1.00 to 1.00, but less than
1.30 to 1.00
--------------------------------------------------------------------------------------------------------------
Greater than or equal to 0.00% 0.00% 2.75% 2.25%
1.30 to 1.00
==============================================================================================================
For the purpose of determining any such adjustments to the Applicable Margin,
the Fixed Charge Coverage Ratio shall be determined based upon the Parent's
Financial Statements for each of its respective Fiscal Quarters, beginning with
the Fiscal Quarter ending September 30, 2001, delivered
LOAN AND SECURITY AGREEMENT - Page 4
to the Agent as required by Section 7.2(a) (with respect to the Financial
Statements for the last Fiscal Quarter of the Parent of each Fiscal Year) or
Section 7.2(b) (with respect to the financial statements for each Fiscal Quarter
of the Parent which is not a Fiscal Year end), and any such adjustment, if any,
shall become effective (A) with respect to the Base Rate Revolving Loans and all
other Obligations on and after the first day of the calendar month following the
calendar month in which such Financial Statements are delivered to the Agent and
(B) with respect to LIBOR Rate Revolving Loans as of the date on or after the
first day of the calendar month following the calendar month in which such
Financial Statements are delivered to the Agent when any LIBOR Rate Revolving
Loan is made, continued, or converted, as the case may be.
"Assignee" has the meaning specified in Section 13.3(a).
"Assignment and Acceptance" has the meaning specified in Section 13.3(a).
"Attorney Costs" means and includes all reasonable and customary fees,
expenses, and disbursements of any law firm or other counsel engaged by the
Agent, the allocated costs of internal legal services of the Agent, and the
reasonable expenses of internal counsel to the Agent.
"Available Credit" means, at any time, (a) the Borrowing Base minus (b)
the Aggregate Revolver Outstandings.
"Availability" means, at any time, (a) the Borrowing Base, calculated
pursuant to clause (b) of the definition of Borrowing Base, minus (b) the
Aggregate Revolver Outstandings.
"Bank" means Bank of America, National Association, a national banking
association, or any successor entity thereto.
"Bank Products" means any one or more of the following types of services
or facilities extended to any Borrower by the Bank, the Documentation Agent, or
any Affiliate of the Bank or the Documentation Agent in reliance on the Bank's
or the Documentation Agent's, as applicable, agreement to indemnify such
Affiliate: (a) credit cards; (b) ACH Transactions; (c) Hedge Agreements; and (d)
foreign exchange contracts.
"Bank Product Reserves" means all reserves which the Agent or the
Documentation Agent from time to time establishes in its sole discretion for the
Bank Products then provided or outstanding.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C.ss.101 et seq.).
"Base Rate" means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by the Bank in Charlotte, North
Carolina as its "prime rate" (the "prime rate" being a rate set by the Bank
based upon various factors including the Bank's costs and desired return,
general economic conditions, and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the
LOAN AND SECURITY AGREEMENT - Page 5
public announcement of such change. Each Interest Rate based upon the Base Rate
shall be adjusted simultaneously with any change in the Base Rate.
"Base Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the Base Rate.
"Blocked Account Agreement" means an agreement among one or more of the
Borrowers, the Agent, and a Clearing Bank, in form and substance satisfactory to
the Agent, concerning the collection of payments which represent the proceeds of
Accounts and other Collateral of a Borrower.
"Borrower" means, separately and individually, any of the Parent,
Aerospace Specification Metals, Inc., Aerospace Specification Metals-U.K., Inc.,
Allmet Building Products, L.P., Allmet GP, Inc., Allmet LP, Inc., Cornerstone
Building Products, Inc., Cornerstone Metals Corporation, Cornerstone Patio
Concepts, L.L.C., ▇▇▇▇▇▇ Titanium, Ltd., Interstate Steel Supply Company of
Maryland, Intsel GP, Inc., Intsel LP, Inc., i-Solutions Direct, Inc., ▇▇▇▇▇▇▇▇
Real Estate Corporation, ▇▇▇▇▇▇▇▇ Steel GP, Inc., ▇▇▇▇▇▇▇▇ Steel LP, Inc.,
Metalmart, Inc., Metal Ventures, L.L.C., Metals Aerospace International, Inc.,
Metals USA Building Products Southeast, Inc., Metals USA Carbon Flat Rolled,
Inc., Metals USA Finance Corp., Metals USA Flat Rolled Central, Inc., Metals USA
Management Co., L.P., Metals USA Plates and Shapes Northcentral, Inc., Metals
USA Plates and Shapes Northeast, L.P., Metals USA Plates and Shapes
Southcentral, Inc., Metals USA Plates and Shapes Southeast, Inc., Metals USA
Plates and Shapes Southwest, Limited Partnership, Metals USA Realty Company,
Metals USA Specialty Metals Northcentral, Inc., Metals USA Specialty Metals
Northwest, Inc., MUSA GP, Inc., MUSA LP, Inc., National Manufacturing, Inc.,
Queensboro, L.L.C., Texas Aluminum Industries, Inc., Valley Aluminum Co., Valley
Aluminum of Nevada, Inc., Western Awning Company, ▇▇▇▇▇▇-▇▇▇▇▇▇ Steel
Corporation, WSS Transportation, Inc., and any other Person who becomes a party
to this Agreement as a "Borrower" pursuant to the terms hereof, jointly,
severally, and collectively, and "Borrowers" means more than one or all of the
foregoing Persons, jointly, severally, and collectively, as the context
requires; provided that "Borrowers" excludes the Building Products Borrowers
after the date of any release of the Building Products Borrowers from this
Agreement pursuant to Section 13.2(b).
"Borrowing" means a borrowing hereunder consisting of Revolving Loans made
on the same day by the Lenders, by the Bank (in the case of a Borrowing funded
by a Non-Ratable Loan), or by the Agent (in the case of a Borrowing consisting
of an Agent Advance) to a Borrower, or the issuance of Letters of Credit or
Credit Support hereunder.
"Borrowing Base" means, at any time, an amount equal to the lesser of
(a) the Maximum Revolver Amount or
(b) the sum of
(i) eighty-five percent (85.0%) of the Net Amount of Eligible
Accounts, plus
LOAN AND SECURITY AGREEMENT - Page 6
(ii) the lesser of
(A) sixty-five percent (65.0%) of the lesser of the
original cost or market value of Eligible Metals Inventory or
(B) eighty-five percent (85.0%) of the Orderly
Liquidation Value of Eligible Metals Inventory, plus ----
(iii) the lesser of
(A) thirty-five percent (35.0%) of the lesser of the
original cost or market value of Eligible Building Products
Inventory or
(B) eighty percent (80.0%) of the Orderly Liquidation
Value of Eligible Building Products Inventory, plus ----
(iv) an amount determined at such time based on the value of
the RPA Seller Notes equal to the lesser of fifty percent (50.0%) of
the aggregate outstanding principal balance of the RPA Seller Notes
or fifteen percent (15.0%) of "Eligible Accounts" (as defined in the
MRC Loan Agreement) under the MRC Loan Agreement, plus
(v) the Equipment Sublimit, minus
(vi) the sum of
(A) reserves for accrued and unpaid interest on the
Obligations,
(B) the Environmental Compliance Reserve,
(C) the Bank Product Reserves, and
(D) all other reserves which the Agent deems necessary
in the exercise of its reasonable credit judgment to maintain
with respect to any Borrower, including reserves for any
amounts which the Agent or any Lender may be obligated to pay
in the future for the account of any Borrower.
"Borrowing Base Certificate" means a certificate by a Responsible Officer
of the Parent, substantially in the form of Exhibit B (or another form
acceptable to the Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof (including, to the extent a
Borrower has received notice of any such reserve from the Agent, any of the
reserves included in such calculation pursuant to clause (b)(vi) of the
definition of Borrowing Base), all in such detail as shall be reasonably
satisfactory to the Agent. All calculations of the Borrowing Base in connection
with the preparation of any Borrowing Base Certificate shall originally be made
by the Parent and certified to the Agent; provided that the Agent shall have the
right to review and adjust,
LOAN AND SECURITY AGREEMENT - Page 7
in the exercise of its reasonable credit judgment, any such calculation (a) to
reflect its reasonable estimate of declines in value of any of the Collateral
described therein, and (b) to the extent that such calculation is not in
accordance with this Agreement.
"Building Products Borrower" means each of Allmet Building Products, Inc.,
Allmet GP, Inc., Allmet LP, Inc., Cornerstone Building Products, Inc.,
Cornerstone Metals Corporation, Cornerstone Patio Concepts, L.L.C., Metals USA
Building Products Southeast, Inc., National Manufacturing, Inc., Texas Aluminum
Industries, Inc., Valley Aluminum Co., Valley Aluminum of Nevada, Inc., Western
Awning Company, Inc., and any other Subsidiary of the Parent designated in
writing to the Agent by the Parent as a Building Products Borrower and which is
engaged in substantially the same line of business as the then existing Building
Products Borrowers.
"Business Day" means (a) any day that is not a Saturday, Sunday, or a day
on which banks in Dallas, Texas, or Charlotte, North Carolina are required or
permitted to be closed, and (b) with respect to all notices, determinations,
fundings, and payments in connection with the LIBOR Rate or LIBOR Rate Revolving
Loans, any day that is a Business Day pursuant to clause (a) preceding and that
is also a day on which trading in Dollars is carried on by and between banks in
the London interbank market.
"Capital Adequacy Regulation" means any guideline, request, or directive
of any central bank or other Governmental Authority, or any other law, rule, or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means expenditures (whether paid in cash or by
entering into any Debt, including any Capital Leases) required to be included in
or reflected by the property, plant, equipment, or similar fixed asset accounts
reflected in the consolidated balance sheet of the Parent and its Subsidiaries,
excluding expenditures incurred (a) in connection with Permitted Acquisitions,
by the Parent and its Subsidiaries that, in accordance with GAAP, and (b) to
replace, repair, restore, or rebuild any Fixed Assets which are the subject of
any loss, damage, or destruction to the extent such expenditures are paid from,
or have been reimbursed by proceeds of, a policy of insurance.
"Capital Lease" means, with respect to any Person, any lease of property
which, in accordance with GAAP, should be reflected as a capital lease on a
balance sheet of such Person.
"Capital Stock" means any and all corporate stock, units, shares,
partnership interests, membership interests, equity interests, rights,
securities, or other equivalent evidences of ownership (however designated)
issued by any Person.
"Cash Purchase Consideration" means, as of any date of determination and
with respect to any acquisition by a Borrower, the purchase price to be paid for
the Capital Stock issued by the Person being acquired or the assets being
acquired, including all cash consideration paid (whether classified as purchase
price, present value of noncompete payments, present value of consulting
payments (other than for services actually rendered), or otherwise and without
regard to whether such amount is paid at closing or paid over time; provided
that payments made over time shall be
LOAN AND SECURITY AGREEMENT - Page 8
redeemed to their present value at the closing of the applicable transaction)
and the Dollar value of all other assets, other than Capital Stock of the
Parent, to be transferred by the purchaser in connection with such acquisition
to the seller or sellers, all valued in accordance with the applicable agreement
entered into between the Person being acquired or selling such assets and/or the
seller or sellers and the Borrower making such acquisition, and including
(without duplication) the amount of any Debt incurred, assumed, or acquired by
such Borrower in connection with such acquisition.
"Change of Control" means the occurrence of any of the following: (a)
except as allowed by Section 9.9, the adoption of a plan relating to the
liquidation or dissolution of the Parent or any other Borrower; (b) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) of a direct or indirect
majority in interest (more than fifty percent (50.0%)) of the voting power of
the voting stock of the Parent by way of merger or consolidation or otherwise;
(c) during any period of twelve (12) consecutive calendar months, individuals
(i) who were members of the Management Group of the Parent on the first day of
such period, or (ii) whose election or nomination for election to the Management
Group of the Parent was recommended or approved by at least a majority of the
Management Group then still in office who were members of the Management Group
of the Parent on the first day of such period, or whose election or nomination
for election was so approved, shall cease to constitute a majority of the
Management Group of the Borrower; or (d) except as allowed by Section 9.9, any
Borrower (other than the Parent) shall cease to be a Wholly-Owned Subsidiary of
the Parent.
"Clearing Bank" means the Bank, the Documentation Agent, or any other
banking institution with whom a Payment Account has been established pursuant to
a Blocked Account Agreement.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute, and the regulations promulgated thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Commitment" means, at any time with respect to a Lender, the principal
amount set forth beside such Lender's name under the heading "Commitment" on the
signature pages of this Agreement or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder, or the most
recent Assignment and Acceptance such Lender is a party to, in accordance with
the provisions of Section 13.3, as such Commitment may be adjusted from time to
time in accordance with the provisions of Section 13.3, and "Commitments" means,
collectively, the aggregate amount of the Commitments of all of the Lenders.
"Compliance Certificate" has the meaning specified in Section 7.2(d).
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
LOAN AND SECURITY AGREEMENT - Page 9
"Conversion/Continuation Date" means the effective date of (a) any
conversion of LIBOR Rate Revolving Loans to Base Rate Revolving Loans or of Base
Rate Revolving Loans to LIBOR Rate Revolving Loans or (b) any continuation of
LIBOR Rate Revolving Loans as LIBOR Rate Revolving Loans.
"Copyright, Patent, and Trademark Agreements" means each Copyright
Security Agreement, Patent Security Agreement, and Trademark Security Agreement
executed and delivered by a Borrower to the Agent to evidence and perfect the
Agent's security interest in such Borrower's present and future copyrights,
patents, trademarks, and related licenses and rights, for the benefit of the
Agent and the Lenders.
"Credit Support" has the meaning specified in Section 2.3(a).
"Debt" means, without duplication, with respect to any Person (the
"subject Person"), all indebtedness, liabilities, and obligations of the subject
Person of any kind or nature, now or hereafter owing, arising, due, or payable,
howsoever evidenced, created, incurred, acquired, or owing, whether primary,
secondary, direct, contingent, fixed, or otherwise, and including, without in
any way limiting the generality of the foregoing: (a) indebtedness, liabilities,
and obligations to trade creditors; (b) in the case of a Borrower, all
Obligations; (c) all indebtedness, liabilities, and obligations of any other
Person, whether or not owed by the subject Person, secured by any Lien on the
subject Person's property, even though the subject Person shall not have assumed
or become liable for the payment thereof; provided, however, that all such
indebtedness, liabilities, and obligations which are limited in recourse to such
property shall be included in Debt only to the extent of the book value of such
property as would be shown on a balance sheet of the subject Person prepared in
accordance with GAAP; (d) all indebtedness, liabilities, and obligations created
or arising under any Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by the subject Person, even
if the rights and remedies of the lessor, seller, or lender thereunder are
limited to repossession of such property; provided, however, that all such
indebtedness, liabilities, and obligations which are limited in recourse to such
property shall be included in Debt only to the extent of the book value of such
property as would be shown on a balance sheet of the subject Person prepared in
accordance with GAAP; and (e) all indebtedness, liabilities, and obligations
under Guaranties.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at all times
equal to the sum of (a) the otherwise applicable Interest Rate plus (b) two
percent (2.0%). Each Default Rate shall be adjusted simultaneously with any
change in the applicable Interest Rate. In addition, with respect to Letters of
Credit and Credit Support, the Default Rate shall mean the Letter of Credit Fee
Percentage, plus two percent (2.0%).
"Defaulting Lender" has the meaning specified in Section 2.2(g)(ii).
LOAN AND SECURITY AGREEMENT - Page 10
"Distribution" means, with respect to any Person: (a) the payment or
making of any dividend or other distribution of property in respect of such
Person's Capital Stock (or any options or warrants for, or other rights with
respect to, such Capital Stock), other than distributions solely in such
Person's Capital Stock (or any options or warrants for, or other rights with
respect to, such Capital Stock) of the same class; or (b) the redemption or
other acquisition by such Person of any Capital Stock (or any options or
warrants for, or other rights with respect to, such Capital Stock).
"Documentation Agent" means PNC Bank, National Association, a national
banking association.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" means dollars in the lawful currency of the United
States.
"EBITDA" means, for any period, the sum of Adjusted Net Income, plus, the
sum of the following to the extent deducted in the determination of Adjusted Net
Income, without duplication: (a) the amount, if any, by which Interest Expense
exceeds interest income; plus (b) income and franchise taxes; plus (c)
depreciation and amortization expense.
"Eligible Accounts" means the Accounts of a Borrower which the Agent in
the exercise of its reasonable discretion determines to be Eligible Accounts.
Without limiting the discretion of the Agent to establish other criteria of
ineligibility, Eligible Accounts shall not, unless the Agent in its sole
discretion elects, include any Account:
(a) with respect to which more than one hundred twenty (120) days
have elapsed since the date of the original invoice therefor or which is
more than sixty (60) days past due;
(b) with respect to which any of the representations, warranties,
covenants, and agreements contained in Section 6.8 are not or have ceased
to be complete and correct or have been breached;
(c) with respect to which Account (or any other Account due from
such Account Debtor), in whole or in part, a check, promissory note,
draft, trade acceptance, or other instrument for the payment of money has
been received, presented for payment, and returned uncollected for any
reason;
(d) which represents a progress billing; provided that for the
purposes hereof, "progress billing" means any invoice for goods sold or
leased or services rendered under a contract or agreement pursuant to
which the Account Debtor's obligation to pay such invoice is conditioned
upon such Borrower's completion of any further performance under the
contract or agreement;
(e) with respect to which any one or more of the following events
has occurred to the Account Debtor on such Account: (i) death or judicial
declaration of incompetency of an Account Debtor who is an individual;
(ii) the filing by or against the Account Debtor of
LOAN AND SECURITY AGREEMENT - Page 11
a request or petition for liquidation, reorganization, arrangement,
adjustment of debts, adjudication as a bankrupt, winding-up, or other
relief under the bankruptcy, insolvency, or similar laws of the United
States, any state or territory thereof, or any foreign jurisdiction, now
or hereafter in effect; (iii) the making of any general assignment by the
Account Debtor for the benefit of creditors; (iv) the appointment of a
receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or
taking possession by a "custodian," as defined in the Bankruptcy Code; (v)
the institution by or against the Account Debtor of any other type of
insolvency proceeding (under the Bankruptcy Code or otherwise) or of any
formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account
Debtor; (vi) the sale, assignment, or transfer of all or any material part
of the assets of the Account Debtor; (vii) the nonpayment generally by the
Account Debtor of its debts as they become due; or (viii) the cessation of
the business of the Account Debtor as a going concern;
(f) if fifty percent (50.0%) or more of the aggregate Dollar amount
of outstanding Accounts owed at such time by the Account Debtor thereon is
classified as ineligible under clause (a) preceding;
(g) owed by an Account Debtor which: (i) does not maintain its chief
executive office in the United States or Canada; or (ii) is not organized
under the laws of the United States or Canada or any political
subdivision, state, or province thereof; or (iii) is the government of any
foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof;
except to the extent that such Account is secured or payable by a letter
of credit satisfactory to the Agent in its discretion;
(h) owed by an Account Debtor which is an Affiliate or employee of
such Borrower;
(i) except as agreed by the Agent as provided in clause (g)
preceding or clause (l) following, with respect to which either the
perfection, enforceability, or validity of the Agent's Lien in such
Account, or the Agent's right or ability to obtain direct payment to the
Agent of the proceeds of such Account, is governed by any federal, state,
or local statutory requirements other than those of the UCC;
(j) owed by an Account Debtor to which a Borrower or any of their
respective Subsidiaries is indebted in any way, or which is subject to any
right of set-off or recoupment by the Account Debtor, unless the Account
Debtor has entered into an agreement acceptable to the Agent to waive
set-off rights; or if the Account Debtor thereon has disputed liability or
made any claim with respect to any other Account due from such Account
Debtor; but in each such case only to the extent of such indebtedness,
set-off, recoupment, dispute, or claim;
LOAN AND SECURITY AGREEMENT - Page 12
(k) with respect to which such Borrower has deemed such Account as
uncollectible or has any reason to believe that such Account is
uncollectible;
(l) owed by the government of the United States, or any department,
agency, public corporation, or other instrumentality thereof, unless the
Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. ss. 3727
et seq.), and any other steps necessary to perfect the Agent's Lien
therein, have been complied with to the Agent's satisfaction with respect
to such Account;
(m) owed by any state of the United States or any municipality, or
other political subdivision, department, agency, public corporation, or
other instrumentality thereof, and as to which the Agent determines that
its Lien therein is not or cannot be perfected;
(n) which represents a sale on a ▇▇▇▇-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or
return basis;
(o) which is evidenced by a promissory note or other instrument or
by chattel paper;
(p) with respect to which the Agent believes, in the exercise of its
reasonable credit judgment, that the prospect of collection of such
Account is impaired or that the Account may not be paid by reason of the
Account Debtor's financial inability to pay;
(q) with respect to which the Account Debtor is located in any state
requiring the filing of a Notice of Business Activities Report or similar
report in order to permit such Borrower to seek judicial enforcement in
such state of payment of such Account, unless such Borrower has qualified
to do business in such state or has filed a Notice of Business Activities
Report or equivalent report for the then current year;
(r) which arises out of a sale not made in the ordinary course of
such Borrower's business;
(s) with respect to which the goods giving rise to such Account have
not been shipped and delivered to, or have been rejected or objected to,
by the Account Debtor or the services giving rise to such Account have not
been performed by such Borrower, and, if applicable, accepted by the
Account Debtor, or the Account Debtor revokes its acceptance of such goods
or services;
(t) owed by an Account Debtor which is obligated to such Borrower
respecting Accounts the aggregate unpaid balance of which exceeds
twenty-five percent (25.0%) of the aggregate unpaid balance of all
Accounts owed to such Borrower at such time by all of such Borrower's
Account Debtors, but only to the extent of such excess;
LOAN AND SECURITY AGREEMENT - Page 13
(u) which arises out of an enforceable contract or order which, by
its terms, forbids, restricts, or makes void or unenforceable the granting
of a Lien by such Borrower to the Agent with respect to such Account;
(v) which is not subject to a first priority and perfected security
interest in favor of the Agent, for the benefit of the Agent and the
Lenders, or which is subject to any other Lien; or
(w) which the Agent determines, in its reasonable discretion, is
ineligible for any other reason.
If any Account at any time ceases to be an Eligible Account, then such Account
shall promptly be excluded from the calculation of the Borrowing Base.
"Eligible Assignee" means (a) a commercial bank, commercial finance
company, or other asset based lender having total assets in excess of
$1,000,000,000 and being reasonably acceptable to the Agent and, after the
"Initial Syndication" (as defined in the Agents' Letter) and if no Default or
Event of Default exists hereunder, the Parent; (b) any Lender; (c) any Affiliate
of any Lender; and (d) if an Event of Default exists, any other Person
reasonably acceptable to the Agent.
"Eligible Building Products Inventory" means Inventory of a Borrower which
the Agent, in its reasonable discretion, determines to meet all of the following
requirements:
(a) such Inventory meets all of the requirements of the definition
of Eligible Inventory, and
(b) such Inventory is owned by and carried on the books of a
Building Products Borrower.
"Eligible Inventory" means Inventory of a Borrower which the Agent, in its
reasonable discretion, determines to be Eligible Inventory. Without limiting the
discretion of the Agent to establish other criteria of eligibility, Eligible
Inventory shall meet all of the following requirements:
(a) such Inventory is owned such Borrower;
(b) such Inventory is subject to the Agent's Liens, which are
perfected as to such Inventory, and is subject to no other Lien whatsoever
(other than the Liens described in clause (c) and clause (e) of the
definition of Permitted Liens; provided that such Permitted Liens (i) are
junior in priority to the Agent's Liens (other than statutory landlord's
Liens to the extent provided otherwise by a Requirement of Law) and (ii)
do not impair directly or indirectly the ability of the Agent to realize
on or obtain the full benefit of the Collateral);
(c) such Inventory consists of finished goods or raw materials;
LOAN AND SECURITY AGREEMENT - Page 14
(d) such Inventory does not consist of work-in-process, chemicals,
supplies, packing and shipping materials, or advertising or marketing
materials (including samples);
(e) such Inventory is in good condition, not unmerchantable, and
meets all standards imposed by any Governmental Authority having
regulatory authority over such goods, its use, or sale;
(f) such Inventory is currently either usable or salable, at prices
approximating at least cost, in the normal course of such Borrower's
business and is not slow moving or stale;
(g) such Inventory is not obsolete, defective, or returned or
repossessed or used goods taken in trade;
(h) such Inventory is located within the United States (and not
in-transit from vendors or suppliers);
(i) if such Inventory is located in a public warehouse or in
possession of a bailee or in a facility leased by such Borrower, the
warehouseman, the bailee, or the lessor has delivered to the Agent, if
requested by the Agent, a subordination agreement in form and substance
reasonably satisfactory to the Agent;
(j) if such Inventory contains or bears any Proprietary Rights
licensed to a Borrower by any Person, the Agent shall be satisfied that it
may sell or otherwise dispose of such Inventory in accordance with Article
11 without infringing the rights of the licensor of such Proprietary
Rights or violating any contract with such licensor (and without payment
of any royalties other than any royalties due with respect to the sale or
disposition of such Inventory pursuant to the existing license agreement),
and, if the Agent deems it necessary, such Borrower shall deliver to the
Agent a consent or sublicense agreement from such licensor in form and
substance acceptable to the Agent; and
(k) such Inventory is not determined by the Agent in its reasonable
discretion, to be ineligible for any other reason.
If any Inventory at any time ceases to be Eligible Inventory, such Inventory
shall promptly be excluded from the calculation of the Borrowing Base.
"Eligible Metals Inventory" means Inventory of a Borrower which the Agent,
in its reasonable discretion, determines to meet all of the following
requirements:
(a) such Inventory meets all of the requirements of the definition
of Eligible Inventory, and
(b) such Inventory is owned by and carried on the books of a Metals
Inventory Borrower.
LOAN AND SECURITY AGREEMENT - Page 15
"Enactment State" means, from and after the effective date of its
enactment thereof, any state (or the District of Columbia) of the United States
that enacts Revised Article 9.
"Environmental Compliance Reserve" means any reserve which the Agent,
after the Closing Date, establishes in its reasonable discretion from time to
time for amounts that are reasonably likely to be expended by a Borrower in
order for such Borrower and its operations and property (a) to comply with any
notice from a Governmental Authority asserting material non-compliance with
Environmental Laws, or (b) to correct any such material non-compliance
identified in a report delivered to the Agent and the Lenders pursuant to
Section 9.7.
"Environmental Laws" means all federal, state, or local laws, statutes,
common law duties, rules, regulations, ordinances, and codes, together with all
administrative orders, directed duties, licenses, authorizations, and permits
of, and agreements with, any Governmental Authority, in each case relating to
environmental, health, safety, and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental Authority
for (a) any liability under Environmental Laws or (b) damages arising from, or
costs incurred by such Governmental Authority in response to, a Release or
threatened Release of a Contaminant into the environment.
"Equipment" means, with respect to a Person, all of such Person's now
owned and hereafter acquired machinery, equipment, as defined by the UCC,
furniture, furnishings, fixtures, and other tangible personal property (except
Inventory), including motor vehicles and other rolling stock with respect to
which a certificate of title has been issued, aircraft, dies, tools, jigs, and
office equipment, as well as all of such types of property leased by such Person
and all of such Person's rights and interests with respect thereto under such
leases (including, without limitation, options to purchase); together with all
present and future additions and accessions thereto, replacements therefor,
component and auxiliary parts and supplies used or to be used in connection
therewith, and all substitutes for any of the foregoing, and all manuals,
drawings, instructions, warranties, and rights with respect thereto, wherever
any of the foregoing is located.
"Equipment Sublimit" means, as of any date of determination, the lesser of
(a) $30,000,000 minus the Equipment Sublimit Reduction or (b) in the Agent's
reasonable discretion, fifty percent (50.0%) of the most recent Orderly
Liquidation Value appraisal of the Borrower's Equipment received by the Agent
pursuant to Section 6.5, minus the portion of the Equipment Sublimit Reduction
for the period from the date of such appraisal through the date of
determination.
"Equipment Sublimit Reduction" means the aggregate cumulative amount,
determined as of the first day of each calendar month after the Closing Date,
equal to the sum of (a) the product of $500,000 multiplied by the number of full
calendar months elapsed since March 1, 2001 plus (b) the aggregate amount of all
required reductions in the Equipment Sublimit pursuant to Section 4.3(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
LOAN AND SECURITY AGREEMENT - Page 16
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with a Borrower within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan,
(b) a withdrawal by a Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA, (c) a complete or partial withdrawal by a Borrower or any ERISA Affiliate
from a Multi-employer Plan or notification that a Multi-employer Plan is in
reorganization, (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multi-employer Plan, (e) the occurrence of an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multi-employer Plan, or (f) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon a Borrower or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, and regulations
promulgated thereunder.
"Existing Article 9" means, with respect to the UCC as in effect in any
state (or the District of Columbia) of the United States, Article 9 of the UCC
as in effect in such jurisdiction from time to time prior to the date of
enactment by such state of Revised Article 9.
"Existing Obligations" means, with respect to a Newly Obligated Party, any
Obligations which are outstanding and unpaid as of the time such Newly Obligated
Party becomes a Borrower.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1.0%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to the
Bank on such day on such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
LOAN AND SECURITY AGREEMENT - Page 17
"Financial Statements" means, according to the context in which it is
used, the financial statements referred to in Section 8.6 or any other financial
statements required to be given to the Agent or the Lenders pursuant to this
Agreement.
"Fiscal Quarter" means one of the four three (3) calendar month fiscal
measurement periods in each Fiscal Year.
"Fiscal Period" means a calendar month.
"Fiscal Year" means the Parent's fiscal year for financial accounting
purposes. The current Fiscal Year of the Parent ends on December 31, 2001.
"Fixed Assets" means, with respect to a Person, the Equipment and Real
Estate of such Person.
"Fixed Charge Coverage Measurement Date" means the last day of each Fiscal
Quarter, beginning with the Fiscal Quarter ending on December 31, 2001 and
continuing thereafter (as applicable), in which the Availability, minus the sum
of the Borrowers' accounts payable which remain unpaid more than sixty (60) days
from their respective invoice date or thirty (30) days from their respective due
date (other than accounts payable contested in good faith), whichever such time
period is longer, is less than $60,000,000.
"Fixed Charge Coverage Ratio" means, as of the end of any Fiscal Quarter,
determined for the Parent and its Subsidiaries for the preceding four (4) Fiscal
Quarters on a consolidated basis in accordance with GAAP (other than the
exclusion from such determination of any of the following items used in such
determination to the extent that it arises with respect to a Subsidiary of a
Borrower prior to the date such Subsidiary becomes a Subsidiary of, or is
consolidated with, a Borrower), the ratio of (a) EBITDA for such period, minus
(i) the cash amount of income or franchise taxes paid during such period, minus
(ii) the amount of Net Capital Expenditures during such period, minus (iii) the
cash amount of Distributions paid by the Parent during such period to (b) the
sum of (i) the aggregate amount of all principal payments made with respect to
Funded Debt during such period (excluding repayments on the Revolving Loans
prior to the Stated Termination Date, repayments of principal by MRC pursuant to
the MRC Loan Agreement prior to the maturity thereof, and prepayments of
principal outstanding under the Subordinated Notes), plus (ii) the aggregate
amount of the Equipment Sublimit Reduction attributable to such four (4) Fiscal
Quarter period, plus (iii) the cash amount of Interest Expense paid during such
period.
"Funded Debt" means with respect to a Person, without duplication, (a) all
Debt of such Person for borrowed money, (b) all Debt of such Person evidenced by
bonds, notes, debentures, or other similar instruments, (c) the amount of all
Debt of such Person under Capital Leases, (d) the amount of all Debt of such
Person secured by a Lien existing on property owned by such Person whether or
not the Debt secured thereby has been assumed by such Person or is non-recourse
to such Person, (e) all Debt of such Person to redeem or retire any Capital
Stock of such Person; provided that the holder(s) of such Capital Stock shall on
the date of determination hold the right to redeem or retire such Capital Stock
for cash, (f) all Debt of such Person in respect of unfunded vested
LOAN AND SECURITY AGREEMENT - Page 18
benefits under any Plan, (g) all obligations of such Person to pay the deferred
purchase price of property or services (excluding trade accounts payable of such
Person arising in the ordinary course of business that are not past due by more
than ninety (90) days or that are being contested in good faith by appropriate
proceedings diligently pursued and for which adequate reserves have been
established in accordance with GAAP), (h) all reimbursement obligations of such
Person (whether contingent or otherwise) in respect of letters of credit,
bankers' acceptances, surety or other bonds, and similar instruments, and (i)
the imputed principal balance outstanding under any synthetic lease, tax
retention operating lease, off balance sheet loan, or similar off balance sheet
financing product to which such Person is a party, where such transaction is
considered borrowed money indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and practices set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
United States accounting profession) provided, however, that with respect to the
calculation of financial ratios and other financial tests required by this
Agreement, "GAAP" means generally accepted accounting principles as in effect as
of the Closing Date.
"General Intangibles" means, with respect to a Person, all of such
Person's now owned or hereafter acquired general intangibles, as defined in the
UCC, choses in action and causes of action and all other intangible personal
property of such Person of every kind and nature (other than Accounts),
including, without limitation, all contract rights, Proprietary Rights,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds which may
become due to such Person in connection with the termination of any Plan or
other employee benefit plan or any rights thereto and any other amounts payable
to such Person from any Plan or other employee benefit plan, rights and claims
against carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar type of
insurance and any proceeds thereof, proceeds of insurance covering the lives of
key employees on which such Person is beneficiary, and any letter of credit,
guarantee, claim, security interest, or other security held by or granted to
such Person. Without limiting any of the foregoing, in the case of each RPA
Seller "General Intangibles" includes, without limitation, all of the RPA Seller
Interest owned by such RPA Seller.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
LOAN AND SECURITY AGREEMENT - Page 19
"Guaranty" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend, or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services.
"Guaranty Agreement" means the Parent Guaranty or a Subsidiary Guaranty,
as the case may be.
"Hedge Agreement" means any and all transactions, agreements, or documents
now existing or hereafter entered into, which provide for an interest rate,
credit, commodity, or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging a Person's exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security, or currency valuations, or
commodity prices, including, without limitation, any such agreement or
transaction entered into in connection with or pursuant to the ISDA Master
Agreements.
"Indenture" means that certain Indenture, dated as of February 11, 1998,
by and among Metals USA, Inc., the "Guarantors" named therein, and U.S. Trust
Company of California, N.A., as trustee, as such indenture may be amended,
restated, supplemented, or otherwise modified from time to time.
"Intercompany Accounts" means all assets and liabilities, however arising,
which are due to any Borrower from, which are due from any Borrower to, or which
otherwise arise from any transaction by any Borrower with, any Affiliate of such
Borrower.
"Interest Expense" means, with respect to any Person for any period, the
interest expense of such Person for such period, determined in accordance with
GAAP.
"Interest Period" means, with respect to any LIBOR Rate Revolving Loan,
the period commencing on the Funding Date of such Revolving Loan or on the
Conversion/Continuation Date on which such Revolving Loan is converted into or
continued as a LIBOR Rate Revolving Loan, and ending on the date one, two, or
three months thereafter as selected by a Borrower in a Notice of Borrowing or a
Notice of Conversion/Continuation; provided that:
(a) if any Interest Period would otherwise end on a day that is not
a Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
LOAN AND SECURITY AGREEMENT - Page 20
(b) any Interest Period pertaining to a LIBOR Rate Revolving Loan
that begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Stated Termination
Date.
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 3.1.
"Inventory" means, with respect to a Person, all of such Person's now
owned and hereafter acquired inventory, as defined in the UCC, goods, and
merchandise, wherever located, in each case to be furnished under any contract
of service or held for sale or lease, all returned goods, raw materials, other
materials, and supplies of any kind, nature, or description which are used or
consumed in such Person's business or used in connection with the packing,
shipping, advertising, selling, or finishing of such goods, merchandise, and
other property, and all documents of title or other documents representing them.
"Investment Property" means, with respect to a Person, all of such
Person's right, title, and interest in and to any and all investment property,
as defined in the UCC, including, without limitation, all (a) securities whether
certificated or uncertificated, (b) securities entitlements, (c) securities
accounts, (d) commodity contracts and (e) commodity accounts; together with all
other units, shares, partnership interests, membership interests, equity
interests, rights, or other equivalent evidences of ownership (howsoever
designated) issued by any Person.
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
"ISDA Master Agreement" means any agreement between the Parent and the
Bank and/or the Parent and the Documentation Agent pursuant to which the Parent
▇▇▇▇▇▇ its exposure to fluctuations in interest rates, including, without
limitation, that certain ISDA Master Agreement, dated concurrently herewith,
between the Parent and the Bank and that certain ISDA Master Agreement, dated as
of March 9, 2001, between the Parent and the Documentation Agent
"Issuer" has the meaning specified in Section 6.2(d).
"Latest Projections" means: (a) on the Closing Date and thereafter until
the Agent receives new projections pursuant to Section 7.2(e), the projections
of the financial condition, results of operations, and cash flows, in each case
for the Borrowers for the period commencing on January 1, 2001, and ending on
December 31, 2001, and delivered to the Agent prior to the Closing Date; and (b)
thereafter, the projections most recently received by the Agent pursuant to
Section 7.2(e).
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof and shall include the Agent to the extent of any Agent Advance
outstanding and the Bank to the extent of any Non-Ratable Loan outstanding.
LOAN AND SECURITY AGREEMENT - Page 21
"Letter of Credit" has the meaning specified in Section 2.3.
"Letter of Credit Fee" has the meaning specified in Section 3.5.
"Letter of Credit Fee Percentage" means (a) with respect to any Letter of
Credit issued by the Letter of Credit Issuer as security for any Borrower's
workers compensation insurance program, a per annum percentage equal to two
percent (2.00%) and (b) with respect to any other Letter of Credit issued by the
Letter of Credit Issuer pursuant to the terms of this Agreement or any Credit
Support issued hereunder, on any date of determination, a per annum percentage
equal to the Applicable Margin for LIBOR Rate Revolving Loans as of such date of
determination.
"Letter of Credit Issuer" means the Bank, any Affiliate of the Bank, or
any other financial institution that issues any Letter of Credit pursuant to
this Agreement.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate
Revolving Loans, the rate of interest per annum determined pursuant to the
following formula:
LIBOR Rate = Offshore Base Rate
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means, for any day
during any Interest Period, the reserve percentage (expressed
as a decimal, rounded upward to the next 1/100th of 1.0%) in
effect on such day applicable to member banks under
regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement
(including any emergency, supplemental, or other marginal
reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"). The
LIBOR Rate for each outstanding LIBOR Rate Revolving Loan
shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
"Offshore Base Rate" means the rate per annum appearing
on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable
to such Interest Period. If for any reason such rate is not
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such
rates. If for any reason none of the foregoing rates is
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum determined by the Agent as the rate
of interest at which Dollar deposits in the approximate
LOAN AND SECURITY AGREEMENT - Page 22
amount of the LIBOR Rate Revolving Loan comprising part of
such Borrowing would be offered by the Bank's London Branch to
major banks in the offshore Dollar market at their request at
or about 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to
such Interest Period.
"LIBOR Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.
"Lien" means (a) any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment, or bailment for security purposes, (b) to the extent not included
under clause (a) preceding, any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease, or other title exception
or encumbrance affecting property, and (c) any contingent or other agreement to
provide any of the foregoing.
"Loan Account" means the loan account of the Borrowers, which account
shall be maintained by the Agent.
"Loan Documents" means collectively this Agreement, the Revolving Notes,
the Copyright, Patent, and Trademark Agreements, the Mortgages, the Guaranty
Agreements, the Agents' Letter and each other agreement, certificate, document,
or instrument executed or delivered by any Borrower to the Agent or any Lender
in connection with this Agreement, the Obligations, or the Collateral whether
prior to, on, or after the Closing Date, and any and all renewals, extensions,
amendments, modifications, or restatements of any of the foregoing.
"Majority Lenders" means, as of any date of determination, the Lenders
whose Pro Rata Shares aggregate more than fifty percent (50.0%) as such
percentage is determined according to the definition of Pro Rata Share.
"Management Group" means, as of any date of determination, the board of
directors, board of managers, or similar constituency having management
authority in respect of an entity under any Requirement of Law.
"Margin Stock" means "margin stock" as such term is defined in Regulation
T, U, or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise), or prospects of the Borrowers, taken as a whole, or of
a material portion of the Collateral, (b) a material impairment of the ability
of the Borrowers, taken as a whole, to perform under any Loan Document to which
they are a party and to avoid any Event of Default, or (c) a material adverse
effect upon the legality,
LOAN AND SECURITY AGREEMENT - Page 23
validity, binding effect, or enforceability against any Borrower of any Loan
Document to which it is a party.
"Maximum Rate" means, at any time, the maximum rate of interest the
Lenders may lawfully contract for, charge, or receive in respect of the
Obligations as allowed by any Requirement of Law. For purposes of determining
the Maximum Rate under the Requirements of Law of the State of Texas, the
applicable rate ceiling shall be (a) the "weekly ceiling" described in and
computed in accordance with the provisions of Section 303.003 of the Texas
Finance Code, as amended or (b) if the parties subsequently contract as allowed
by any Requirement of Law, the "quarterly ceiling" or the "annualized ceiling"
computed pursuant to Section 303.008 of the Texas Finance Code, as amended;
provided, however, that at any time the "weekly ceiling", the "quarterly
ceiling", or the "annualized ceiling" shall be less than eighteen percent
(18.0%) per annum or more than twenty-four percent (24.0%) per annum, the
provisions of Section 303.009(a) and Section 303.009(b) of the Texas Finance
Code, as amended, shall control for purposes of such determination, as
applicable.
"Maximum Revolver Amount" means $350,000,000.
"Metals Inventory Borrower" means any Borrower other than a Building
Products Borrower.
"Mortgages" means and includes any and all of the mortgages, deeds of
trust, deeds to secure debt, assignments, and other instruments executed and
delivered by any Borrower to or for the benefit of the Agent by which the Agent,
for the benefit of the Agent and the Lenders, acquires a Lien on Real Estate of
a Borrower or a collateral assignment of such Borrower's interest under leases
of Real Estate, and all amendments, modifications, and supplements thereto.
"MRC" means Metals Receivables Corporation, a Delaware corporation and
Wholly-Owned Subsidiary of the Parent, and its successors and assigns.
"MRC Loan Agreement" means that certain Loan and Security Agreement, dated
concurrently herewith, among MRC, Bank of America, National Association as
administrative agent for the "Lenders" party thereto, and each of the lending
institutions party thereto as "Lenders", as such agreement may be amended,
restated, or otherwise modified from time to time.
"Multi-employer Plan" means a "multi-employer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by a Borrower or any ERISA
Affiliate.
"Negative Pledge" means any agreement, contract, or other arrangement
whereby any Borrower is prohibited from, or would otherwise be in default as a
result of, creating, assuming, incurring, or suffering to exist, directly or
indirectly, any Lien on any of its assets in favor of the Agent under the Loan
Documents.
"Net Amount of Eligible Accounts" means, at any time, the gross amount of
Eligible Accounts less sales, excise, or similar taxes, and less returns,
discounts, claims, credits, and allowances of any nature at any time issued,
owing, granted, outstanding, available, or claimed.
LOAN AND SECURITY AGREEMENT - Page 24
"Net Capital Expenditures" means, for any period, the aggregate amount of
Capital Expenditures during such period less (a) the aggregate amount of
proceeds received during such period in respect of asset dispositions and
applied to the Obligations during such period pursuant to Section 4.3 less (b)
the aggregate amount of such Capital Expenditures which were financed during
such period with Funded Debt other than the Revolving Loans.
"Net Income" means, as applied to any Person (the "subject Person"), the
net income (or net loss) of the subject Person for the period in question after
giving effect to deduction of or provision for all operating expenses, all taxes
and reserves (including, without limitation, reserves for deferred taxes), and
all other proper deductions, all determined in accordance with GAAP.
"Newly Obligated Party" means each Person, if any, who becomes party to
this Agreement as a Borrower effective as of any date after the Closing Date.
"Non-Ratable Loan" and "Non-Ratable Loans" have the respective meanings
specified in Section 2.2(h).
"Notice of Borrowing" has the meaning specified in Section 2.2(b).
"Notice of Conversion/Continuation" has the meaning specified in Section
3.2(b).
"Obligations" means all present and future loans, advances, liabilities,
obligations, covenants, duties, and debts owing by the Borrowers, or any of
them, to the Agent and/or any Lender, arising under or pursuant to this
Agreement or any of the other Loan Documents, whether or not evidenced by any
note, or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification, or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including all principal, interest, charges, expenses, fees,
attorneys' fees, filing fees, and any other sums chargeable to any Borrower
hereunder or under any of the other Loan Documents. "Obligations" includes,
without limitation, (a) all debts, liabilities, and obligations now or hereafter
arising from or in connection with the Letters of Credit and Credit Support and
(b) all debts, liabilities, and obligations now or hereafter arising from or in
connection with Bank Products; provided, however, that notwithstanding the
foregoing, in the case of and with regard to or in connection with any Newly
Obligated Party, the term "Obligations," wherever in any manner used in the Loan
Documents, excludes Existing Obligations.
"Orderly Liquidation Value" means, with respect to Inventory or Equipment
of any Borrower, the orderly liquidation value thereof as determined in a manner
acceptable to the Agent by an experienced and reputable appraiser acceptable to
the Agent.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges, or similar levies (excluding, in
the case of each Lender and the Agent, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by each Lender's or the Agent's
net income) which arise from any payment made hereunder or from the
LOAN AND SECURITY AGREEMENT - Page 25
execution, delivery, or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents.
"Parent" means Metals USA, Inc., a Delaware corporation.
"Parent Guaranty" means an agreement of Guaranty executed by the Parent
pursuant to Section 6.17.
"Participant" means any commercial bank, financial institution, or other
Person not an Affiliate of the Borrower who shall have been granted the right by
any Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.
"Payment Account" means each bank account established pursuant to Section
6.9, to which the funds of the Borrowers (including proceeds of Accounts and
other Collateral) are deposited or credited, and which is maintained in the name
of the Agent or any Borrower, or any of them, as the Agent may determine, on
terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any Governmental
Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice of Borrowing received by
the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which any Borrower or any ERISA Affiliate sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan has made contributions at
any time during the immediately preceding five (5) calendar years.
"Permitted Acquisition" means any acquisition of the Capital Stock of a
Person or any acquisition of property which constitutes a significant or
material portion of an existing business of a Person, in each case, in a
transaction that satisfies each of the following requirements:
(a) both before and after giving effect to such acquisition and the
Revolving Loans (if any) requested to be made in connection therewith, no
Default or Event of Default exists or will exist or would result
therefrom;
(b) as soon as available, but not less than thirty (30) Business
Days prior to such acquisition, the Parent has provided to the Lenders a
copy of the information provided to the board of directors of the Parent
or other Borrower making such acquisition;
(c) the Cash Purchase Consideration paid in connection with such
acquisition does not exceed $25,000,000, and the Cash Purchase
Consideration paid in connection with
LOAN AND SECURITY AGREEMENT - Page 26
all acquisitions in the prior four (4) Fiscal Quarters (including the
current Fiscal Quarter) does not exceed $60,000,000;
(d) if such acquisition is an acquisition of the Capital Stock of a
Person, the acquisition is structured so that the acquired Person shall
become a Subsidiary of the Parent (and a Borrower pursuant to the terms of
this Agreement), and if such acquisition is an acquisition of assets, the
acquisition is structured so that a Borrower shall acquire such assets;
(e) no Borrower shall, as a result of or in connection with any such
acquisition, assume or incur any direct or contingent liabilities (whether
relating to environmental, tax, litigation, or other matters) that could
reasonably be expected, as of the date of such acquisition, to result in
the existence or occurrence of a Material Adverse Effect;
(f) the Fixed Charge Coverage Ratio, without giving effect to such
acquisition, shall be greater than or equal to 1.00 to 1.00 for the most
recently completed period of four (4) Fiscal Quarters;
(g) the Pro Forma Fixed Charge Coverage Ratio, after giving effect
to such acquisition, for the following period of four (4) Fiscal Quarters
shall be greater than or equal to 1.00 to 1.00; and
(h) the Borrower making such acquisition shall certify (and provide
the Agent with a pro forma calculation in form and substance reasonably
satisfactory to the Agent) to the Agent and the Lenders that, after giving
effect to completion of such acquisition, the Availability is not less
than $45,000,000 on a pro forma basis which includes all consideration
given in connection with such acquisition, other than Capital Stock of the
Parent delivered to the seller(s) in such acquisition, as having been paid
in cash at the time of making such acquisition.
"Permitted Liens" means:
(a) the Agent's Liens;
(b) Liens, if any, which are described on Schedule 1.1A ("Permitted
Liens") on the Closing Date and Liens resulting from the refinancing of
the related Debt, provided that such refinancing is on the same or
substantially similar terms, the Debt secured thereby shall not be
increased, and the Liens shall not cover any additional property;
(c) Liens for taxes, fees, assessments, or other charges of a
Governmental Authority which are (i) not delinquent (including statutory
Liens for taxes not delinquent) or (ii) due and payable in an aggregate
amount not in excess of $3,000,000; provided that the payment of such
taxes, fees, assessments, or other charges described in this clause (ii)
is being contested in good faith and by appropriate proceedings diligently
pursued and adequate
LOAN AND SECURITY AGREEMENT - Page 27
financial reserves have been established in accordance with GAAP on the
appropriate Borrower's books and records and a stay of enforcement of any
such Lien is in effect;
(d) Liens consisting of deposits made in the ordinary course of
business in connection with, or to secure payment of, obligations under
worker's compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of bids, tenders, or contracts
(other than for the repayment of Funded Debt) or to secure indemnity,
performance, or other similar bonds for the performance of bids, tenders,
or contracts (other than for the repayment of Funded Debt) or to secure
statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance, or other similar bonds;
(e) Liens securing the claims or demands of materialmen, mechanics,
repairmen, carriers, warehousemen, landlords, and other like Persons,
provided that if any such Lien arises from the nonpayment of such claims
or demands when due, such claims or demands do not exceed $5,000,000 in
the aggregate;
(f) Liens constituting encumbrances in the nature of reservations,
exceptions, encroachments, easements, rights of way, covenants running
with the land, and other similar title exceptions or encumbrances
affecting any Real Estate; provided such Liens do not in the aggregate
materially detract from the value of such Real Estate or materially
interfere with its use in the ordinary conduct of a Borrower's business;
(g) Liens arising from judgments and attachments in connection with
court proceedings; provided that the attachment or enforcement of such
Liens would not result in an Event of Default hereunder and such Liens are
being contested in good faith by appropriate proceedings, adequate
reserves have been set aside and no material Property is subject to a
material risk of loss or forfeiture, and the claims in respect of such
Liens are fully covered by insurance (subject to ordinary and customary
deductibles) and a stay of execution pending appeal or proceeding for
review is in effect;
(h) Liens which constitute purchase money Liens and secure Funded
Debt permitted under clause (c) of Section 9.13; and
(i) Liens on Accounts of an RPA Seller granted by such RPA Seller in
favor of MRC pursuant to Section 9.17 of the RPA;
provided that (i) none of such Liens listed in clause (b) through clause (h)
preceding may attach to any Accounts, (ii) none of such Liens listed in clause
(b) through clause (h) preceding, other than such Liens of a type and to the
extent provided by clause (e) preceding, may attach to any Inventory owned by a
Borrower, and (iii) none of such Liens listed in clause (e) preceding shall be a
"Permitted Lien" to the extent that any such Lien attaches to any Inventory
owned by a Borrower and the aggregate amount of claims or demands under clause
(e) against all Borrowers exceeds $5,000,000.
LOAN AND SECURITY AGREEMENT - Page 28
"Permitted Subordinated Debt" means (a) unsecured Debt owing by a Borrower
to a Borrower, provided that such Debt is subordinated to payment of the
Obligations on terms substantially the same as are provided by the Subsidiary
Guaranty or, if otherwise, is approved in writing by the Agent and the Majority
Lenders, (b) the Debt evidenced by the Subordinated Notes, and (c) other Debt of
a Borrower which has maturities and terms, and which is subordinated to payment
of the Obligations in a manner approved in writing by the Majority Lenders, and
in each such case described in clause (a), clause (b), and clause (c) preceding,
any renewals, modifications, or amendments thereof which are approved in writing
by the Majority Lenders.
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Borrower sponsors or maintains or to which any Borrower makes,
is making, or is obligated to make contributions and includes any Pension Plan.
"Pro Forma Fixed Charge Coverage Ratio" means the ratio, for any period,
determined according to the definition of Fixed Charge Coverage Ratio, provided,
that each item thereof shall be calculated as of the end of such period on a pro
forma basis for the next succeeding (rather than the immediately preceding) four
(4) Fiscal Quarters.
"Pro Rata Share" means, with respect to a Lender, a fraction (expressed as
a percentage), the numerator of which is the amount of such Lender's Commitment
and the denominator of which is the sum of the amounts of all of the Lenders'
Commitments, or if no Commitments are outstanding, a fraction (expressed as a
percentage), the numerator of which is the amount of Obligations owed to such
Lender and the denominator of which is the aggregate amount of the Obligations
owed to the Lenders, in each case giving effect to a Lender's participation in
Non-Ratable Loans and Agent Advances.
"Proprietary Rights" means, with respect to a Person, all of such Person's
now owned and hereafter arising or acquired licenses, franchises, permits,
patents, patent rights, copyrights, works which are the subject matter of
copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service ▇▇▇▇ applications, and all licenses and rights related to
any of the foregoing, including those registered patents and trademarks set
forth on Schedule 8.12, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to ▇▇▇ for past,
present, and future infringement of any of the foregoing.
"Real Estate" means, with respect to any Person, all of such Person's now
or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds, and future interests, together with all of
such Person's now and hereafter owned or leased interests in the improvements
thereon, the fixtures attached thereto, and the easements appurtenant thereto.
LOAN AND SECURITY AGREEMENT - Page 29
"Release" means a release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching, or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Real Estate or
other property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater, or Real Estate or other property.
"Rentals" has the meaning specified in Section 9.23.
"Reportable Event" means, any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule, or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject. In
respect of contracts relating to interest or finance charges that are made or
performed in the State of Texas, "Requirement of Law" includes the laws of the
United States, including, without limitation, 12 USC ▇▇.▇▇. 85 and 86(a), as
amended from time to time, and any other statute of the United States now or at
any time hereafter prescribing the maximum rates of interest on loans and
extensions of credit, and the laws of the State of Texas, including, without
limitation, Chapter 306 of the Texas Finance Code, if applicable, and if Chapter
306 of the Texas Finance Code is not applicable, Chapter 303 of the Texas
Finance Code, and any other statute of the State of Texas now or at any time
hereafter prescribing maximum rates of interest on loans and extensions of
credit; provided that the parties hereto agree pursuant to Texas Finance Code
Section 346.004 that the provisions of Chapter 346 of the Texas Finance Code
shall not apply to the Revolving Loans, this Agreement, or any other Loan
Documents.
"Responsible Officer" means, with respect to any Borrower, the chief
executive officer, president, chief financial officer, chief accounting officer,
treasurer, or controller and, in each case preceding, any other officer having
substantially the same authority and responsibility.
"Restricted Investment" means, with respect to any Borrower, any
acquisition of any Funded Debt, equity interests, or securities by such Borrower
in exchange for cash or other property, whether in the form of an acquisition of
stock, debt, or other indebtedness or obligation, or a loan, advance, capital
contribution, or subscription, except the following: (a) current assets acquired
in the ordinary course of business of such Borrower; (b) direct obligations of
the United States, or any agency thereof, or obligations guaranteed by the
United States; provided that such obligations mature within one (1) year from
the date of acquisition thereof; (c) acquisitions of certificates of deposit
maturing within one (1) year from the date of acquisition, bankers' acceptances,
Eurodollar bank deposits, or overnight bank deposits, in each case issued by,
created by, or with a bank or trust company organized under the laws of the
United States or any state thereof having capital and surplus aggregating at
least $100,000,000; (d) acquisitions of commercial paper given a rating of "A2"
or better by Standard & Poor's Corporation or "P2" or better by ▇▇▇▇▇'▇
Investors Service, Inc. and maturing not more than ninety (90) days from the
date of creation thereof; (e) Hedge Agreements entered into for the purpose of
hedging interest payable under this Agreement; (f) investments in mutual funds
substantially all of the assets of which are comprised of securities of the
types
LOAN AND SECURITY AGREEMENT - Page 30
described in clauses (b), (c), and (d) preceding; (g) Permitted Acquisitions;
(h) investments consisting of intercompany loans between any Borrower and
another Borrower; (i) existing investments listed on the attached Schedule
1.1(B); (j) other investments not listed in clause (a) through clause (i)
preceding in an aggregate amount at any time not exceeding $10,000,000; and (k)
with respect to each RPA Seller, loans by such Borrower to MRC consisting of
"Originator Revolving Loans" as defined by, and pursuant to, the RPA.
"Revised Article 9" means, with respect to the UCC as in effect in any
Enactment State, Uniform Commercial Code, Article 9, 1999 Official Text, as
enacted in such state.
"Revolving Loans" has the meaning specified in Section 2.2 and includes
each Agent Advance and Non-Ratable Loan.
"Revolving Note" means a promissory note made by the Borrowers payable to
the order of a Lender evidencing the obligation of the Borrowers to pay the
aggregate unpaid principal amount of the Revolving Loans made to each of the
Borrowers by such Lender (and any promissory note or notes that may be issued
from time to time in substitution, renewal, extension, replacement, or exchange
thereof whether payable to such Lender or to a different Lender in connection
with a Person becoming a Lender after the Closing Date or otherwise)
substantially in the form of Exhibit A, with all of the blanks properly
completed, either as originally executed or as such promissory note may be
renewed, extended, modified, amended, supplemented, or restated from time to
time.
"RPA" means that certain Receivables Purchase Agreement dated concurrently
herewith among each of the RPA Sellers, as sellers, and MRC, as purchaser, as
such agreement may be amended, restated, or otherwise modified from time to
time.
"RPA Seller Note" means each promissory note executed by MRC payable to an
RPA Seller, evidencing MRC's obligation to repay such RPA Seller all "Originator
Revolving Loans" (as defined by the RPA) made to MRC by such RPA Seller pursuant
to the RPA, as any such promissory note may be renewed, extended, amended,
restated, or otherwise modified from time to time.
"RPA Seller" means each "Originator" (as defined in the RPA) and its
successors and assigns, each additional Person which becomes an "Originator" (as
defined in the RPA) under the RPA with the written consent of the Agent and its
successors and assigns, and "RPA Sellers" means more than one or all of such
Persons.
"RPA Seller Interest" means, with respect to each Borrower that is an RPA
Seller, all of such Borrower's right, title, and interest (including, without
limitation, any and all claims and rights to payment at any time owing to such
Borrower) under the RPA.
"Settlement" and "Settlement Date" have the meanings specified in Section
2.2(j)(i).
"Solvent" means, with respect to any Person, as of any date, that on and
as of such date (both before and after effecting the transactions contemplated
by this Agreement and making any
LOAN AND SECURITY AGREEMENT - Page 31
Revolving Loans or issuing any Letter of Credit or taking any other actions
permitted by this Agreement proposed to be taken as of such date) (a) the sum of
such Person's debts is not greater than all of such Person's property, at a fair
valuation, (b) the sum of such Person's debts is not greater than all of such
Person's assets, at a fair valuation, (c) such Person is generally paying its
debts as they become due, (d) such Person is not engaged or about to engage in
any business or any transaction for which (i) its property is an unreasonably
small capital or (ii) the remaining assets of such Person are unreasonably small
in relation to any such business or transaction, (e) such Person does not intend
to incur, and does not believe that it will incur, debts that are or would be
beyond its ability to pay as such debts mature or become due, and (f) such
Person does not intend to hinder, delay, or defraud any creditor of such Person.
For this purpose "debts" includes anything included within the definition of
"debt" as used in Section 548 of the United States Bankruptcy Code or as defined
or used by Section 24.002 or Section 24.003 of the Texas Uniform Fraudulent
Transfer Act, and "assets" has the meaning defined or used by Section 24.002 of
the Texas Uniform Fraudulent Transfer Act. Contingent, unliquidated, or disputed
obligations or liabilities (if any) are valued at the amount which, in light of
all relevant facts and circumstances, is reasonably expected to become absolute,
liquidated, or mature.
"Stated Termination Date" means March 12, 2004.
"Subordinated Notes" means those certain 85/8% Senior Subordinated Notes
due 2008 issued pursuant to the Indenture.
"Subsidiary" means, with respect to any Person (the "subject Person"), any
corporation, association, partnership, limited liability company, joint venture,
or other business entity of which more than fifty percent (50.0%) of the voting
stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the subject
Person, or one or more of the Subsidiaries of the subject Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of a Borrower.
"Subsidiary Guaranty" means an agreement of Guaranty executed by a
Subsidiary of the Parent pursuant to Section 6.17.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding, in the case of the Agent and each Lender, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by the Agent's or
such Lender's net income in any jurisdiction (whether federal, state, or local
and including any political subdivision thereof) under the laws of which the
Agent or such Lender, as the case may be, is organized or maintains a lending
office.
"Termination Date" means the earliest to occur of (a) the Stated
Termination Date, (b) the date the Total Facility is terminated either by the
Borrowers pursuant to Section 4.2 or by the Majority Lenders pursuant to Section
11.2, and (c) the date this Agreement is otherwise terminated for any reason
whatsoever pursuant to the terms of this Agreement.
"Total Facility" has the meaning specified in Section 2.1.
LOAN AND SECURITY AGREEMENT - Page 32
"UCC" means the Uniform Commercial Code (or any successor statute), as in
effect from time to time, of the State of Texas or of any other state the laws
of which are required as a result thereof to be applied in connection with the
issue of perfection of security interests.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"United States" means the United States of America.
"Unused Letter of Credit Subfacility" means an amount equal to
$50,000,000, minus the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit and Credit Support, plus (b) the aggregate unpaid
reimbursement obligations with respect to all Letters of Credit and Credit
Support.
"Unused Line Fee" has the meaning specified in Section 3.4.
"Unused Line Fee Percentage" means, as of the Closing Date, one-half
percent (0.50%), subject to adjustment from time to time thereafter to the
applicable percentage specified corresponding to the Fixed Charge Coverage
Ratio, as set forth below, respectively:
================================================================================
Fixed Charge Coverage Ratio Unused Line Fee Percentage
================================================================================
Less than 1.00 to 1.00 0.50%
--------------------------------------------------------------------------------
Greater than or equal to 1.00 to 1.00, but 0.375%
less than 1.30 to 1.00
--------------------------------------------------------------------------------
Greater than or equal to 1.30 to 1.00 0.25%
================================================================================
For the purpose of determining any such adjustments to the Unused Line Fee
Percentage, the Fixed Charge Coverage Ratio shall be determined based upon the
Parent's Financial Statements for each of its respective Fiscal Quarters,
beginning with the Fiscal Quarter ending September 30, 2001, delivered to the
Agent as required by Section 7.2(a) (with respect to the Financial Statements
for the last Fiscal Quarter of the Parent of each Fiscal Year) or Section 7.2(b)
(with respect to the financial statements for each Fiscal Quarter of the Parent
which is not a Fiscal Year end), and any such adjustment, if any, shall become
effective on and after the first day of the calendar month following the
calendar month in which such Financial Statements are delivered to the Agent.
"Wholly-Owned Subsidiary" when used to determine the relationship of a
Subsidiary to a Person, means a Subsidiary all of the issued and outstanding
Capital Stock (other than directors' qualifying shares) of which shall at the
time be owned by such Person or one or more of such Person's Wholly-Owned
Subsidiaries or by such Person and one or more of such Person's Wholly-Owned
Subsidiaries.
LOAN AND SECURITY AGREEMENT - Page 33
Section 1.2 Accounting Terms. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given to such term in accordance with GAAP, and all financial
computations hereunder shall be computed, unless otherwise specifically provided
herein, in accordance with GAAP as consistently applied and using the same
method for inventory valuation as used in the preparation of the Financial
Statements.
Section 1.3 Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms. Terms used herein that are
defined in the UCC and are not otherwise defined herein, shall have the
meaning specified therefor in the UCC.
(b) The words "hereof," "herein," "hereunder," and similar words
refer to this Agreement as a whole and not to any particular provision of
this Agreement. Section, Schedule, and Exhibit references are to this
Agreement unless otherwise specified. The term "documents" includes any
and all instruments, documents, agreements, certificates, indentures,
notices, and other writings, however evidenced. The term "including" is
not limiting and means "including, without limitation." In the computation
of periods of time from a specified date to a later specified date, the
word "from" means "from and including," the words "to" and "until" each
mean "to but excluding" and the word "through" means "to and including."
(c) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing, or interpreting the statute or regulation.
(d) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this
Agreement.
(e) This Agreement and the other Loan Documents may use several
different limitations, tests, or measurements to regulate the same or
similar matters. All such limitations, tests, and measurements are
cumulative and shall each be performed in accordance with their terms.
(f) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the
Lenders, and the Borrowers and are the products of all parties.
Accordingly, they shall not be construed against the Agent, the Lenders,
or the Borrowers merely because of the Agent's, the Lenders', or the
Borrowers' involvement in their preparation.
ARTICLE 2
LOAN AND SECURITY AGREEMENT - Page 34
LOANS AND LETTERS OF CREDIT
Section 2.1 Total Facility. Subject to all of the terms and conditions of
this Agreement, the Lenders severally agree to make available a total credit
facility of $350,000,000 (the "Total Facility") for use by any one or more of
the Borrowers from time to time during the term of this Agreement. The Total
Facility shall be composed of a revolving line of credit consisting of Revolving
Loans and Letters of Credit and Credit Support, as described in Section 2.2 and
Section 2.3.
Section 2.2 Revolving Loans.
(a) Amounts. Subject to the satisfaction of the conditions precedent
set forth in Article 10, each Lender severally, but not jointly, agrees,
upon a Borrower's request from time to time on any Business Day during the
period from the Closing Date to the Termination Date, to make revolving
loans (the "Revolving Loans") to the Borrowers in amounts not to exceed
(except for the Bank with respect to Non-Ratable Loans and except for the
Agent with respect to Agent Advances) such Lender's Pro Rata Share of the
Borrowing Base. The Lenders, however, in their unanimous discretion, may
elect to make Revolving Loans or issue or arrange to have issued Letters
of Credit and Credit Support in excess of the Available Credit on one or
more occasions, but if they do so, neither the Agent nor the Lenders shall
be deemed thereby to have changed the limits of the Borrowing Base or to
be obligated to exceed such limits on any other occasion. If the Aggregate
Revolver Outstandings exceed the Borrowing Base, the Lenders may refuse to
make or otherwise restrict the making of Revolving Loans and the issuance
of Letters of Credit and Credit Support as the Lenders determine until
such excess has been eliminated, subject to the Agent's authority, in its
sole discretion, to make Agent Advances pursuant to the terms of Section
2.2(i).
(b) Procedure for Borrowing.
(i) Each Borrowing shall be made upon a Borrower's irrevocable
written notice delivered to the Agent in the form of a notice of
borrowing in the form attached hereto as Exhibit C (a "Notice of
Borrowing"), which must be received by the Agent prior to 11:00 a.m.
(Dallas, Texas time) (y) three (3) Business Days prior to the
requested Funding Date in the case of a LIBOR Rate Revolving Loan
and (z) on the requested Funding Date, in the case of a Base Rate
Revolving Loan, specifying:
(A) the amount of the Borrowing, which, if a LIBOR Rate
Revolving Loan, shall be in an amount that is not less than
$5,000,000 or an integral multiple of $1,000,000 in excess
thereof and if a Base Rate Revolving Loan, shall be in an
amount that is not less than $100,000 or an integral multiple
of $100,000 in excess thereof;
LOAN AND SECURITY AGREEMENT - Page 35
(B) the requested Funding Date, which shall be a
Business Day;
(C) whether the Revolving Loan requested is to be a Base
Rate Revolving Loan or a LIBOR Rate Revolving Loan; provided
that if such Borrower fails to specify whether any Revolving
Loan is to be a Base Rate Revolving Loan or a LIBOR Rate
Revolving Loan, such request shall be deemed a request for a
Base Rate Revolving Loan;
(D) the duration of the Interest Period if the requested
Revolving Loan is to be a LIBOR Rate Revolving Loan; provided
that if the Borrower fails to select the duration of the
Interest Period with respect to any requested LIBOR Rate
Revolving Loan, the Borrower shall be deemed to have requested
such Revolving Loan be made as a LIBOR Rate Revolving Loan
with an Interest Period of one month in duration; and
(E) the account (as acceptable to the Agent pursuant to
Section 2.2(c)) to which the proceeds of such Borrowing are to
be deposited, or wire transfer instructions satisfactory to
the Agent with respect to any Borrowing which is permitted to
be funded directly to any Person other than a Borrower;
provided that if any Default or Event of Default exists at the time
of any request by a Borrower for a LIBOR Rate Revolving Loan, such
Borrower shall be deemed to have requested such Revolving Loan be
made as a Base Rate Revolving Loan. With respect to any Borrowing to
be made on the Closing Date, unless otherwise agreed by the Agent
and the Lenders such Borrowing will consist of Base Rate Revolving
Loans.
(ii) With respect to any request for Base Rate Revolving
Loans, in lieu of delivering the above-described Notice of
Borrowing, a Borrower may give the Agent telephonic notice of such
request by the required time, with such telephonic notice to be
confirmed in writing no later than the Business Day following the
giving of such telephonic notice but the Agent at all times shall be
entitled to rely on such telephonic notice in making such Revolving
Loans, regardless of whether any such confirmation is received by
the Agent.
(c) Disbursement; Reliance upon Authority. The Borrowers shall
deliver to the Agent, prior to the Closing Date, a writing setting forth
the deposit account to which the Agent is authorized by the Borrowers to
transfer the proceeds of the Revolving Loans requested pursuant to this
Section 2.2, which deposit account shall be reasonably acceptable to the
Agent. The Agent shall be entitled to rely conclusively on any
individual's request for Revolving Loans on behalf of a Borrower, the
proceeds of which are to be transferred to the deposit account specified
by the Borrowers pursuant to the immediately preceding sentence, until the
Agent receives written notice from the Borrowers that the proceeds of the
Revolving Loans are to be sent to a different deposit account. The Agent
shall have no duty to verify
LOAN AND SECURITY AGREEMENT - Page 36
the identity of any individual representing himself or herself as a person
authorized by any Borrower to make such requests on its behalf.
(d) No Liability. The Agent shall not incur any liability to the
Borrowers as a result of acting upon any notice referred to in Section
2.2(b) and Section 2.2(c), which notice the Agent believes in good faith
to have been given by an officer or other person duly authorized by a
Borrower to request Revolving Loans on its behalf or for otherwise acting
in good faith under this Section 2.2, and the crediting of Revolving Loans
to a Borrower's deposit account, or wire transfer to such Person as a
Borrower shall direct, shall conclusively establish the obligation of the
Borrowers to repay such Revolving Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 2.2(b) shall be
irrevocable and such Borrower shall be bound to borrow the funds requested
therein in accordance therewith.
(f) The Agent's Election. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to Section
2.2(b), the Agent shall elect, in its discretion, (i) to have the terms of
Section 2.2(g) apply to such requested Borrowing, or (ii) if the requested
Revolving Loan is a Base Rate Revolving Loan to request the Bank to make a
Non-Ratable Loan pursuant to the terms of Section 2.2(h) in the amount of
the requested Borrowing; provided, however, that if the Bank declines in
its sole discretion to make a Non-Ratable Loan pursuant to Section 2.2(h),
the Agent shall elect to have the terms of Section 2.2(g) apply to such
requested Borrowing.
(g) Making of Revolving Loans.
(i) In the event that the Agent shall elect to have the terms
of this Section 2.2(g) apply to a requested Borrowing as described
in Section 2.2(f) or otherwise, then promptly after receipt of a
Notice of Borrowing or telephonic notice pursuant to Section 2.2(b),
the Agent shall notify the Lenders by telecopy, telephone, or other
similar form of transmission, of the requested Borrowing. Each
Lender shall make the amount of such Lender's Pro Rata Share of the
requested Borrowing available to the Agent in immediately available
funds, to such account of the Agent as the Agent may designate, not
later than 12:00 noon (Dallas, Texas time) on the Funding Date
applicable thereto. After the Agent's receipt of the proceeds of
such requested Borrowing, the Agent shall make the proceeds of such
requested Borrowing available to the applicable Borrower on the
applicable Funding Date by transferring same day funds equal to the
proceeds of such Revolving Loans received by the Agent to the
deposit account designated pursuant to Section 2.2(c) or disbursing
such funds in such other manner as the Borrower requesting such
Borrowing may direct to the Agent.
(ii) Unless the Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing after
the Closing Date, at least one Business Day prior to the date of
such Borrowing, that such Lender will not make
LOAN AND SECURITY AGREEMENT - Page 37
available as and when required hereunder to the Agent for the
account of the Borrowers the amount of that Lender's Pro Rata Share
of such Borrowing, the Agent may assume that each Lender has made
such amount available to the Agent in immediately available funds on
the Funding Date and the Agent may (but shall not be so required),
in reliance upon such assumption, make available to the Borrowers on
such date a corresponding amount. If and to the extent any Lender
shall not have made its full amount available to the Agent in
immediately available funds and the Agent in such circumstances has
made available to the applicable Borrower such amount, that Lender
shall on the Business Day following such Funding Date make such
amount available to the Agent, together with interest at the Federal
Funds Rate for each day during such period. A notice by the Agent
submitted to any Lender with respect to amounts owing under this
clause (ii) shall be conclusive, absent manifest error. If such
amount is so made available, such payment to the Agent shall
constitute such Lender's Revolving Loan for all purposes of this
Agreement. If such amount is not made available to the Agent on the
Business Day following the Funding Date, the Agent will notify the
Borrowers of such failure to fund and, upon demand by the Agent, the
Borrowers shall pay such amount to the Agent for the Agent's
account, together with interest thereon for each day elapsed since
the date of such Borrowing, at a rate per annum equal to the
Interest Rate applicable at the time to the Revolving Loans
comprising such Borrowing. The failure of any Lender to make any
Revolving Loan on any Funding Date (any such Lender, prior to the
cure of such failure, being hereinafter referred to as a "Defaulting
Lender") shall not relieve any other Lender of any obligation
hereunder to make a Revolving Loan on such Funding Date, but no
Lender shall be responsible for the failure of any other Lender to
make the Revolving Loan to be made by such other Lender on any
Funding Date.
(iii) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by any Borrower to the Agent for
the Defaulting Lender's benefit, nor shall a Defaulting Lender be
entitled to the sharing of any payments hereunder. Amounts payable
to a Defaulting Lender shall instead be paid to or retained by the
Agent. The Agent may hold and, in its discretion, re-lend to any
Borrower the amount of all such payments received or retained by it
for the account of such Defaulting Lender. Any amounts so re-lent to
a Borrower shall bear interest at the rate applicable to Base Rate
Revolving Loans and for all other purposes of this Agreement shall
be treated as if they were Revolving Loans, provided, however, that
for purposes of voting or consenting to matters with respect to the
Loan Documents and determining Pro Rata Shares, such Defaulting
Lender shall be deemed not to be a "Lender". Until a Defaulting
Lender cures its failure to fund its Pro Rata Share of any Borrowing
(A) such Defaulting Lender shall not be entitled to any portion of
the Unused Line Fee and (B) the Unused Line Fee shall accrue in
favor of the Lenders which have funded their respective Pro Rata
Shares of such requested Borrowing and shall be allocated among such
performing Lenders ratably based upon their relative Commitments.
This Section shall remain effective with respect to such Lender
until such time as the Defaulting Lender shall no longer be in
default of any of its
LOAN AND SECURITY AGREEMENT - Page 38
obligations under this Agreement. The terms of this Section shall
not be construed to increase or otherwise affect the Commitment of
any Lender, or relieve or excuse the performance by any Borrower of
its duties and obligations hereunder.
(h) Making of Non-Ratable Loans.
(i) Except in the case of LIBOR Rate Revolving Loans requested
by a Borrower, in the event the Agent shall elect, with the consent
of the Bank, to have the terms of this Section 2.2(h) apply to a
requested Borrowing as described in Section 2.2(f), the Bank shall
make a Revolving Loan in the amount of such Borrowing (any such
Revolving Loan made solely by the Bank pursuant to this Section
2.2(h) being referred to as a "Non-Ratable Loan" and such Revolving
Loans being referred to collectively as "Non-Ratable Loans")
available to the Borrowers on the Funding Date applicable thereto by
transferring same day funds to the deposit account of the Borrowers,
designated pursuant to Section 2.2(c). Each Non-Ratable Loan shall
be subject to all the terms and conditions applicable to other
Revolving Loans except that all payments thereon shall be payable to
the Bank solely for its own account (and for the account of the
holder of any participation interest with respect to such Revolving
Loan). The Agent shall not request the Bank to make any Non-Ratable
Loan if (A) the Agent shall have received written notice from any
Lender that one or more of the applicable conditions precedent set
forth in Article 10 will not be satisfied on the requested Funding
Date for the applicable Borrowing, or (B) the Agent has received
notice that a Default exists under Section 9.26. The Agent shall not
otherwise be required to determine whether the applicable conditions
precedent set forth in Article 10 have been satisfied prior to
making, in its sole discretion, any Non-Ratable Loan.
(ii) The Non-Ratable Loans shall be secured by the Agent's
Liens in and to the Collateral, shall constitute Revolving Loans and
Obligations hereunder, and shall bear interest at the rate
applicable to the Revolving Loans from time to time.
(i) Agent Advances.
(i) Subject to the limitations set forth in the provisos
contained in this Section 2.2(i) and Section 13.2(a), the Agent is
hereby authorized by the Borrowers and the Lenders, from time to
time in the Agent's sole discretion, (A) after the occurrence of a
Default or an Event of Default, or (B) at any time that any of the
other applicable conditions precedent set forth in Article 10 have
not been satisfied, to make Base Rate Revolving Loans to any
Borrower on behalf of the Lenders which the Agent, in its reasonable
business judgment, deems necessary or desirable (1) to preserve or
protect the Collateral, or any portion thereof, (2) to enhance the
likelihood of, or maximize the amount of, repayment of the Revolving
Loans and other Obligations, or (3) to pay any other amount
chargeable to the Borrowers pursuant to the terms of this Agreement,
including costs, fees, and expenses as described in Section 15.7
(any of the advances described in this Section 2.2(i) being
LOAN AND SECURITY AGREEMENT - Page 39
hereinafter referred to as "Agent Advances"); provided that the
Majority Lenders may at any time revoke the Agent's authorization
contained in this Section 2.2(i) to make Agent Advances, any such
revocation to be in writing and to become effective prospectively
upon the Agent's receipt thereof;
(ii) The Agent Advances shall be repayable on demand and
secured by the Agent's Liens in and to the Collateral, shall
constitute Revolving Loans and Obligations hereunder, and shall bear
interest at the rate applicable to Base Rate Revolving Loans from
time to time. The Agent shall notify each Lender in writing of each
Agent Advance; provided that any delay or failure of the Agent in
providing any such notice to any Lender shall not result in any
liability or constitute the breach of any duty or obligation of the
Agent hereunder.
(j) Settlement. Except as may be specifically provided otherwise by
this Section 2.2, it is agreed that each Lender's funded portion of the
Revolving Loans is intended by the Lenders to be equal at all times to
such Lender's Pro Rata Share of the outstanding Revolving Loans.
Notwithstanding such agreement, the Agent, the Bank, and the Lenders agree
(which agreement shall not be for the benefit of or enforceable by the
Borrowers) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among them as to the
Revolving Loans, including the Non-Ratable Loans and the Agent Advances,
shall take place on a periodic basis in accordance with the following
provisions:
(i) The Agent shall request settlement (a "Settlement") with
the Lenders on at least a weekly basis, or on a more frequent basis
if so determined by the Agent, (A) on behalf of the Bank, with
respect to each outstanding Non-Ratable Loan, (B) for itself, with
respect to each Agent Advance, and (C) with respect to collections
received, in each case, by notifying the Lenders of such requested
Settlement by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 11:00 a.m.
(Dallas, Texas time) on the date of such requested Settlement (the
"Settlement Date"). Each Lender (other than the Bank, in the case of
Non-Ratable Loans, and the Agent, in the case of Agent Advances)
shall make the amount of such Lender's Pro Rata Share of the
outstanding principal amount of the Non-Ratable Loans and Agent
Advances with respect to which Settlement is requested available to
the Agent, to such account of the Agent as the Agent may designate,
not later than 2:00 p.m. (Dallas, Texas time), on the Settlement
Date applicable thereto, which may occur before or after the
occurrence or during the continuation of a Default or an Event of
Default and whether or not the applicable conditions precedent set
forth in Article 10 have then been satisfied. Such amounts made
available to the Agent shall be applied against the amounts of the
applicable Non-Ratable Loan or Agent Advance and, together with the
portion of such Non-Ratable Loan or Agent Advance representing the
Bank's Pro Rata Share thereof, shall constitute Revolving Loans of
the Lenders, respectively. If any such amount is not made available
to the Agent by any Lender on the Settlement Date applicable
thereto, the Agent shall, on behalf of the Bank with respect to each
outstanding Non-
LOAN AND SECURITY AGREEMENT - Page 40
Ratable Loan and for itself with respect to each Agent Advance, be
entitled to recover such amount on demand from such Lender together
with interest thereon at the Federal Funds Rate for the first three
(3) days from and after the Settlement Date and thereafter at the
Interest Rate then applicable to Base Rate Revolving Loans.
(ii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or
after the occurrence of a Default or an Event of Default and
regardless of whether the Agent has requested a Settlement with
respect to a Non-Ratable Loan or Agent Advance), each Lender (A)
shall irrevocably and unconditionally purchase and receive from the
Bank or the Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such Non-Ratable Loan or
Agent Advance equal to such Lender's Pro Rata Share of such
Non-Ratable Loan or Agent Advance and (B) if Settlement has not
previously occurred with respect to such Non-Ratable Loans or Agent
Advances, upon demand by the Bank or the Agent, as applicable, shall
pay to the Bank or the Agent, as applicable, as the purchase price
of such participation an amount equal to one-hundred percent (100%)
of such Lender's Pro Rata Share of such Non-Ratable Loans or Agent
Advances. If such amount is not in fact made available to the Agent
by any Lender, the Agent shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the
Federal Funds Rate for the first three (3) days from and after such
demand and thereafter at the Interest Rate then applicable to Base
Rate Revolving Loans.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Non-Ratable
Loan or Agent Advance pursuant to clause (ii) preceding, the Agent
shall promptly distribute to such Lender such Lender's Pro Rata
Share of all payments of principal and interest and all proceeds of
Collateral received by the Agent in respect of such Non-Ratable Loan
or Agent Advance.
(iv) Between Settlement Dates, to the extent no Agent Advances
are outstanding, the Agent may pay over to the Bank any payments
received by the Agent, which in accordance with the terms of this
Agreement would be applied to the reduction of the Revolving Loans,
for application to the Bank's Revolving Loans including Non-Ratable
Loans. If, as of any Settlement Date, collections received since the
then immediately preceding Settlement Date have been applied to the
Bank's Revolving Loans (other than to Non-Ratable Loans or Agent
Advances in which a Lender has not yet funded its purchase of a
participation pursuant to Section 2.2(j)(ii), as provided for in the
previous sentence, the Bank shall pay to the Agent for the accounts
of the Lenders, to be applied to the outstanding Revolving Loans of
such Lenders, an amount such that each Lender shall, upon receipt of
such amount, have, as of such Settlement Date, its Pro Rata Share of
the Revolving Loans. During the period between Settlement Dates, the
Bank with respect to Non-Ratable Loans, the Agent with respect to
Agent Advances, and each Lender with respect to the Revolving Loans
other than Non-Ratable Loans and Agent Advances, shall be
LOAN AND SECURITY AGREEMENT - Page 41
entitled to interest at the applicable rate or rates payable under
this Agreement on the actual average daily amount of funds employed
by the Bank, the Agent, and the Lenders.
(k) Notation. The Agent shall record on its books the principal
amount of the Revolving Loans owing to each Lender, including the
Non-Ratable Loans owing to the Bank and the Agent Advances owing to the
Agent, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment
of principal of such Lender's Revolving Loans in its books and records,
including computer records, such books and records constituting
presumptive evidence, absent manifest error, of the accuracy of the
information contained therein.
(l) Lenders' Failure to Perform. All Revolving Loans (other than
Non-Ratable Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is
understood that (i) no Lender shall be responsible for any failure by any
other Lender to perform its obligation to make any Revolving Loans
hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligation to make any Revolving Loans hereunder, (ii) no failure by any
Lender to perform its obligation to make any Revolving Loans hereunder
shall excuse any other Lender from its obligation to make any Revolving
Loans hereunder, and (iii) the obligations of each Lender hereunder shall
be several, not joint and several.
(m) Revolving Notes. The Borrowers shall execute and deliver to the
Agent, on behalf of each Lender, effective as of the Closing Date and on
the date of the assignment of any portion of any Lender's Revolving Loans,
a Revolving Note, to evidence such Lender's Revolving Loans, in the
principal amount equal to the amount of such Lender's Commitment with
respect to the Revolving Loans.
Section 2.3 Letters of Credit and Credit Support.
(a) Agreement to Issue or Cause To Issue. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations and
warranties of the Borrowers herein set forth, the Agent agrees (i) to
cause the Letter of Credit Issuer to issue for the account of any of the
Borrowers (whether one or more) one or more commercial/documentary and
standby letters of credit (each a "Letter of Credit" and collectively, the
"Letters of Credit") and/or (ii) to provide credit support or other
enhancement to a Letter of Credit Issuer acceptable to the Agent, which
issues a Letter of Credit for the account of a Borrower (any such credit
support or enhancement being herein referred to as a "Credit Support") in
accordance with this Section 2.3 from time to time during the term of this
Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall not have any
obligation to take steps to issue or cause to be issued any Letter of
Credit or to provide Credit Support at any time if: (i) the maximum face
amount of the requested Letter of Credit or Credit
LOAN AND SECURITY AGREEMENT - Page 42
Support is greater than the Unused Letter of Credit Subfacility at such
time; (ii) after taking into account the maximum undrawn amount of the
requested Letter of Credit or Credit Support (provided that the requesting
Borrower shall, to the Agent's satisfaction, have made provision for all
commissions, fees, and charges due from such Borrower in connection with
the opening of the requested Letter of Credit or Credit Support), the
Availability at such time would be less than the minimum amount prescribed
by Section 9.26; or (iii) such Letter of Credit or Credit Support has an
expiration date later than thirty (30) days prior to the Stated
Termination Date or more than twelve (12) calendar months from the date of
issuance for standby letters of credit and six (6) calendar months from
the date of issuance for commercial or documentary letters of credit.
(c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article
10, the obligation of the Agent to issue or to cause to be issued any
Letter of Credit or to provide Credit Support is subject to the following
conditions precedent having been satisfied in a manner satisfactory to the
Agent:
(i) The Borrowers shall have delivered to the Letter of Credit
Issuer, at such times and in such manner as the Letter of Credit
Issuer may prescribe, an application in form and substance
satisfactory to the Letter of Credit Issuer and satisfactory to the
Agent for the issuance of the Letter of Credit and such other
documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit shall be
satisfactory to the Agent and the Letter of Credit Issuer (provided
that in the event any term of such application or any other document
is inconsistent with the terms of this Agreement and the Letter of
Credit Issuer and the Agent are the same Person, then the terms of
this Agreement shall be controlling); and
(ii) As of the date of issuance, no order of any court,
arbitrator, or Governmental Authority shall purport by its terms to
enjoin or restrain banks generally from issuing letters of credit of
the type and in the amount of the proposed Letter of Credit, and no
law, rule, or regulation applicable to banks generally and no
request or directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over banks generally
shall prohibit, or request that the Letter of Credit Issuer refrain
from, the issuance of letters of credit generally or the issuance of
such proposed Letter of Credit.
(d) Issuance of Letters of Credit.
(i) Request for Issuance. Any Borrower that wishes to cause
the issuance of a Letter of Credit or any Credit Support shall give
the Agent three (3) Business Days prior written notice of such
Borrower's request for the issuance of such Letter of Credit or
Credit Support. Such notice shall be irrevocable and shall specify
the original amount of the Letter of Credit or Credit Support
requested, the effective date (which date shall be a Business Day)
of issuance of such requested Letter of Credit or Credit Support,
whether such Letter of Credit or Credit Support may be drawn in
LOAN AND SECURITY AGREEMENT - Page 43
a single or in partial draws, the date on which such requested
Letter of Credit or Credit Support is to expire (which date shall be
a Business Day), the purpose for which such Letter of Credit or
Credit Support is to be issued, and the beneficiary of the requested
Letter of Credit or Credit Support, and in addition shall include as
an attachment the proposed form of any requested Letter of Credit.
(ii) Responsibilities of the Agent; Issuance. The Agent shall
determine, as of the Business Day immediately preceding the
requested effective date of issuance of the Letter of Credit or
Credit Support set forth in the notice from a Borrower pursuant to
Section 2.3(d)(i), (A) the amount of the Unused Letter of Credit
Subfacility and (B) the Availability as of such date. If the amount
of the requested Letter of Credit or Credit Support is not greater
than the Unused Letter of Credit Subfacility the Agent shall, so
long as the other conditions required by this Agreement are met,
cause the Letter of Credit Issuer to issue the requested Letter of
Credit or Credit Support on such requested effective date of
issuance.
(iii) Notice of Issuance. On each Settlement Date, the Agent
shall give notice to each Lender of the issuance of all Letters of
Credit and Credit Support issued since the last Settlement Date.
(iv) Extensions and Amendments. The Agent shall not be
obligated to cause the Letter of Credit Issuer to extend or amend
any Letter of Credit or Credit Support issued pursuant hereto unless
the requirements of this Section 2.3 are met as though a new Letter
of Credit or Credit Support were being requested and issued. With
respect to any Letter of Credit or Credit Support which contains any
"evergreen" or automatic renewal provision, each Lender shall be
deemed to have consented to any such extension or renewal unless any
such Lender shall have provided to the Agent, not less than thirty
(30) days prior to the last date on which the Letter of Credit
Issuer can in accordance with the terms of the applicable Letter of
Credit or Credit Support decline to extend or renew such Letter of
Credit or Credit Support, written notice that it declines to consent
to any such extension or renewal; provided, that if all of the
requirements of this Section 2.3 are met and no Default or Event of
Default exists, no Lender shall decline to consent to any such
extension or renewal.
(e) Payments Pursuant to Letters of Credit.
(i) Payment of Letter of Credit and Credit Support
Obligations. The Borrower for whose account any Letter of Credit or
Credit Support is issued agrees immediately upon demand to reimburse
the Letter of Credit Issuer for any draw under any such Letter of
Credit and the Agent for the account of the Lenders upon any payment
pursuant to any Credit Support, and to pay the Letter of Credit
Issuer and the Agent the amount of all other obligations and other
amounts payable to the Letter of Credit Issuer under or in
connection with any Letter of Credit immediately when
LOAN AND SECURITY AGREEMENT - Page 44
due, irrespective of any claim, set-off, defense, or other right
which such Borrower may have at any time against the Letter of
Credit Issuer or any other Person.
(ii) Revolving Loans to Satisfy Reimbursement Obligations.
Each drawing under any Letter of Credit or Credit Support shall
constitute a request by the applicable Borrower to the Agent for a
Borrowing of a Base Rate Revolving Loan in the amount of such
drawing. The Funding Date with respect to such Borrowing shall be
the date of such drawing. In the event that the Letter of Credit
Issuer of any Letter of Credit honors a draw under such Letter of
Credit or the Agent shall have made any payment pursuant to any
Credit Support and the Borrower for whose account such Letter of
Credit or Credit Support was issued shall not have repaid such
amount to the Letter of Credit Issuer of such Letter of Credit or
the Agent, as applicable, pursuant to Section 2.3(e)(i), the Agent
shall, upon receiving notice of such failure, notify each Lender of
such failure, and each Lender shall unconditionally pay to the
Agent, for the account of the Letter of Credit Issuer or the Agent,
as applicable, as and when provided hereinbelow, an amount equal to
such Lender's Pro Rata Share of the amount of such payment in
Dollars and in same day funds. If the Agent so notifies the Lenders
prior to 11:00 a.m. (Dallas, Texas time) on any Business Day, each
Lender shall make available to the Agent the amount of such payment,
as provided in the immediately preceding sentence, on such Business
Day. Such amounts paid by the Lenders to the Agent shall constitute
Revolving Loans which shall be deemed to have been requested by such
Borrower pursuant to Section 2.2 and made as provided by Section
4.6.
(f) Participations.
(i) Purchase of Participations. Immediately upon issuance of
any Letter of Credit or Credit Support in accordance with Section
2.3(d), each Lender shall be deemed to have irrevocably and
unconditionally purchased and received without recourse or warranty,
an undivided interest and participation equal to such Lender's Pro
Rata Share of the face amount of such Letter of Credit or Credit
Support provided through the Agent to the Letter of Credit Issuer,
if not the Agent, in connection with the issuance of such Letter of
Credit or Credit Support (including all obligations of the Borrower
for whose account such Letter of Credit or Credit Support was issued
and any security therefor or guaranty pertaining thereto).
(ii) Sharing of Reimbursement Obligation Payments. Whenever
the Agent receives a payment from a Borrower on account of
reimbursement obligations in respect of a Letter of Credit or Credit
Support as to which the Agent has previously received for the
account of the Agent or the Letter of Credit Issuer thereof payment
from a Lender pursuant to Section 2.3(e)(ii), the Agent shall
promptly pay to such Lender such Lender's Pro Rata Share of such
payment from such Borrower in Dollars. Each such payment shall be
made by the Agent on the Business Day on which the Agent receives
immediately available funds paid to such Person pursuant
LOAN AND SECURITY AGREEMENT - Page 45
to the immediately preceding sentence, if received prior to 2:00
p.m. (Dallas, Texas time) on such Business Day and otherwise on the
next succeeding Business Day.
(iii) Documentation. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit, Credit
Support, reimbursement agreement executed in connection therewith,
application for any Letter of Credit or Credit Support, and such
other documentation as may reasonably be requested by such Lender.
(iv) Obligations Irrevocable. The obligation of each Lender to
make payments to the Agent, for the account of the Lenders, with
respect to any Letter of Credit or Credit Support and the obligation
of the Borrowers to make payments to the Agent, for the account of
the Lenders, with respect to any Letter of Credit or Credit Support
shall be irrevocable, not subject to any qualification or exception
whatsoever, including any of the following circumstances:
(A) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(B) the existence of any claim, set-off, defense, or
other right which such Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of
any Letter of Credit (or any Person for whom any such
transferee may be acting), any Lender, the Agent, the Letter
of Credit Issuer, or any other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions
contemplated herein, or any unrelated transactions (including
any underlying transactions between such Borrower or any other
Person and the beneficiary named in any Letter of Credit);
(C) any draft, certificate, or any other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid, or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the
Loan Documents; or
(E) the occurrence of any Default or Event of Default.
(g) Recovery or Avoidance of Payments. In the event any payment by
or on behalf of any Borrower received by the Agent with respect to any
Letter of Credit or Credit Support and distributed by the Agent to the
Lenders on account of their respective participations therein is
thereafter set aside, avoided, or recovered from the Agent in connection
with any receivership, liquidation, or bankruptcy proceeding, the Lenders
shall,
LOAN AND SECURITY AGREEMENT - Page 46
upon demand by the Agent, pay to the Agent their respective Pro Rata
Shares of such amount set aside, avoided, or recovered, together with
interest at the rate required to be paid by the Agent upon the amount
required to be repaid by it.
(h) Indemnification; Exoneration; Power of Attorney
(i) Indemnification. IN ADDITION TO AMOUNTS PAYABLE AS
ELSEWHERE PROVIDED IN THIS SECTION 2.3, EACH BORROWER HEREBY AGREES
TO PROTECT, INDEMNIFY, PAY, AND SAVE THE LENDERS AND THE AGENT
HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, LIABILITIES,
DAMAGES, LOSSES, COSTS, CHARGES, AND EXPENSES (INCLUDING ATTORNEYS
COSTS) WHICH ANY LENDER OR THE AGENT (OTHER THAN THE BANK IN ITS
CAPACITY AS THE LETTER OF CREDIT ISSUER) MAY INCUR OR BE SUBJECT TO
AS A CONSEQUENCE, DIRECT OR INDIRECT, OF THE ISSUANCE OF ANY LETTER
OF CREDIT OR THE PROVISION OF ANY CREDIT SUPPORT OR ENHANCEMENT IN
CONNECTION THEREWITH (OTHER THAN ANY SUCH CLAIMS, DEMANDS,
LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES, AND EXPENSES RESULTING
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH LENDER OR
THE AGENT). THE AGREEMENT IN THIS SECTION 2.3(h)(i) SHALL SURVIVE
PAYMENT OF ALL OBLIGATIONS. NOTHING CONTAINED IN THIS AGREEMENT IS
INTENDED TO LIMIT ANY BORROWER'S RIGHTS, IF ANY, WITH RESPECT TO THE
LETTER OF CREDIT ISSUER WHICH ARISE AS A RESULT OF THE LETTER OF
CREDIT APPLICATION AND RELATED DOCUMENTS EXECUTED BY AND BETWEEN ANY
BORROWER AND THE LETTER OF CREDIT ISSUER.
(ii) Assumption of Risk by the Borrowers. As among the
Borrowers, the Lenders, and the Agent, the Borrowers assume all
risks of the acts and omissions of, or misuse of any of the Letters
of Credit by, the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, the
Lenders and the Agent shall not be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness, or legal effect of any
document submitted by any Person in connection with the application
for and issuance of and presentation of drafts with respect to any
of the Letters of Credit, even if it should prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent, or
forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) the failure of the beneficiary of
any Letter of Credit to comply duly with conditions required in
order to draw upon such Letter of Credit; (D) errors, omissions,
interruptions, or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, or otherwise, whether or
not they be in cipher; (E) errors in interpretation of technical
terms; (F) any loss or delay in the transmission or
LOAN AND SECURITY AGREEMENT - Page 47
otherwise of any document required in order to make a drawing under
any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing under such Letter of Credit; or (H) any
consequences arising from causes beyond the control of the Lenders
or the Agent, including any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental
Authority; provided that, subject to any application for a Letter of
Credit between the applicable Borrower and the Letter of Credit
Issuer, the applicable Borrower shall retain any claim it may have,
if any, against the Letter of Credit Issuer with respect to any
actual damages, but excluding any consequential damages, suffered by
such Borrower which were directly caused by (1) the Letter of Credit
Issuer's willful misconduct or gross negligence in determining
whether documents presented under a Letter of Credit complied with
such Letter of Credit or (2) the Letter of Credit Issuer's willful
failure to make lawful payment under any Letter of Credit after the
presentation to it of a draft and all documents required under such
Letter of Credit strictly complying with the terms and conditions of
such Letter of Credit. None of the foregoing shall affect, impair,
or prevent the vesting of any rights or powers of the Agent or any
Lender under this Section 2.3(h).
(iii) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action
taken or omitted by the Agent or any Lender under or in connection
with any of the Letters of Credit or any related certificates, in
the absence of gross negligence or willful misconduct, shall not put
the Agent or any Lender under any resulting liability to any
Borrower or relieve any Borrower of any of its obligations hereunder
to any such Person.
(iv) Indemnification by Lenders. The Lenders agree to
indemnify the Letter of Credit Issuer (to the extent not reimbursed
by the Borrowers and without limiting the obligations of the
Borrowers hereunder) ratably in accordance with their respective Pro
Rata Shares, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
(including Attorney Costs), or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by, or asserted against
the Letter of Credit Issuer in any way relating to or arising out of
any Letter of Credit or the transactions contemplated thereby or any
action taken or omitted by the Letter of Credit Issuer under any
Letter of Credit or any Loan Document in connection therewith;
provided that no Lender shall be liable for any of the foregoing to
the extent it arises from the gross negligence or willful misconduct
of the Person to be indemnified. Without limitation of the
foregoing, each Lender agrees to reimburse the Letter of Credit
Issuer promptly upon demand for its Pro Rata Share of any costs or
expenses payable by any Borrower to the Letter of Credit Issuer, to
the extent that the Letter of Credit Issuer is not promptly
reimbursed for such costs and expenses by a Borrower. The agreement
contained in this Section shall survive payment in full of all
Obligations.
LOAN AND SECURITY AGREEMENT - Page 48
(v) Power of Attorney. In connection with all Inventory
financed by Letters of Credit, each Borrower hereby appoints the
Agent, or the Agent's designee, as its attorney, with full power and
authority: (A) to sign and/or endorse such Borrower's name upon any
warehouse or other receipts; (B) to sign such Borrower's name on
bills of lading and other negotiable and non-negotiable documents;
(C) to clear Inventory through customs in the Agent's or such
Borrower's name, and to sign and deliver to customs officials powers
of attorney in such Borrower's name for such purpose; (D) to
complete in such Borrower's or the Agent's name, any order, sale, or
transaction, obtain the necessary documents in connection therewith,
and collect the proceeds thereof; and (E) to do such other acts and
things as are necessary in order to enable the Agent to obtain
possession or control of such Inventory and to obtain payment of the
Obligations. Neither the Agent nor its designee, as such Borrower's
attorney, will be liable for any acts or omissions, nor for any
error of judgment or mistakes of fact or law other than for gross
negligence or willful misconduct. This power, being coupled with an
interest, is irrevocable until all Obligations have been paid and
satisfied.
(vi) Account Party. Each Borrower hereby authorizes and
directs the Letter of Credit Issuer to name any Borrower as the
"Account Party" in each Letter of Credit issued pursuant to this
Agreement and to deliver to the Agent all instruments, documents,
and other writings and property received by the Letter of Credit
Issuer pursuant to each such Letter of Credit, and to accept and
rely upon the Agent's instructions and agreements with respect to
all matters arising in connection with each such Letter of Credit or
the application therefor.
(vii) Control of Inventory. In connection with all Inventory
financed by Letters of Credit, each Borrower for whose account such
Letter of Credit was issued will, at the Agent's request, instruct
all suppliers, carriers, forwarders, customs brokers, warehouses, or
others receiving or holding cash, checks, Inventory, documents, or
instruments in which the Agent holds a security interest to deliver
them to the Agent and/or subject to the Agent's order, and if they
shall come into such Borrower's possession, to deliver them, upon
request, to the Agent in their original form. Each such Borrower
shall also, at the Agent's request, designate the Agent as the
consignee on all bills of lading and other negotiable and
non-negotiable documents.
(i) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 2.3(b) and Section 12.1 any
Letter of Credit or Credit Support is outstanding upon the termination of
this Agreement, then upon such termination the Borrower for whose account
such Letter of Credit or such Credit Support was issued shall deposit with
the Agent, for the ratable benefit of the Agent and the Lenders, with
respect to each such Letter of Credit or such Credit Support then
outstanding, as the Majority Lenders in their discretion shall specify,
either (i) a standby letter of credit (a "Supporting Letter of Credit") in
form and substance satisfactory to the Agent, issued by an issuer
satisfactory to the Agent in an amount equal to the greatest amount for
which such Letter of Credit or such
LOAN AND SECURITY AGREEMENT - Page 49
Credit Support may be drawn plus any fees and expenses associated
with such Letter of Credit or such Credit Support, under which
Supporting Letter of Credit the Agent is entitled to draw amounts
necessary to reimburse the Agent and the Lenders for payments to be
made by the Agent and the Lenders under such Letter of Credit or
such Credit Support and any fees and expenses associated with such
Letter of Credit or such Credit Support, or (ii) cash in amounts
necessary to reimburse the Agent and the Lenders for payments made
by the Agent or the Lenders under such Letter of Credit or such
Credit Support and any fees and expenses associated with such Letter
of Credit or such Credit Support. Such Supporting Letter of Credit
or deposit of cash shall be held by the Agent, for the ratable
benefit of the Agent and the Lenders, as security for, and to
provide for the payment of, the aggregate undrawn amount of such
Letters of Credit or such Credit Support remaining outstanding.
Section 2.4 Bank Products. Any Borrower may request and the Bank or the
Documentation Agent (as applicable) may, in its sole and absolute discretion,
arrange for such Borrower to obtain from the Bank, the Documentation Agent, or
the Bank's or the Documentation Agent's (as applicable) Affiliates Bank
Products, although no Borrower is required to do so. To the extent Bank Products
are provided by an Affiliate of the Bank or the Documentation Agent, each
Borrower agrees to indemnify and hold the Bank or the Documentation Agent (as
applicable) and the Lenders harmless from any and all costs and obligations now
or hereafter incurred by the Bank, the Documentation Agent, or any of the
Lenders which arise from the indemnity given by the Bank or the Documentation
Agent (as applicable) to its Affiliates related to such Bank Products. The
agreement contained in this Section shall survive termination of this Agreement.
Each Borrower acknowledges and agrees that the obtaining of Bank Products from
the Bank, the Documentation Agent, or the Bank's or the Documentation Agent's
(as applicable) Affiliates (a) is in the sole and absolute discretion of the
Bank, the Documentation Agent, or their applicable Affiliates, and (b) is
subject to all rules and regulations of the Bank, the Documentation Agent, or
their applicable Affiliates.
ARTICLE 3
INTEREST AND FEES
Section 3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear interest
on the unpaid principal amount thereof (including, to the extent permitted
by law, on accrued interest thereon not paid when due) from the date made
until paid in full in cash at a rate determined by reference to the Base
Rate or the LIBOR Rate, as applicable, and this Section 3.1(a), but not to
exceed the Maximum Rate. Any of the Revolving Loans may be converted into,
or continued as, Base Rate Revolving Loans or LIBOR Rate Revolving Loans,
subject to, and in the manner provided in, Section 3.2. If at any time
Revolving Loans are outstanding with respect to which notice has not been
delivered to the Agent in accordance with the terms of this Agreement
specifying the basis for determining the interest rate applicable thereto,
then those Revolving Loans shall be Base Rate Revolving Loans and shall
bear interest at a rate determined by reference to the Base Rate until
notice to the contrary has been given to the
LOAN AND SECURITY AGREEMENT - Page 50
Agent in accordance with this Agreement and such notice has become
effective. Except as otherwise provided herein, the outstanding
Obligations shall bear interest as follows:
(i) for all Base Rate Revolving Loans and other Obligations
(other than LIBOR Rate Revolving Loans) at a fluctuating per annum
rate equal to the lesser of (A) the Base Rate plus the Applicable
Margin or (B) the Maximum Rate; and
(ii) for all LIBOR Rate Revolving Loans at a per annum rate
equal to the lesser of (A) the LIBOR Rate plus the Applicable Margin
or (B) the Maximum Rate.
Each change in the Base Rate shall be reflected in the interest rate
described in clause (i) preceding as of the effective date of such change.
Subject to Section 3.3, all interest charges shall be computed on the
basis of a year of 360 days and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year).
(b) Default Rate. During the existence of any Default or Event of
Default if the Agent or the Majority Lenders in their discretion so elect,
then, while such Default or Event of Default exists, the Obligations shall
bear interest at a rate per annum equal to the lesser of (i) the Default
Rate applicable thereto or (ii) the Maximum Rate.
(c) Interest Periods. After giving effect to any Borrowing,
conversion, or continuation of any LIBOR Rate Revolving Loan, there may
not be more than eight (8) different Interest Periods in effect hereunder;
provided that in its discretion the Agent may agree to permit the
Borrowers to maintain more than eight (8) different Interest Periods in
effect hereunder.
(d) Revolving Loans Outstanding Under the Equipment Sublimit.
Subject to the other provisions of this Agreement, as long as the
Equipment Sublimit is greater than zero, the outstanding Revolving Loans
shall be deemed to be funded first under the Equipment Sublimit, to the
extent of the Equipment Sublimit. Interest on all such Revolving Loans
deemed to be outstanding under the Equipment Sublimit shall accrue at the
Applicable Rate as provided in this Agreement. Subject to Section
2.2(b)(i)(A) and Section 3.2(a)(ii), to the extent LIBOR Rate Revolving
Loans are available under the terms of this Agreement, the Borrowers shall
request that the Revolving Loans outstanding under the Equipment Sublimit
shall be funded as or continued as LIBOR Rate Revolving Loans with a
single Interest Period of one month. LIBOR Rate Loans outstanding other
than under the Equipment Sublimit shall not be permitted to be funded or
continued as a portion of the Interest Period for the LIBOR Rate Revolving
Loans outstanding under the Equipment Sublimit.
Section 3.2 Conversion and Continuation Elections.
(a) A Borrower may, upon irrevocable written notice to the Agent in
accordance with Section 3.2(b):
LOAN AND SECURITY AGREEMENT - Page 51
(i) elect, as of any Business Day, in the case of Base Rate
Revolving Loans to convert any such Revolving Loans (or any part
thereof in an amount not less than $5,000,000, or that is in an
integral multiple of $1,000,000 in excess thereof) into LIBOR Rate
Revolving Loans; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Rate Revolving Loans having Interest
Periods expiring on such day (or any part thereof in an amount not
less than $5,000,000, or that is in an integral multiple of
$1,000,000 in excess thereof) as LIBOR Rate Revolving Loans;
provided that if at any time the aggregate amount of LIBOR Rate Revolving
Loans in respect of any Borrowing is reduced, by payment, prepayment, or
conversion of part thereof to be less than $5,000,000, such LIBOR Rate
Revolving Loans shall, effective as of the expiration date of the
applicable Interest Period, automatically convert into Base Rate Revolving
Loans.
(b) The Borrowers shall deliver a notice of conversion/continuation
in the form of Exhibit D (a "Notice of Conversion/Continuation") to be
received by the Agent not later than 11:00 a.m. (Dallas, Texas time) at
least three (3) Business Days in advance of the Conversion/Continuation
Date, if the Revolving Loans are to be converted into or continued as
LIBOR Rate Revolving Loans and specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the Revolving Loans and the aggregate amount of such
Revolving Loans to be converted or renewed;
(iii) the type of Revolving Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Rate Revolving Loans, the Borrowers have failed to timely select a
new Interest Period to be applicable to such LIBOR Rate Revolving Loans or
if any Default or Event of Default then exists, the Borrowers shall be
deemed to have elected to convert such LIBOR Rate Revolving Loans into
Base Rate Revolving Loans effective as of the expiration date of such
Interest Period.
(d) The Agent will promptly notify each Lender of its receipt of a
Notice of Conversion/Continuation. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts
of the Revolving Loans with respect to which the Notice of
Conversion/Continuation was given held by each Lender.
LOAN AND SECURITY AGREEMENT - Page 52
(e) During the existence of a Default or Event of Default, the
Borrowers may not elect to have a Revolving Loan converted into or
continued as a LIBOR Rate Revolving Loan.
Section 3.3 Maximum Interest Rate. If the Interest Rate, absent the
limitation set forth in this Section 3.3, would have exceeded the Maximum Rate,
then the Interest Rate shall be the Maximum Rate, and, if in the future, the
Interest Rate would otherwise be less than the Maximum Rate, then the Interest
Rate shall remain at the Maximum Rate until such time as the amount of interest
paid hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate. In the event that, upon payment
in full of the Obligations, the total amount of interest paid or accrued under
the terms of this Agreement is less than the total amount of interest which
would, but for this Section 3.3, have been paid or accrued if the Interest Rate
otherwise set forth in this Agreement had at all times been in effect, then the
Borrowers shall, to the extent permitted by applicable law, pay the Agent, for
the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been paid or accrued if the Maximum
Rate had, at all times, been in effect or (ii) the amount of interest which
would have been paid or accrued had the interest rate otherwise set forth in
this Agreement, at all times, been in effect over (b) the amount of interest
actually paid or accrued under this Agreement. The Agent, each Lender, and each
Borrower acknowledges, agrees, and declares that it is its intention to
expressly comply with all Requirements of Law in respect of limitations on the
amount or rate of interest that can legally be contracted for, charged, or
received under or in connection with the Loan Documents. Notwithstanding
anything to the contrary contained in any Loan Document (even if any such
provision expressly declares that it controls all other provisions of the Loan
Documents), in no contingency or event whatsoever shall the amount of interest
(including the aggregate of all charges, fees, benefits, or other compensation
which constitutes interest under any Requirement of Law) under the Loan
Documents paid by any Borrower, received by the Agent, the Letter of Credit
Issuer, or any Lender, agreed to be paid by any Borrower, or requested or
demanded to be paid by the Agent, the Letter of Credit Issuer, or any Lender,
exceed the Maximum Rate, and all provisions of the Loan Documents in respect of
the contracting for, charging, or receiving compensation for the use,
forbearance, or detention of money shall be limited as provided by this Section
3.3. In the event any such interest is paid to the Agent, the Letter of Credit
Issuer, or any Lender by the Borrowers, or any of them, in an amount or at a
rate which would exceed the Maximum Rate, the Agent, the Letter of Credit
Issuer, or such Lender, as the case may be, shall automatically apply such
excess to any unpaid amount of the Obligations other than interest, in inverse
order of maturity, or if the amount of such excess exceeds said unpaid amount,
such excess shall be paid to the paying Borrowers or Borrower, as applicable.
All interest paid, or agreed to be paid, by any Borrower, or taken, reserved, or
received by the Agent, the Letter of Credit Issuer, or any Lender, shall be
amortized, prorated, spread, and allocated in respect of the Obligations
throughout the full term of this Agreement. Notwithstanding any provision
contained in any of the Loan Documents, or in any other related documents
executed pursuant hereto, neither the Agent, the Letter of Credit Issuer, nor
any Lender shall ever be entitled to charge, receive, take, reserve, collect, or
apply as interest any amount which, together with all other interest under the
Loan Documents would result in a rate of interest under the Loan Documents in
excess of the Maximum Rate and, in the event the Agent, the Letter of Credit
Issuer, or any Lender ever charges, receives, takes, reserves, collects, or
applies any amount in respect of the Borrowers, or any of them, that otherwise
would,
LOAN AND SECURITY AGREEMENT - Page 53
together with all other interest under the Loan Documents, be in excess of the
Maximum Rate, such amount shall automatically be deemed to be applied in
reduction of the unpaid principal balance of the Obligations and, if such
principal balance is paid in full, any remaining excess shall forthwith be paid
to the applicable Borrowers or Borrower. The Borrowers, the Agent, the Letter of
Credit Issuer, and the Lenders shall, to the maximum extent permitted under any
Requirement of Law, (A) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge, expense, or reimbursement
for a third-party expense rather than as interest and (B) exclude prepayments,
acceleration, and the effects thereof. Nothing in any Loan Document shall be
construed or so operate as to require or obligate the Borrowers, or any of them,
to pay any interest, fees, costs, or charges greater than is permitted by any
Requirement of Law. Subject to the foregoing, the Borrowers hereby agree that
the actual effective rate of interest from time to time existing under the Loan
Documents, including all amounts agreed to by the Borrowers or charged or
received by the Agent, the Letter of Credit Issuer, or the Lenders pursuant to
and in accordance with the Loan Documents, which may be deemed to be interest
under any Requirement of Law, shall be deemed to be a rate which is agreed to
and stipulated by the Borrowers and the Lenders in accordance with Requirements
of Law.
Section 3.4 Unused Line Fee. Until the Revolving Loans have been paid in
full and this Agreement terminated, the Borrowers agree to pay, on the first day
of each calendar month and on the Termination Date, to the Agent, for the
account of the Lenders, in accordance with their respective Pro Rata Shares, an
unused line fee (the "Unused Line Fee") equal to the Unused Line Fee Percentage
multiplied by the amount by which the Maximum Revolver Amount exceeded the sum
of the average daily outstanding amount of the Revolving Loans and the average
daily undrawn face amount of all outstanding Letters of Credit and Credit
Support during the immediately preceding calendar month or shorter period if
calculated on the Termination Date. Subject to Section 3.3, the Unused Line Fee
shall be computed on the basis of a 360-day year for the actual number of days
elapsed. For purposes of calculating the Unused Line Fee pursuant to this
Section 3.4, any payment received by the Agent (if received prior to 2:00 p.m.
Dallas, Texas time) shall be deemed to be credited to the Borrowers' Loan
Account on the date such payment is received by the Agent.
Section 3.5 Letter of Credit Fee. The Borrowers agree to pay to the Agent,
for the account of the Lenders, in accordance with their respective Pro Rata
Shares, for each Letter of Credit or Credit Support, a fee (the "Letter of
Credit Fee") equal to the Letter of Credit Fee Percentage, or during the
existence of any Default or Event of Default the Default Rate with respect to
Letters of Credit, multiplied by the undrawn face amount of each Letter of
Credit or Credit Support, plus all out-of-pocket costs, fees, and expenses
incurred by the Agent and the Letter of Credit Issuer in connection with the
application for, processing of, issuance of, or amendment to any Letter of
Credit or Credit Support, which costs, fees, and expenses shall include a
"fronting fee" of one-quarter percent (0.25%) payable to the Letter of Credit
Issuer on the date of issuance of each Letter of Credit or Credit Support. The
Letter of Credit Fee shall be payable quarterly in arrears on the first day of
each calendar quarter following any calendar quarter in which a Letter of Credit
or Credit Support was issued and/or in which a Letter of Credit or Credit
Support remains outstanding and on the Termination Date. Subject to Section 3.3,
the Letter of Credit Fee shall be computed on the basis of a 360-day year for
the actual number of days elapsed.
LOAN AND SECURITY AGREEMENT - Page 54
Section 3.6 Other Fees. The Borrowers agree to pay all other fees and
expenses set forth in the Agents' Letter.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
Section 4.1 Revolving Loans. The Borrowers shall repay the outstanding
principal balance of the Revolving Loans together with all other Obligations,
including all accrued but unpaid interest thereon, on the Termination Date. The
Borrowers may prepay the Revolving Loans at any time, and reborrow subject to
the terms of this Agreement; provided, however, that with respect to any LIBOR
Rate Revolving Loans prepaid prior to the expiration date of the Interest Period
applicable thereto, the Borrowers shall pay to the Agent, for the account of the
Lenders, the amounts described in Section 5.4. In addition, and without limiting
the generality of the foregoing, upon demand the Borrowers shall pay to the
Agent, for the account of the Lenders, the amount, if any and without
duplication, by which the Aggregate Revolver Outstandings less the aggregate
amount of Pending Revolving Loans exceeds the Borrowing Base. Accrued interest
on the Revolving Loans shall be due and payable in arrears (a) in the case of
Base Rate Revolving Loans, on the first day of each calendar month and on the
Termination Date and (b) in the case of LIBOR Rate Revolving Loans and with
respect to each such Revolving Loan (i) on the last day of the Interest Period
with respect thereto and (ii) on the Termination Date.
Section 4.2 Reduction of Commitments; Termination of Facility.
(a) The Borrowers may reduce the Maximum Revolver Amount (i) at any
time by an amount not in excess of $50,000,000 in the aggregate effective
upon five (5) Business Days prior written notice thereof to the Agent and
the Lenders and (ii) in addition to any reduction pursuant to clause (i)
preceding, at the time of a release of the Building Products Borrowers
from this Agreement pursuant to the provisions of Section 13.2(b) by an
amount not in excess of $20,000,000, provided, that any such reduction
pursuant to clause (i) or clause (ii) preceding (A) shall be in an amount
of at least $5,000,000 or any integral multiple of $1,000,000 in excess
thereof and (B) shall be permanent. The Lenders shall have no obligation
at any time to increase the Maximum Revolver Amount following any such
reduction.
(b) The Borrowers may terminate this Agreement upon at least thirty
(30) days prior written notice thereof to the Agent and the Lenders, upon
(i) the payment in full of all outstanding Revolving Loans, together with
accrued and unpaid interest thereon, and the cancellation and return of
all outstanding Letters of Credit and Credit Support (or, alternatively,
with respect to each such Letter of Credit or Credit Support, the
furnishing to the Agent, for the benefit of the Lenders, of a Supporting
Letter of Credit or cash deposit, in each case in amounts and in the
manner required by Section 2.3(i)), (ii) the payment of the early
termination fee set forth in the following sentence, (iii) with respect to
any LIBOR Rate Revolving Loans prepaid in connection with such termination
prior to the expiration date of the Interest Period applicable thereto,
the payment of the amounts described in Section 5.4,
LOAN AND SECURITY AGREEMENT - Page 55
and (iv) the payment in full in cash of all other Obligations together
with accrued and unpaid interest thereon. Subject to Section 3.3, if this
Agreement is terminated at any time prior to the third Anniversary Date
following the Closing Date, whether pursuant to this Section or pursuant
to Section 11.2, the Borrowers shall pay to the Agent, for the account of
the Lenders, an early termination fee in an amount equal to one-quarter
percent (0.25%) of the then existing Maximum Revolver Amount.
Notwithstanding the foregoing, no such early termination fee shall be
payable in the event this Agreement is terminated in connection with
refinancing of the Obligations in a transaction in which the Bank and the
Documentation Agent, or any of their respective Affiliates, provides or
arranges replacement financing or acts as underwriter or arranger of any
public offering of debt or equity securities of the Parent.
Section 4.3 Prepayments from Asset Dispositions.
(a) All proceeds or other cash payments received by any Borrower
pursuant to any transaction of merger, reorganization, consolidation,
transfer, sale, assignment, lease, or other disposition allowed by Section
9.9(b)(iv) (other than the sale of Inventory in the ordinary course of
business) and Section 9.19 (any such merger, reorganization,
consolidation, transfer, sale, assignment, lease, or other disposition
being referred to in this Section as the "subject disposition"), net of
related actual transaction costs and expenses, shall be paid to the Agent,
promptly upon such receipt, for application to the Obligations as follows:
(i) the proceeds of the subject disposition shall be applied
to the outstanding principal balance of the Revolving Loans without
a corresponding reduction in the aggregate amount of the
Commitments; and
(ii) if any of the proceeds of the subject disposition are not
used within 360 days of the date of the subject disposition to
replace the property which was the subject of the subject
disposition with property that will be used in the business of such
Borrower or if the applicable Borrower notifies the Agent that the
proceeds of the subject disposition will not be used to replace the
such property, then the Commitments shall be permanently reduced by
the amount that the proceeds exceed such replacement costs and
(b) an amount equal to (i) the proceeds or other cash payments
received by any Borrower pursuant to any subject disposition referenced in
clause (a) preceding, net of related actual transaction costs and expenses
and actual amounts, if any, used to finance the replacement of any
property that was disposed of in such subject disposition and (ii) the
Orderly Liquidation Value of the Equipment owned by each of the Building
Products Borrowers determined according to the appraisal most recently
delivered to the agent pursuant to Section 6.5 as of the date of any
release of the Building Products Borrowers from this Agreement pursuant to
Section 13.2(b), shall each constitute an Equipment Sublimit Reduction for
purposes of clause (b) of the definition of Equipment Sublimit Reduction.
LOAN AND SECURITY AGREEMENT - Page 56
Section 4.4 Other Required Prepayments.
(a) Prepayments from Distributions or Loans from MRC. All proceeds
or other cash payments received by the Parent constituting proceeds of a
Distribution, loan, or other advance to the Parent by MRC shall be paid to
the Agent, promptly upon such receipt, for application to the unpaid
balance of the Revolving Loans.
(b) Prepayments from Release of Building Products Borrowers. In the
event the Building Products Borrowers are released from this Agreement
pursuant to Section 13.2(b), at the time of such release the Borrowers
shall make a prepayment of the outstanding principal balance of the
Revolving Loans, without a corresponding reduction in the aggregate amount
of the Commitments except as may be elected by the Borrowers pursuant to
Section 4.2(a)(ii), in an amount equal to (i) eighty-five percent (85.0%)
of the Net Amount of Eligible Accounts of the Building Products Borrowers
on the date of such release, plus (ii) the lesser of (A) thirty-five
percent (35.0%) of the lesser of the original cost or market value of
Eligible Building Products Inventory on the date of such release or (B) or
eighty percent (80.0%) of the Orderly Liquidation Value of Eligible
Building Products Inventory on the date of such release.
Section 4.5 Payments by the Borrowers.
(a) All payments to be made by the Borrowers shall be made without
set-off, recoupment, or counterclaim. Except as otherwise expressly
provided herein, all payments by the Borrowers shall be made to the Agent
for the account of the Lenders at the Agent's address set forth in Section
15.8, and shall be made in Dollars and in immediately available funds, no
later than 2:00 p.m. (Dallas, Texas time) on the date specified herein.
Any payment received by the Agent later than 2:00 p.m. (Dallas, Texas
time) shall be deemed to have been received on the following Business Day
and any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
Interest Period, whenever any payment is due on a day other than a
Business Day, such payment shall be due on the following Business Day, and
such extension of time shall in such case be included in the computation
of interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrowers prior to the
date on which any payment is due to the Lenders that the Borrowers will
not make such payment in full as and when required, the Agent may assume
that the Borrowers have made such payment in full to the Agent on such
date in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender. If and
to the extent the Borrowers have not made such payment in full to the
Agent, each Lender shall repay to the Agent on demand such amount
distributed to such Lender, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such
Lender until the date repaid.
LOAN AND SECURITY AGREEMENT - Page 57
Section 4.6 Payments as Revolving Loans. All payments of principal,
interest, reimbursement obligations in connection with Letters of Credit and
Credit Support, fees, premiums, and other sums payable hereunder, including,
without limitation, all reimbursement for expenses pursuant to Section 15.7,
may, at the option of the Agent, in its sole discretion, subject only to the
terms of this Section 4.6, be paid from the proceeds of Revolving Loans made
hereunder, whether made following a request by the Borrowers, or any of them,
pursuant to Section 2.2 or a deemed request as provided in this Section 4.6. The
Borrowers hereby irrevocably authorize the Agent to charge the Loan Account for
the purpose of paying principal, interest, reimbursement obligations in
connection with Letters of Credit and Credit Support, fees, premiums, and other
sums payable hereunder, including, without limitation, reimbursing expenses
pursuant to Section 15.7, and agree that all such amounts charged shall
constitute Revolving Loans (including Non-Ratable Loans and Agent Advances) and
that all such Revolving Loans so made shall be deemed to have been requested
pursuant to Section 2.2.
Section 4.7 Apportionment, Application, and Reversal of Payments. Except
as otherwise expressly provided herein, aggregate principal and interest
payments shall be apportioned ratably among the Lenders (according to the unpaid
principal balance of the Revolving Loans to which such payments relate held by
each Lender) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders. All payments shall be remitted to the Agent and all
such payments not relating to principal or interest of specific Revolving Loans,
or not constituting payment of specific fees, and all proceeds of any Borrower's
Accounts or any other Collateral received by the Agent, shall be applied,
ratably, subject to the provisions of this Agreement, first, to pay any fees,
indemnities, or expense reimbursements, then due to the Agent from the
Borrowers; second, to pay any fees or expense reimbursements then due to the
Lenders from the Borrowers; third, to pay interest due in respect of the
Revolving Loans; fourth, to pay or prepay principal of the Non-Ratable Loans and
the Agent Advances; fifth, to pay or prepay principal of the Revolving Loans
(other than the Non-Ratable Loans and the Agent Advances), unpaid reimbursement
obligations in respect of Letters of Credit and Credit Support, and any amounts
relating to Bank Products; and sixth, to the payment of any other Obligation due
to the Agent or any Lender by the Borrowers. Notwithstanding anything to the
contrary contained in this Agreement, unless so directed by a Borrower, or
unless an Event of Default is in existence, neither the Agent nor any Lender
shall apply any payment which it receives to any LIBOR Rate Revolving Loan
except (a) on the expiration date of the Interest Period applicable to any such
LIBOR Rate Revolving Loan, or (b) in the event, and only to the extent, that
there are no outstanding Base Rate Revolving Loans. The Agent shall promptly
distribute to each Lender, pursuant to the applicable wire transfer instructions
received from each Lender in writing, such funds as it may be entitled to
receive, subject to a Settlement delay as provided for in Section 2.2(j). The
Agent and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the
Obligations.
Section 4.8 Indemnity for Returned Payments. If after receipt of any
payment which is applied to the payment of all or any part of the Obligations,
the Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible set-off, or a diversion of trust funds, or for
any other reason, then the
LOAN AND SECURITY AGREEMENT - Page 58
Obligations or part thereof intended to be satisfied shall be revived and
continued and this Agreement shall continue in full force as if such payment or
proceeds had not been received by the Agent or such Lender and the Borrowers
shall be liable to pay to the Agent and the Lenders, and each Borrower hereby
indemnifies the Agent and the Lenders and holds the Agent and the Lenders
harmless for the amount of such payment or proceeds surrendered. The provisions
of this Section 4.8 shall be and remain effective notwithstanding any contrary
action which may have been taken by the Agent or any Lender in reliance upon
such payment or application of proceeds, and any such contrary action so taken
shall be without prejudice to the Agent's and the Lenders' rights under this
Agreement and shall be deemed to have been conditioned upon such payment or
application of proceeds having become final and irrevocable. The provisions of
this Section 4.8 shall survive the termination of this Agreement.
Section 4.9 The Agent's and the Lenders' Books and Records; Monthly
Statements. The Borrowers agree that the Agent's and each Lender's books and
records showing the Obligations and the transactions pursuant to this Agreement
and the other Loan Documents shall be admissible in any action or proceeding
arising therefrom, and shall constitute presumptive proof thereof, irrespective
of whether any Obligation is also evidenced by a promissory note or other
instrument. The Agent will provide to the Borrowers a monthly statement of
Revolving Loans, payments, and other transactions pursuant to this Agreement.
Such statement shall be deemed correct, accurate, and binding on the Borrowers
and an account stated (except for reversals and reapplications of payments made
as provided in Section 4.7 and corrections of errors discovered by the Agent),
unless a Borrower notifies the Agent in writing to the contrary within thirty
(30) days after such statement is rendered. In the event a timely written notice
of objections is given by a Borrower, only the items to which exception is
expressly made will be considered to be disputed.
ARTICLE 5
TAXES, YIELD PROTECTION, AND ILLEGALITY
Section 5.1 Taxes.
(a) Any and all payments by or on behalf of the Borrowers, or any of
them, to the Agent or any Lender under this Agreement and any other Loan
Document shall be made free and clear of, and without deduction or
withholding for any Taxes. In addition, the Borrowers shall pay all Other
Taxes.
(b) The Borrowers agree to indemnify and hold harmless the Agent and
each Lender for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section) paid by the Agent or any Lender and any liability (including
penalties, interest, additions to tax, and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification shall be
made within thirty (30) days after the date the Agent or any Lender makes
written demand therefor.
LOAN AND SECURITY AGREEMENT - Page 59
(c) If the Borrowers shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder
to the Agent or any Lender, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including,
without limitation, deductions and withholdings applicable to
additional sums payable under this Section) the Agent or such
Lender, as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings been
made;
(ii) the Borrowers shall make such deductions and
withholdings;
(iii) the Borrowers shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with any Requirement of Law; and
(iv) the Borrowers shall also pay to the Agent, for the
account of each Lender, or each Lender at the time interest is paid,
all additional amounts which the respective Lender specifies as
necessary to preserve the after-tax yield such Lender would have
received if such Taxes or Other Taxes had not been imposed.
(d) Within thirty (30) days after the date of any payment by the
Borrowers of Taxes or Other Taxes, the Borrowers shall furnish the Agent
the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to the Agent.
(e) If the Borrowers are required to pay additional amounts to the
Agent or any Lender pursuant to Section 5.1(c), then the applicable Lender
shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its lending office so as to
eliminate any such additional payment by the Borrowers which may
thereafter accrue, if such change in the judgment of such Lender is not
otherwise disadvantageous to such Lender.
Section 5.2 Illegality.
(a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for such Lender or its applicable lending
office to make LIBOR Rate Revolving Loans, then, on notice thereof by such
Lender to the Borrowers through the Agent, any obligation of such Lender
to make LIBOR Rate Revolving Loans shall be suspended until such Lender
notifies the Agent and the Borrowers that the circumstances giving rise to
such determination no longer exist.
LOAN AND SECURITY AGREEMENT - Page 60
(b) If a Lender determines that it is unlawful to maintain any LIBOR
Rate Revolving Loan, the Borrowers shall, upon receipt of notice of such
fact and demand from such Lender (with a copy to the Agent), prepay in
full such LIBOR Rate Revolving Loans of such Lender then outstanding,
together with accrued and unpaid interest thereon and amounts required
under Section 5.4, either on the last day of the Interest Period thereof,
if such Lender may lawfully continue to maintain such LIBOR Rate Revolving
Loans to such day, or immediately, if such Lender may not lawfully
continue to maintain such LIBOR Rate Revolving Loans. If the Borrowers are
required to so prepay any LIBOR Rate Revolving Loans, then concurrently
with such prepayment, the Borrowers shall borrow from the affected Lender,
in the amount of such prepayment, a Base Rate Revolving Loan.
Section 5.3 Increased Costs and Reduction of Return.
(a) If any Lender determines that due to either (i) the introduction
of or any change in the interpretation of any law or regulation or (ii)
the compliance by that Lender with any guideline or request from any
central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to such Lender of
agreeing to make or making, funding, or maintaining any LIBOR Rate
Revolving Loans, then the Borrowers shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to be sent to the
Agent), pay to the Agent, for the account of such Lender, additional
amounts as are sufficient to compensate such Lender for such increased
costs.
(b) If any Lender shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or
(iv) compliance by such Lender or any corporation or other entity
controlling such Lender with any Capital Adequacy Regulation, affects or
would affect the amount of capital required or expected to be maintained
by such Lender or any corporation or other entity controlling such Lender
and (taking into consideration such Lender's or such corporation's or
other entity's policies with respect to capital adequacy and such Lender's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitments, loans, credits, or
obligations under this Agreement, then, upon demand of such Lender to the
Borrowers through the Agent, the Borrowers shall pay to such Lender, from
time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender for such increase.
Section 5.4 Funding Losses. The Borrowers shall reimburse each Lender and
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of:
(a) the failure of the Borrowers to make on a timely basis any
payment of principal of any LIBOR Rate Revolving Loan;
LOAN AND SECURITY AGREEMENT - Page 61
(b) the failure of the Borrowers to borrow, continue, or convert a
Revolving Loan after any Borrower has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/Continuation (except as
permitted by Section 5.5);
(c) the prepayment or other payment (including after acceleration
thereof) of any LIBOR Rate Revolving Loan on a day that is not the last
day of the relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by such Lender to
maintain its LIBOR Rate Revolving Loans or from fees payable to terminate the
deposits from which such funds were obtained. The Borrowers shall also pay any
customary administrative fees charged by any Lender in connection with the
foregoing.
Section 5.5 Inability to Determine Rates. If the Agent determines that for
any reason adequate and reasonable means do not exist for determining the LIBOR
Rate for any requested Interest Period with respect to a proposed LIBOR Rate
Revolving Loan, or that the LIBOR Rate for any requested Interest Period with
respect to a proposed LIBOR Rate Revolving Loan does not adequately and fairly
reflect the cost to the Lenders of funding such Revolving Loan, the Agent will
promptly so notify the Borrowers and each Lender. Thereafter, the obligation of
the Lenders to make or maintain LIBOR Rate Revolving Loans hereunder shall be
suspended until the Agent revokes such notice in writing. Upon receipt of a
notice pursuant to the first sentence of this Section, the Borrowers may revoke
any Notice of Borrowing or Notice of Conversion/Continuation then submitted by
any of them. If the Borrowers do not revoke any such Notice of Borrowing or
Notice of Conversion/Continuation, the Lenders shall make, convert, or continue
the Revolving Loans, as proposed by the Borrowers, in the amount specified in
the applicable Notice of Borrowing or Notice of Conversion/Continuation
submitted by the Borrowers, but such Revolving Loans shall be made, converted,
or continued as Base Rate Revolving Loans instead of LIBOR Rate Revolving Loans.
Section 5.6 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article 5 shall deliver to the Borrowers (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to such Lender hereunder and such certificate shall be conclusive and binding on
the Borrowers in the absence of manifest error.
Section 5.7 Survival. The agreements and obligations of the Borrowers in
this Article 5 shall survive the payment of all other Obligations.
Section 5.8 Claims Under Section 5.1 and Section 5.3. Each Lender shall
notify the Borrowers and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Lender to payment of
any amount under Section 5.1 or Section 5.3 and will designate a different
lending office if such designation will avoid the need for, or reduce the amount
of, such payment and will not, in the judgment of such Lender be otherwise
disadvantageous to it.
Section 5.9 Replacement of Affected Lender. Within thirty (30) days after
receipt by the Borrowers of written notice and demand from any Lender for any
payment under the terms of Section 5.1 or Section 5.3 then, subject to this
Section 5.9, the Borrowers may, at their option, notify
LOAN AND SECURITY AGREEMENT - Page 62
the Agent and such Lender (the "Affected Lender") of their intention to obtain,
at the Borrowers' sole expense, a replacement Lender ("Replacement Lender") to
purchase the Affected Lender's Loans and its obligations under the Loan
Documents. Subject to this Section 5.9, the Borrowers shall, within thirty (30)
days following the delivery of such notice from the Borrowers, cause the
Replacement Lender to purchase (and the Affected Lender hereby agrees to sell
and convey to such Replacement Lender) the Loans and other obligations of the
Affected Lender and assume the Affected Lender's Commitment and obligations
hereunder in accordance with the terms of an Assignment and Acceptance for cash
in an aggregate amount equal to the aggregate unpaid principal of the Loans and
other Obligations held by such Affected Lender, all unpaid interest and fees
accrued thereon or with respect thereto, and all other Obligations owed to such
Affected Lender, including amounts owed under Section 5.1 or Section 5.3 (but
excluding any amount pursuant to Section 4.2). Notwithstanding the foregoing,
(a) the Borrowers shall continue to be obligated to pay to the Affected Lender
in full all amounts then demanded and due under Section 5.1 or Section 5.3 in
accordance with the terms of this Agreement, (b) neither the Agent nor any
Lender shall have any obligation to find a Replacement Lender, (c) the
Replacement Lender must be acceptable to the Agent in its reasonable discretion,
and (d) the Bank may not be replaced under this Section 5.9 without its consent.
If the Borrowers elect to replace any Affected Lender, the Borrowers must
replace all Affected Lenders as set forth in this Section, each such replacement
to occur within a reasonable period of time not to exceed sixty (60) days from
the date such Affected Lender requested any payment under Section 5.1 or Section
5.3.
ARTICLE 6
COLLATERAL
Section 6.1 Grant of Security Interest.
(a) As security for the Obligations (excluding Existing Obligations
in the case of property owned by a Newly Obligated Party) each Borrower
hereby collaterally assigns and grants to the Agent, for the benefit of
the Agent and the Lenders, a continuing security interest in, lien on,
collateral assignment of, and right of set-off against, all of the
following property and assets of such Borrower, whether now owned or
existing or hereafter acquired or arising, regardless of where located:
(i) all Accounts (including any credit enhancement therefor);
(ii) all Inventory;
(iii) in the case of each Borrower that is an RPA Seller, the
RPA Seller Note payable to such Borrower and all rights, remedies,
powers, and privileges of such Borrower thereunder and all security
therefor;
(iv) all contract rights, letters of credit, chattel paper,
instruments, notes, documents, and documents of title;
LOAN AND SECURITY AGREEMENT - Page 63
(v) all General Intangibles;
(vi) all Equipment;
(vii) all Investment Property;
(viii) all money, cash, cash equivalents, securities, and
other property of any kind of such Borrower;
(ix) all of such Borrower's deposit accounts, credits, and
balances with and other claims against the Agent, any Lender, any
Affiliate of the Agent or any Lender, or any other financial
institution with which such Borrower maintains deposits, including
any Payment Accounts;
(x) all books, records, and other property related to or
referring to any of the foregoing, including books, records, account
ledgers, data processing records, computer software and other
property, and General Intangibles at any time evidencing or relating
to any of the foregoing; and
(xi) all accessions to, substitutions for, and replacements,
products, and proceeds of any of the foregoing, including, but not
limited to, proceeds of any insurance policies, claims against third
parties, and condemnation or requisition payments with respect to
all or any of the foregoing.
All of the foregoing, together with the Real Estate covered by any
Mortgages, and all other property of the Borrower's in which the Agent or
any Lender may at any time be granted a Lien, is herein collectively
referred to as the "Collateral."
(b) Without limiting Section 6.1(a), each RPA Seller hereby
collaterally assigns to the Agent, for the benefit of the Agent and the
Lenders, all rights, claims, remedies, and benefits of such Borrower under
the RPA; provided that neither the agent nor any Lender assumes any
obligations under the RPA and it is expressly agreed that neither the
Agent nor any Lender shall have any obligations under the RPA.
(c) Within twenty (20) days of the Agent's request, as security for
the Obligations (excluding Existing Obligations in the case of property
owned by a Newly Obligated Party), each applicable Borrower shall execute
and deliver to the Agent one or more Mortgages on any of such Real Estate
owned by such Borrower listed on Schedule 8.11 as requested by the Agent
in its discretion.
(d) The Obligations (excluding Existing Obligations in the case of
property owned by a Newly Obligated Party) shall be secured by all of the
Collateral. Each Borrower acknowledges and expressly agrees with the Agent
and each Lender that the grant by such Borrower of the Agent's Lien in the
Collateral of such Borrower as security for the Obligations of the other
Borrowers is required solely as a condition to, and is given solely
LOAN AND SECURITY AGREEMENT - Page 64
as inducement for and in consideration of, credit or accommodations
extended or to be extended under the Loan Documents to any or all of the
other Borrowers and is not required or given as a condition of extensions
of credit to such Borrower.
Section 6.2 Perfection and Protection of Security Interest.
(a) Each Borrower shall, at its expense, perform all steps requested
by the Agent at any time to perfect, maintain, protect, and enforce the
Agent's Liens, including: (i) executing, delivering, and/or filing and
recording of the Mortgages, the Copyright, Patent, and Trademark
Agreements, and executing and filing financing or continuation statements,
and amendments thereof, in form and substance satisfactory to the Agent;
(ii) delivering to the Agent the originals of all instruments, documents,
and chattel paper, and all other Collateral of which the Agent determines
it should have physical possession in order to perfect and protect the
Agent's security interest therein, duly pledged, endorsed, or assigned to
the Agent without restriction; (iii) delivering to the Agent (A) warehouse
receipts covering any portion of the Collateral located in warehouses and
for which warehouse receipts are issued and (B) if requested by the Agent,
certificates of title reflecting the Agent's Liens covering any portion of
the Collateral for which certificates of title have been issued; (iv) when
an Event of Default exists, transferring Inventory to warehouses or other
locations designated by the Agent; (v) delivering to the Agent all letters
of credit on which such Borrower is named beneficiary; and (vi) taking
such other steps as are reasonably deemed necessary or desirable by the
Agent to maintain and protect the Agent's Liens. To the extent permitted
by any Requirement of Law, the Agent may file, without any Borrower's
signature, one or more financing statements disclosing the Agent's Liens.
Each Borrower agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement executed and
delivered by such Borrower is sufficient as a financing statement.
(b) If any Collateral is at any time in the possession or control of
any warehouseman, bailee, or any of such Borrower's agents or processors,
then such Borrower shall notify the Agent thereof and shall, at the
request of the Agent, notify such Person of the Agent's security interest
in such Collateral and instruct such Person to hold all such Collateral
for the Agent's account subject to the Agent's instructions. If at any
time any Collateral is located at any operating facility of a Borrower
which is not owned by such Borrower, such Borrower shall use commercially
reasonable efforts to obtain written landlord lien waivers or
subordinations, in form and substance reasonably satisfactory to the
Agent, of all present and future Liens to which the owner or lessor of
such premises may be entitled to assert against the Collateral; provided
that in the event any Borrower is unable to obtain any such written waiver
or subordination, the Agent may, in its discretion establish a reserve
with respect to any such Collateral.
(c) From time to time, each Borrower shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging to
the Agent, for the benefit of the Agent and the Lenders, the Collateral
with respect to such Borrower, but the failure to do so shall not affect
or limit any security interest or any other rights of the Agent or any
Lender in and to the Collateral with respect to such Borrower. So long as
this Agreement is in effect
LOAN AND SECURITY AGREEMENT - Page 65
and until all Obligations have been fully satisfied, the Agent's Liens
shall continue in full force and effect in all Collateral (whether or not
deemed eligible for the purpose of calculating the Available Credit or the
Availability or as the basis for any advance, loan, extension of credit,
or other financial accommodation).
(d) To the extent any Borrower is the owner of or becomes the issuer
of any Investment Property that is Collateral (each such Person which
issues any such Investment Property being referred to herein as an
"Issuer"), each such Borrower which is an Issuer agrees, and each Borrower
which is the owner of any Investment Property agrees to cause any the
Issuer thereof to agree, as follows with respect to such Investment
Property:
(i) All such Investment Property issued by such Issuer, all
warrants, and all non-cash dividends and other non-cash
distributions in respect thereof at any time registered in the name
of, or otherwise deliverable to, any Borrower, shall be delivered
directly to the Agent, for the account of such Borrower, at the
Agent's address for notices set forth in Section 15.8.
(ii) During the existence of any Event of Default, all cash
dividends, cash distributions, and other cash or cash equivalents in
respect of such Investment Property at any time payable or
deliverable to any Borrower shall be delivered directly to the
Agent, for the account of the Agent and the Lenders, at the Agent's
address for notices set forth in Section 15.8.
(iii) Such Issuer will not acknowledge any transfer or
encumbrance in respect of such Investment Property to or in favor of
any Person other than the Agent or a Person designated by the Agent
in writing.
(iv) With respect to any of such Investment Property at any
time constituting an uncertificated security as defined by the UCC,
such Issuer will comply with instructions originated by the Agent
without further consent by the registered owner thereof.
Section 6.3 Location of Collateral. Each Borrower represents and warrants
to the Agent and the Lenders that: (a) Schedule 6.3 is a correct and complete
list of such Borrower's chief executive office, the location of its books and
records, the locations of the Collateral (other than Inventory in transit,
rolling stock, and Collateral in the Agent's possession), and the locations of
all of its other places of business; and (b) Schedule 6.3 correctly identifies
any of such facilities and locations that are not owned by such Borrower and
sets forth the names of the owners and lessors or sublessors of such facilities
and locations. Each Borrower covenants and agrees that it will not (x) maintain
any Collateral (other than Inventory in transit, rolling stock, and Collateral
in the Agent's possession) at any location other than those locations listed for
such Borrower on Schedule 6.3, (y) otherwise change or add to any of such
locations, or (z) change the location of its chief executive office from the
location identified in Schedule 6.3, unless it gives the Agent at least thirty
(30) days prior written notice thereof and executes any and all financing
statements and other documents that the Agent reasonably requests in connection
therewith. In the event any Borrower
LOAN AND SECURITY AGREEMENT - Page 66
requests to change or add any location of Collateral and has provided the Agent
with all financing statements and other documents requested by the Agent in
connection therewith, the Borrower shall prepare and deliver to the Agent a
revised Schedule 6.3 which shall automatically be adopted as Schedule 6.3 for
all purposes. Without limiting the foregoing, each Borrower represents that all
of its Inventory (other than Inventory in transit) is, and covenants that all of
its Inventory will be, located either (A) on premises owned by such Borrower, or
(B) on premises leased by such Borrower and included on Schedule 6.3.
Section 6.4 Title to, Liens on, and Sale and Use of Collateral. Each
Borrower represents and warrants to the Agent and the Lenders and agrees with
the Agent and the Lenders that: (a) all of its Collateral is and will continue
to be owned by such Borrower free and clear of all Liens whatsoever, except for
Permitted Liens; (b) the Agent's Liens in the Collateral will not be subject to
any prior Lien except for those Liens identified, and to the limited extent
provided, in clauses (d), (e), and (h) of the definition of Permitted Liens; (c)
such Borrower will use, store, and maintain the Collateral with all reasonable
care and will use such Collateral for lawful purposes only; and (d) such
Borrower will not, without the Agent's prior written approval, sell or dispose
of, or permit the sale or disposition of, any of the Collateral except for (i)
sales of Inventory in the ordinary course of business, (ii) sales of Equipment
and Real Estate as permitted by Section 9.9(b)(iv) and Section 9.19 and (iii)
subject to and as provided by Section 9.9, sales of Accounts by any RPA Seller
to MRC pursuant to the RPA. Each RPA Seller represents and warrants to the Agent
and the Lenders that it is the owner and holder of its RPA Seller Note.
Section 6.5 Appraisals. Within thirty (30) days of the Closing Date, the
Borrowers shall, at their expense, provide the Agent with an appraisal of the
Borrowers' Equipment from credentialed appraisers, and prepared in a form and on
a basis, reasonably satisfactory to the Agent. Whenever a Default or Event of
Default exists, and at such other times not more frequently than once per year
as the Agent requests, the Borrowers shall, at their expense and upon the
Agent's request, provide the Agent with appraisals or updates thereof of any or
all of the Collateral from credentialed appraisers, and prepared in a form and
on a basis, reasonably satisfactory to the Agent, such appraisals and updates to
include, without limitation, information required by Requirements of Law and by
the internal policies of the Lenders.
Section 6.6 Access and Examination; Confidentiality.
(a) The Agent, accompanied by any Lender which so elects, may at all
reasonable times during regular business hours, and at any time when a
Default or Event of Default exists, have access to, examine, audit, make
extracts from or copies of, and inspect any or all of the Borrowers'
records, files, and books of account and the Collateral, and discuss the
Borrowers' affairs with the Borrowers' officers and senior management. The
Borrowers will deliver to the Agent any instrument necessary for the Agent
to obtain records from any service bureau maintaining records for the
Borrowers. The Agent may, and at the direction of the Majority Lenders
shall, at any time when a Default or Event of Default exists, and at the
Borrowers' expense, make copies of all of the Borrowers' books and
records, or require the Borrowers to deliver such copies to the Agent. The
Agent may, without expense to the Agent, use such of the Borrowers'
respective personnel, supplies, and premises as may be
LOAN AND SECURITY AGREEMENT - Page 67
reasonably necessary for maintaining or enforcing the Agent's Liens. The
Agent shall have the right, at any time, in the Agent's name or in the
name of a nominee of the Agent, to verify the validity, amount, or any
other matter relating to the Accounts, Inventory, or other Collateral, by
mail, telephone, or otherwise.
(b) Each of the Borrowers hereby consents that the Agent and each
Lender may issue and disseminate to the public general information
describing the credit accommodation entered into pursuant to this
Agreement, including the names and addresses of the Borrowers and a
general description of the Borrowers' business and may use the Borrowers'
names in advertising and other promotional material.
(c) Each Lender severally agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by any Borrower and
provided to the Agent or such Lender by or on behalf of such Borrower,
under this Agreement or any other Loan Document, except to the extent that
such information (i) was or becomes generally available to the public
other than as a result of disclosure by the Agent or such Lender, or (ii)
was or becomes available on a nonconfidential basis from a source other
than the Borrowers; provided that such source is not bound by a
confidentiality agreement with the Borrowers known to the Agent or such
Lender. Notwithstanding the foregoing, the Agent and any Lender may
disclose any such information (1) at the request or pursuant to any
requirement of any Governmental Authority to which the Agent or such
Lender is subject or in connection with an examination of the Agent or
such Lender by any such Governmental Authority, (2) pursuant to subpoena
or other court process, (3) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (4) to the extent
reasonably required in connection with any litigation or proceeding
(including, but not limited to, any bankruptcy proceeding) to which the
Agent, any Lender, or their respective Affiliates may be party, (5) to the
extent required in connection with the exercise of any remedy or
enforcement of any rights hereunder or under any other Loan Document, (6)
to the Agent's or such Lender's independent auditors, accountants,
attorneys, and other professional advisors, (7) to any prospective
Participant or Assignee, actual or potential, provided that such
prospective Participant or Assignee agrees to keep such information
confidential to the same extent required of the Agent and the Lenders
hereunder, (8) as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which any Borrower is a
party or is deemed a party with the Agent or such Lender, and (9) to its
Affiliates.
Section 6.7 Collateral Reporting. The Parent shall provide, or cause to be
provided, to the Agent the following documents on or before the twentieth (20th)
day of each Fiscal Period (unless specifically indicated otherwise), or more
frequently if requested by the Agent, for the preceding Fiscal Period end, in
form reasonably satisfactory to the Agent: (a) a schedule of each Borrower's
Accounts created since the last such schedule, a schedule of each Borrower's
Inventory by category (including the current market price for each such
category), a schedule showing, for each RPA Seller Note, the unpaid principal
balance and accrued interest owing thereunder, and a Borrowing Base Certificate;
provided that such schedules and Borrowing Base Certificate may be provided by
the Parent more frequently to redetermine Availability or Available Credit; (b)
an aging
LOAN AND SECURITY AGREEMENT - Page 68
of each Borrower's Accounts together with a reconciliation to the previous
calendar month end's accounts receivable balance of such Borrower's Accounts and
to its general ledger; (c) an aging of each Borrower's accounts payable; (d)
Inventory reports for each Borrower by category and location, with additional
detail showing aggregate additions to and aggregate deletions from such
Borrower's Inventory and any Inventory held by such Borrower on consignment or
approval together with a reconciliation to such Borrower's general ledger; (e)
upon the Agent's request, copies of invoices in connection with each Borrower's
Accounts, customer statements, credit memos, remittance advices and reports,
deposit slips, and shipping and delivery documents in connection with each
Borrower's Accounts and for Inventory and Equipment acquired by each Borrower,
purchase orders, and invoices; (f) upon the Agent's request, a statement of the
balance of each of the Intercompany Accounts; (g) such other reports as to the
Collateral as the Agent shall reasonably request from time to time; and (h) with
the delivery of each of the foregoing, a certificate of the Borrowers executed
by a Responsible Officer of the Parent on behalf of all of the Borrowers
certifying as to the accuracy and completeness of the foregoing. If any of the
Borrowers' records or reports of the Collateral are prepared by an accounting
service or other agent, each Borrower hereby authorizes such service or agent to
deliver such records, reports, and related documents to the Agent, for
distribution to the Lenders.
Section 6.8 Accounts. Each Borrower covenants, agrees, represents, and
warrants, as to itself, as follows:
(a) With respect to such Borrower's Accounts: (i) each existing
Account represents, and each future Account will represent, a bona fide
sale or lease and delivery of goods by such Borrower, or rendition of
services by such Borrower, in the ordinary course of such Borrower's
business; (ii) each existing Account is, and each future Account will be,
for a liquidated amount payable by the Account Debtor thereon on the terms
then in effect or in the schedule thereof delivered to the Agent, without
any offset, deduction, defense, or counterclaim except those known to such
Borrower and disclosed to the Agent and the Lenders as required by this
Agreement; (iii) no payment will be received with respect to any Account,
and no credit, discount, or extension, or agreement therefor will be
granted on any Account except as reported to the Agent and the Lenders in
accordance with this Agreement; (iv) each copy of an invoice delivered to
the Agent by such Borrower will be a genuine copy of the original invoice
sent to the Account Debtor named therein; and (v) all goods described in
any invoice representing a sale of goods will have been delivered to the
Account Debtor and all services of such Borrower described in each invoice
will have been performed.
(b) Such Borrower shall not re-date any invoice or sale or make
sales on extended dating beyond that customary in such Borrower's business
or extend or modify any Account outside the ordinary course of business.
If such Borrower becomes aware of any matter adversely affecting the
collectibility of any Account or the Account Debtor therefor involving an
amount greater than $1,000,000, including information regarding the
Account Debtor's creditworthiness, such Borrower will promptly so advise
the Agent.
(c) Such Borrower shall not, without the Agent's prior written
consent, accept any note or other instrument (except a check or other
instrument for the immediate payment
LOAN AND SECURITY AGREEMENT - Page 69
of money) with respect to any Account other than Accounts which (i) do not
exceed $1,000,000 individually and (ii) at the time of accepting such note
or other instrument are not less than ninety (90) days past due from the
date of the original invoice therefor. If the Agent consents to the
acceptance of any such instrument, it shall be considered as evidence of
the Account and not payment thereof and such Borrower will promptly
deliver such instrument to the Agent, endorsed by such Borrower to the
Agent in a manner satisfactory in form and substance to the Agent.
Regardless of the form of presentment, demand, or notice of protest with
respect thereto, such Borrower shall remain liable thereon until such
instrument is paid in full.
(d) Such Borrower shall notify the Agent promptly of all offsets,
deductions, defenses, or counterclaims in excess of $1,000,000 with any
Account Debtor, and agrees to settle, contest, or adjust such dispute or
claim at no expense to the Agent or any Lender. No discount, credit, or
allowance shall be granted to any such Account Debtor without the Agent's
prior written consent, except for discounts, credits, and allowances made
or given in the ordinary course of such Borrower's business when no Event
of Default exists hereunder. The Borrower shall promptly send the Agent a
copy of each credit memorandum in excess of $1,000,000. The Agent may at
all times when an Event of Default exists, settle or adjust disputes and
claims directly with Account Debtors of any Borrower for amounts and upon
terms which the Agent or the Majority Lenders, as applicable, shall
consider advisable and, in all cases, the Agent will credit the Loan
Account with the net amounts received by the Agent in payment of any
Accounts.
(e) If an Account Debtor returns any Inventory to a Borrower when no
Event of Default exists, then such Borrower shall promptly determine the
reason for such return and shall issue a credit memorandum to the Account
Debtor in the appropriate amount. The Borrowers shall immediately report
to the Agent any return involving an amount in excess of $1,000,000. Each
such report shall indicate the reasons for the returns and the locations
and condition of the returned Inventory. In the event any Account Debtor
returns Inventory to a Borrower when an Event of Default exists, such
Borrower, upon the request of the Agent, shall: (i) hold the returned
Inventory in trust for the Agent; (ii) segregate all returned Inventory
from all of its other property; (iii) dispose of the returned Inventory
solely according to the Agent's written instructions; and (iv) not issue
any credits or allowances with respect thereto without the Agent's prior
written consent. All returned Inventory of any Borrower shall be subject
to the Agent's Liens thereon. Whenever any Inventory is returned, the
related Account shall be deemed ineligible to the extent of the amount
owing by the Account Debtor with respect to such returned Inventory.
Section 6.9 Collection of Accounts; Payments.
(a) Within ninety (90) days of the Closing Date, the Borrowers shall
establish a lock-box service for collections of Accounts (other than
Accounts sold by the RPA Sellers to MRC pursuant to the RPA) at Clearing
Banks acceptable to the Agent and subject to Blocked Account Agreements
and other documentation acceptable to the Agent. The Borrowers shall
instruct all Account Debtors to make all payments directly to the address
LOAN AND SECURITY AGREEMENT - Page 70
established for each such lock-box service. If, notwithstanding such
instructions, any Borrower receives any proceeds of Accounts, it shall
receive such payments as the Agent's trustee, and shall immediately
deliver such payments to the Agent in their original form duly endorsed in
blank or deposit them into a Payment Account, as the Agent may direct. All
collections received in any lock-box or Payment Account or directly by any
Borrower or the Agent, and all funds in any Payment Account or other
account to which such collections are deposited shall be subject to the
Agent's sole control and withdrawals by any Borrower shall not be
permitted. The Agent or the Agent's designee may, at any time after the
occurrence of an Event of Default, notify Account Debtors that the
Accounts have been assigned to the Agent and of the Agent's security
interest therein, and may collect them directly and charge the collection
costs and expenses to the Loan Account as a Revolving Loan. So long as an
Event of Default exists, the Borrowers at the Agent's request, shall
execute and deliver to the Agent such documents as the Agent shall require
to grant the Agent access to any post office box in which collections of
Accounts are received.
(b) If sales of Inventory are made or services are rendered by any
Borrower for cash, such Borrower shall immediately deliver, or cause to be
delivered to the Agent or deposit into a Payment Account, the cash which
such Borrower receives.
(c) All payments received by the Agent in a bank account designated
by the Borrowers and the Agent will be the Agent's sole property for its
benefit and the benefit of the Lenders and will be credited to the Loan
Account (conditional upon final collection) on the same day received (if
received prior to 2:00 p.m. (Dallas, Texas time); provided that the
Borrowers shall compensate the Bank for the cost of collection and
clearance of remittances applied to the Loan Account, including interest
for one (1) day, on all uncollected funds credited to the Loan Account as
provided by this Section 6.9(c).
(d) In the event all of the Obligations are repaid upon the
termination of this Agreement or upon acceleration of the Obligations,
other than through the Agent's receipt of payments on account of the
Accounts or proceeds of the other Collateral, such payment will be
credited (conditional upon final collection) to the Loan Account (i) on
the date of the Agent's receipt of such funds if such funds are collected
funds or (ii) one (1) Business Day after the Agent's receipt of such funds
if such funds are uncollected funds.
Section 6.10 Inventory; Perpetual Inventory. Each Borrower represents and
warrants to the Agent and the Lenders and agrees with the Agent and the Lenders
that all of the Inventory (other than returned or obsolete Inventory) owned by
such Borrower is and will be held for sale or lease, or to be furnished in
connection with the rendition of services, in the ordinary course of such
Borrower's business, and is and will be fit for such purposes. Each Borrower
will keep its Inventory (other than returned or obsolete Inventory) in good and
marketable condition, except for damaged or defective goods arising in the
ordinary course of such Borrower's business. No Borrower will, without the prior
written consent of the Agent, acquire or maintain any Inventory in excess of
$1,000,000 at any time on consignment or approval unless such Inventory is
disclosed to the Agent pursuant to clause (d) of Section 6.7 and the applicable
Borrower takes appropriate steps to insure that all of such Inventory is
excluded from any determination of Eligible Inventory. Each Borrower agrees that
all
LOAN AND SECURITY AGREEMENT - Page 71
Inventory produced in the United States will be produced in accordance with the
Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder. Each Borrower will conduct a physical count
of its Inventory at least once per Fiscal Year, and during the existence of an
Event of Default, at such other times as the Agent may reasonably request. Each
Metals Inventory Borrower will maintain a perpetual inventory reporting system
at all times, and within six (6) months of the Closing Date, each Building
Products Borrower will maintain a perpetual inventory reporting system at all
times. Without the Agent's written consent, no Borrower will sell, through a
single transaction or a series of related transactions, Inventory on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval, consignment,
or other repurchase or return basis in excess of $1,000,000.
Section 6.11 Equipment and Real Estate.
(a) Each Borrower represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that all of the
Equipment (other than obsolete Equipment or Equipment no longer used or
useful in such Borrower's business) owned by such Borrower is and will be
used or held for use in such Borrower's business, and is and will be fit
for such purposes. Each Borrower shall keep and maintain its Equipment in
good operating condition and repair (ordinary wear and tear excepted) and
shall make all necessary replacements thereof.
(b) Each Borrower shall promptly inform the Agent of any material
additions to or deletions from its Equipment and Real Estate. No Borrower
shall permit any of its Equipment to become a fixture with respect to real
property or to become an accession with respect to other personal property
with respect to which real or personal property the Agent does not have a
Lien. No Borrower will, without the Agent's prior written consent, alter
or remove any identifying symbol or number on any Equipment constituting
Collateral.
(c) No Borrower shall, without the Agent's prior written consent,
sell, lease as a lessor, or otherwise dispose of any of its Equipment or
Real Estate; provided, however, that subject to the provisions of Section
9.9(b)(iv) and Section 9.19, the Borrowers may dispose of Equipment and
Real Estate if the proceeds of any such disposition are applied to the
Obligations pursuant to Section 4.3.
Section 6.12 Documents, Instruments, and Chattel Paper. Each Borrower
represents and warrants to the Agent and the Lenders that (a) all documents,
instruments, and chattel paper of such Borrower describing, evidencing, or
constituting Collateral, and all signatures and endorsements thereon, are and
will be complete, valid, and genuine, and (b) all goods evidenced by such
documents, instruments, and chattel paper are and will be owned by such Borrower
free and clear of all Liens other than Permitted Liens.
Section 6.13 Right to Cure. The Agent may, in its discretion, and shall,
at the direction of the Majority Lenders, pay any amount or do any act required
of any Borrower hereunder or under any other Loan Document in order to preserve,
protect, maintain, or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which any Borrower fails to pay or do, including
LOAN AND SECURITY AGREEMENT - Page 72
payment of any judgment against any Borrower, any insurance premium, any
warehouse charge, any finishing or processing charge, any landlord's or bailee's
claim, and any other Lien upon or with respect to the Collateral. All payments
that the Agent makes under this Section 6.13 and all out-of-pocket costs and
expenses that the Agent pays or incurs in connection with any action taken by it
hereunder shall be charged to the Loan Account as a Revolving Loan. Any payment
made or other action taken by the Agent under this Section 6.13 shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
thereafter as herein provided.
Section 6.14 Power of Attorney. Each Borrower, as to itself, hereby
appoints the Agent and the Agent's designee as such Borrower's attorney, with
power: (a) to endorse such Borrower's name on any checks, notes, acceptances,
money orders, or other forms of payment or security that come into the Agent's
or any Lender's possession; (b) to sign such Borrower's name on any invoice,
▇▇▇▇ of lading, warehouse receipt, or other document of title relating to any
Collateral, on drafts against customers, on assignments of Accounts, on notices
of assignment, financing statements, and other public records and to file any
such financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedure; (c) so long as any
Event of Default exists, to notify the post office authorities to change the
address for delivery of such Borrower's mail to an address designated by the
Agent and to receive, open, and dispose of all mail addressed to such Borrower;
(d) to send requests for verification of Accounts to customers or Account
Debtors; (e) to clear Inventory through customs in such Borrower's name, the
Agent's name, or the name of the Agent's designee, and to sign and deliver to
customs officials powers of attorney in such Borrower's name for such purpose;
and (f) to do all things the Agent determines are necessary to carry out this
Agreement. Each Borrower ratifies and approves all acts of such attorney. None
of the Lenders, the Agent, nor their attorneys will be liable for any acts or
omissions or for any error of judgment or mistake of fact or law other than any
such liability arising from any such Person's gross negligence or willful
misconduct. This power, being coupled with an interest, is irrevocable until
this Agreement has been terminated and the Obligations have been fully
satisfied.
Section 6.15 The Agent's and the Lenders' Rights, Duties, and Liabilities.
The Borrowers assume all responsibility and liability arising from or relating
to the use, sale, or other disposition of the Collateral. The Obligations shall
not be affected by any failure of the Agent or any Lender to take any steps to
perfect the Agent's Liens or to collect or realize upon the Collateral, nor
shall loss of or damage to the Collateral release any Borrower from any of the
Obligations. Following the occurrence and continuation of an Event of Default,
the Agent may (but shall not be required to), and at the direction of the
Majority Lenders shall, without notice to or consent from any Borrower ▇▇▇ upon
or otherwise collect, extend the time for payment of, modify or amend the terms
of, compromise or settle for cash, credit, or otherwise upon any terms, grant
other indulgences, extensions, renewals, compositions, or releases, and take or
omit to take any other action with respect to the Collateral, any security
therefor, any agreement relating thereto, any insurance applicable thereto, or
any Person liable directly or indirectly in connection with any of the
foregoing, without discharging or otherwise affecting the liability of any
Borrower for the Obligations or under this Agreement or any other agreement now
or hereafter existing between the Agent and/or any Lender and any Borrower.
LOAN AND SECURITY AGREEMENT - Page 73
Section 6.16 Site Visits, Observations and Testing. The Agent and its
representatives will have the right at any reasonable time to enter and visit
the Real Estate and any other place where any property of any Borrower is
located for the purposes of observing the Real Estate, taking and removing soil
or groundwater samples, and conducting tests on any part of the Real Estate. The
Agent is under no duty, however, to visit or observe the Real Estate or to
conduct tests, and any such acts by the Agent will be solely for the purposes of
protecting the Agent's Liens and preserving the Agent's and the Lenders' rights
under this Agreement. No site visit, observation or testing by the Agent or the
Lenders will result in a waiver of any Default or Event of Default or impose any
liability on the Agent or the Lenders. In no event will any site visit,
observation, or testing by the Agent be a representation that hazardous
substances are or are not present in, on, or under the Real Estate, or that
there has been or will be compliance with any Environmental Law. Neither any
Borrower nor any other party is entitled to rely on any site visit, observation,
or testing by the Agent. The Agent and the Lenders owe no duty of care to
protect the Borrowers or any other party against, or to inform the Borrowers or
any other party of, any hazardous substances or any other adverse condition
affecting the Real Estate. The Agent will promptly disclose to the Parent upon
its request, or to any other party as required by law, any report or findings
made as a result of, or in connection with, any site visit, observation, or
testing by the Agent. The Borrowers understand and agree that the Agent makes no
warranty or representation to the Borrowers or any other party regarding the
truth, accuracy, or completeness of any such report or findings that may be
disclosed. The Borrowers also understand that depending on the results of any
site visit, observation, or testing by the Agent and disclosed to the Borrowers,
the Borrowers may have a legal obligation to notify one or more environmental
agencies of the results, that such reporting requirements are site-specific, and
are to be evaluated by the Borrowers without advice or assistance from the
Agent. In each instance, the Agent will give the Borrowers reasonable notice
before entering the Real Estate or any other place the Agent is permitted to
enter under this Section 6.16. The Agent will make reasonable efforts to avoid
interfering with the Borrowers' use of the Real Estate or any other property in
exercising any rights provided hereunder.
Section 6.17 Guaranties; Third Party Joinder. Each Borrower shall
guarantee payment and performance of the Obligations (other than Obligations
owing by itself and excluding Existing Obligations in the case of any such
guarantee by a Newly Obligated Party) pursuant to a Guaranty Agreement in form
and substance satisfactory to the Agent, duly executed by each such Borrower.
Each such guaranteeing Borrower acknowledges and expressly agrees with the Agent
and each Lender that the Guaranty by such Borrower is required solely as a
condition to, and is given solely as inducement for and in consideration of,
credit or accommodations extended or to be extended under the Loan Documents to
any or all of the other Borrowers and is not required or given as a condition of
extensions of credit to such Borrower. Subject to the provisions of and pursuant
to Section 15.20, promptly upon creation or acquisition of any Subsidiary of a
Borrower, such Borrower shall, to the extent required pursuant to Section 9.20,
cause such new Subsidiary to become a Borrower and a Guarantor by executing and
delivering to the Agent such Loan Documents and other instruments, certificates,
and agreements as the Agent may request. Upon execution and delivery of such
Loan Documents and other instruments, certificates, and agreements, such newly
created or acquired Subsidiary shall automatically become a Borrower and
thereupon shall have all of the rights, benefits, duties, and obligations of a
Borrower and a Guarantor under the Loan Documents.
LOAN AND SECURITY AGREEMENT - Page 74
Section 6.18 Voting Rights, Distributions, Etc. in Respect of Investment
Property.
(a) So long as no Event of Default exists (i) each Borrower shall be
entitled to exercise any and all voting and other consensual rights
(including, without limitation, the right to give consents, waivers, and
notifications in respect of any securities) pertaining to its Investment
Property or any part thereof; provided, however, that without the prior
written consent of the Agent and the Majority Lenders, no vote shall be
cast or consent, waiver, or ratification given or action taken which would
(A) be inconsistent with or violate any provision of this Agreement or any
other Loan Document or (B) amend, modify, or waive any material term,
provision, or condition of the certificate of incorporation, bylaws,
certificate of formation, or other charter document or other agreement
relating to, evidencing, providing for the issuance of, or securing any
such Investment Property, in any manner that would impair such Investment
Property, the transferability thereof, or the Agent's Liens therein, and
(ii) each Borrower shall be entitled to receive and retain any and all
dividends and interest paid in respect of any of such Investment Property
(unless otherwise required by this Agreement).
(b) During the existence of an Event of Default, (i) the Agent may,
without notice to any Borrower or any other Person obligated for payment
of all or any part of the Obligations, transfer or register in the name of
the Agent or any of its nominees, for the benefit of the Agent and the
Lenders, any or all of the Collateral consisting of Investment Property,
the proceeds thereof (in cash or otherwise), and all liens, security,
rights, remedies, and claims of any Borrower with respect thereto (as used
in this Section 6.18 collectively, the "Pledged Collateral") held by the
Agent hereunder, and the Agent or its nominee may thereafter, after
delivery of notice to the applicable Borrower, exercise all voting and
corporate rights at any meeting of any corporation, partnership, or other
business entity issuing any of the Pledged Collateral and any and all
rights of conversion, exchange, subscription, or any other rights,
privileges, or options pertaining to any of the Pledged Collateral as if
it were the absolute owner thereof, including, without limitation, the
right to exchange at its discretion any and all of the Pledged Collateral
upon the merger, consolidation, reorganization, recapitalization, or other
readjustment of any corporation, partnership, or other business entity
issuing any of such Pledged Collateral or upon the exercise by any such
issuer or the Agent of any right, privilege, or option pertaining to any
of the Pledged Collateral, and in connection therewith, to deposit and
deliver any and all of the Pledged Collateral with any committee,
depositary, transfer agent, registrar, or other designated agency upon
such terms and conditions as it may determine, all without liability
except to account for property actually received by it, but the Agent
shall have no duty to exercise any of the aforesaid rights, privileges, or
options, and the Agent shall not be responsible for any failure to do so
or delay in so doing, (ii) after the Agent's giving of the notice
specified in clause (i) of this Section 6.18(b), all rights of any
Borrower to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to clause (i) of Section
6.18(a) and to receive the dividends, interest, and other distributions
which it would otherwise be authorized to receive and retain thereunder
shall be suspended until such Event of Default shall no longer exist, and
all such rights shall, until
LOAN AND SECURITY AGREEMENT - Page 75
such Event of Default shall no longer exist, thereupon become vested in
the Agent which shall thereupon have the sole right to exercise such
voting and other consensual rights and to receive and hold as Pledged
Collateral such dividends, interest, and other distributions, (iii) all
dividends, interest, and other distributions which are received by any
Borrower contrary to the provisions of this Section 6.18(b) shall be
received in trust for the benefit of the Agent, shall be segregated from
other funds of such Borrower and shall be forthwith paid over to the Agent
as Collateral in the same form as so received (with any necessary
endorsement), and (iv) each Borrower shall execute and deliver (or cause
to be executed and delivered) to the Agent all such proxies and other
instruments as the Agent may reasonably request for the purpose of
enabling the Agent to exercise the voting and other rights which it is
entitled to exercise pursuant to this Section 6.18(b) and to receive the
dividends, interest, and other distributions which it is entitled to
receive and retain pursuant to this Section 6.18(b). The foregoing shall
not in any way limit the Agent's power and authority granted pursuant to
Section 6.14.
Section 6.19 RPA Seller Notes. Each RPA Seller has instructed the RPA
Buyer to disburse directly to the Agent, for the account of such RPA Seller, all
payments in respect of the RPA Seller Note payable to such RPA Seller, as
proceeds of Collateral to be applied pursuant to this Agreement.
Section 6.20 Revised UCC Article 9. The parties to this Agreement
acknowledge that Revised Article 9 will become effective in the State of Texas
and in various other Enactment States on July 1, 2001, and that it may be
adopted and become effective in one or more other Enactment States at any time
thereafter. In anticipation of the effectiveness of Revised Article 9 in any
Enactment State and its resulting application to the Loan Documents or any
matters contemplated thereby, the Agent, the Lenders, and the Borrowers hereby
agree as follows:
(a) Attachment. Without otherwise limiting any other provision of
this Agreement or of Part 7 of Revised Article 9, in applying the law of
any Enactment State at any time on and after the Enactment Date with
respect to such Enactment State (i) the Collateral includes, without
limitation, each of the following categories as defined by Revised Article
9, and all property of the Borrowers included therein at any time owned or
acquired: goods (including, without limitation, inventory, equipment,
fixtures and accessions); instruments (including, without limitation,
promissory notes); documents of title; accounts; chattel paper (whether
tangible or electronic); deposit accounts; letter-of- credit rights;
commercial tort claims (to the extent described in any notice delivered by
the Borrowers pursuant to Section 6.20(c); investment property; general
intangibles; leases; money; supporting obligations; and proceeds; in each
case wherever located, and whenever owned or acquired, and (ii) the
Agent's Lien in all such property created under this Agreement (whether
pursuant to Existing Article 9 or other Requirement of Law) on the Closing
Date shall continue in full force and effect on and under and pursuant to
Revised Article 9 and other Requirements of Law.
(b) Perfection by Filing. The Agent may, at any time and from time
to time, file financing statements, continuation statements, and
amendments thereto that describe the Collateral as "all assets" of the
Borrowers, or words of similar effect, and which contain any
LOAN AND SECURITY AGREEMENT - Page 76
other information required pursuant to Revised Article 9 for the
sufficiency of filing office acceptance of any financing statement,
continuation statement, or amendment, and each Borrower agrees to furnish
any such information to the Agent promptly upon request. Any such
financing statement, continuation statement, or amendment may be signed by
the Agent on behalf of a Borrower and may be filed at any time in any
jurisdiction whether or not Revised Article 9 is then in effect in that
jurisdiction.
(c) Other Perfection, etc. Each Borrower shall, at any time and from
time to time, whether or not Revised Article 9 is in effect in any
particular jurisdiction, take such steps as the Agent may reasonably
request for the Agent (i) to obtain an acknowledgment, in form and
substance reasonably satisfactory to the Agent, of any bailee having
possession of any of the Collateral, stating that the bailee holds such
Collateral for the Agent, (ii) to obtain "control" of any investment
property, deposit accounts, letter-of-credit rights, or electronic chattel
paper (as such terms are defined by Revised Article 9 with corresponding
provisions thereof defining what constitutes "control" for such items of
Collateral), with any agreements establishing control to be in form and
substance reasonably satisfactory to the Agent, and (iii) otherwise to
insure the continued perfection and priority of the Agent's security
interest in any of the Collateral and of the preservation of its rights
therein, whether in anticipation of or following the effectiveness of
Revised Article 9 in any jurisdiction. If any Borrower shall at any time,
whether or not Revised Article 9 is in effect in any particular
jurisdiction, acquire a "commercial tort claim" (as such term is defined
in Revised Article 9) in excess of $1,000,000, such Borrower shall
promptly notify the Agent thereof in a writing, therein providing a
reasonable description and summary thereof, and upon delivery thereof to
the Agent, such Borrower shall be deemed to thereby grant to the Agent
(and such Borrower hereby grants to the Agent) a security interest and
lien in and to such commercial tort claim and all proceeds thereof, all
upon the terms of and governed by this Agreement.
(d) Savings Clause. Nothing contained in this Section 6.20 shall be
construed to narrow the scope of the Agent's Liens or the perfection or
priority thereof or to impair or otherwise limit any of the rights,
powers, privileges, or remedies of the Agent or any Lender under the Loan
Documents.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
Section 7.1 Books and Records. The Borrowers shall maintain, at all times,
correct and complete books, records, and accounts in which complete, correct,
and timely entries are made of their respective transactions in accordance with
GAAP applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 7.2(a). The Borrowers shall, by means of
appropriate entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provision for
depreciation and amortization of property and bad debts, all in accordance with
GAAP. The Borrowers shall maintain at all times books and records pertaining to
the Collateral in such detail, form, and scope as the Agent shall reasonably
require, including, but not limited to, records of (a) all payments received and
all credits
LOAN AND SECURITY AGREEMENT - Page 77
and extensions granted with respect to the Accounts, (b) the return, rejection,
repossession, stoppage in transit, loss, damage, or destruction of any
Inventory, and (c) all other dealings affecting the Collateral.
Section 7.2 Financial Information. The Borrowers shall promptly furnish to
the Agent, all such information regarding each Borrower's financial and business
affairs as the Agent or any Lender (through the Agent) shall reasonably request.
Without limiting the foregoing, the Borrowers will furnish, or cause to be
furnished, to the Agent the following in sufficient copies for distribution by
the Agent to each Lender and in such detail as the Agent or the Lenders shall
request.
(a) The Borrowers will furnish, or cause to be furnished, as soon as
available, but in any event not later than ninety (90) days after the
close of each Fiscal Year, consolidated audited, and consolidating (with
respect to MRC only, unless otherwise reasonably requested by the Agent)
unaudited, balance sheets, statements of income, cash flow, and
stockholders' equity for the Parent and its Subsidiaries for such Fiscal
Year, the accompanying notes thereto, and setting forth in comparative
form figures for the previous Fiscal Year, all in reasonable detail,
fairly presenting the financial position and the results of operations of
the Parent and its Subsidiaries as at the date thereof and for the Fiscal
Year then ended, and prepared in accordance with GAAP. Such Financial
Statements shall be examined in accordance with generally accepted
auditing standards by and, in the case of such Financial Statements
performed on a consolidated basis, accompanied by a report thereon,
unqualified in any respect, of independent certified public accountants of
national standing selected by the Parent. Each Borrower hereby authorizes
the Agent to communicate directly with its certified public accountants
and, by this provision, authorizes those accountants to disclose to the
Agent any and all financial statements and other supporting financial
documents and schedules relating to such Borrower and to discuss directly
with the Agent such Borrower's finances and affairs.
(b) The Borrowers will furnish, or cause to be furnished, as soon as
available, but in any event not later than thirty (30) days after the end
of each Fiscal Period, other than any Fiscal Period which is a Fiscal
Quarter end and with respect to any such Fiscal Quarter end within
forty-five (45) days after the end of such Fiscal Quarter, consolidated
and consolidating (with respect to MRC only, unless otherwise reasonably
requested by the Agent) unaudited balance sheets of the Parent and its
Subsidiaries as at the end of such Fiscal Period or Fiscal Quarter, as
applicable, and consolidated and consolidating (with respect to MRC only,
unless otherwise reasonably requested by the Agent) unaudited statements
of income and cash flow for the Parent and its Subsidiaries for such
Fiscal Period or Fiscal Quarter, as applicable, and for the period from
the beginning of the Fiscal Year to the end of such Fiscal Period or
Fiscal Quarter, as applicable, all in reasonable detail, fairly presenting
the financial position and results of operations of the Parent and its
Subsidiaries as at the date thereof and for such periods, and prepared in
accordance with GAAP (other than presentation of footnotes and subject to
normal year-end audit adjustments) applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 7.2(a).
The Parent shall certify by a certificate signed by its chief financial
officer or chief accounting officer that all such Financial Statements
have been prepared in
LOAN AND SECURITY AGREEMENT - Page 78
accordance with GAAP and present fairly, subject to normal year-end
adjustments, the financial position of the Parent and its Subsidiaries as
at the dates thereof and its results of operations for the periods then
ended.
(c) [Reserved].
(d) The Borrowers will furnish, or cause to be furnished, within
forty-five days (45) of the last day of each Fiscal Quarter, a certificate
of the chief financial officer or chief accounting officer of the Parent
in the form of Exhibit F (a "Compliance Certificate") (i) setting forth in
reasonable detail the calculations required to establish compliance with
the covenants set forth in Section 9.22 through Section 9.26 during the
period covered by such Financial Statements and as at the end thereof,
(ii) setting forth for the Fiscal Quarter and Fiscal Year to date period
then ended the aggregate amount of all dispositions of property covered
under Section 4.3 and the aggregate amount of the cost of any replacements
of such property, and (iii) stating that, except as explained in
reasonable detail in such certificate, (A) all of the representations and
warranties of the Borrowers contained in this Agreement and the other Loan
Documents are correct and complete in all material respects as at the date
of such certificate as if made at such time, except for those that speak
as of a particular date, (B) the Borrowers are, at the date of such
certificate, in compliance in all material respects with all of their
respective covenants and agreements in this Agreement and the other Loan
Documents, and (C) no Default or Event of Default then exists or existed
during the period covered by such Financial Statements. If such
certificate discloses that a representation or warranty is not correct or
complete, or that a covenant has not been complied with, or that a Default
or Event of Default existed or exists, such certificate shall set forth
what action the Borrowers have taken or propose to take with respect
thereto.
(e) The Borrowers will furnish, or cause to be furnished, no sooner
than sixty (60) days and not less than thirty (30) days prior to the
beginning of each Fiscal Year, and periodically thereafter during such
Fiscal Year as determined necessary by the Borrowers as an update thereto,
annual forecasts prepared by the Parent during such time period (to
include forecasted consolidated and consolidating (with respect to MRC
only, unless otherwise reasonably requested by the Agent) balance sheets
and statements of income and cash flow) for the Parent and its
Subsidiaries as at the end of and for each Fiscal Quarter of such Fiscal
Year.
(f) Upon the Agent's request, the Borrowers will furnish, or cause
to be furnished, promptly after filing with the PBGC and the IRS, a copy
of each annual report or other filing filed with respect to each Plan of
any Borrower.
(g) The Borrowers will furnish, or cause to be furnished, promptly
upon the filing thereof, copies of all reports, if any, to or other
documents filed by any Borrower with the Securities and Exchange
Commission under the Exchange Act, and all reports, notices, or statements
sent or received by any Borrower to or from the holders of any equity
interests of any Borrower (other than routine non-material correspondence
sent by shareholders of any Borrower to such Borrower) or of any Funded
Debt of any Borrower registered under the
LOAN AND SECURITY AGREEMENT - Page 79
Securities Act of 1933 or to or from the trustee under any indenture under
which the same is issued.
(h) The Borrowers will furnish, or cause to be furnished, as soon as
available, but in any event not later than fifteen (15) days after any
Borrower's receipt thereof, a copy of all management reports and
management letters prepared by any independent certified public
accountants of the Parent or any other Borrower.
(i) The Borrowers will furnish, or cause to be furnished, promptly
after their preparation, copies of any and all proxy statements, financial
statements, and reports which the Parent makes available to its
shareholders or any holder of any Funded Debt.
(j) Upon the Agent's request, the Borrowers will furnish, or cause
to be furnished, promptly after filing with the IRS, a copy of each tax
return filed by any Borrower.
(k) The Borrowers will furnish, or cause to be furnished, such
additional information as the Agent and/or any Lender may from time to
time reasonably request regarding the financial and business affairs of
any Borrower.
Section 7.3 Notices to the Lenders. The Borrowers shall notify the Agent
and the Lenders in writing of the following matters at the following times:
(a) promptly after becoming aware of any Default or Event of
Default;
(b) promptly after becoming aware of the assertion by the holder of
any Capital Stock of any Borrower or of any Funded Debt in excess of
$5,000,000 that a default exists with respect thereto or that any Borrower
is not in compliance with the terms thereof, or the written threat or
commencement by such holder of any enforcement action because of such
asserted default or non-compliance;
(c) promptly after becoming aware of any event or circumstance which
could have, or has resulted in, a Material Adverse Effect;
(d) promptly after becoming aware of any pending or threatened (in
writing) action, suit, proceeding, or counterclaim by any Person, or any
pending or threatened investigation by a Governmental Authority, which
could have a Material Adverse Effect;
(e) promptly after becoming aware of any pending or threatened (in
writing) strike, work stoppage, unfair labor practice claim, or other
labor dispute affecting any Borrower in a manner which could have a
Material Adverse Effect;
(f) promptly after becoming aware of any violation of any law,
statute, regulation, or ordinance of a Governmental Authority affecting
any Borrower which could have a Material Adverse Effect;
LOAN AND SECURITY AGREEMENT - Page 80
(g) promptly after receipt of any written notice of any violation by
any Borrower of any Environmental Law which could have a Material Adverse
Effect or that any Governmental Authority has asserted in writing that any
Borrower is not in compliance with any Environmental Law or is
investigating any Borrower's compliance therewith;
(h) promptly after receipt of any written notice that any Borrower
is or may be liable to any Person as a result of the Release or threatened
Release of any Contaminant or that any Borrower is subject to
investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to the Release or threatened Release
of any Contaminant which, in either case, is reasonably likely to give
rise to liability in excess of $5,000,000;
(i) promptly after receipt of any written notice of the imposition
of any Environmental Lien with respect to liability in excess of
$5,000,000 against any property of any Borrower;
(j) any change in any Borrower's name, state of organization, or
form of organization, trade names under which any Borrower will sell
Inventory or create Accounts, or to which instruments in payment of
Accounts may be made payable, in each case at least thirty (30) days prior
thereto;
(k) within ten (10) Business Days after any Borrower or any ERISA
Affiliate knows or has reason to know, that an ERISA Event or a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred, and, when known, any action taken or threatened by the IRS, the
DOL, or the PBGC with respect thereto;
(l) upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within
three (3) Business Days after the filing thereof with the PBGC, the DOL,
or the IRS, as applicable, copies of the following: (i) each annual report
(form 5500 series), including Schedule B thereto, filed with the PBGC, the
DOL, or the IRS with respect to each Plan, (ii) a copy of each funding
waiver request filed with the PBGC, the DOL or the IRS with respect to any
Plan and all communications received by any Borrower or any ERISA
Affiliate from the PBGC, the DOL, or the IRS with respect to such request,
and (iii) a copy of each other filing or notice filed with the PBGC, the
DOL, or the IRS, with respect to each Plan of any Borrower or any ERISA
Affiliate;
(m) upon request, copies of each actuarial report for any Plan or
Multi-employer Plan and annual report for any Multi-employer Plan, and
within three (3) Business Days after receipt thereof by any Borrower or
any ERISA Affiliate, copies of the following: (i) any notices of the
PBGC's intention to terminate a Plan or to have a trustee appointed to
administer such Plan; (ii) any favorable or unfavorable determination
letter from the IRS regarding the qualification of a Plan under Section
401(a) of the Code; or (iii) any notice from a Multi-employer Plan
regarding the imposition of withdrawal liability;
LOAN AND SECURITY AGREEMENT - Page 81
(n) within three (3) Business Days after the occurrence thereof: (i)
any changes in the benefits of any existing Plan which increase any
Borrower's annual costs with respect thereto by an amount in excess of
$1,000,000, or the establishment of any new Plan or the commencement of
contributions in excess of $1,000,000 to any Plan to which any Borrower or
any ERISA Affiliate was not previously contributing or (ii) any failure by
any Borrower or any ERISA Affiliate to make a required installment or any
other required payment in excess of $1,000,000 under Section 412 of the
Code on or before the due date for such installment or payment;
(o) within three (3) Business Days after any Borrower or any ERISA
Affiliate knows or has reason to know that any of the following events has
or will occur: (i) a Multi-employer Plan has been or will be terminated;
(ii) the administrator or plan sponsor of a Multi-employer Plan intends to
terminate a Multi-employer Plan; or (iii) the PBGC has instituted or will
institute proceedings under Section 4042 of ERISA to terminate a
Multi-employer Plan;
(p) promptly upon becoming aware of any default or event of default
under the Subordinated Notes;
(q) promptly upon commencement of any proceedings contesting any
tax, fee, assessment, or other governmental charge in excess of $250,000;
and
(r) promptly upon becoming aware of any "Default" (as defined by the
MRC Loan Agreement) or "Event of Default" (as defined by the MRC Loan
Agreement) under the MRC Loan Agreement or of any "Termination Event" (as
defined by the RPA) or "Potential Termination Event" (as defined by the
RPA) under the RPA.
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail, and shall set forth the action that any Borrower or any
ERISA Affiliate, as applicable, has taken or proposes to take with respect
thereto.
Section 7.4 Revisions or Updates to Schedules. Should any of the
information or disclosures provided on any of the schedules originally attached
hereto become outdated or incorrect in any material respect, the Borrowers from
time to time shall deliver to the Agent and the Lenders, together with an
officer's certificate of the type required pursuant to Section 7.2(d), such
revisions or updates to such schedule(s) whereupon such schedules shall be
deemed to be amended by such revisions or updates, as may be necessary or
appropriate to update or correct such schedule(s), provided that,
notwithstanding the foregoing, no such revisions or updates to Schedules 8.5,
8.11, 8.12, 8.14, 8.16, 8.17, or 8.20 shall be deemed to have amended, modified,
or superseded any such schedules as originally attached hereto, or to have cured
any breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such schedules, unless and until the Agent and the
Majority Lenders shall have accepted in writing such revisions or updates to any
such schedules.
LOAN AND SECURITY AGREEMENT - Page 82
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
Each Borrower warrants and represents to the Agent and the Lenders that
except as set forth in the Schedules to this Agreement as they may be modified
from time to time pursuant to Section 7.4, and except as hereafter disclosed to
and accepted by the Majority Lenders in writing:
Section 8.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents; No Conflicts. Each Borrower has the power and authority
to execute, deliver, and perform this Agreement and the other Loan Documents to
which it is a party, to incur the Obligations, and to grant to the Agent Liens
upon the Collateral. Each Borrower has taken all necessary action (including
obtaining approval of its stockholders, partners, general partner(s), members,
or other applicable equity owners, if necessary) to authorize its execution,
delivery, and performance of this Agreement and the other Loan Documents to
which it is a party. This Agreement and the other Loan Documents have been duly
executed and delivered by each Borrower, and constitute the legal, valid, and
binding obligations of each Borrower, enforceable against it in accordance with
their respective terms without defense, set-off, or counterclaim, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws at the time in effect affecting the rights of creditors generally
and to the effect of general principles of equity whether applied by a court of
law or equity. Each Borrower's execution, delivery, and performance of this
Agreement and the other Loan Documents to which it is a party do not and will
not conflict with, or constitute a violation or breach of, or constitute a
default under, or result in or require the creation or imposition of any Lien
upon the property of any Borrower by reason of the terms of (a) any contract,
mortgage, Lien, lease, agreement, indenture, document, or agreement related to
any Permitted Subordinated Debt (including, without limitation, the Debt
evidenced by the Subordinated Notes, the Indenture, and any other agreements
entered into in connection therewith), or instrument to which such Borrower is a
party or which is binding upon it, (b) any Requirement of Law applicable to such
Borrower, or (c) the certificate or articles of incorporation, by-laws, or other
organizational or constituent documents, as the case may be, of such Borrower.
The Borrowers' entering into this Agreement and incurrence of the Obligations
resulting from each Borrowing is not prohibited under the Subordinated Notes.
Section 8.2 Validity and Priority of Security Interest. The provisions of
this Agreement, the Mortgages, and the other Loan Documents create legal and
valid Liens on all the Collateral in favor of the Agent, for the benefit of the
Agent and the Lenders, and, to the extent any such Liens may be perfected under
the UCC, such Liens constitute perfected and continuing Liens on the Collateral,
securing all the Obligations, and enforceable against the Borrowers and all
third parties, and having priority over all other Liens on the Collateral (a)
except in the case of Liens described in clauses (d), (e), and (f) of the
definition of Permitted Liens to the extent any such Liens would have priority
over the Agent's Liens pursuant to any Requirement of Law) and (b) except for
Liens the perfection of which is outside the scope of the UCC, Liens in
certificated vehicles, and Liens perfected only by possession to the extent the
Agent has not obtained or does not maintain possession of such Collateral.
LOAN AND SECURITY AGREEMENT - Page 83
Section 8.3 Organization and Qualification. Each Borrower (a) is duly
formed or organized and validly existing in good standing under the laws of the
jurisdiction of its formation or organization, (b) is qualified to do business
as a foreign business entity and is in good standing in the jurisdictions set
forth on Schedule 8.3, which are the only jurisdictions in which qualification
is necessary in order for it to own or lease its property and conduct its
business except for any jurisdiction for which the failure to so qualify could
not reasonably be expected to have a Material Adverse Effect, and (c) has all
requisite power and authority to conduct its business and to own its property as
presently conducted or owned.
Section 8.4 Corporate Name; Prior Transactions. Except as set forth on
Schedule 8.4, since the date of its organization or acquisition as a Subsidiary
of the Parent, whichever time period is shorter, no Borrower has been known by
or used any other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its property outside of the ordinary course of business.
Section 8.5 Subsidiaries. Schedule 8.5 is a correct and complete list, as
of the Closing Date, of the name and relationship to the Parent of each and all
of the Parent's Subsidiaries. Schedule 8.5 sets forth, as of the Closing Date, a
true and complete listing of each class of each Borrower's authorized Capital
Stock, of which all of such issued shares are validly issued, outstanding, fully
paid and non-assessable, and owned beneficially and of record by the Persons
identified on Schedule 8.5. All Borrowers (other than the Parent) are
Wholly-Owned Subsidiaries of the Parent. As of the Closing Date the Borrowers
(other than the Parent) constitute all of the Subsidiaries of the Parent
excluding MRC.
Section 8.6 Financial Statements and Projections.
(a) The Parent has delivered to the Agent and the Lenders the
audited balance sheet and related statements of income, retained earnings,
cash flow, and changes in stockholders equity for the Parent and its
Subsidiaries as of December 31, 1999, and for the Fiscal Year then ended,
accompanied by the report thereon of the Parent's independent certified
public accountants, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP. The Parent has also delivered to
the Agent and the Lenders the unaudited balance sheet and related
statements of income and cash flow for the Parent and its Subsidiaries as
of December 31, 2000. All such financial statements have been prepared in
accordance with GAAP and fairly present the financial position of the
Parent and its Subsidiaries as at the dates thereof and their results of
operations for the periods then ended (except with respect to the
financial statements dated December 31, 2000, for the absence of
applicable footnotes and subject to normal year-end adjustments).
(b) The Latest Projections when submitted to the Agent and the
Lenders as required herein represent the Borrowers' good faith estimate of
the future financial performance of the Borrowers for the periods set
forth therein. The Latest Projections have been prepared on the basis of
the assumptions set forth therein, which the Borrowers believe are fair
and reasonable in light of current and reasonably foreseeable business
conditions at the time submitted to the Lender.
LOAN AND SECURITY AGREEMENT - Page 84
Section 8.7 Solvency. Each Borrower is Solvent prior to and after giving
effect to the making of the Revolving Loans to be made on the Closing Date and
the issuance of the Letters of Credit and Credit Support to be issued on the
Closing Date (if any), and shall remain Solvent during the term of this
Agreement.
Section 8.8 Debt. After giving effect to the making of the Revolving Loans
to be made on the Closing Date, the Borrowers have no Debt, except (a) the
Obligations, (b) Debt described on Schedule 8.8, (c) trade payables and other
obligations arising in the ordinary course of business, (d) Permitted
Subordinated Debt, (e) other Debt existing on the Closing Date and reflected in
the Financial Statements described in Section 8.6(a), and (f) other Debt entered
into after the Closing Date as permitted by Section 9.13 and reflected in the
Financial Statements delivered pursuant to Section 7.2.
Section 8.9 Distributions. As of the Closing Date, since December 31,
2000, no Distribution has been declared, paid, or made upon or in respect of any
Capital Stock or other equity securities of the Parent.
Section 8.10 Title to Property. Each Borrower has good and indefeasible
title in fee simple to the Real Estate identified on Schedule 8.11 as owned by
such Borrower, and each Borrower has good, indefeasible, and merchantable title
to all of its other property (including the assets reflected on the December 31,
2000 Financial Statements delivered to the Agent and the Lenders, except as
sold, transferred, or otherwise disposed of in the ordinary course of business
since the date thereof or as permitted by this Agreement), free of all Liens
except Permitted Liens.
Section 8.11 Real Estate; Leases. Schedule 8.11 sets forth, as of the
Closing Date, a correct and complete list of all Real Estate owned by each
Borrower, all leases and subleases of real or personal property by each Borrower
as lessee or sublessee (other than leases of personal property as to which it is
lessee or sublessee for which the value of such personal property is less than
$500,000), and all leases and subleases of real or personal property by each
Borrower as lessor or sublessor. Each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, and,
to the Borrowers' knowledge, no default by any party to any such lease or
sublease exists.
Section 8.12 Proprietary Rights. Schedule 8.12 sets forth a correct and
complete list of all of each Borrower's registered patents and trademarks
material to its business. None of the patents and trademarks listed in Schedule
8.12 is subject to any licensing agreement or similar arrangement except as set
forth on Schedule 8.12. The patents and trademarks described on Schedule 8.12
constitute all of the property of such type necessary to the current and
anticipated future conduct of the Borrowers' business. To the best of each
Borrower's knowledge, no slogan or other advertising device, product, process,
method, substance, part, or other material now employed, or now contemplated to
be employed, by any Borrower infringes in any material respect upon any rights
held by any other Person. No claim or litigation regarding any of the foregoing
is pending or threatened, and no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard,
LOAN AND SECURITY AGREEMENT - Page 85
or code is pending or, to the knowledge of any Borrower, proposed, which, in
either case, could reasonably be expected to have a Material Adverse Effect.
Section 8.13 Trade Names. All trade names or styles under which any
Borrower will sell Inventory or create Accounts, or to which instruments in
payment of Accounts may be made payable, are listed on Schedule 8.13.
Section 8.14 Litigation. Except as set forth on Schedule 8.14 , there is
no pending, or to the best of any Borrower's knowledge threatened, action, suit,
proceeding, or counterclaim by any Person, or investigation by any Governmental
Authority, or any basis for any of the foregoing, which could reasonably be
expected to have a Material Adverse Effect.
Section 8.15 Restrictive Agreements. No Borrower is a party to any
contract or agreement, or subject to any charter or other corporate restriction,
which affects its ability to execute, deliver, and perform the Loan Documents to
which it is a party and repay the Obligations or which could have a Material
Adverse Effect.
Section 8.16 Labor Matters. Except as set forth on Schedule 8.16, as of
the Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of any Borrower, (b) no such collective bargaining
agreement or other labor contract is scheduled to expire during the term of this
Agreement, (c) no union or other labor organization is seeking to organize, or
to be recognized as, a collective bargaining unit of employees of any Borrower
or for any similar purpose, and (d) there is no pending or threatened, strike,
work stoppage, material unfair labor practice claim, or other material labor
dispute against or affecting any Borrower or its employees.
Section 8.17 Environmental Matters. Except as otherwise disclosed on
Schedule 8.17:
(a) Each Borrower has complied in all material respects with all
Environmental Laws and no Borrower nor any of its presently owned Real
Estate or presently conducted operations, nor its previously owned Real
Estate or prior operations, is subject to any enforcement order from or
liability agreement with any Governmental Authority or private Person
respecting (i) compliance with any Environmental Law or (ii) any potential
liabilities and costs or remedial action (involving a liability or
potential liability in excess of $1,000,000) arising from the Release or
threatened Release of a Contaminant.
(b) Each Borrower has obtained all permits necessary for its current
operations under Environmental Laws other than permits which the failure
to obtain could not reasonably be expected to have a Material Adverse
Effect, and all such permits are in good standing and each Borrower is in
compliance with all material terms and conditions of such permits other
than permits which the failure to comply with could not reasonably be
expected to have a Material Adverse Effect.
(c) No Borrower, nor to the best of any Borrower's knowledge any of
its predecessors in interest, has in violation of any Environmental Law
stored, treated, or disposed of any hazardous waste (as defined pursuant
to 40 CFR Part 261 or any equivalent
LOAN AND SECURITY AGREEMENT - Page 86
Environmental Law) other than violations that could not reasonably be
expected to have a Material Adverse Effect.
(d) No Borrower has received any summons, complaint, order, or
similar written notice indicating that it is not currently in compliance
with, or that any Governmental Authority is investigating its compliance
with, any Environmental Laws or that it is or may be liable to any other
Person as a result of a Release or threatened Release of a Contaminant.
(e) None of the present or past operations of any Borrower is the
subject of any investigation by any Governmental Authority evaluating
whether any remedial action is needed to respond to a Release or
threatened Release of a Contaminant in each such case other than a Release
or threatened Release that could not reasonably be expected to have a
Material Adverse Effect.
(f) There is not now, nor to the best of any Borrower's knowledge
has there ever been on or in the Real Estate of any Borrower in violation
of Environmental Laws other than violations that could not reasonably be
expected to have a Material Adverse Effect:
(i) any underground storage tanks or surface impoundments,
(ii) any asbestos-containing material, or
(iii) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers, or other equipment.
(g) Since December 31, 1998 or as otherwise disclosed to the Agent
pursuant to Section 7.3(g), Section 7.3(h), or Section 7.3(i), no Borrower
has filed any notice under any requirement of Environmental Law reporting
a spill or accidental and unpermitted Release or discharge of a
Contaminant into the environment.
(h) No Borrower has entered into any negotiations or settlement
agreements with any Person (including the prior owner of its property)
imposing material obligations or liabilities on any Borrower with respect
to any remedial action in response to the Release of a Contaminant or
environmentally related claim.
(i) None of the products manufactured, distributed, or sold by any
Borrower contains asbestos containing material.
(j) No Environmental Lien has attached to the Real Estate of any
Borrower.
Section 8.18 No Violation of Law. No Borrower is in violation of any law,
statute, regulation, ordinance, judgment, order, or decree applicable to it
which violation could reasonably be expected to have a Material Adverse Effect.
LOAN AND SECURITY AGREEMENT - Page 87
Section 8.19 No Default. No Borrower is in default with respect to any
note, indenture, loan agreement, mortgage, lease, deed, or other agreement to
which such Borrower is a party or by which it is bound, which default could have
a Material Adverse Effect. No default or event of default exists under the
Subordinated Notes or the Indenture.
Section 8.20 ERISA Compliance. Except as specifically disclosed in
Schedule 8.20:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code, and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code
has received a favorable determination letter from the IRS and nothing has
occurred which would cause the loss of such qualification. Each Borrower
and each ERISA Affiliate has made all required contributions to any Plan
subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412
of the Code has been made with respect to any Plan.
(b) There are no pending or threatened claims, actions, or lawsuits,
or action by any Governmental Authority, with respect to any Plan which
has resulted or could be expected to result in a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or could
be expected to result in a Material Adverse Effect.
(c) Except for instances, if any, which together do not give rise to
liability in excess of $1,000,000 in the aggregate, (i) no ERISA Event has
occurred or is reasonably expected to occur; (ii) no Pension Plan has any
Unfunded Pension Liability; (iii) no Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) no Borrower nor any ERISA
Affiliate has incurred, or expects to incur, any liability (and no event
has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with
respect to a Multi-employer Plan; and (v) no Borrower nor any ERISA
Affiliate has engaged in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
Section 8.21 Taxes. Each Borrower has filed all federal and other tax
returns and reports required to be filed (or appropriate extensions have been
timely filed), and has paid all federal and other taxes, assessments, fees, and
other governmental charges levied or imposed upon them or their properties,
income, or assets otherwise due and payable unless such unpaid taxes and
assessments would constitute a Permitted Lien.
Section 8.22 Regulated Entities. No Borrower nor any Person controlling a
Borrower is an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940. No Borrower
is a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, or a regulated entity
LOAN AND SECURITY AGREEMENT - Page 88
under the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or law, or any other federal or state statute or regulation
limiting its ability to incur indebtedness.
Section 8.23 Use of Proceeds; Margin Regulations. The proceeds of the
Revolving Loans are to be used solely for the purposes specified in Section
9.27. No Borrower is engaged in the business of buying or selling Margin Stock
or extending credit for the purpose of buying or carrying Margin Stock.
Section 8.24 No Material Adverse Change. No material adverse change has
occurred in the property, business, operations, or conditions (financial or
otherwise), profits, or prospects of the Borrowers, taken as a whole, since the
date of the Financial Statements delivered to the Lenders pursuant to Section
8.6.
Section 8.25 Full Disclosure. None of the representations or warranties
made by any Borrower in the Loan Documents as of the date such representations
and warranties are made or deemed made, and none of the statements contained in
any exhibit, report, statement, or certificate furnished by or on behalf of any
Borrower in connection with the Loan Documents (including the offering and
disclosure materials delivered by or on behalf of any Borrower to the Lenders
prior to the Closing Date), contain any untrue statement of a material fact or
omit any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
Section 8.26 Material Agreements. As of the Closing Date, Schedule 8.26
sets forth all material agreements and contracts (other than this agreement and
the RPA) of any Borrower which are required to be publicly disclosed pursuant to
any Requirement of Law since the date of the Parent's quarterly report for the
Fiscal Quarter ended September 30, 2000.
Section 8.27 Bank Accounts. As of the Closing Date, Schedule 8.27 contains
a complete and accurate list of all bank accounts maintained by each Borrower
with any bank or other financial institution.
Section 8.28 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery, or performance by, or enforcement against, any
Borrower of this Agreement or any other Loan Document except for those which
have been duly obtained by the Borrowers, copies of which have been provided to
the Agent and the Lenders, and for filing of financing statements and mortgages.
Section 8.29 Investment Property.
(a) Schedule 8.29 sets forth a correct and complete list of all
Investment Property owned by each Borrower. Each Borrower is the legal and
beneficial owner of such Investment Property, as so reflected, free and
clear of any Lien (other than Permitted Liens), and has not sold, granted
any option with respect to, assigned or transferred, or otherwise disposed
of any of its rights or interest therein.
LOAN AND SECURITY AGREEMENT - Page 89
(b) To the extent any Borrower is an Issuer (as defined in Section
6.2(d)): (i) the Issuer's shareholders that are Borrowers and the
ownership interest of each such shareholder are as set forth on Schedule
8.5 , and each such shareholder is the registered owner thereof on the
books of the Issuer; (ii) the Issuer acknowledges the Agent's Lien; (iii)
to the extent required to perfect the Agent's Liens, such security
interest, collateral assignment, lien, and pledge in favor of the Agent
has been registered on the books of the Issuer for such purpose as of the
date hereof; and (iv) the Issuer is not aware of any liens, restrictions,
or adverse claims which exist on any such Investment Property other than
the continuing security interest, collateral assignment, lien, and pledge
in favor of the Agent granted pursuant to the terms of Section 6.1.
Section 8.30 Common Enterprise. The successful operation and condition of
each of the Borrowers is dependent on the continued successful performance of
the functions of the group of Borrowers as a whole and the successful operation
of each Borrower is dependent on the successful performance and operation of
each other Borrower. Each of the Borrowers expects to derive benefit (and its
board of directors or other governing body has determined that it may reasonably
be expected to derive benefit), directly and indirectly, from successful
operations of the Parent and each of the other Borrowers. Each Borrower expects
to derive benefit (and the boards of directors or other governing body of each
such Borrower have determined that it may reasonably be expected to derive
benefit), directly and indirectly, from the credit extended by the Lenders to
the Borrowers hereunder, both in their separate capacities and as members of the
group of companies. Each Borrower has determined that execution, delivery, and
performance of this Agreement and any other Loan Documents to be executed by
such Borrower is within its corporate purpose, will be of direct and indirect
benefit to such Borrower, and is in its best interest.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Borrower covenants to the Agent and each Lender that so long as any
of the Obligations remain outstanding or this Agreement is in effect unless
waived pursuant to Section 13.2(a) each Borrower will keep and perform each of
the following covenants:
Section 9.1 Taxes and Other Obligations. Except as otherwise permitted by
the terms of this Agreement, each Borrower shall (a) file when due all tax
returns and other reports which it is required to file, (b) pay, or provide for
the payment, when due, of all taxes, fees, assessments, and other governmental
charges against it or upon its property, income, and franchises, make all
required withholding and other tax deposits, and establish adequate reserves for
the payment of all such items, and provide to the Agent and the Lenders, upon
request, satisfactory evidence of its timely compliance with the foregoing, and
(c) pay when due all Funded Debt owed by it and all claims of materialmen,
mechanics, carriers, warehousemen, landlords, processors, and other like
Persons, and all other indebtedness owed by it and perform and discharge in a
timely manner all other obligations undertaken by it; provided, however, such
Borrower need not pay any tax, fee, assessment, or governmental charge, that (w)
it is contesting in good faith by appropriate proceedings diligently pursued,
(x) such Borrower has established proper reserves for as provided in accordance
with
LOAN AND SECURITY AGREEMENT - Page 90
GAAP, (y) no Lien (other than a Permitted Lien) results from such non-payment,
and (z) with respect to any such tax, fee, assessment, or governmental charge in
excess of $250,000, such Borrower has notified the Agent in writing of any
contest described in clause (w) preceding.
Section 9.2 Existence and Good Standing. Except with respect to any
Borrower that merges into or consolidates with another Borrower as allowed by
Section 9.9, each Borrower shall maintain its existence and its qualification
and good standing in all jurisdictions in which the failure to maintain such
existence and qualification or good standing could reasonably be expected to
have a Material Adverse Effect.
Section 9.3 Compliance with Law and Agreements; Maintenance of Licenses.
Each Borrower shall comply with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business (including the Federal
Fair Labor Standards Act and all Environmental Laws) except for any
noncompliance which could not reasonably be expected to have a Material Adverse
Effect. Each Borrower shall obtain and maintain all licenses, permits,
franchises, and governmental authorizations necessary to own its property and,
except as could not reasonably be expected to have a Material Adverse Effect, to
conduct its business as conducted on the Closing Date. No Borrower shall modify,
amend, or alter its certificate or articles of incorporation (or other similar
constituent documents) other than in a manner which does not adversely affect
the rights of the Lenders or the Agent.
Section 9.4 Maintenance of Property. Each Borrower shall maintain all of
its property necessary and useful in the conduct of its business, in good
operating condition and repair, ordinary wear and tear excepted.
Section 9.5 Insurance.
(a) Each Borrower shall maintain with financially sound and
reputable insurers insurance that is reasonably consistent with prudent
industry practice and acceptable to the Agent in its reasonable
discretion. Without limiting the foregoing, each Borrower shall maintain
flood insurance, in the event of a designation of the area in which any of
its Real Estate is located as "flood prone" or a "flood risk area,"
(hereinafter "SFHA") as defined by the Flood Disaster Protection Act of
1973, in an amount to be reasonably determined by the Agent, and shall
comply with the additional requirements of the National Flood Insurance
Program as set forth in said Act.
(b) For each of the insurance policies issued as required by this
Section 9.5 each Borrower shall cause the Agent, for the benefit of the
Agent and the Lenders, to be named as secured party or mortgagee and loss
payee or additional insured, in a manner acceptable to the Agent. Each
policy of insurance shall contain a clause or endorsement requiring the
insurer to give not less than thirty (30) days prior written notice to the
Agent in the event of cancellation of such policy for any reason
whatsoever and a clause or endorsement stating that the interest of the
Agent shall not be impaired or invalidated by any act or neglect of the
insured Person or the owner of any premises for purposes more hazardous
than are permitted by such policy. All premiums for such insurance shall
be paid by the Borrowers when due,
LOAN AND SECURITY AGREEMENT - Page 91
and certificates of insurance and, if requested by the Agent, photocopies
of the policies shall be delivered to the Agent, in each case, in
sufficient quantity for distribution by the Agent to each of the Lenders.
If any Borrower fails to procure such insurance or to pay the premiums
therefor when due, the Agent may, and at the direction of the Majority
Lenders shall, do so from the proceeds of Revolving Loans.
(c) Each Borrower shall promptly notify the Agent and the Lenders of
any loss, damage, or destruction to the Collateral in excess of (A)
$5,000,000 if covered by insurance or (B) $1,000,000 if not covered by
insurance. The Agent is hereby authorized to directly collect all
insurance proceeds in respect of Collateral and to apply or remit such
proceeds as follows:
(i) With respect to insurance proceeds relating to Collateral
other than Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection
or handling thereof, the Agent shall apply such proceeds to the
reduction of the Obligations in the manner provided for in, and such
proceeds shall be subject to the provisions of, Section 4.3.
(ii) With respect to insurance proceeds relating to Collateral
consisting of Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection
or handling thereof, the Agent shall apply such proceeds, ratably,
to the reduction of the Revolving Loans, or at the option of the
Majority Lenders, may permit or require such money, or any part
thereof, to be used to replace, repair, restore, or rebuild the
relevant Fixed Assets in a diligent and expeditious manner with
materials and workmanship of substantially the same quality as
existed before the loss, damage, or destruction.
Section 9.6 Condemnation.
(a) Each Borrower shall, promptly upon learning of the institution
of any proceeding for the condemnation or other taking of any of its
property, notify the Agent of the pendency of such proceeding, and agrees
that the Agent may participate in any such proceeding, and the Borrowers
from time to time will deliver to the Agent all instruments reasonably
requested by the Agent to permit such participation.
(b) The Agent is hereby authorized to directly collect the proceeds
of any condemnation claim or award, and to apply or remit such proceeds in
the same manner as insurance proceeds under Section 9.5.
Section 9.7 Environmental Laws.
(a) Each Borrower shall conduct its business in material compliance
with all Environmental Laws applicable to it, including those relating to
the generation, handling, use, storage, and disposal of any Contaminant.
Each Borrower shall take prompt and
LOAN AND SECURITY AGREEMENT - Page 92
appropriate action to respond to any non-compliance with Environmental
Laws and shall regularly report to the Agent on such response.
(b) Without limiting the generality of the foregoing, the Borrowers
shall, upon the Agent's request, submit to the Agent and the Lenders an
update of the status of each environmental compliance or liability issue
concerning any Borrower or any of their respective properties or
operations (whether past or present). The Agent or any Lender may request
copies of technical reports prepared by any Borrower and its
communications with any Governmental Authority to determine whether such
Borrower is proceeding reasonably to correct, cure, or contest in good
faith any alleged non-compliance or environmental liability. Each Borrower
shall, at the Agent's or the Majority Lenders' request and at such
Borrower's expense, (i) retain an independent environmental engineer
acceptable to the Agent to evaluate any site, including tests if
appropriate, where the non-compliance or alleged non-compliance with
Environmental Laws has occurred and prepare and deliver to the Agent, in
sufficient quantity for distribution by the Agent to the Lenders, a report
setting forth the results of such evaluation, a proposed plan for
responding to any environmental problems described therein, and an
estimate of the costs thereof, and (ii) provide to the Agent, in
sufficient quantity for distribution by the Agent to the Lenders, a
supplemental report of such engineer whenever the scope of the
environmental problems (if any), or the response thereto or the estimated
costs thereof, shall change in any material respect.
Section 9.8 Compliance with ERISA. Each Borrower shall, and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code, and other
federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the Code; (d) not engage in
a prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan; and (e) not engage in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.
Section 9.9 Mergers, Consolidations, Sales, Acquisitions. No Borrower
shall enter into any transaction of merger, reorganization, or consolidation, or
transfer, sell, assign, lease, or otherwise dispose of all or any part of its
property, or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except for sales of Inventory in the ordinary course of its business
and sales or other dispositions of Real Estate and Equipment in the ordinary
course of its business that is obsolete or no longer useable by such Borrower in
its business; provided that:
(a) each RPA Seller may sell Accounts to MRC pursuant to the RPA;
provided, further, that any such sale is subject to the Agent's Lien (it
being expressly agreed that the Agent's Lien shall not be released as a
result of such sale but instead shall continue in full force and effect),
provided, further, that the Agent and the Lenders agree that the Agent's
Lien in such Accounts hereby is subordinated in favor of the liens and
security interests therein granted by MRC to the "Agent" (as defined by
the MRC Loan Agreement) arising under the MRC Loan Agreement (provided
that such subordination is solely for the benefit of the "Agent" (as
defined by the MRC Loan Agreement) and shall not inure to the benefit of,
or be enforceable by, any other Person); and
LOAN AND SECURITY AGREEMENT - Page 93
(b) notwithstanding the foregoing or any other provision of this
Agreement, as long as no Default or Event of Default exists or would
result therefrom and provided the Parent gives the Agent and the Lenders
prior written notice:
(i) a Borrower, other than the Parent, may wind-up, dissolve,
or liquidate if (i) its property is transferred to the Parent or
another Borrower and (ii) the Person acquiring such property
complies with its obligations under Section 6.2 and Section 9.28
simultaneously with such acquisition;
(ii) a Borrower, other than the Parent, may merge or
consolidate with the Parent or another Borrower (provided the Parent
is the survivor of any such merger or consolidation to which it is a
party);
(iii) a Borrower may make Permitted Acquisitions; and
(iv) a Borrower may enter into sales or other dispositions of
its property consisting of:
(A) Inventory sold in the ordinary course of business;
(B) subject to Section 4.3, Equipment and Real Estate if
(1) the Orderly Liquidation Value of such Equipment and the
appraised fair market value of such Real Estate does not
exceed $50,000,000 in the aggregate (net of the related sales
costs, if any, of such Equipment and Real Estate) during the
term of this Agreement for all of the Borrowers, collectively,
(2) the Orderly Liquidation Value of such Equipment and the
appraised fair market value of such Real Estate does not
exceed $25,000,000 in the aggregate (net of the related sales
costs, if any, of such Equipment and Real Estate) for all of
the Borrowers, collectively, during any period of four
consecutive Fiscal Quarters, (3) the Agent shall have received
written notice of any such sale or disposition involving
Equipment with an Orderly Liquidation Value and Real Estate
having an appraised fair market value in excess of $5,000,000,
(4) the cash consideration received by the applicable Borrower
at the time of any such sale or other disposition shall be not
less than seventy percent (70.0%) of the total consideration
received, and (5) all of the proceeds (net of the related
sales costs, if any, of such Equipment and Real Estate) of any
such sale or other disposition must be reinvested in Equipment
or Real Estate usable in such Borrower's business within three
hundred sixty (360) days of such sale or other disposition, or
the Commitments shall be permanently reduced as provided in
Section 4.3; and
(C) subject to Section 4.3, sales allowed by Section
9.19.
LOAN AND SECURITY AGREEMENT - Page 94
The inclusion of proceeds in the definition of Collateral shall not be deemed to
constitute the Agent's or any Lender's consent to any sale or other disposition
of the Collateral except as expressly permitted herein.
Section 9.10 Distributions; Capital Change; Restricted Investments. No
Borrower shall (a) directly or indirectly declare or make, or incur any
liability to make, any Distribution, except (i) Distributions by a Borrower to
another Borrower and (ii) Distributions by the Parent with respect to its
Capital Stock in the form of cash dividends, such dividends not to exceed
$1,100,000 in any Fiscal Quarter and provided that before and after giving
effect to such dividend the Availability is greater than or equal to $45,000,000
and no Default or Event of Default exists or will occur, (b) make any change in
its capital structure which could have a Material Adverse Effect, or (c) make
any Restricted Investment.
Section 9.11 Transactions Affecting Collateral or Obligations. No Borrower
shall enter into any transaction which could reasonably be expected to result in
a Material Adverse Effect.
Section 9.12 Guaranties. No Borrower shall make, issue, or become liable
on any Guaranty, except Guaranties of the Obligations and Guaranties of Debt
allowed under Section 9.13.
Section 9.13 Debt. No Borrower shall incur or maintain any Debt, other
than: (a) the Obligations; (b) trade payables and obligations arising in the
ordinary course of business; (c) other Debt existing on the Closing Date and
reflected in the Financial Statements described in Section 8.6(a) or
constituting purchase money Debt (including, without limitation, obligations
under Capital Leases) incurred after the Closing Date in an aggregate amount at
any time outstanding of not more than $20,000,000; (d) in the case of a Borrower
that is an RPA Seller, Debt incurred by such Borrower under the RPA; and (e)
Permitted Subordinated Debt.
Section 9.14 Prepayment of Debt. No Borrower shall voluntarily prepay any
Funded Debt, except the Obligations in accordance with the terms of this
Agreement, provided that for so long as no Default is in existence or would
result therefrom, (a) a Borrower may voluntarily prepay Debt owing by such
Borrower to another Borrower, (b) if the Fixed Charge Coverage Ratio is greater
than or equal to 1.00 to 1.00, a Borrower may voluntarily prepay Capital Leases
and other purchase money Funded Debt, (c) a Borrower may voluntarily prepay
Capital Leases and other purchase money Funded Debt in connection with any
refinancing of such Capital Leases and other purchase money Funded Debt or
replacement of the Fixed Assets subject to such prepaid financing with new Fixed
Assets usable in such Borrower's business and subject to additional Capital
Leases or other purchase money Funded Debt; and (d) the Parent may purchase
through one or more open market transactions occurring after December 31, 2001
up to $100,000,000 of the face value of the Subordinated Notes if (i) before and
after giving effect to any such purchase, Availability is greater than
$60,000,000, (ii) the Fixed Charge Coverage Ratio at the time of such purchase
is not less than 1.00 to 1.00, and (iii) after giving effect to such purchase,
not more than $50,000,000 in aggregate face value of the Subordinated Notes have
been purchased by the Parent during the preceding four (4) Fiscal Quarters.
LOAN AND SECURITY AGREEMENT - Page 95
Section 9.15 Transactions with Affiliates. Except as set forth below, no
Borrower shall sell, transfer, distribute, or pay any money or property,
including, but not limited to, any fees or expenses of any nature (including,
but not limited to, any fees or expenses for management services), to any
Affiliate that is not a Borrower, or lend or advance money or property to any
Affiliate that is not a Borrower, or invest in (by capital contribution or
otherwise) or purchase or repurchase any stock or indebtedness, or any property,
of any Affiliate that is not a Borrower, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate that is not a
Borrower. Notwithstanding the foregoing, (a) the RPA Sellers may enter into and
perform their respective obligations under the RPA and (b) if no Default or
Event of Default is in existence or would result therefrom, any Borrower may
engage in transactions with an Affiliate in the ordinary course of such
Borrower's business consistent with past practices and upon terms no less
favorable to such Borrower than would be obtained in a comparable arm's-length
transaction with a third party who is not an Affiliate.
Section 9.16 Investment Banking and Finder's Fees. No Borrower shall pay
or agree to pay, or reimburse any other party with respect to, any investment
banking or similar or related fee, underwriter's fee, finder's fee, or broker's
fee to any Person in connection with this Agreement other than pursuant to the
Agents' Letter. The Borrowers shall defend and indemnify the Agent and the
Lenders against and hold them harmless from (a) all claims of any Person that
any Borrower is obligated to pay any such fees and (b) all costs and expenses
(including attorneys' fees) incurred by the Agent and/or any Lender in
connection therewith.
Section 9.17 Business Conducted. The Borrowers shall not engage directly
or indirectly, in any line of business other than the businesses in which the
Borrowers are engaged on the Closing Date and any business activities that are
substantially similar, related, or incidental thereto.
Section 9.18 Liens. No Borrower shall create, incur, assume, or permit to
exist any Lien on any property now owned or hereafter acquired by it, except
Permitted Liens. Other than as set forth in this Agreement or in connection with
the creation or incurrence of any Debt under Section 9.13(d) no Borrower will
enter into or become subject to any Negative Pledge; provided that any Negative
Pledge entered into in connection with the creation or incurrence of Debt under
Section 9.13(d) shall be limited to the property subject to the purchase money
Lien securing such Debt.
Section 9.19 Sale and Leaseback Transactions. No Borrower shall, directly
or indirectly, enter into any arrangement with any Person providing for such
Borrower to lease or rent property that such Borrower has sold or will sell or
otherwise transfer to such other Person; provided that, subject to Section 4.3,
any Borrower may at any time enter into any such arrangement so long as the
aggregate net book value of all property sold by the Borrowers in connection
with all such arrangements does not exceed $20,000,000 and the aggregate amount
of all obligations incurred by the Borrowers in connection with all such
arrangements does not exceed $20,000,000 in the aggregate at any time
outstanding.
Section 9.20 New Subsidiaries. No Borrower shall directly or indirectly,
organize, create, acquire or permit to exist any Subsidiary except as permitted
by this Section 9.20. Promptly upon
LOAN AND SECURITY AGREEMENT - Page 96
creation or acquisition of any Subsidiary of a Borrower (including any
Subsidiary acquired pursuant to Section 9.9), such Borrower shall propose to the
Agent that such new Subsidiary become and, with the Agent's and the Majority
Lenders' consent, pursuant and subject to Section 15.20 cause such Subsidiary to
become a Borrower and a Guarantor hereunder.
Section 9.21 Fiscal Year. The Parent shall not change the last day of its
Fiscal Year without prior notice to the Agent given concurrently with any
required notice to the Securities and Exchange Commission.
Section 9.22 Capital Expenditures. No Borrower shall make or incur any
Capital Expenditure if, after giving effect thereto, the aggregate amount of all
Capital Expenditures by the Borrowers on a consolidated basis during any Fiscal
Year would exceed the amount specified below opposite the applicable Fiscal Year
end:
================================================================================
Fiscal Year Maximum Capital Expenditures
================================================================================
December 31, 2001 $25,000,000
--------------------------------------------------------------------------------
December 31, 2002 $27,000,000
--------------------------------------------------------------------------------
December 31, 2003 and each $29,000,000
Fiscal Year ending thereafter
================================================================================
Section 9.23 Operating Lease Obligations. No Borrower shall enter into, or
suffer to exist, any lease of real or personal property as lessee or sublessee
(excluding Capital Leases), if, after giving effect thereto, the aggregate
amount of Rentals payable by the Borrowers on a consolidated basis in any Fiscal
Year in respect of such lease and all other such leases would exceed
$45,000,000. The term "Rentals" means all payments due from the lessee or
sublessee under a lease, including, without limitation, basic rent, percentage
rent, property taxes, utility or maintenance costs, and insurance premiums.
Section 9.24 Fixed Charge Coverage Ratio. On each Fixed Charge Coverage
Measurement Date, the Borrowers shall not permit the Fixed Charge Coverage Ratio
to be less than 1.00 to 1.00.
Section 9.25 Adjusted Tangible Net Worth. The Borrowers shall not permit
the Adjusted Tangible Net Worth, determined for the Parent and its Subsidiaries,
as of the last day of the Fiscal Quarter ending March 31, 2001 and continuing as
of the last day of each Fiscal Quarter ending thereafter, to be less than the
Adjusted Tangible Net Worth Requirement.
Section 9.26 Minimum Availability. The Borrowers shall not permit the
Availability to be less than (a) as of the Closing Date and any day thereafter
until receipt of the Equipment appraisal required to be delivered to the Agent
pursuant to the first sentence of Section 6.5 and successful syndication of the
Total Facility in the Agent's discretion, $45,000,000 and (b) as of any day
thereafter $25,000,000.
LOAN AND SECURITY AGREEMENT - Page 97
Section 9.27 Use of Proceeds. The Borrowers shall use the proceeds of the
Loans (a) to pay Debt under that certain Second Amended and Restated Credit
Agreement, dated as of November 1, 2000 among Metals USA, Inc., Bank One, N.A.,
and the lending institutions party thereto, (b) for payment of Cash
Consideration in connection with any Permitted Acquisition, (c) to finance the
repurchase from MRC of Accounts outstanding on the Closing Date and previously
arising from the sale of goods or the provision of services by Metals Flat
Rolled Central, Inc. or Metals USA Plates and Shapes Northeast, L.P. and
previously purchased by MRC from the Parent, and (d) for general working capital
purposes (not otherwise prohibited by this Agreement) in the ordinary course of
business, and shall not use any portion of Revolving Loan proceeds, directly or
indirectly, (i) to buy or carry any Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Borrowers or others incurred to buy or carry any
Margin Stock, (iii) to extend credit for the purpose of buying or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act.
Section 9.28 Further Assurances. The Borrowers shall execute and deliver,
or cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions, as
the Agent or any Lender may, from time to time, reasonably request to carry out
the terms and conditions of this Agreement and the other Loan Documents.
Section 9.29 Bank and Documentation Agent as Depository. Each Borrower
shall maintain its master collection and operating accounts with the Bank. Each
Borrower shall otherwise utilize either the Bank and/or the Documentation Agent
as its principal depository banks, including for the maintenance of
administrative, cash management, collection activity, and other deposit accounts
for the conduct of its business.
Section 9.30 Interest Rate Protection. Commencing on the Closing Date, and
continuing thereafter through the third Anniversary Date of the Closing Date,
the Borrowers shall maintain in full force and effect one or more Hedge
Agreements, in form and substance reasonably satisfactory to the Agent, with the
Bank and the Documentation Agent, or another financial institution reasonably
acceptable to the Agent, that will have placed a limit upon the rate of interest
payable by the Borrowers under this Agreement with respect to a principal amount
not less than $100,000,000.
Section 9.31 RPA Seller Notes. Each RPA Seller agrees that is will not
make demand under the RPA Seller Note payable to such Borrower, or exercise any
remedies (including, without limitation, enforcement of any security therefor)
in respect thereof, without the prior written consent of the Agent.
ARTICLE 10
CONDITIONS OF LENDING
Section 10.1 Conditions Precedent to Making of Revolving Loans on the
Closing Date. The obligation of the Lenders to make the initial Revolving Loans
on the Closing Date, and the obligation of the Agent to cause the Letter of
Credit Issuer to issue any Letter of Credit or Credit
LOAN AND SECURITY AGREEMENT - Page 98
Support on the Closing Date, are subject to the following conditions precedent
having been satisfied in a manner satisfactory to the Agent and each Lender:
(a) The Agent shall have received each of the following documents,
all of which shall be satisfactory in form and substance to the Agent and
the Lenders:
(i) certified copies of the certificate of incorporation,
certificate of limited partnership, or comparable organizational
document of each of the Borrowers, with all amendments, if any,
certified by the appropriate Governmental Authority (provided that
upon request by any Borrower and with the consent of the Agent, any
such certified certificate of incorporation, certificate of limited
partnership, or comparable organizational document for such Borrower
to the extent not provided on the Closing Date, may be provided
within thirty (30) days of the Closing Date, provided that an
uncertified copy thereof has been delivered to the Agent together
with a written statement by a Responsible Officer confirming that
such copy is true, correct, and complete), and the bylaws,
regulations, operating agreement, or similar governing document of
each Borrower, in each case certified by the corporate secretary,
general partner, or comparable authorized representative of such
Borrower, as being true and correct and in effect on the Closing
Date;
(ii) certificates of incumbency and specimen signatures with
respect to each Person authorized to execute and deliver this
Agreement and the other Loan Documents on behalf of each Borrower
and each other Person executing any document, certificate, or
instrument to be delivered in connection with this Agreement and the
other Loan Documents and, in the case of each Borrower, to request
Borrowings and the issuance of Letters of Credit or Credit Support
for any Letter of Credit;
(iii) a certificate evidencing the existence of each Borrower,
and certificates evidencing the good standing of each Borrower in
the jurisdiction of its organization and in each other jurisdiction
in which it is required to be qualified as a foreign business entity
to transact its business as presently conducted, provided that upon
request by any Borrower and with the consent of the Agent,
certificates of good standing for such Borrower in any state other
than the state(s) of its organization and chief executive office, to
the extent not provided on the Closing Date, may be provided within
thirty (30) days of the Closing Date;
(iv) certified copies of all action taken by each Borrower to
authorize the execution, delivery, and performance of this
Agreement, the other Loan Documents, and the Borrowings and the
issuance of Letters of Credit and/or Credit Support;
(v) a certificate of each Borrower signed by a Responsible
Officer:
(A) stating that all of the representations and
warranties made or deemed to be made under this Agreement are
true and correct as of the
LOAN AND SECURITY AGREEMENT - Page 99
Closing Date, after giving effect to the Revolving Loans to be
made at such time and the application of the proceeds thereof
and the issuance of any Letter(s) of Credit and/or Credit
Support at such time,
(B) stating that no Default or Event of Default exists,
(C) specifying the account of the Borrowers to which the
Agent is authorized to transfer the proceeds of the Revolving
Loans, as required by Section 2.2(c), and
(D) certifying as to such other factual matters as may
be reasonably requested by the Agent;
(vi) with respect to any Letter of Credit or Credit Support to
be issued, all documentation required by Section 2.3, duly executed;
(vii) a Revolving Note payable to the order of each Lender in
the amount of its Commitment, duly executed and delivered by each
Borrower, complying with the requirements of Section 2.2;
(viii) UCC financing statements and/or amendments to existing
UCC financing statements with respect to all Collateral as may be
requested by the Agent, duly executed by the respective Borrowers,
in all jurisdictions that the Agent may deem necessary or desirable
in order to perfect the Agent's Lien therein;
(ix) duly executed UCC-3 termination statements or assignments
and such other instruments, in form and substance satisfactory to
the Agent, as shall be necessary to terminate and satisfy all Liens
on the property of the Borrowers except Permitted Liens;
(x) a Copyright, Patent, and Trademark Agreement with respect
to all Proprietary Rights, if any, owned by any Borrower which must
be registered with any Governmental Authority to perfect the Agent's
Liens in such Proprietary Rights, duly executed by each Borrower, as
applicable;
(xi) each Guaranty Agreement, duly executed and delivered by
each Person required pursuant to Section 6.17;
(xii) (A) stock certificates and stock powers (duly executed
in blank) for all Capital Stock (to the extent certificated) in each
Borrower other than Parent, together with acknowledgments executed
by the respective issuers thereof, in form and substance
satisfactory to the Agent and (B) "control" agreements (pursuant to
the UCC), each duly executed, as the Agent may request with respect
to any other Investment Property listed in Schedule 8.29;
LOAN AND SECURITY AGREEMENT - Page 100
(xiii) the following with respect to each parcel of Real
Estate for which a Borrower is required to execute a Mortgage in
favor of the Agent pursuant to Section 6.1(c):
(A) a Mortgage in proper form for recording in the
jurisdiction in which such Real Estate covered thereby is
located; and
(B) such other information, documentation, and
certifications, in form and substance satisfactory to the
Agent, as may be required by the Agent;
(xiv) a Borrowing Base Certificate effective as of the
Business Day preceding the day such initial Revolving Loans are to
be funded or any such Letter of Credit or Credit Support is to be
issued;
(xv) a landlord's or mortgagee's waiver and consent agreement,
in form and substance reasonably acceptable to the Agent, duly
executed on behalf of each landlord or mortgagee, as the case may
be, of Real Estate on which any Collateral is located (provided,
that the Borrowers may defer delivery of any such agreements for a
period not to exceed ninety (90) days from the Closing Date;
provided, further, that thereafter the Agent may, in its discretion,
establish a reserve with respect to any Collateral located on any
Real Estate for which the Agent has not received an acceptable
waiver and consent agreement);
(xvi) within ninety (90) days of the Closing Date, each
Blocked Account Agreement duly executed as requested by the Agent;
(xvii) signed opinions of counsel for the Borrowers, opining
as to such matters in connection with the transactions contemplated
by this Agreement as the Agent may reasonably request, each such
opinion to be in a form, scope, and substance satisfactory to the
Agent, the Lenders, and their respective counsel; provided that
delivery of any such opinion (if any) requested by the Agent in
connection with a Borrower's execution and delivery of a Mortgage
covering Real Estate may be deferred for up to ninety (90) days
following delivery of the applicable Mortgage;
(xviii) the Agent shall have received evidence, in form,
scope, and substance, reasonably satisfactory to the Agent, of all
insurance coverage as required by this Agreement;
(xix) copies of all agreements, documents, and instruments
executed and delivered in connection with the Subordinated Notes;
and
(xx) such other documents and instruments as the Agent or any
Lender may reasonably request.
LOAN AND SECURITY AGREEMENT - Page 101
(b) This Agreement and the other Loan Documents shall have been
executed by each party thereto and the Borrowers shall have performed and
complied with all covenants, agreements, and conditions contained herein
and in the other Loan Documents which are required to be performed or
complied with by the Borrowers before or on the Closing Date.
(c) Upon making the initial Revolving Loans (including such
Revolving Loans made to finance the fees, costs, and expenses then payable
under this Agreement) and issuing any Letters of Credit or Credit Support
on the date of making the initial Revolving Loans, and with all their
obligations current, the Borrowers shall have remaining Availability in an
amount not less than $45,000,000.
(d) All representations and warranties made hereunder and in the
other Loan Documents shall be true and correct on the Closing Date.
(e) No Default or Event of Default shall exist on the Closing Date,
or would exist after giving effect to the Revolving Loans to be made, the
Letters of Credit to be issued, and the Credit Support to be in place on
such date.
(f) The Borrowers shall have paid all fees and expenses of the Agent
and the Attorney Costs incurred in connection with any of the Loan
Documents and the transactions contemplated thereby to the extent
invoiced.
(g) The Agent and the Lenders shall have had an opportunity, if they
so choose, to examine the books of account and other records and files of
the Borrowers and to make copies thereof, and to conduct a pre-closing
audit which shall include, without limitation, verification of Inventory,
Accounts, and the Borrowing Base, and the results of such examination and
audit shall have been satisfactory to the Agent and the Lenders in all
respects.
(h) All proceedings taken in connection with the execution of this
Agreement, all other Loan Documents and all documents and papers relating
thereto shall be satisfactory in form, scope, and substance to the Agent
and the Lenders.
(i) No action, proceeding, investigation, regulation, or legislation
shall have been instituted, threatened, or proposed by or before any
Governmental Authority to enjoin, restrain, or prohibit, or to obtain
damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated by this
Agreement or which, in the Agent's or the Lenders' reasonable discretion,
would make it inadvisable to consummate the transactions contemplated by
this Agreement.
The acceptance by the Borrowers of any Revolving Loans made or Letters of Credit
or Credit Support issued on the Closing Date shall be deemed to be a
representation and warranty made by the Borrowers to the effect that all of the
conditions precedent to the making of such Revolving Loans or the issuance of
such Letters of Credit or Credit Support have been satisfied, with the same
effect
LOAN AND SECURITY AGREEMENT - Page 102
as delivery to the Agent and the Lenders of a certificate signed by a
Responsible Officer of the Borrowers, dated the Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this Section 10.1 have been fulfilled to the satisfaction of such
Lender, (ii) the decision of such Lender to execute and deliver to the Agent an
executed counterpart of this Agreement was made by such Lender independently and
without reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this Section 10.1, and (iii) all documents sent
to such Lender for approval, consent, or satisfaction were acceptable to such
Lender.
Section 10.2 Conditions Precedent to Each Revolving Loan. The obligation
of the Lenders to make each Revolving Loan, including the initial Revolving
Loans on the Closing Date, and the obligation of the Agent to cause the Letter
of Credit Issuer to issue any Letter of Credit or provide any Credit Support
shall be subject to the further conditions precedent that on and as of the date
of any such extension of credit:
(a) the following statements shall be true, and the acceptance by
the Borrowers of any extension of credit shall be deemed to be a statement
to the effect set forth in clause (i) and clause (ii) following with the
same effect as the delivery to the Agent and the Lenders of a certificate
signed by a Responsible Officer of each Borrower, dated the date of such
extension of credit, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material
respects on and as of the date of such extension of credit as though
made on and as of such date, other than any such representation or
warranty which relates to a specified prior date and except to the
extent the Agent and the Lenders have been notified by the Borrowers
that any representation or warranty is not correct and the Majority
Lenders have explicitly waived in writing compliance with such
representation or warranty; and
(ii) No event has occurred and is continuing, or would result
from such extension of credit, which constitutes a Default or an
Event of Default;
(b) The Agent shall have received satisfactory evidence that the
Agent has a valid, exclusive (other than Permitted Liens), and perfected
first priority security interest, lien, collateral assignment, and pledge
as of such date in all Collateral, to the extent any such Liens may be
perfected under the UCC (but excluding any Liens on vehicles for which a
certificate of title has been issued and Liens perfected solely by
possession, but only to the extent the Agent has not requested perfection
of its Liens in such vehicles or possession of such Collateral); provided
that upon the Agent's request, the Borrowers shall provide any additional
agreement, document, instrument, certificate, or other item relating to
any other Collateral as may be required for perfection under any
Requirement of Law;
(c) As of the Closing Date and as of the date of funding such
Revolving Loan or issuing such Letter of Credit or Credit Support, there
shall not have occurred or exist any event or condition which constitutes
a Material Adverse Effect.
LOAN AND SECURITY AGREEMENT - Page 103
The foregoing conditions precedent are not conditions to each Lender
participating in or reimbursing the Bank or the Agent for such Lenders' Pro Rata
Share of any Non-Ratable Loan or Agent Advance made in accordance with the
provisions of Section 2.2(h) and Section 2.2(i).
ARTICLE 11
DEFAULT REMEDIES
Section 11.1 Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for any
reason:
(a) any failure by the Borrowers to pay the principal of or interest
or premium on any of the Obligations or any fee or other amount owing
hereunder when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by the
Borrowers in this Agreement or in any of the other Loan Documents, any
Financial Statement, or any certificate furnished by the Borrowers at any
time to the Agent or any Lender shall prove to be untrue in any material
respect as of the date on which made, deemed made, or furnished;
(c) any default shall occur in
(i) the observance or performance of any of the covenants and
agreements contained in Section 9.2 (insofar as it requires the
preservation of the existence of the Borrowers) or Section 9.9
through Section 9.31, or
(ii) the observance or performance of any of the covenants and
agreements contained in Article 6 or Article 7, and such default
shall continue for a period of three (3) Business Days after written
notice thereof has been given to the Parent by the Agent,
(iii) the observance or performance of any of the covenants
and agreements contained in this Agreement, other than as referenced
in Section 11.1(a), Section 11.1(b), Section 11.1(c)(i), and Section
11.1(c)(ii) or any other Loan Documents, or any other agreement
entered into at any time to which the Borrowers and the Agent or any
Lender are party (including in respect of any Bank Products) and
such default shall continue for a period of twenty (20) days after
written notice thereof has been given to the Parent by the Agent, or
if any such agreement or document shall terminate (other than in
accordance with its terms or the terms hereof or with the written
consent of the Agent and the Majority Lenders) or become void or
unenforceable, without the written consent of the Agent and the
Majority Lenders;
(d) default shall occur with respect to the Debt evidenced by the
Subordinated Notes or any other Funded Debt (other than the Obligations)
of any Borrower in an
LOAN AND SECURITY AGREEMENT - Page 104
outstanding principal amount which exceeds $10,000,000, or under any
agreement or instrument under or pursuant to which any such Funded Debt
may have been issued, created, assumed, or guaranteed by any Borrower, and
such default shall continue for more than the period of grace, if any,
therein specified, if the effect thereof (with or without the giving of
notice or further lapse of time or both) is to accelerate, or to permit
the holders of any such Funded Debt to accelerate, the maturity of any
such Funded Debt, or any such Funded Debt shall be declared due and
payable or be required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof;
(e) any Borrower shall (i) file a voluntary petition in bankruptcy
or file a voluntary petition or an answer or otherwise commence any action
or proceeding seeking reorganization, arrangement, or readjustment of its
debts or for any other relief under the Bankruptcy Code, as amended, or
under any other bankruptcy or insolvency act or law, state or federal, now
or hereafter existing, or consent to, approve of, or acquiesce in, any
such petition, action, or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee, or similar officer for it or for all or any part of its
property; (iii) make an assignment for the benefit of creditors; or (iv)
be unable generally to pay its debts as they become due;
(f) an involuntary petition or proposal shall be filed or an action
or proceeding otherwise commenced (other than as referenced in Section
11.1(e)) seeking reorganization, arrangement, consolidation, or
readjustment of the debts of any Borrower or for any other relief under
the Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing and
either (i) such petition, proposal, action, or proceeding shall not have
been dismissed within a period of sixty (60) days after its commencement
or (ii) an order for relief against any Borrower shall have been entered
in such proceeding;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee, or similar officer for any Borrower or for all or any
part of its property shall be appointed or a warrant of attachment,
execution, or similar process shall be issued against any part of the
property of any Borrower;
(h) any Borrower shall file a certificate of dissolution under
applicable state law or shall be liquidated, dissolved, or wound-up
(except in a transaction allowed under Section 9.9) or shall commence or
have commenced against it any action or proceeding for dissolution,
winding-up, or liquidation, or shall take any corporate action in
furtherance thereof;
(i) all or any material part of the property of any Borrower shall
be nationalized, expropriated, or condemned, seized, or otherwise
appropriated, or custody or control of such property or of any Borrower
shall be assumed by any Governmental Authority or any court of competent
jurisdiction at the instance of any Governmental Authority, except where
contested in good faith by proper proceedings diligently pursued where a
stay of enforcement is in effect;
LOAN AND SECURITY AGREEMENT - Page 105
(j) any Guaranty of the Obligations shall be terminated, revoked, or
declared void or invalid;
(k) one or more judgments, orders, decrees, or arbitration awards is
entered against any Borrower involving liability in the aggregate (to the
extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related or
unrelated series of transactions, incidents or conditions, of $5,000,000
or more, and the same shall remain unsatisfied, unvacated, and unstayed
pending appeal for a period of thirty (30) days after the entry thereof;
(l) any loss, theft, damage, or destruction of any item or items of
Collateral or other property of any Borrower occurs which reasonably could
be expected to cause a Material Adverse Effect and is not adequately
covered by insurance;
(m) there occurs a Material Adverse Effect;
(n) there is filed against any Borrower any action, suit, or
proceeding under any federal or state racketeering statute (including the
Racketeer Influenced and Corrupt Organization Act of 1970), which action,
suit or proceeding (i) is not dismissed within one hundred twenty (120)
days, and (ii) could reasonably be expected to result in the confiscation
or forfeiture of any material portion of the Collateral;
(o) for any reason other than the failure of the Agent to take any
action available to it to maintain perfection of the Agent's Liens,
pursuant to the Loan Documents, any Loan Document ceases to be in full
force and effect or any Lien with respect to any material portion of the
Collateral intended to be secured thereby ceases to be, or is not, valid,
perfected, and prior to all other Liens (other than Permitted Liens which
are expressly permitted to have priority over the Agent's Liens) or is
terminated, revoked, or declared void;
(p) (i) an ERISA Event shall occur with respect to a Pension Plan or
Multi-employer Plan which has resulted or could reasonably be expected to
result in liability of any Borrower under Title IV of ERISA to the Pension
Plan, Multi-employer Plan, or the PBGC in an aggregate amount in excess of
$1,000,000; (ii) the aggregate amount of Unfunded Pension Liability among
all Pension Plans at any time exceeds $1,000,000; or (iii) any Borrower or
any ERISA Affiliate shall fail to pay when due, after the expiration of
any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multi-employer
Plan in an aggregate amount in excess of $1,000,000;
(q) there occurs a Change of Control;
(r) any "Event of Default" (as defined in the Indenture) occurs
under the Subordinated Notes or the Indenture;
LOAN AND SECURITY AGREEMENT - Page 106
(s) any "Event of Default" (as defined in the MRC Loan Agreement)
occurs under the MRC Loan Agreement; or
(t) any "Termination Event" (as defined in the RPA) occurs under the
RPA.
Section 11.2 Remedies.
(a) If a Default or an Event of Default exists, the Agent may, in
its discretion, and shall, at the direction of the Majority Lenders, do
one or more of the following at any time or times and in any order,
without notice to or demand on any Borrower: (i) reduce the Maximum
Revolver Amount, or the advance rates against Eligible Accounts and/or
Eligible Inventory used in computing the Borrowing Base, or reduce or
increase one or more of the other elements used in computing the Borrowing
Base; (ii) restrict the amount of or refuse to make Revolving Loans; and
(iii) restrict or refuse to provide Letters of Credit or Credit Support.
If an Event of Default exists, the Agent shall, at the direction of the
Majority Lenders, do one or more of the following, in addition to the
actions described in the preceding sentence, at any time or times and in
any order, without notice to or demand on any Borrower: (A) terminate the
Commitments and this Agreement; (B) declare any or all Obligations to be
immediately due and payable; provided, however, that upon the occurrence
of any Event of Default described in Section 11.1(e), Section 11.1(f),
Section 11.1(g), or Section 11.1(h), the Commitments shall automatically
and immediately expire and all Obligations shall automatically become
immediately due and payable without notice or demand of any kind; and (C)
pursue its other rights and remedies under the Loan Documents and
applicable law.
(b) If an Event of Default has occurred and is continuing: (i) the
Agent shall have for the benefit of the Lenders, in addition to all other
rights of the Agent and the Lenders, the rights and remedies of a secured
party under the UCC; (ii) the Agent may, at any time, take possession of
the Collateral and keep it on any Borrower's premises, at no cost to the
Agent or any Lender, or remove any part of it to such other place or
places as the Agent may desire, or any Borrower shall, upon the Agent's
demand, at such Borrower's cost, assemble the Collateral and make it
available to the Agent at a place reasonably convenient to the Agent; and
(iii) the Agent may sell and deliver any Collateral at public or private
sales, for cash, upon credit, or otherwise, at such prices and upon such
terms as the Agent deems advisable, in its sole discretion, and may, if
the Agent deems it reasonable, postpone or adjourn any sale of the
Collateral by an announcement at the time and place of sale or of such
postponed or adjourned sale without giving a new notice of sale. Without
in any way requiring notice to be given in the following manner, each
Borrower agrees that any notice by the Agent of sale, disposition, or
other intended action hereunder or in connection herewith, whether
required by the UCC or otherwise, shall constitute reasonable notice to
the Borrowers if such notice is mailed by registered or certified mail,
return receipt requested, postage prepaid, or is delivered personally
against receipt, at least five (5) days prior to such action to the
Borrowers' address specified in or pursuant to Section 15.8. If any
Collateral is sold on terms other than payment in full at the time of
sale, no credit shall be given against the Obligations until the Agent or
the Lenders receive payment, and if the buyer defaults in
LOAN AND SECURITY AGREEMENT - Page 107
payment, the Agent may resell the Collateral without further notice to any
Borrower. In the event the Agent seeks to take possession of all or any
portion of the Collateral by judicial process, each Borrower irrevocably
waives: (A) the posting of any bond, surety, or security with respect
thereto which might otherwise be required; (B) any demand for possession
prior to the commencement of any suit or action to recover the Collateral;
and (C) any requirement that the Agent retain possession and not dispose
of any Collateral until after trial or final judgment. Each Borrower
agrees that the Agent has no obligation to preserve rights to the
Collateral or marshal any Collateral for the benefit of any Person. The
Agent is hereby granted a license or other right to use, without charge,
each Borrower's labels, patents, copyrights, name, trade secrets, trade
names, trademarks, and advertising matter, or any similar property, in
completing production of, advertising or selling any Collateral, and each
Borrower's rights under all licenses and all franchise agreements shall
inure to the Agent's benefit for such purpose. The proceeds of sale shall
be applied first to all expenses of sale, including attorneys' fees, and
then to the Obligations. The Agent will return any excess to the
Borrowers, and the Borrowers shall remain liable for any deficiency.
(c) If an Event of Default occurs and is continuing, each Borrower
hereby waives all rights to notice and hearing prior to the exercise by
the Agent of the Agent's rights to repossess the Collateral without
judicial process or to replevy, attach, or levy upon the Collateral
without notice or hearing.
(d) Each Borrower recognizes that the Agent may be unable to effect
a public sale of any or all of the Collateral or other property to be sold
by reason of certain prohibitions contained in the laws of any
jurisdiction outside the United States or in applicable federal or state
securities laws but may be compelled to resort to one or more private
sales thereof to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such Collateral or other property to
be sold for their own account for investment and not with a view to the
distribution or resale thereof. Each Borrower acknowledges and agrees that
any such private sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale and, notwithstanding
such circumstances, agrees that any such private sale shall, to the extent
permitted by law, be deemed to have been made in a commercially reasonable
manner. Unless required by a Requirement of Law, the Agent shall not be
under any obligation to delay a sale of any of the Collateral or other
property to be sold for the period of time necessary to permit the issuer
of such securities to register such securities under the laws of any
jurisdiction outside the United States under any applicable federal or
state securities laws, even if such issuer would agree to do so. Each
Borrower further agrees to do or cause to be done, to the extent that such
Borrower may do so under Requirements of Law, all such other acts and
things as may be necessary to make such sales or resales of any portion or
all of the Collateral or other property to be sold valid and binding and
in compliance with any and all Requirements of Law at the Borrowers'
expense. Each Borrower further agrees that a breach of any of the
covenants contained in this Section 11.2(d) will cause irreparable injury
to the Agent and the Lenders for which there is no adequate remedy at law
and, as a consequence, agrees that each covenant contained in this Section
11.2(d) shall be specifically enforceable against such Borrower and such
Borrower hereby waives and agrees, to the fullest extent permitted by law,
not to assert as a defense
LOAN AND SECURITY AGREEMENT - Page 108
against an action for specific performance of such covenants that (i) such
Borrower's failure to perform such covenants will not cause irreparable
injury to the Agent and the Lenders or (ii) the Agent or the Lenders have
an adequate remedy at law in respect of such breach. Each Borrower further
acknowledges the impossibility of ascertaining the amount of damages which
would be suffered by the Agent and the Lenders by reason of a breach of
any of the covenants contained in this Section 11.2(d) and, consequently,
agrees that, if such Borrower shall breach any of such covenants and the
Agent or the Lenders shall ▇▇▇ for damages for such breach, such Borrower
shall pay to the Agent, for the benefit of the Agent and the Lenders, as
liquidated damages and not as a penalty, an aggregate amount equal to the
value of the Collateral or other property to be sold on the date the Agent
shall demand compliance with this Section 11.2(d).
ARTICLE 12
TERM AND TERMINATION
Section 12.1 Term and Termination. The term of this Agreement shall end on
the Stated Termination Date unless terminated or automatically extended as
provided in this Article. This Agreement shall automatically be renewed on the
Stated Termination Date for a renewal term of one year unless it is terminated
as provided in this Article. The Borrowers, the Agent, and each Lender shall
have the right to terminate this Agreement, without premium or penalty, on the
Stated Termination Date or at the end of any such renewal term by giving the
other parties hereto written notice not less than thirty (30) days prior to the
Stated Termination Date by registered or certified mail. The Borrowers may also
terminate this Agreement at any time if they: (a) give the Agent and the Lenders
thirty (30) days prior written notice of termination by registered or certified
mail; and (b) pay and perform all Obligations, including, without limitation,
all fees (if any) required by Section 4.2 and any other fees payable under the
Loan Documents on or prior to the effective date of termination. The Agent upon
direction from the Majority Lenders may terminate this Agreement without notice
to the Borrowers during the existence of an Event of Default. Upon the effective
date of termination of this Agreement for any reason whatsoever, all Obligations
(including all unpaid principal, accrued and unpaid interest, and any early
termination or prepayment fees but excluding indemnification obligations to the
extent no claim with respect thereto has been asserted and remains unsatisfied)
shall become immediately due and payable and the Borrowers shall immediately
arrange for the cancellation and return of all Letters of Credit and Credit
Support then outstanding. Notwithstanding the termination of this Agreement,
until all Obligations are indefeasibly paid and performed in full in cash, the
Borrowers shall remain bound by the terms of this Agreement and shall not be
relieved of any of their Obligations hereunder or under any other Loan Document,
and the Agent and the Lenders shall retain all their rights and remedies
hereunder (including, without limitation, the Agent's Liens in and all rights
and remedies with respect to all then existing and after-arising Collateral).
LOAN AND SECURITY AGREEMENT - Page 109
ARTICLE 13
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
Section 13.1 No Waivers; Cumulative Remedies. No failure by the Agent or
any Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement hereto, or in any other agreement between or among
any Borrower and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will operate as a waiver thereof. Subject to
Section 13.2(a), no waiver by the Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
the Agent or the Lenders on any occasion shall affect or diminish the Agent's
and each Lender's rights thereafter to require strict performance by the
Borrowers of any provision of this Agreement. The Agent's and each Lender's
rights under this Agreement will be cumulative and not exclusive of any other
right or remedy which the Agent or any Lender may have.
Section 13.2 Amendments and Waivers; Release of Building Products
Borrowers.
(a) No amendment or waiver of any provision of this Agreement or any
other Loan Document, and no consent with respect to any departure by any
Borrower therefrom, shall be effective unless the same shall be in writing
and signed by the Majority Lenders (or by the Agent at the written request
of the Majority Lenders) and the Borrowers and then any such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the
Lenders and the Borrowers and acknowledged by the Agent, do any of the
following:
(i) increase or extend the Commitment of any Lender;
(ii) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or
other amounts due to the Lenders (or any of them) hereunder or under
any other Loan Document;
(iii) reduce the principal of, or the rate of interest
specified herein on any Revolving Loan, or any fees or other amounts
payable hereunder or under any other Loan Document;
(iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Revolving Loans which is
required for the Lenders or any of them to take any action
hereunder;
(v) increase any of the percentages set forth in the
definition of the Borrowing Base;
(vi) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
LOAN AND SECURITY AGREEMENT - Page 110
(vii) release Collateral other than as permitted by Section
14.12;
(viii) change the definition of "Majority Lenders"; or
(ix) increase the Maximum Revolver Amount or the Unused Letter
of Credit Subfacility;
provided, however, the Agent may, in its sole discretion and
notwithstanding the limitations contained in clause (v) and clause
(ix) preceding and any other terms of this Agreement, make Revolving
Loans (including Agent Advances) in an amount not to exceed five
percent (5.0%) of the Maximum Revolver Amount, provided, further,
that no amendment, waiver, or consent shall, unless in writing and
signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document, and provided, further,
that notwithstanding the provisions of clause (vii) preceding, the
Agent, upon consent of the Majority Lenders, may release the Agent's
Liens on the Collateral of the Building Products Borrowers at any
time concurrent with or subsequent to a release of the Building
Products Borrowers from this Agreement as provided in Section
13.2(b).
(b) Subject to the terms of this Section 13.2(b) and notwithstanding
any limitation of Section 13.2(a), at the request of the Borrowers, the
Building Products Borrowers may be released from liability for the
Obligations (except as provided otherwise by Section 15.11), conditioned
upon satisfaction of each of the following requirements:
(i) the Borrowers shall have given the Agent and the Lenders
at least forty-five (45) days prior written notice of their request
for release of the Building Products Borrowers pursuant to this
Section 13.2(b);
(ii) the Borrowers shall have made the prepayment required by
Section 4.4(b);
(iii) the Borrowers shall have delivered to the Agent any
appraisal of the Equipment of the Building Products Borrowers
requested pursuant to Section 6.5;
(iv) the Borrowers (including the Building Products Borrowers)
shall have delivered to the Agent and the Lenders such information
and other documents as may be requested by the Agent and the
Majority Lenders in connection with any such requested release,
including, without limitation, any amendments or other modifications
to the representations, warranties, covenants, terms, conditions,
and other provisions of this Agreement and the other Loan Documents
as the Agent and the Majority Lenders may require; and
(v) the Borrowers (other than the Building Products Borrowers)
and any other Person who has executed a Guaranty, the Agent, and the
Majority Lenders shall
LOAN AND SECURITY AGREEMENT - Page 111
have consented in writing to such release, in form and substance
satisfactory to the Agent and the Majority Lenders.
Any release of the Building Products Borrowers pursuant to this Section
13.2 shall become effective upon satisfaction of the conditions specified
in clause (i) through clause (v) preceding and execution and delivery by
each of the Persons referenced in clause (v) preceding of a release
agreement in form and substance satisfactory to the Agent and the Majority
Lenders. Concurrent with or following any release of the Building Products
Borrowers pursuant to this Section 13.2(b), the Agent and the Majority
Lenders referenced in clause (v) preceding will execute such releases with
respect to the Building Products Borrowers and the Agent shall execute
such releases and termination statements with respect to the Agent's Liens
in the Collateral of the Building Products Borrowers, in each case as the
Building Products Borrowers may reasonably request in order to evidence
such release.
Section 13.3 Assignments; Participations.
(a) Any Lender may, with the written consent of the Agent (which
consent shall not be unreasonably withheld), assign and delegate to one or
more Eligible Assignees (provided that no consent of the Agent shall be
required in connection with any assignment and delegation by a Lender to
an Affiliate of such Lender) (each an "Assignee") all, or any ratable part
of all, of the Revolving Loans, the Commitments, and the other rights and
obligations of such Lender hereunder (any such assignment and delegation
being referred to herein as an "Assignment"), in a minimum amount of
$7,777,777.78 (provided that, unless an assignor Lender has assigned and
delegated all of its Revolving Loans and Commitments, no such assignment
and/or delegation shall be permitted unless, after giving effect thereto,
such assignor Lender retains a Commitment in a minimum amount of
$7,777,777.78); provided, however, that the Borrowers and the Agent may
continue to deal solely and directly with such Lender in connection with
the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, shall have been given to the
Borrowers and the Agent by such Lender and the Assignee; (ii) such Lender
and its Assignee shall have delivered to the Borrowers and the Agent an
Assignment and Acceptance in the form of Exhibit E ("Assignment and
Acceptance") together with any Note or Notes subject to such assignment,
and (iii) the assignor Lender or Assignee has paid to the Agent a
processing fee in the amount of $5,000; provided, further, that the
Lenders acknowledge and agree that, on the Closing Date, each Lender is
also a "Lender" (as defined by the MRC Loan Agreement) under the MRC Loan
Agreement with a "Pro Rata Share" (as defined by the MRC Loan Agreement)
under the MRC Loan Agreement identical to its Pro Rata Share hereunder,
and the Lenders further agree that, in addition to and without limiting
the foregoing requirements for an Assignment, no such Assignment shall be
made unless, simultaneously with the effectiveness of any Assignment, the
assignor Lender effects an "Assignment" (as defined by the MRC Loan
Agreement) to such Assignee under the MRC Loan Agreement and thereby
assigns and delegates to such Assignee, as an "Assignee" under the MRC
Loan Agreement, all or a ratable part of all, as the case may be, of the
"Revolving Loans" and "Commitments" (as such terms are defined by the MRC
Loan Agreement) and the other
LOAN AND SECURITY AGREEMENT - Page 112
rights and obligations of such assignor Lender as a "Lender" (as defined
by the MRC Loan Agreement) under the MRC Loan Agreement, so that at all
times the Pro Rata Share of each Lender hereunder, and the "Pro Rata
Share" (as defined by the MRC Loan Agreement) of each Lender as a "Lender"
under the MRC Loan Agreement, respectively, shall be identical.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations, including, but not limited to, the obligation to participate
in Letters of Credit and Credit Support have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations
of a Lender under the Loan Documents, and (ii) the assignor Lender shall,
to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations
under this Agreement (and in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties, or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement or
any other Loan Document furnished pursuant hereto or the attachment,
perfection, or priority of any Lien granted by the Borrowers to the Agent
or any Lender in the Collateral; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of the Borrowers or the performance or observance
by any Borrower of any of its obligations under this Agreement or any
other Loan Document furnished pursuant hereto; (iii) such Assignee
confirms that it has received a copy of this Agreement, together with such
other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such Assignee will, independently and without reliance
upon the Agent, such assigning Lender, or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such Assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms hereof,
together with such powers, including the discretionary rights and
incidental power, as are reasonably incidental thereto; and (vi) such
Assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) Immediately upon satisfaction of the requirements of Section
13.3(a), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to
LOAN AND SECURITY AGREEMENT - Page 113
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more Participants
participating interests in any Revolving Loans, the Commitment of that
Lender, and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i)
the originating Lender's obligations under this Agreement shall remain
unchanged, (ii) the originating Lender shall remain solely responsible for
the performance of such obligations, (iii) the Borrowers and the Agent
shall continue to deal solely and directly with the originating Lender in
connection with the originating Lender's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Lender shall transfer
or grant any participating interest under which the Participant has rights
to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, and (v) all amounts payable by
the Borrowers hereunder shall be determined as if such Lender had not sold
such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same
extent and subject to the same limitation as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or
any portion of its rights under and interest in this Agreement in favor of
any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Board or U.S. Treasury Regulation 31 CFR ss.203.14, and such
Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
ARTICLE 14
THE AGENT
Section 14.1 Appointment and Authorization. Each Lender hereby designates
and appoints the Bank (acting in its capacity as the Agent) as its agent under
this Agreement and the other Loan Documents and each Lender hereby irrevocably
authorizes the Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. The Agent agrees to act as such on the express
conditions contained in this Article 14. The provisions of this Article 14 are
solely for the benefit of the Agent and the Lenders and the Borrowers shall have
no rights as a third party beneficiary of any of the provisions contained herein
other than as expressly provided in Section 14.10 and Section 14.12.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any
LOAN AND SECURITY AGREEMENT - Page 114
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including (a) the
determination of the applicability of ineligibility criteria with respect to the
calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to
Section 2.2(i), and (c) the exercise of remedies pursuant to Section 11.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.
Section 14.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees,
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent, employee, or attorney-in-fact that it
selects as long as such selection was made without gross negligence or willful
misconduct.
Section 14.3 Liability of the Agent. None of the Agent-Related Persons
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders for any
recital, statement, representation, or warranty made by any Borrower or
Affiliate of any Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement, or
other document referred to or provided for in, or received by the Agent under or
in connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability, or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books, or records of any Borrower or any Borrower's
Affiliates.
Section 14.4 Reliance by the Agent.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex, or telephone
message, statement, or other document or conversation 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
(including, without limitation, counsel to any Borrower), independent
accountants and other experts selected by the Agent.
LOAN AND SECURITY AGREEMENT - Page 115
The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Majority Lenders as it
deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any
such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any other Loan Document
in accordance with a request or consent of the Majority Lenders (or all
Lenders if so required by Section 13.2(a)) and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 10.1, each Lender that has executed this Agreement
shall be deemed to have consented to, approved, or accepted or to be
satisfied with, each document or other matter either sent by the Agent to
such Lender for consent, approval, acceptance, or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Lender.
Section 14.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, unless
the Agent shall have received written notice from a Lender or a Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." The Agent will notify the
Lenders of its receipt of any such notice. The Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Majority
Lenders in accordance with Article 11; provided, however, that unless and until
the Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable.
Section 14.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrowers and their Affiliates, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition, and creditworthiness of the
Borrowers and their Affiliates, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Borrowers. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals, and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition, and creditworthiness of the Borrowers. Except for
notices, reports, and other documents expressly herein required to be furnished
to the Lenders by the Agent, the Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial
LOAN AND SECURITY AGREEMENT - Page 116
and other condition, or creditworthiness of any Borrower which may come into the
possession of any of the Agent-Related Persons.
Section 14.7 Indemnification. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED
HEREBY ARE CONSUMMATED, THE LENDERS SHALL INDEMNIFY UPON DEMAND THE
AGENT-RELATED PERSONS (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF THE
BORROWERS AND WITHOUT LIMITING THE OBLIGATION OF THE BORROWERS TO DO SO), PRO
RATA, FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES AS SUCH TERM IS
DEFINED IN SECTION 15.11; PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR
THE PAYMENT TO THE AGENT- RELATED PERSONS OF ANY PORTION OF SUCH INDEMNIFIED
LIABILITIES RESULTING SOLELY FROM SUCH PERSON'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. Without limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings, or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Borrowers. The undertaking in this Section shall survive the payment of
all Obligations hereunder and the resignation or replacement of the Agent.
Section 14.8 The Agent in Individual Capacity.
(a) The Bank and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests
in and generally engage in any kind of banking, trust, financial advisory,
underwriting, or other business with any Borrower and its Affiliates as
though the Bank were not the Agent hereunder and without notice to or
consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, the Bank or its Affiliates may receive information regarding
any Borrower or its Affiliates (including information that may be subject
to confidentiality obligations in favor of any such Borrower or such
Affiliate) and acknowledge that the Agent and the Bank shall be under no
obligation to provide such information to the Lenders. With respect to its
Revolving Loans, the Bank shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were
not the Agent, and the terms "Lender" and "Lenders" include the Bank in
its individual capacity.
(b) Each of the Lenders acknowledges and agrees that the Bank acts,
and/or may in the future act, as administrative agent under the MRC Loan
Agreement. Each Lender hereby acknowledges and consents to the Bank acting
in such capacity and agrees that in connection with acting in such
capacity the Bank may take or refrain from taking any action, and each of
the Lenders hereby holds the Bank harmless in connection with taking or
refraining from taking any such action, which the Bank in its sole
discretion deems appropriate in the circumstances, subject to the terms of
the MRC Loan Agreement.
LOAN AND SECURITY AGREEMENT - Page 117
Section 14.9 Successor Agent. The Agent may resign as Agent upon thirty
(30) days notice to the Lenders and the Borrowers, such resignation to be
effective upon the acceptance of a successor agent to its appointment as Agent.
In the event the Bank sells all of its Commitment and Revolving Loans as part of
a sale, transfer, or other disposition by the Bank of substantially all of its
loan portfolio, the Bank shall resign as Agent and such purchaser or transferee
shall become the successor Agent hereunder. If the Agent resigns under this
Agreement, subject to the proviso in the preceding sentence, the Majority
Lenders shall appoint from among the Lenders a successor agent for the Lenders.
If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrowers, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor agent, and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article 14 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
Section 14.10 Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership, or trust"
within the meaning of the Code and such Lender claims exemption from, or a
reduction of, United States withholding tax under Sections 1441 or 1442 of
the Code, such Lender agrees with and in favor of the Agent, to deliver to
the Agent and the Parent:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest
in the first calendar year and before the payment of any interest in
each third succeeding calendar year during which interest may be
paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year
of such Lender and in each succeeding taxable year of such Lender
during which interest may be paid under this Agreement, and IRS Form
W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent and the Parent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
1001 and such Lender sells, assigns, grants
LOAN AND SECURITY AGREEMENT - Page 118
a participation in, or otherwise transfers all or part of the Obligations
owing to such Lender, such Lender agrees to notify the Agent and the
Parent of the percentage amount in which it is no longer the beneficial
owner of Obligations owing to such Lender. To the extent of such
percentage amount, the Agent and the Parent will treat such Lender's IRS
Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations
owing to such Lender, such Lender agrees to undertake sole responsibility
for complying with the withholding tax requirements imposed by Sections
1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent or any Borrower may withhold from any interest
payment to such Lender an amount equivalent to the applicable withholding
tax after taking into account such reduction. If the forms or other
documentation required by clause (a) of this Section are not delivered to
the Agent and the Parent, then the Agent or any Borrower may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent or any
Borrower did not properly withhold tax from amounts paid to or for the
account of any Lender (because the appropriate form was not delivered, was
not properly executed, or because such Lender failed to notify the Agent
or any Borrower of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify the Agent and the Borrowers fully for
all amounts paid, directly or indirectly, by the Agent or any Borrower as
tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the Agent
under this Section 14.10, together with all costs and expenses (including
Attorney Costs). The obligation of the Lenders under this Section 14.10(e)
shall survive the payment of all Obligations and the resignation or
replacement of the Agent.
Section 14.11 Co-Agents. None of the Lenders identified on the facing page
or signature pages of this Agreement as a "co-agent" shall have any right,
power, obligation, liability, responsibility, or duty under this Agreement other
than those applicable to all Lenders as such. Without limiting the foregoing,
none of the Lenders so identified as a "co-agent" shall have or be deemed to
have any fiduciary relationship with any Lender. Each Lender acknowledges that
it has not relied, and will not rely, on any of the Lenders so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder.
Section 14.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Lien upon any
Collateral (i) upon the termination of
LOAN AND SECURITY AGREEMENT - Page 119
the Commitments and payment and satisfaction in full of all Revolving
Loans and reimbursement obligations in respect of Letters of Credit and
Credit Support, and the termination of all outstanding Letters of Credit
and Credit Support (whether or not any of such obligations are due) and
all other Obligations; (ii) constituting property being sold or disposed
of if the Borrower disposing of such property certifies to the Agent that
the sale or disposition is made in compliance with Section 9.9 or Section
9.19 (and the Agent may rely conclusively on any such certificate, without
further inquiry); (iii) constituting property in which no Borrower owned
any interest at the time the Lien was granted or at any time thereafter;
or (iv) constituting property leased to a Borrower under a lease which has
expired or been terminated in a transaction permitted under this
Agreement. Except as provided above, the Agent will not release any of the
Agent's Liens without the prior written authorization of the Lenders;
provided that the Agent may, in its discretion, release the Agent's Liens
on Collateral valued in the aggregate not in excess of $10,000,000 during
any one (1) year period without the prior written authorization of the
Lenders. Upon request by the Agent or the Borrowers at any time, the
Lenders will confirm in writing the Agent's authority to release any
Agent's Liens upon particular types or items of Collateral pursuant to
this Section 14.12.
(b) Upon receipt by the Agent of any authorization required pursuant
to Section 14.12(a) from the Lenders of the Agent's authority to release
any Agent's Liens upon particular types or items of Collateral, and upon
at least five (5) Business Days prior written request by the Borrowers,
the Agent shall (and is hereby irrevocably authorized by the Lenders to)
execute such documents as may be necessary to evidence the release of the
Agent's Liens upon such Collateral; provided, however, that (i) the Agent
shall not be required to execute any such document on terms which, in the
Agent's opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other
than those expressly being released) upon (or obligations of the Borrowers
in respect of) all interests retained by the Borrowers, including the
proceeds of any sale, all of which shall continue to constitute part of
the Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by any Borrower
or is cared for, protected, or insured or has been encumbered, or that the
Agent's Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular
priority, or to exercise at all or in any particular manner or under any
duty of care, disclosure, or fidelity, or to continue exercising, any of
the rights, authorities, and powers granted or available to the Agent
pursuant to any of the Loan Documents, it being understood and agreed that
in respect of the Collateral, or any act, omission, or event related
thereto, the Agent may act in any manner it may deem appropriate, in its
sole discretion given the Agent's own interest in the Collateral in its
capacity as one of the Lenders and that the Agent shall have no other duty
or liability whatsoever to any Lender as to any of the foregoing.
Section 14.13 Restrictions on Actions by Lenders; Sharing of Payments.
LOAN AND SECURITY AGREEMENT - Page 120
(a) Each of the Lenders agrees that it shall not, without the
express consent of the Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of all other Lenders, set-off
against the Obligations, any amounts owing by such Lender to any Borrower
or any accounts of any Borrower now or hereafter maintained with such
Lender. Each of the Lenders further agrees that it shall not, unless
specifically requested to do so by the Agent, take or cause to be taken
any action to enforce its rights under this Agreement or against any
Borrower, including the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, set-off, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations owing to such Lender arising
under, or relating to, this Agreement or the other Loan Documents, except
for any such proceeds or payments received by such Lender from the Agent
pursuant to the terms of this Agreement, or (ii) payments from the Agent
in excess of such Lender's ratable portion of all such distributions by
the Agent, such Lender shall promptly (A) turn the same over to the Agent,
in kind, and with such endorsements as may be required to negotiate the
same to the Agent, or in same day funds, as applicable, for the account of
all of the Lenders and for application to the Obligations in accordance
with the applicable provisions of this Agreement, or (B) purchase, without
recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received
shall be applied ratably as among the Lenders in accordance with their Pro
Rata Shares; provided, however, that if all or part of such excess payment
received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor
shall be returned to such purchasing party, but without interest except to
the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
Section 14.14 Agency for Perfection. Each Lender hereby appoints each
other Lender as agent for the purpose of perfecting the Lenders' security
interest in assets which, in accordance with Article 9 of the UCC can be
perfected only by possession. Should any Lender (other than the Agent) obtain
possession of any such Collateral, such Lender shall notify the Agent thereof,
and, promptly upon the Agent's request therefor shall deliver such Collateral to
the Agent or otherwise deal with such Collateral in accordance with the Agent's
instructions.
Section 14.15 Payments by the Agent to the Lenders. All payments to be
made by the Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, in the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, or interest on the Revolving Loans or otherwise.
LOAN AND SECURITY AGREEMENT - Page 121
Section 14.16 Concerning the Collateral and the Related Loan Documents.
Each Lender authorizes and directs the Agent to enter into this Agreement and
the other Loan Documents for the benefit and obligation of the Agent and the
Lenders. Each Lender agrees that any action taken by the Agent or the Majority
Lenders, as applicable, in accordance with the terms of this Agreement or the
other Loan Documents, and the exercise by the Agent or the Majority Lenders, as
applicable, of their respective powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders.
Section 14.17 Field Audit and Examination Reports; Disclaimer by Lenders.
By signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared
by the Agent;
(b) expressly agrees and acknowledges that neither the Bank nor the
Agent (i) makes any representation or warranty as to the accuracy of any
Report, or (ii) shall be liable for any information contained in any
Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent, the Bank, or other
party performing any audit or examination will inspect only specific
information regarding the Borrowers and will rely significantly upon the
Borrowers' books and records, as well as on representations of the
Borrowers' personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and
any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may
reach or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to the
Borrowers, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a loan or loans of the Borrowers; and
(ii) to pay and protect, and indemnify, defend, and hold the Agent and any
such other Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses, and other amounts
(including Attorney Costs) incurred by the Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying
Lender.
Section 14.18 Relation Among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
LOAN AND SECURITY AGREEMENT - Page 122
ARTICLE 15
MISCELLANEOUS
Section 15.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Agent's and each Lender's rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies that the Agent and the
Lenders may have under the UCC or other applicable law. The Agent and the
Lenders shall have the right, in their sole discretion, to determine which
rights and remedies are to be exercised and in which order. The exercise of one
right or remedy shall not preclude the exercise of any others, all of which
shall be cumulative. The Agent and the Lenders may, without limitation, proceed
directly against any Person liable therefor to collect the Obligations without
any prior recourse to the Collateral. No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power, or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power, or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power, or privilege.
Section 15.2 Severability. The illegality or unenforceability of any
provision of this Agreement, any Loan Document, or any instrument or agreement
required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any instrument
or agreement required hereunder.
Section 15.3 Governing Law; Choice of Forum.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT
PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO
APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE
UCC) OF THE STATE OF TEXAS; PROVIDED THAT THE AGENT AND THE LENDERS SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ FOR THE NORTHERN DISTRICT OF TEXAS, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE
AGENT, AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE
BORROWERS, THE AGENT, AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING
OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT
LOAN AND SECURITY AGREEMENT - Page 123
RELATED HERETO. NOTWITHSTANDING THE FOREGOING (i) THE AGENT AND THE
LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY
BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT
OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (ii) EACH OF THE
PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE THOSE JURISDICTIONS.
Section 15.4 Waiver of Jury Trial. EACH OF THE BORROWERS, THE LENDERS, AND
THE AGENT IRREVOCABLY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT, OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. EACH OF THE BORROWERS, THE LENDERS, AND THE AGENT AGREES THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
Section 15.5 Survival of Representations and Warranties. All of the
representations and warranties of each Borrower contained in this Agreement
shall survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
Section 15.6 Other Security and Guaranties. The Agent, may, without notice
or demand and without affecting the Borrowers' obligations hereunder, from time
to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce, or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
Section 15.7 Fees and Expenses. Each Borrower agrees to pay to the Agent,
for its benefit, on demand, all costs and expenses that the Agent pays or incurs
in connection with the negotiation,
LOAN AND SECURITY AGREEMENT - Page 124
preparation, syndication, consummation, administration, enforcement, and
termination of this Agreement or any of the other Loan Documents, including: (a)
Attorney Costs; (b) costs and expenses (including attorneys' and paralegals'
fees and disbursements) for any amendment, supplement, waiver, consent, or
subsequent closing in connection with the Loan Documents and the transactions
contemplated thereby; (c) costs and expenses of lien and title searches and
title insurance; (d) taxes, fees, and other charges for recording the Mortgages,
filing financing statements and continuations, and other actions to perfect,
protect, and continue the Agent's Liens (including costs and expenses paid or
incurred by the Agent in connection with the consummation of this Agreement);
(e) sums paid or incurred to pay any amount or take any action required of any
Borrower under the Loan Documents that such Borrower fails to pay or take; (f)
costs of appraisals, inspections, and verifications of the Collateral, including
travel, lodging, and meals for inspections of the Collateral and the Borrowers'
operations by the Agent plus the Agent's then customary charge for field
examinations and audits and the preparation of reports thereof (such charge is
currently $650 per day (or portion thereof) for each agent or employee of the
Agent with respect to each field examination or audit); (g) costs and expenses
of forwarding loan proceeds, collecting checks, and other items of payment, and
establishing and maintaining Payment Accounts and lock boxes; (h) costs and
expenses of preserving and protecting the Collateral; and (i) costs and expenses
(including Attorney Costs) paid or incurred to obtain payment of the
Obligations, enforce the Agent's Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
defend any claims made or threatened against the Agent or any Lender arising out
of the transactions contemplated hereby (including preparations for and
consultations concerning any such matters). The foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding costs and expenses
to be paid by the Borrowers. All of the foregoing costs and expenses shall be
charged to the Loan Account as Revolving Loans as described in Section 4.6.
Section 15.8 Notices. Except as otherwise provided herein, all notices,
demands, and requests that any party is required or elects to give to any other
shall be in writing, or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by overnight mail and
courier service, (b) four (4) days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid, or (c)
in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified as follows:
If to the Agent or to the Bank:
------------------------------
Bank of America, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Finance Business Credit/Regional Manager: URGENT
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
LOAN AND SECURITY AGREEMENT - Page 125
with a copy to:
--------------
Jenkens & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the Borrowers:
-------------------
c/o Metals USA, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
--------------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration, or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration, or other communication.
Section 15.9 Waiver of Notices. Unless otherwise expressly provided
herein, each Borrower waives presentment, notice of demand or dishonor, and
protest as to any instrument, notice of intent to accelerate the Obligations,
and notice of acceleration of the Obligations, as well as any and all other
notices to which it might otherwise be entitled. No notice to or demand on any
Borrower which the Agent or any Lender may elect to give shall entitle any
Borrower to any or further notice or demand in the same, similar, or other
circumstances.
Section 15.10 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; provided, however, that no
interest herein may be assigned by any Borrower without the prior written
consent of the Agent and each Lender. The rights and benefits of the Agent and
the Lenders hereunder shall, if such Persons so agree, inure to any party
acquiring any interest in the Obligations or any part thereof.
LOAN AND SECURITY AGREEMENT - Page 126
Section 15.11 Indemnity of the Agent and the Lenders by the Borrowers.
(a) EACH BORROWER AGREES TO DEFEND, INDEMNIFY, AND HOLD THE
AGENT-RELATED PERSONS AND EACH LENDER AND EACH OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, COUNSEL, AGENTS, AND ATTORNEYS-IN-FACT
(EACH, AN "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, CHARGES, EXPENSES, AND DISBURSEMENTS (INCLUDING ATTORNEY
COSTS) OF ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME (INCLUDING
AT ANY TIME FOLLOWING REPAYMENT OF THE REVOLVING LOANS AND THE
TERMINATION, RESIGNATION, OR REPLACEMENT OF THE AGENT OR REPLACEMENT OF
ANY LENDER) BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY SUCH
PERSON IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY
DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN, OR THE TRANSACTIONS
CONTEMPLATED HEREBY, OR ANY ACTION TAKEN OR OMITTED BY ANY SUCH PERSON
UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING WITH RESPECT
TO ANY INVESTIGATION, LITIGATION, OR PROCEEDING (INCLUDING ANY INSOLVENCY
PROCEEDING OR APPELLATE PROCEEDING) RELATED TO OR ARISING OUT OF THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE REVOLVING LOANS OR THE USE OF
THE PROCEEDS THEREOF, WHETHER OR NOT ANY INDEMNIFIED PERSON IS A PARTY
THERETO (ALL THE FOREGOING, COLLECTIVELY, THE "INDEMNIFIED LIABILITIES");
PROVIDED THAT THE BORROWERS SHALL HAVE NO OBLIGATION HEREUNDER TO ANY
INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES RESULTING
SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED
PERSON. THE AGREEMENTS IN THIS SECTION 15.11 SHALL SURVIVE PAYMENT OF ALL
OTHER OBLIGATIONS.
(b) EACH BORROWER AGREES TO INDEMNIFY, DEFEND, AND HOLD HARMLESS THE
AGENT AND THE LENDERS FROM ANY LOSS OR LIABILITY DIRECTLY OR INDIRECTLY
ARISING OUT OF THE USE, GENERATION, MANUFACTURE, PRODUCTION, STORAGE,
RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL, OR PRESENCE OF A
HAZARDOUS SUBSTANCE RELATING TO ANY BORROWER'S OPERATIONS, BUSINESS, OR
PROPERTY. THIS INDEMNITY WILL APPLY WHETHER THE HAZARDOUS SUBSTANCE IS ON,
UNDER, OR ABOUT ANY BORROWER'S PROPERTY OR OPERATIONS OR PROPERTY LEASED
TO ANY BORROWER. THE INDEMNITY INCLUDES BUT IS NOT LIMITED TO ATTORNEY
COSTS. THE INDEMNITY EXTENDS TO THE AGENT AND THE LENDERS, THEIR PARENTS,
AFFILIATES, SUBSIDIARIES, AND ALL OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, SUCCESSORS, ATTORNEYS, AND ASSIGNS. "HAZARDOUS SUBSTANCES" MEANS
ANY SUBSTANCE, MATERIAL, OR WASTE THAT IS OR BECOMES DESIGNATED OR
REGULATED AS "TOXIC," "HAZARDOUS," "POLLUTANT," OR "CONTAMINANT"
LOAN AND SECURITY AGREEMENT - Page 127
OR A SIMILAR DESIGNATION OR REGULATION UNDER ANY FEDERAL, STATE, OR LOCAL
LAW (WHETHER UNDER COMMON LAW, STATUTE, REGULATION, OR OTHERWISE) OR
JUDICIAL OR ADMINISTRATIVE INTERPRETATION OF SUCH, INCLUDING PETROLEUM OR
NATURAL GAS. THIS INDEMNITY WILL SURVIVE REPAYMENT OF ALL OTHER
OBLIGATIONS.
(c) In the event any Borrower is released from the terms of this
Agreement or the other Loan Documents, the provisions of this Section
15.11 shall, notwithstanding such release unless specifically agreed
otherwise in writing, continue in full force and effect with respect to
such Borrower after the date of such release.
Section 15.12 Limitation of Liability. NO CLAIM MAY BE MADE BY ANY
BORROWER, ANY LENDER, OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS OF ANY OF THEM FOR ANY
SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM
FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND
EACH BORROWER AND EACH LENDER HEREBY WAIVES, RELEASES, AND AGREES NOT TO ▇▇▇
UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN
OR SUSPECTED TO EXIST IN ITS FAVOR.
Section 15.13 Final Agreement. This Agreement and the other Loan Documents
are intended by the Borrowers, the Agent, and the Lenders to be the final,
complete, and exclusive expression of the agreement between them. This Agreement
and the other Loan Documents supersede any and all prior oral or written
agreements relating to the subject matter hereof and thereof. No modification,
rescission, waiver, release, or amendment of any provision of this Agreement or
any other Loan Document shall be made, except by a written agreement signed by
the Borrowers and a duly authorized officer of each of the Agent and the
requisite Lenders.
THIS WRITTEN LOAN AND SECURITY AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 15.14 Counterparts. This Agreement and the other Loan Documents
may be executed in any number of counterparts, and by the Agent, each Lender,
and the Borrowers in separate counterparts, each of which shall be an original,
but all of which shall together constitute one and the same agreement. Signature
pages may be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are physically attached to the
same document, and a telecopy of any such executed signature page shall be valid
as an original.
LOAN AND SECURITY AGREEMENT - Page 128
Section 15.15 Captions. The captions contained in this Agreement and the
other Loan Documents are for convenience of reference only, are without
substantive meaning and should not be construed to modify, enlarge, or restrict
any provision.
Section 15.16 Right of Set-off. In addition to any rights and remedies of
the Lenders provided by law, if an Event of Default exists or the Revolving
Loans have been accelerated, each Lender is authorized at any time and from time
to time, without prior notice to the Borrowers, any such notice being waived by
the Borrowers to the fullest extent permitted by law, to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by, and other indebtedness at any time owing by, such Lender to or
for the credit or the account of any Borrower against any and all Obligations
owing to such Lender, now or hereafter existing, irrespective of whether or not
the Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Borrowers and the Agent after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT
OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY
OF ANY BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN
CONSENT OF THE AGENT.
Section 15.17 Joint and Several Liability. All Revolving Loans, upon
funding, shall be deemed to be jointly funded to and received by the Borrowers.
Each Borrower jointly and severally agrees to pay, and shall be jointly and
severally liable under this Agreement for, all Obligations (excluding Existing
Obligations in the case of a Newly Obligated Party), regardless of the manner or
amount in which proceeds of Revolving Loans are used, allocated, shared, or
disbursed by or among the Borrowers themselves, or the manner in which the Agent
and/or any Lender accounts for such Revolving Loans or other extensions of
credit on its books and records. Each Borrower shall be liable for all amounts
due to the Agent and/or any Lender under this Agreement, regardless of which
Borrower actually receives Revolving Loans or other extensions of credit
hereunder or the amount of such Revolving Loans and extensions of credit
received or the manner in which the Agent and/or such Lender accounts for such
Revolving Loans or other extensions of credit on its books and records. Each
Borrower's Obligations with respect to Revolving Loans and other extensions of
credit made to it, and such Borrower's Obligations arising as a result of the
joint and several liability of such Borrower hereunder, with respect to Loans
made to the other Borrowers hereunder, shall be separate and distinct
obligations, but all such Obligations shall be primary obligations of such
Borrower. The Borrowers acknowledge and expressly agree with the Agent and each
Lender that the joint and several liability of each Borrower is required solely
as a condition to, and is given solely as inducement for and in consideration
of, credit or accommodations extended or to be extended under the Loan Documents
to any or all of the other Borrowers and is not required or given as a condition
of extensions of credit to such Borrower. Each Borrower's obligations under this
Agreement and as an obligor under a Guaranty Agreement shall be separate and
distinct obligations. Each Borrower's obligations under this Agreement shall, to
the fullest extent permitted by law, be unconditional irrespective of (i) the
validity or enforceability, avoidance, or subordination of the Obligations of
any other Borrower or of any promissory note or other document evidencing all or
LOAN AND SECURITY AGREEMENT - Page 129
any part of the Obligations of any other Borrower, (ii) the absence of any
attempt to collect the Obligations from any other Borrower, any Guarantor, or
any other security therefor, or the absence of any other action to enforce the
same, (iii) the waiver, consent, extension, forbearance, or granting of any
indulgence by the Agent and/or any Lender with respect to any provision of any
instrument evidencing the Obligations of any other Borrower or Guarantor, or any
part thereof, or any other agreement now or hereafter executed by any other
Borrower or Guarantor and delivered to the Agent and/or any Lender, (iv) the
failure by the Agent and/or any Lender to take any steps to perfect and maintain
its security interest in, or to preserve its rights to, any security or
collateral for the Obligations of any other Borrower or Guarantor, (v) the
Agent's and/or any Lender's election, in any proceeding instituted under the
Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy
Code, (vi) any borrowing or grant of a security interest by any other Borrower,
as debtor-in-possession under Section 364 of the Bankruptcy Code, (vii) the
disallowance of all or any portion of the Agent's and/or any Lender's claim(s)
for the repayment of the Obligations of any other Borrower under Section 502 of
the Bankruptcy Code, or (viii) any other circumstances which might constitute a
legal or equitable discharge or defense of a guarantor or of any other Borrower.
With respect to any Borrower's Obligations arising as a result of the joint and
several liability of the Borrowers hereunder with respect to Revolving Loans or
other extensions of credit made to any of the other Borrowers hereunder, such
Borrower waives, until the Obligations shall have been paid in full and the Loan
Agreement shall have been terminated, any right to enforce any right of
subrogation or any remedy which the Agent and/or any Lender now has or may
hereafter have against any other Borrower, any endorser or any guarantor of all
or any part of the Obligations, and any benefit of, and any right to participate
in, any security or collateral given to the Agent and/or any Lender to secure
payment of the Obligations or any other liability of any Borrower to the Agent
and/or any Lender. Upon any Event of Default, the Agent may proceed directly and
at once, without notice, against any Borrower to collect and recover the full
amount, or any portion of the Obligations, without first proceeding against any
other Borrower or any other Person, or against any security or collateral for
the Obligations. Each Borrower consents and agrees that the Agent shall be under
no obligation to marshal any assets in favor of any Borrower or against or in
payment of any or all of the Obligations.
Section 15.18 Contribution and Indemnification among the Borrowers. Each
Borrower is obligated to repay the Obligations as joint and several obligors
under this Agreement. To the extent that any Borrower shall, under this
Agreement as a joint and several obligor, repay any of the Obligations
constituting Revolving Loans made to another Borrower hereunder or other
Obligations incurred directly and primarily by any other Borrower (an
"Accommodation Payment"), then the Borrower making such Accommodation Payment
shall be entitled to contribution and indemnification from, and be reimbursed
by, each of the other Borrowers in an amount, for each of such other Borrowers,
equal to a fraction of such Accommodation Payment, the numerator of which
fraction is such other Borrower's Allocable Amount (as defined below) and the
denominator of which is the sum of the Allocable Amounts of all of the
Borrowers. As of any date of determination, the "Allocable Amount" of each
Borrower shall be equal to the maximum amount of liability for Accommodation
Payments which could be asserted against such Borrower hereunder without (a)
rendering such Borrower "insolvent" within the meaning of Section 101 (31) of
the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act ("UFTA")
or Section 2 of the Uniform Fraudulent Conveyance Act ("UFCA"), (b) leaving such
Borrower with unreasonably small capital
LOAN AND SECURITY AGREEMENT - Page 130
or assets, within the meaning of Section 548 of the Bankruptcy Code, Section 4
of the UFTA, or Section 5 of the UFCA, or (c) leaving such Borrower unable to
pay its debts as they become due within the meaning of Section 548 of the
Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA. All rights
and claims of contribution, indemnification, and reimbursement under this
Section shall be subordinate in right of payment to the prior payment in full of
the Obligations. The provisions of this Section shall, to the extent expressly
inconsistent with any provision in any Loan Document, supersede such
inconsistent provision.
Section 15.19 Agency of the Parent for Each Other Borrower. Each of the
other Borrowers irrevocably appoints the Parent as its agent for all purposes
relevant to this Agreement, including the giving and receipt of notices and
execution and delivery of all documents, instruments, and certificates
contemplated herein (including, without limitation, execution and delivery to
the Agent of Borrowing Base Certificates, Notices of Borrowing, and Notices of
Conversion/Continuation) and all modifications hereto. Any acknowledgment,
consent, direction, certification, or other action which might otherwise be
valid or effective only if given or taken by all or any of the Borrowers or
acting singly, shall be valid and effective if given or taken only by the
Parent, whether or not any of the other Borrowers joins therein, and the Agent
and the Lenders shall have no duty or obligation to make further inquiry with
respect to the authority of the Parent under this Section 15.19, provided that
nothing in this Section 15.19 shall limit the effectiveness of, or the right of
the Agent and the Lenders to rely upon, any notice (including without limitation
a Notice of Borrowing or a Notice of Conversion/Continuation), document,
instrument, certificate, acknowledgment, consent, direction, certification, or
other action delivered by any Borrower pursuant to this Agreement.
Section 15.20 Additional Borrowers. Addition of any Person as a party to
this Agreement is subject to approval of the Agent and the Majority Lenders, and
may be conditioned upon such requirements as they may determine in their
discretion, including, without limitation, (a) the furnishing of such financial
and other information as the Agent or any such Lender may request; (b) approval
by all appropriate approval authorities of the Agent and each such Lender; (c)
execution and delivery by the Borrowers, such Person, the Agent, and the
Majority Lenders of such agreements and other documentation (including, without
limitation, an amendment to this Agreement or any other Loan Document), and the
furnishing by such Person or any of the Borrowers of such certificates,
opinions, and other documentation, as the Agent and any such Lender may request.
Neither the Agent nor any Lender shall have any obligation to approve any such
Person for addition as a party to this Agreement.
Section 15.21 Express Waivers By Borrowers In Respect of Cross Guaranties
and Cross Collateralization. Each Borrower agrees as follows:
(a) Each Borrower hereby waives: (i) notice of acceptance of this
Agreement; (ii) notice of the making of any Revolving Loans, the issuance
of any Letter of Credit or any other financial accommodations made or
extended under the Loan Documents or the creation or existence of any
Obligations; (iii) notice of the amount of the Obligations, subject,
however, to such Borrower's right to make inquiry of the Agent to
ascertain the amount of the Obligations at any reasonable time; (iv)
notice of any adverse change in the financial condition of any other
Borrower or of any other fact that might increase such Borrower's risk
LOAN AND SECURITY AGREEMENT - Page 131
with respect to such other Borrower under the Loan Documents; (v) notice
of presentment for payment, demand, protest, and notice thereof as to any
promissory notes or other instruments among the Loan Documents; and (vii)
all other notices (except if such notice is specifically required to be
given to such Borrower hereunder or under any of the other Loan Documents
to which such Borrower is a party) and demands to which such Borrower
might otherwise be entitled;
(b) Each Borrower hereby waives the right by statute or otherwise to
require the Agent or any Lender to institute suit against any other
Borrower or to exhaust any rights and remedies which the Agent or any
Lender has or may have against any other Borrower. Each Borrower further
waives any defense arising by reason of any disability or other defense of
any other Borrower (other than the defense that the Obligations shall have
been fully and finally performed and indefeasibly paid) or by reason of
the cessation from any cause whatsoever of the liability of any such
Borrower in respect thereof.
(c) Each Borrower hereby waives and agrees not to assert against the
Agent, any Lender, or the Letter of Credit Issuer: (i) any defense (legal
or equitable), set-off, counterclaim, or claim which such Borrower may now
or at any time hereafter have against any other Borrower or any other
party liable under the Loan Documents; (ii) any defense, set- off,
counterclaim, or claim of any kind or nature available to any other
Borrower against the Agent, any Lender, or the Letter of Credit Issuer,
arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability of the Obligations or
any security therefor; (iii) any right or defense arising by reason of any
claim or defense based upon an election of remedies by the Agent, any
Lender, or the Letter of Credit Issuer under any applicable law; (iv) the
benefit of any statute of limitations affecting any other Borrower's
liability hereunder;
(d) Each Borrower consents and agrees that, without notice to or by
such Borrower and without affecting or impairing the obligations of such
Borrower hereunder, the Agent may (subject to any requirement for consent
of any of the Lenders to the extent required by this Agreement), by action
or inaction: (i) compromise, settle, extend the duration or the time for
the payment of, or discharge the performance of, or may refuse to or
otherwise not enforce the Loan Documents; (ii) release all or any one or
more parties to any one or more of the Loan Documents or grant other
indulgences to any other Borrower in respect thereof; (iii) amend or
modify in any manner and at any time (or from time to time) any of the
Loan Documents; or (iv) release or substitute any Person liable for
payment of the Obligations, or enforce, exchange, release, or waive any
security for the Obligations or any Guaranty of the Obligations;
Each Borrower represents and warrants to the Agent and the Lenders that such
Borrower is currently informed of the financial condition of all other Borrowers
and all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants that such Borrower has read and understands the terms and
conditions of the Loan Documents. Each Borrower agrees that neither the Agent,
any Lender, nor the Letter of Credit Issuer has any responsibility to inform any
Borrower of the financial condition
LOAN AND SECURITY AGREEMENT - Page 132
of any other Borrower or of any other circumstances which bear upon the risk of
nonpayment or nonperformance of the Obligations.
Section 15.22 Designated Senior Debt. Each of the Borrowers represents,
warrants, and agrees that the Obligations constitute, and are hereby designated
as, "Designated Senior Debt" as such term is defined in the Indenture.
[Remainder of page intentionally left blank]
LOAN AND SECURITY AGREEMENT - Page 133
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
BORROWERS:
---------
METALS USA, INC.
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and Chief
Accounting Officer
AEROSPACE SPECIFICATION METALS, INC.
AEROSPACE SPECIFICATION METALS - U.K., INC.
ALLMET BUILDING PRODUCTS, L.P.
By: Allmet GP, Inc., its General Partner
ALLMET GP, INC.
ALLMET LP, INC.
CORNERSTONE BUILDING PRODUCTS, INC.
CORNERSTONE METALS CORPORATION
CORNERSTONE PATIO CONCEPTS, L.L.C.
By: Metals USA, Inc., its sole Member
▇▇▇▇▇▇ TITANIUM, LTD.
INTERSTATE STEEL SUPPLY CO. OF MARYLAND,
INC.
INTSEL GP, INC.
INTSEL LP, INC.
i-SOLUTIONS DIRECT, INC.
▇▇▇▇▇▇▇▇ REAL ESTATE CORPORATION
▇▇▇▇▇▇▇▇ STEEL GP, INC.
▇▇▇▇▇▇▇▇ STEEL LP, INC.
METALMART, INC.
METALS AEROSPACE INTERNATIONAL, INC.
METALS USA BUILDING PRODUCTS SOUTHEAST, INC.
METALS USA CARBON FLAT ROLLED, INC.
METALS USA FINANCE CORP.
METALS USA FLAT ROLLED CENTRAL, INC.
METALS USA MANAGEMENT CO., L.P.
By: MUSA GP, Inc., its General Partner
METALS USA PLATES AND SHAPES NORTHCENTRAL,
INC.
METALS USA PLATES AND SHAPES, NORTHEAST, L.P.
By: ▇▇▇▇▇▇▇▇ Steel GP, Inc., its General Partner
METALS USA PLATES AND SHAPES SOUTHCENTRAL, INC.
METALS USA PLATES AND SHAPES SOUTHEAST, INC.
METALS USA PLATES AND SHAPES SOUTHWEST,
LIMITED PARTNERSHIP
By: Intsel GP, Inc., its General Partner
METALS USA REALTY COMPANY
METALS USA SPECIALTY METALS NORTHCENTRAL, INC.
METALS USA SPECIALTY METALS NORTHWEST, INC.
METAL VENTURES L.L.C.
By: Metals USA Specialty Metals Northcentral,
Inc., its Managing Member
MUSA GP, INC.
MUSA LP, INC.
NATIONAL MANUFACTURING, INC.
QUEENSBORO, L.L.C.
By: Metals USA Plates and Shapes Southeast, Inc.,
its sole Member
TEXAS ALUMINUM INDUSTRIES, INC.
VALLEY ALUMINUM CO.
VALLEY ALUMINUM OF NEVADA, INC.
WESTERN AWNING COMPANY, INC.
▇▇▇▇▇▇-▇▇▇▇▇▇ STEEL CORPORATION
WSS TRANSPORTATION, INC.
By:
----------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
AGENT:
-----
BANK OF AMERICA, NATIONAL ASSOCIATION
By:
------------------------------------
▇▇▇ ▇▇▇▇
Senior Vice President
LENDERS:
-------
Commitment: $175,000,000 BANK OF AMERICA, NATIONAL
ASSOCIATION
By:
------------------------------------
▇▇▇ ▇▇▇▇
Senior Vice President
Commitment: $175,000,000 PNC BANK, NATIONAL ASSOCIATION
By:
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
SCHEDULE 1.1(A)
TO
LOAN AND SECURITY AGREEMENT
Permitted Liens
SCHEDULE 1.1(A) - Solo Page
SCHEDULE 1.1(B)
TO
LOAN AND SECURITY AGREEMENT
Permitted Investments
None.
SCHEDULE 1.1(B) - Solo Page
SCHEDULE 6.3
TO
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Location of Collateral
SCHEDULE 6.3 - Solo Page
SCHEDULE 8.3
TO
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Organization and Qualification
SCHEDULE 8.3 - Solo Page
SCHEDULE 8.4
TO
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Corporate Names
SCHEDULE 8.4 - Solo Page
SCHEDULE 8.5
TO
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Subsidiaries
SCHEDULE 8.5 - Solo Page
SCHEDULE 8.8
TO
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Debt
SCHEDULE 8.8 - Solo Page
SCHEDULE 8.11
TO
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Real Estate; Leases
SCHEDULE 8.11 - Solo Page
SCHEDULE 8.12
TO
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Proprietary Rights
SCHEDULE 8.12 - Solo Page
SCHEDULE 8.13
TO
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Trade Names
SCHEDULE 8.13 - Solo Page
SCHEDULE 8.14
TO
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Litigation
SCHEDULE 8.14 - Solo Page
SCHEDULE 8.16
TO
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Labor Matters
SCHEDULE 8.16 - Solo Page
SCHEDULE 8.17
TO
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Environmental Matters
SCHEDULE 8.17 - Solo Page
SCHEDULE 8.20
TO
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ERISA Matters
SCHEDULE 8.20 - Solo Page
SCHEDULE 8.26
TO
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Material Agreements
None.
SCHEDULE 8.26 - Solo Page
SCHEDULE 8.27
TO
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Bank Accounts
SCHEDULE 8.27 - Solo Page
SCHEDULE 8.29
TO
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Investment Property
See Schedule 8.5.
SCHEDULE 8.29 - Solo Page
EXHIBIT A
TO
LOAN AND SECURITY AGREEMENT
Form of Revolving Note
EXHIBIT A - Cover Page
EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
Form of Borrowing Base Certificate
EXHIBIT B - Cover Page
EXHIBIT C
TO
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Form of Notice of Borrowing
EXHIBIT C - Cover Page
EXHIBIT D
TO
LOAN AND SECURITY AGREEMENT
Form of Notice of Conversion/Continuation
EXHIBIT D - Cover Page
EXHIBIT E
TO
LOAN AND SECURITY AGREEMENT
Form of Assignment and Acceptance
EXHIBIT E - Cover Page
EXHIBIT F
TO
LOAN AND SECURITY AGREEMENT
Form of Compliance Certificate
EXHIBIT F - Cover Page
