AMENDED AND RESTATED LOAN AGREEMENT
BY AND BETWEEN
KENTUCKY ELECTRIC STEEL, INC.
AND
NATIONAL CITY BANK OF KENTUCKY
January 14, 2002
1. Definitions and Cross References 2
1.1 Accounts Receivable 2
1.2 Affiliate 2
1.3 Amended and Restated Loan Agreement 3
1.4 Amended and Restated Working Capital Line of Credit Note 3
1.5 And/or 3
1.6 Application and Agreement For Letter of Credit 3
1.7 Authorized Officer 3
1.8 Bank 3
1.9 Bankruptcy Code 3
1.10 Borrower 3
1.11 Borrower's Loan Account 4
1.12 Borrowing Base 4
1.13 Borrowing Base Report 4
1.14 Borrowing Certificate 4
1.15 Business Day 4
1.16 Capitalized Lease 4
1.17 Capitalized Rentals 4
1.18 CERCLA 4
1.19 Closing Date 5
1.20 Code 5
1.21 Common Stock 5
1.22 Compliance Certificate 5
1.23 Consolidated EBITDA 5
1.24 Consolidated Funded Debt 5
1.25 Consolidated Net Earnings 5
1.26 Consolidated Stockholders' Equity 6
1.27 Consolidated Tangible Net Worth 6
1.28 Consolidated Total Assets 6
1.29 Consolidated Total Capitalization 6
1.30 Covered Tax 6
1.31 Debt 6
1.32 Debt Service 7
1.33 Debt Service Coverage Ratio 7
1.34 Default Rate 7
1.35 Eligible Accounts 7
1.36 Eligible Billet Inventory 8
1.37 Eligible Finished Goods Inventory 8
1.38 Eligible Scrap Inventory 9
1.39 Environmental Claim 9
1.40 Environmental Law 9
1.41 ERISA 10
1.42 ERISA Affiliate 10
1.43 Excluded Tax 10
1.44 Export Accounts Receivable 10
1.45 Events of Default 10
1.46 Fiscal Quarter 11
1.47 Fiscal Year 11
1.48 Funded Debt 11
1.49 Funding Date 11
1.50 GAAP 11
1.51 Governmental Approval 11
1.52 Governmental Authority 11
1.53 Guaranties 11
1.54 Hazardous Material 12
1.55 Hazardous Material Activity 12
1.56 Indebtedness 12
1.57 Interest Charges 13
1.58 Interest Coverage Ratio 13
1.59 Inventory 13
1.60 Investments 13
1.61 Joint Venture 13
1.62 Legal Requirement 14
1.63 Letter of Credit Fee 14
1.64 Letter of Credit Usage 14
1.65 Letters of Credit 14
1.66 Lien 14
1.67 Loan Instruments 15
1.68 Margin Stock 15
1.69 Master Equipment Lease 15
1.70 Material Adverse Effect 15
1.71 Minority Interests 15
1.72 Multiemployer Plan 15
1.73 Net Outstanding Amount of Eligible Accounts 15
1.74 Net Security Value of Eligible Billet Inventory 16
1.75 Net Security Value of Eligible Finished Goods Inventory 16
1.76 Net Security Value of Eligible Scrap Inventory 16
1.77 Obligations 16
1.78 Officer's Certificate 17
1.79 PBGC 17
1.80 Person 17
1.81 Plan 17
1.82 Prime Rate 17
1.83 RCRA 17
1.84 Release 17
1.85 Rentals 17
1.86 Reportable Event 18
1.87 Restricted Investments 18
1.88 Restricted Payments 20
1.89 Security 20
1.90 Senior Note Agreement 21
1.91 Senior Notes 21
1.92 Significant Subsidiary 21
1.93 Subordinated Debt 21
1.94 Subsidiary 21
1.95 Tax 21
1.96 Tax Transferee 21
1.97 Total Utilization of Working Capital Commitment 22
1.98 Voting Stock 22
1.99 Wholly-Owned 22
1.100 Working Capital Commitment 22
1.101 Working Capital Line of Credit 22
1.102 Working Capital Line of Credit Termination Date 22
1.103 Working Capital Loans 22
1.104 Accounting Terms and Financial Information 22
1.105 Other Definitional Provisions 23
2. Working Capital Line of Credit 23
2.1 Working Capital Commitment; Working Capital Loans 24
2.2 Interest on the Amended and Restated Working Capital Line
of Credit Note 28
2.3 Fees 29
2.4 Prepayments and Payments; Reductions in Working Capital
Commitment 30
2.5 Use of Proceeds 31
2.6 Letters of Credit 31
3. Security for the Indebtedness 36
3.1 Security Interest 36
3.2 Right of Offset 37
3.3 Mortgage 37
3.4 Assignment of Rents and Leases 37
3.5 Other Security 37
4. Conditions Precedent 37
4.1 Initial Closing Conditions 37
4.2 Conditions to All Letters of Credit 40
4.3 Conditions to All Working Capital Loans and Letters of
Credit 40
5. Representations and Warranties 41
5.1 Organization, Standing, etc. of the Borrower 41
5.2 Subsidiaries 41
5.3 Qualification 41
5.4 Use of Proceeds 42
5.5 Intellectual Property 42
5.6 Contracts 42
5.7 Disclosure 42
5.8 Funded Debt and Capitalized Leases 43
5.9 Title to Properties; Liens 43
5.10 Litigation, etc 43
5.11 Authorization; Compliance with Other Instruments 43
5.12 Governmental Consent 44
5.13 Eligible Accounts 44
5.14 Investment Company Act Status 44
5.15 Regulation G, etc 44
5.16 Holding Company Act 44
5.17 Employee Retirement Income Security Act of 1974 44
5.18 Accuracy of Financial Reports 45
5.19 Bank Accounts 45
6. Affirmative Covenants 45
6.1 Maintenance of Properties 45
6.2 Monetary Obligations 45
6.3 Financial Statements and Other Reports 46
6.4 Financial Records; Inspection 49
6.5 Permits, Certificates, Leases, Licenses, etc. 49
6.6 Notice 49
6.7 Further Assurances 50
6.8 Payment of Obligations 50
6.9 Preservation of Existence, Leases, etc 50
6.10 Insurance 50
6.11 Environmental Matters 50
7. Negative Covenants 51
7.1 Mergers, Consolidations and Sales of Assets 51
7.2 Use of Assets 53
7.3 Limitation of Liens 53
7.4 Restricted Payments 55
7.5 Nature of Business 56
7.6 Agreements and Licenses 56
7.7 Limitations on Funded Debt 56
7.8 Transactions with Affiliates 57
7.9 Guaranties 57
7.10 ERISA Compliance 57
7.11 Minimum Consolidated Tangible Net Worth 58
7.12 Minimum Consolidated EBITDA 59
7.13 Interest Coverage Ratio 60
7.14 Debt Service Coverage Ratio 60
7.15 Capital Expenditures 60
8. Events of Default; Acceleration 60
9. Remedies 63
9.1 Defaults 63
9.2 Offset 63
9.3 Rights Cumulative 63
9.4 Payment of Costs and Expenses 63
10. Assignments and Participations 64
11. Indemnity 65
12. Miscellaneous 65
12.1 Role of the Bank 65
12.2 Notices 66
12.3 Waiver 67
12.4 Survival of Representations and Warranties 67
12.5 Invalidity 67
12.6 Assignment 67
12.7 Governing Law 67
12.8 Section Headings 68
12.9 Entire Agreement 68
12.10 Time of the Essence 68
12.11 No Oral Modifications 68
12.12 Costs and Expenses 68
12.13 Right to Request Waivers 68
12.14 Supersession of Original Loan Agreement 68
12.15 Termination of Export Line of Credit 68
12.16 Waiver 68
13. Release of Bank 69
14. Waiver of Jury Trial 69
Acceptable Bank 1.87(m)
Acceptable Broker-Dealer 1.87(m)
Accounts Receivable 1.1
Affiliate 1.2
Amended and Restated Loan Agreement Preamble
Amended and Restated Working Capital Line of Credit Note 1.4
And/or 1.5
Application and Agreement For Letter of Credit 1.6
Asset Disposition 7.1(b)
Assignment of Rents and Leases 3.4
Authorized Officer 1.7
Bank Preamble
Bankruptcy Code 1.9
Borrower Preamble
Borrower's Loan Account 1.11
Borrowing Base 1.12
Borrowing Rate 2.2(a)
Borrowing Base Report 1.13
Borrowing Certificate 1.14
Business Day 1.15
Capitalized Lease 1.16
Capitalized Rentals 1.17
CERCLA 1.18
Closing Date 1.19
Code 1.20
Collateral Agent Preamble
Common Stock 1.21
Compliance Certificate 1.22
Consolidated EBITDA 1.23
Consolidated Funded Debt 1.24
Consolidated Net Earnings 1.25
Consolidated Stockholders' Equity 1.26
Consolidated Tangible Net Worth 1.27
Consolidated Total Assets 1.28
Consolidated Total Capitalization 1.29
control 1.2
Covered Tax 1.30
Debt 1.31
Debt Service 1.32
Debt Service Coverage Ratio 1.33
Default Rate 1.34
Eligible Accounts 1.35
Eligible Assignees 10.0(a)
Eligible Billet Inventory 1.36
Eligible Finished Goods Inventory 1.37
Eligible Scrap Inventory 1.38
Environmental Claim 1.39
Environmental Law 1.40
ERISA 1.41
ERISA Affiliate 1.42
Excluded Tax 1.43
Export Accounts Receivable 1.44
Events of Default 1.45, 8
Excluded Asset Dispositions 7.1(c)
Fiscal Quarter 1.46
Fiscal Year 1.47
Funded Debt 1.48
Funding Date 1.49
GAAP 1.50
Government Acts 2.6(h)
Governmental Approval 1.51
Governmental Authority 1.52
Guaranties 1.53
Hazardous Material 1.54
Hazardous Material Activity 1.55
Indebtedness 1.56
Interest Charges 1.57
Interest Coverage Ratio 1.58
Inventory 1.59
Investments 1.60
Joint Venture 1.61
Legal Requirement 1.62
Lenders Preamble
Letter of Credit Fee 1.63
Letter of Credit Usage 1.64
Letters of Credit 1.65
Lien 1.66
Line of Credit Recital A
Loan Instruments 1.67
Margin Stock 1.68
Master Equipment Lease 1.69
Material Adverse Effect 1.70
Minority Interests 1.71
Xxxxx'x 1.87(m)
Mortgage 3.3
Multiemployer Plan 1.72
net income taxes 1.43
Net Outstanding Amount of Eligible Accounts 1.73
Net Security Value of Eligible Billet Inventory 1.74
Net Security Value of Eligible Finished Goods Inventory 1.75
Net Security Value of Eligible Scrap Inventory 1.76
Note Agreement Recital B
Note Documents 4.1(h)
Noteholders Recital B
Obligations 1.77
Officer's Certificate 1.78
PBGC 1.79
Person 1.80
Plan 1.81
primary obligor 1.53
Prime Rate 1.82
Prior Loan Agreement Recital A
RCRA 1.83
Release 1.84
Rentals 1.85
Reportable Event 1.86
Repurchase Agreement 1.87(m)
Restricted Investments 1.87
Restricted Payments 1.88
Restructure Fee 2.3(b)
Security 1.89
Senior Note Agreement 1.90
Senior Notes Recital B, 1.91
Significant Subsidiary 1.92
S&P 1.87(m)
Subordinated Debt 1.93
Subsidiary 1.94
Tax 1.95
Tax Transferee 1.96
Term Sheet Recital D
Title Insurance Policy 4.1(t)
Total Utilization of Working Capital Commitment 1.97
Transfer Price 1.87(m)
Unfunded Vested Pension Liability 7.10(a)
United States Governmental Security 1.87(m)
Voting Stock 1.98
Wholly-Owned 1.99
Working Capital Commitment 1.100
Working Capital Line of Credit 1.101
Working Capital Line of Credit Termination Date 1.102
Working Capital Loans 1.103
EXHIBITS
Description Exhibit
Form of Amended and Restated Working Capital Line of Credit Note A
Form of Application and Agreement for Letter of Credit B
Form of Borrowing Base Report C
Form of Borrowing Certificate D
Form of Compliance Certificate E
Provisions to Include in Opinion of Counsel to Borrower F
Schedule of Indebtedness and Liens G
Schedule of Restricted Investments H
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (the "Amended and Restated Loan
Agreement"), is made and entered into as of the 14th day of January,
2002, by and between: (i) KENTUCKY ELECTRIC STEEL, INC., a Delaware
corporation, with principal office and place of business in Xxxx County,
Kentucky (the "Borrower"), and (ii) NATIONAL CITY BANK OF KENTUCKY, a national
banking association, with principal office and place of business in
Louisville, Kentucky (the "Bank"), for itself and in its capacity as
"Collateral Agent" under that certain Intercreditor and Collateral Agency
Agreement (the "Collateral Agency Agreement") of even date herewith among
Connecticut General Life Insurance Company, Modern Woodmen of America and
the Bank, for the benefit of the "Lenders" (as therein defined).
RECITALS:
A. Pursuant to that certain Amended and Restated Loan Agreement
dated as of November 1, 1995, between the Borrower and the Bank (the
"Prior Loan Agreement"), the Bank established in favor of the Borrower
a revolving line of credit in the principal amount not to exceed Twenty-
Three Million Dollars ($23,000,000.00) (the "Line of Credit").
B. Pursuant to that certain Note Agreement dated as of November
1, 1995, among the Borrower, CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
individually and on behalf of one or more separate accounts, and MODERN
WOODMEN OF AMERICA (the "Noteholders"), as amended by that certain First
Amendment Agreement dated January 30, 1997, and by Amendment No. 2 to
Note Agreement and Waiver of even date herewith (as amended, the "Note
Agreement"), the Borrower has issued its 9.00% Senior Notes in the
aggregate principal amount of Twenty Million Dollars ($20,000,000.00),
with a current outstanding principal balance of Sixteen Million Six
Hundred Sixty-Six Thousand Six Hundred Sixty-Seven Dollars
($16,666,667.00)(the "Senior Notes").
C. The Borrower is in default under the Prior Loan Agreement,
based on the Borrower's failure to comply with certain financial
covenants contained in the Prior Loan Agreement, and based on the
Borrower's failure to remit certain payments to the Noteholders due under
the Senior Notes on November 1, 2001.
D. Pursuant to a term sheet (the "Term Sheet") dated December
5, 2001, in consideration of the grant by the Borrower of a first lien
on all of its assets, the Bank and the Noteholders have agreed to waive
any and all existing defaults of the Borrower; the Bank has agreed to
continue the Line of Credit up to (and not to exceed) the sum of Eighteen
Million Dollars ($18,000,000.00); the Bank has further agreed to extend
the maturity date of the Line of Credit; and the Noteholders have agreed
to revise the payment terms of the Senior Notes, all on the terms and
conditions described in this Amended and Restated Loan Agreement, and in
that certain Amendment No. 2 to Note Agreement and Waiver referred to in
Paragraph B above.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the mutuality, receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS AND CROSS REFERENCES. The following terms used in this
Amended and Restated Loan Agreement shall have the following meanings:
1.1 Accounts Receivable. "Accounts Receivable" means all
"Accounts," as such term is defined in Section 9-106 of the Uniform
Commercial Code, now or hereafter owned, acquired or held by the
Borrower, excluding, however, Export Accounts Receivable, but otherwise
including, without limitation, any and all accounts, accounts receivable,
contract rights, book debts, notes, drafts, acceptances and other forms
of obligations now owned, acquired or held or hereafter received or
acquired by or belonging or owing to the Borrower (including under any
trade names, styles or divisions thereof) arising out of goods sold,
rented or leased and/or services rendered by the Borrower and all of the
Borrower's rights in, to and under all purchase orders, instruments,
receipts and other documents now owned, acquired or held or hereafter
acquired or received by it evidencing obligations for and representing
payment for goods sold or leased and/or services rendered, and all of the
Borrower's rights to goods represented by any of the foregoing (including
unpaid seller's rights of rescission, replevin, reclamation and stopping
in transit and rights to returned, reclaimed or repossessed goods), and
all moneys due or to become due to the Borrower under all contracts for
the sale, rental or lease of goods and/or the performance of services by
the Borrower (whether or not yet earned by performance on the part of the
Borrower) or in connection with any other transaction, now in existence
or hereafter arising, including, without limitation, the right to receive
the proceeds of said purchase orders and contracts, and all collateral
security and guarantees of any kind given by any Person with respect to
any of the foregoing.
1.2 Affiliate. "Affiliate" means any Person (other than a
Wholly-Owned Subsidiary) (a) which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common
control with, the Borrower, (b) which beneficially owns or holds 5% or
more of any class of the Voting Stock of the Borrower, or (c) 5% or more
of the Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is beneficially
owned or held by the Borrower or a Subsidiary. The term "control" means
the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through
the ownership of Voting Stock, by contract or otherwise.
1.3 Amended and Restated Loan Agreement. "Amended and Restated
Loan Agreement" has the meaning assigned to that term in the Preamble to
this Amended and Restated Loan Agreement.
1.4 Amended and Restated Working Capital Line of Credit Note.
"Amended and Restated Working Capital Line of Credit Note" means that
certain Amended and Restated Revolving Promissory Note dated the date of
this Amended and Restated Loan Agreement, made by the Borrower, payable
to the order of the Bank, in the face principal amount of Eighteen
Million Dollars ($18,000,000.00), as the same may hereafter be amended,
modified, restated, renewed and/or replaced from time to time. The
Amended and Restated Working Capital Line of Credit Note evidences the
obligation of the Borrower to repay Working Capital Loans made to the
Borrower pursuant to the Working Capital Line of Credit, together with
accrued interest thereon. The form of the Amended and Restated Working
Capital Line of Credit Note is attached hereto and made a part hereof,
as Exhibit A.
1.5 And/or. "And/or" means one or the other or both, or any
one or more or all, of the things or persons or parties in connection
with which the conjunction is used.
1.6 Application and Agreement For Letter of Credit.
"Application and Agreement For Letter of Credit" means the document
substantially in the form of Exhibit B attached hereto and made a part
hereof, with appropriate insertions and deletions, with respect to the
proposed issuance or amendment of a Letter of Credit; provided, to the
extent any of the provisions of the Application and Agreement For Letter
of Credit are in conflict with the provisions of this Amended and
Restated Loan Agreement, the provisions of this Amended and Restated Loan
Agreement shall govern and control.
1.7 Authorized Officer. "Authorized Officer" means the
President, the Chief Financial Officer and any other officer of the
Borrower who, by the Certificate of Incorporation, Bylaws or Resolutions
of the Board of Directors of the Borrower, is authorized to execute and
deliver this Amended and Restated Loan Agreement and the other Loan
Instruments on behalf of the Borrower.
1.8 Bank. "Bank" has the meaning assigned to that term in the
Preamble to this Amended and Restated Loan Agreement.
1.9 Bankruptcy Code. "Bankruptcy Code" means Title 11 of the
United States Code entitled "Bankruptcy" as now and hereafter in effect,
or any successor statute.
1.10 Borrower. "Borrower" has the meaning assigned to that
term in the Preamble to this Amended and Restated Loan Agreement.
1.11 Borrower's Loan Account. "Borrower's Loan Account" means
the account on the books of the Bank in which will be recorded Working
Capital Loans made by the Bank to the Borrower pursuant to the Working
Capital Line of Credit, payments made on the Working Capital Loans, and
other appropriate debits and credits as provided in this Amended and
Restated Loan Agreement.
1.12 Borrowing Base. "Borrowing Base" means, as of each date
of determination thereof, the sum of (a) eighty percent (80%) of the Net
Outstanding Amount of Eligible Accounts, and (b) the lesser of Twelve
Million Dollars ($12,000,000.00) or the sum of (i) fifty percent (50%)
of the Net Security Value of Eligible Scrap Inventory, (ii) forty percent
(40%) of the Net Security Value of Eligible Billet Inventory, and (iii)
sixty percent (60%) of the Net Security Value of Eligible Finished Goods
Inventory.
1.13 Borrowing Base Report. "Borrowing Base Report" means the
Borrowing Base Report in substantially the form attached hereto and made
a part hereof as Exhibit C.
1.14 Borrowing Certificate. "Borrowing Certificate" means the
Certificate substantially in the form of Exhibit D annexed hereto with
respect to a proposed Working Capital Loan to be delivered by the
Borrower to the Bank pursuant to Sections 2.1(c) and 2.6(c) hereof.
1.15 Business Day. "Business Day" means any day excluding
Saturday, Sunday and any day which is a legal holiday under the laws of
the Commonwealth of Kentucky or is a day on which banking institutions
located in the Commonwealth of Kentucky are authorized or required by law
or other governmental action to close.
1.16 Capitalized Lease. "Capitalized Lease" means any lease,
the obligation for Rentals with respect to which is required to be
capitalized on a consolidated balance sheet of the lessee and its
subsidiaries, or for which the amount of the asset and liability
thereunder as if so capitalized should be disclosed in a note to such
balance sheet in accordance with GAAP.
1.17 Capitalized Rentals. "Capitalized Rentals" of any Person
means as of the date of any determination thereof the amount at which the
aggregate Rentals due and to become due under all Capitalized Leases
under which such Person is a lessee would be reflected as a liability on
a consolidated balance sheet of such Person.
1.18 CERCLA. "CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Supplemental Amendments and Reauthorization Act of 1986, 42 U.S.C.
Sections 9601 et seq., and any future amendments.
1.19 Closing Date. "Closing Date" means the date on which the
conditions set forth in Section 4.1 hereof are satisfied.
1.20 Code. "Code" means the Internal Revenue Code of 1986, as
amended.
1.21 Common Stock. "Common Stock" means the common stock ($.01
par value) of the Borrower.
1.22 Compliance Certificate. "Compliance Certificate" means
a certificate substantially in the form of Exhibit E annexed hereto
delivered by the Borrower to the Bank pursuant to Section 6.3(f) hereof.
1.23 Consolidated EBITDA. "Consolidated EBITDA" shall mean,
for any period, Consolidated Net Earnings during such period, plus (to
the extent deducted in determining Consolidated Net Earnings)(a) all
Interest Charges on all Indebtedness (including Capitalized Rentals) of
the Borrower and its Subsidiaries, (b) all provisions of any federal,
state or other income taxes made by the Borrower and its Subsidiaries
during such period, and (c) depreciation, amortization, or any other non-
cash charges for the Borrower and its Subsidiaries for such period.
1.24 Consolidated Funded Debt. "Consolidated Funded Debt"
means all Funded Debt of the Borrower and its Subsidiaries, determined
on a consolidated basis, eliminating intercompany items.
1.25 Consolidated Net Earnings. "Consolidated Net Earnings"
for any period means the gross revenues of the Borrower and its
Subsidiaries for such period less all expenses and other proper charges
(including taxes on income), determined on a consolidated basis in
accordance with GAAP after eliminating earnings or losses attributable
to outstanding Minority Interests, but excluding in any event:
(a) any extraordinary items (including extraordinary gains
and extraordinary losses);
(b) net earnings and losses of any Subsidiary accrued prior
to the date it became a Subsidiary;
(c) net earnings and losses of any corporation (other than
a Subsidiary), substantially all the assets of which have been acquired
in any manner by the Borrower or any Subsidiary, realized by such
corporation prior to the date of such acquisition;
(d) net earnings and losses of any corporation (other than
a Subsidiary) with which the Borrower or a Subsidiary shall have
consolidated or which shall have merged into or with the Borrower or a
Subsidiary prior to the date of such consolidation or merger;
(e) net earnings of any business entity (other than a
Subsidiary) in which the Borrower or any Subsidiary has an ownership
interest unless such net earnings shall have actually been received by
the Borrower or such Subsidiary in the form of cash distributions; and
(f) any portion of the net earnings of any Subsidiary which
for any reason is unavailable for payment of dividends to the Borrower
or any other Subsidiary.
1.26 Consolidated Stockholders' Equity. "Consolidated
Stockholders' Equity" means stockholders' equity of the Borrower and its
Subsidiaries determined in accordance with GAAP.
1.27 Consolidated Tangible Net Worth. "Consolidated Tangible
Net Worth" shall mean, at any time, Consolidated Stockholders' Equity
after, without duplication, (a) excluding the effect of changes in GAAP
after September 29, 2001, and (b) excluding any write-downs of assets
occurring subsequent to September 29, 2001, (i) under Financial
Accounting Standards Board Statement No. 5 relating to asset impairment,
(ii) under Financial Accounting Standards Board Statement No. 121
relating to asset impairment, and/or (iii) pursuant to Section 382 of the
Code, minus the net book value of all assets of the Borrower and its
Subsidiaries, after deducting any reserves applicable thereto, which
would be treated as intangible under GAAP, including, without limitation,
goodwill, trademarks, trade names, service marks, brand names,
copyrights, patents and unamortized debt discount and expense (other than
expenses incurred in connection with this Amended and Restated Loan
Agreement, the Note Amendment, and certain amendments to the Master
Equipment Lease), organizational expenses and the excess of the equity
in any Subsidiary over the cost of the investment in such Subsidiary.
1.28 Consolidated Total Assets. "Consolidated Total Assets"
means the total assets of the Borrower and its Subsidiaries determined
on a consolidated basis in accordance with GAAP.
1.29 Consolidated Total Capitalization. "Consolidated Total
Capitalization" means the sum of Consolidated Adjusted Net Worth and
Consolidated Funded Debt.
1.30 Covered Tax. "Covered Tax" means any Tax that is not an
Excluded Tax.
1.31 Debt. "Debt" of the Borrower or any Subsidiary means, as
of the date of any determination thereof without duplication (a) all
Indebtedness of the Borrower or any Subsidiary for borrowed money or
which has been incurred in connection with the acquisition of assets, (b)
Capitalized Rentals, and (c) Guaranties of obligations of the character
referred to herein above in this definition; provided, however, that Debt
shall not include (i) Debt of a Subsidiary to the Borrower or to another
Wholly-Owned Subsidiary or Debt of the Borrower to a Wholly-Owned
Subsidiary, (ii) Guaranties by the Borrower or any Subsidiary in favor
of the Borrower or another Wholly-Owned Subsidiary, and (iii) any
unfunded obligations which may exist at any time with respect to any Plan
of the Borrower.
1.32 Debt Service. "Debt Service" shall mean, with respect to
any period, the sum of the following: (a) all Interest Charges on all
Indebtedness (including Capitalized Rentals) of the Borrower and its
Subsidiaries for such period, and (b) all payments of principal in
respect of Debt of the Borrower and its Subsidiaries (including
Capitalized Rentals) paid or payable during such period after eliminating
all offsetting debits and credits between the Borrower and its
Subsidiaries and all other items required to be eliminated in the course
of the preparation of consolidated financial statements of the Borrower
and its Subsidiaries in accordance with GAAP.
1.33 Debt Service Coverage Ratio. "Debt Service Coverage
Ratio" shall mean, at any time, the ratio of (a) Consolidated EBITDA for
the period of four consecutive Fiscal Quarters ending on, or most
recently ended prior to, such time to (b) Debt Service for such period.
Notwithstanding the foregoing, in the fourth Fiscal Quarter of Fiscal
Year 2003 and each of the first three Fiscal Quarters of Fiscal Year
2004, the Debt Service Coverage Ratio shall be annualized by multiplying
Consolidated EBITDA for the actual number of Fiscal Quarters elapsed
since the end of the third Fiscal Quarter of Fiscal Year 2003 at the time
of computation by a fraction, the numerator of which is four and the
denominator of which is the actual number of Fiscal Quarters elapsed
since the end of the third Fiscal Quarter of Fiscal Year 2003.
1.34 Default Rate. "Default Rate" means, upon the occurrence
and during the continuation of any Event of Default, with respect to the
Working Capital Loans then or thereafter outstanding, a variable rate per
annum equal to the sum of one percent (1%) per annum in excess of the
"Borrowing Rate," as defined in Section 2.2(a).
1.35 Eligible Accounts. "Eligible Accounts" means only
Accounts Receivable arising out of the sale, rental or lease of Inventory
or the rendition of services by the Borrower in the ordinary course of
its business to customers or account debtors which are not Wholly-Owned
Subsidiaries or Affiliates of the Borrower, but excluding from the
definition of Eligible Accounts all of the following:
(a) Accounts Receivable which remain unpaid for more than
ninety (90) days from original invoice date,
(b) Accounts Receivable owing by a single account debtor,
or related group of account debtors, if as much as fifteen percent (15%)
of the aggregate balance owing by said account debtor or related group
of account debtors on such Accounts Receivable remains unpaid for more
than ninety (90) days from their respective invoice dates,
(c) Accounts Receivable owed by any Wholly-Owned Subsidiary
or Affiliate of the Borrower,
(d) Accounts Receivable with respect to which the account
debtor is the United States of America or any state, city, county or
governmental authority or any department, agency or instrumentality of
any of them,
(e) Export Accounts Receivable,
(f) Accounts Receivable owed to the Borrower by any account
debtor which is subject to any of the events of the type described in
subsections (h) or (i) of Section 8 hereof,
(g) Accounts Receivable evidencing or otherwise arising out
of the sale, lease or rental of assets of the Borrower other than the
sale, lease or rental of Inventory in the ordinary course of business,
and
(h) Accounts Receivable to the extent any claim, offset or
defense exists to the payment thereof.
The net amount of Eligible Accounts shall be computed by deducting
therefrom any credits and allowances given by the Borrower to its
customers and account debtors as more fully set forth in Section 1.73
hereof. No Account Receivable shall constitute an Eligible Account
unless it complies with Section 5.13 of this Amended and Restated Loan
Agreement.
1.36 Eligible Billet Inventory. "Eligible Billet Inventory"
means and includes such Work In Process Billet Inventory as the Bank, in
its reasonable discretion, considers suitable for use as a basis in
making unsecured loans. The Bank agrees that the Inventory currently
classified as Work in Process Billet Inventory by the Borrower on its
operating and financial statements is eligible for inclusion in the
Borrowing Base and may be used by the Borrower as a basis in obtaining
Working Capital Loans and Letters of Credit. The value of Eligible Billet
Inventory shall be computed at the lower of its cost or market value.
1.37 Eligible Finished Goods Inventory. "Eligible Finished
Goods Inventory" means and includes such finished steel bar quality steel
bar flats, merchant bar quality steel bar flats, and other finished steel
products which are ready for shipment to customers of the Borrower and
which the Bank, in its reasonable discretion, considers suitable for use
as a basis in making Working Capital Loans. The Bank agrees that the
Inventory currently classified as finished goods Inventory by the
Borrower on its operating and financial statements is eligible for
inclusion in the Borrowing Base and may be used by the Borrower as a
basis in obtaining Working Capital Loans and Letters of Credit. The
value of Eligible Finished Goods Inventory shall be computed at the lower
of its cost or market value.
1.38 Eligible Scrap Inventory. "Eligible Scrap Inventory"
means and includes such scrap metal and additives used in the melt
process as the Bank, in its reasonable discretion, considers suitable for
use as a basis in making Working Capital Loans. The Bank agrees that the
Inventory currently classified as scrap or additives Inventory by the
Borrower on its operating and financial statements is eligible for
inclusion in the Borrowing Base and may be used by the Borrower as a
basis in obtaining Working Capital Loans and Letters of Credit. The
value of Eligible Scrap Inventory shall be computed at the lower of its
cost or market value.
1.39 Environmental Claim. "Environmental Claim" means any
investigation, notice, violation, demand, allegation, action, suit,
injunction, judgment, order, consent decree, penalty, fine, lien,
proceeding or claim (whether administrative, judicial or private in
nature) arising (a) pursuant to, or in connection with an actual or
alleged violation of, any Environmental Law, (b) in connection with any
Hazardous Material or actual or alleged Hazardous Material Activity,
(c) from any abatement, removal, remedial, corrective or other response
action in connection with a Hazardous Material, Environmental Law or
other order of a Governmental Authority, or (d) from any actual or
alleged damage, injury, threat or harm to health, safety, natural
resources or the environment.
1.40 Environmental Law. "Environmental Law" means any current
or future Legal Requirement pertaining to (a) the protection of health,
safety and the indoor or outdoor environment, (b) the conservation,
management or use of natural resources and wildlife, (c) the protection
or use of surface water and groundwater, (d) the management, manufacture,
possession, presence, use, generation, transportation, treatment,
storage, disposal, Release, threatened Release, abatement, removal,
remediation or handling of, or exposure to, any Hazardous Material or
(e) pollution (including any Release to air, land, surface water and
groundwater), and includes, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Sections 9601 et seq., Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid
Waste Amendments of 1984, 42 U.S.C. Sections 6901 et seq., Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977, 33
U.S.C. Sections 1251 et seq., Clean Air Act of 1966, as amended, 42
U.S.C. Sections 7401 et seq., Toxic Substances Control Act of 1976, 15
U.S.C. Sections 2601 et seq., Hazardous Materials Transportation Act, 49
U.S.C. Sections 1801 et seq., Occupational Safety and Health Act of 1970,
as amended, 29 U.S.C. Sections 651 et seq., Oil Pollution Act of 1990,
33 U.S.C. Sections 2701 et seq., Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Sections 11001 et seq., National
Environmental Policy Act of 1969, 42 U.S.C. Sections 4321 et seq., Safe
Drinking Water Act of 1974, as amended 42 U.S.C. Sections 300(f) et seq.,
any similar, implementing or successor law, and any amendment, rule,
regulation, order or directive issued thereunder.
1.41 ERISA. "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any successor
statute of similar import, together with the regulations thereunder, in
each case as in effect from time to time. References to sections of
ERISA shall be construed to also refer to any successor sections.
1.42 ERISA Affiliate. "ERISA Affiliate" means any corporation,
trade or business that is, along with the Borrower, a member of a
controlled group of corporations or a controlled group of trades or
businesses, as described in Sections 414(b) and 414(c), respectively, of
the Code or Section 4001 of ERISA.
1.43 Excluded Tax. "Excluded Tax" means any of the following
taxes, levies, imposts, duties, deductions, withholdings or charges, and
all liabilities with respect thereto: (a) Taxes imposed on the net income
of the Bank or a Tax Transferee (including without limitation branch
profits taxes, minimum taxes and taxes computed under alternative
methods, at least one of which is based on net income (collectively
referred to as "net income taxes") by (i) the United States of America,
(ii) the jurisdiction under the laws of which the Bank or Tax Transferee
is organized or any political subdivision thereof or (iii) the
jurisdiction of the Banks or Tax Transferee's applicable lending office
or any political subdivision thereof or (iv) any jurisdiction in which
the Bank or Tax Transferee is doing business, (b) any Taxes to the extent
that they are in effect and would apply to a payment to the Bank as of
the Closing Date, (c) any Taxes that are in effect and would apply to a
payment to a Tax Transferee as of the date of acquisition of the Working
Capital Loans by such Tax Transferee or the date of the change of lending
office of such Tax Transferee, as the case may be (provided however that
a Person shall not be considered a Tax Transferee for purposes of this
clause (c) as a result of a change of its lending office), (d) any Taxes
to the extent of any credit or other tax benefit available to the Bank
or Tax Transferee, as applicable, as a result thereof, or (e) any Taxes
that would not have been imposed but for the failure by the Bank or Tax
Transferee, as applicable, to provide and keep current any certification
or other documentation required to qualify for an exemption from or
reduced rate of any Tax.
1.44 Export Accounts Receivable. "Export Accounts Receivable"
means Accounts Receivable owed to the Borrower from account debtors
located in foreign countries, other than Canada, and which arise from the
sale of Inventory in the ordinary course of business.
1.45 Events of Default. "Events of Default" means the
occurrence or happening of any of the matters set forth in Section 8
hereof.
1.46 Fiscal Quarter. "Fiscal Quarter" means a fiscal quarter
of the Borrower. The Fiscal Quarters of the Borrower for its Fiscal Year
ending September 28, 2002, are December 29, 2001; March 30, 2002; June
29, 2002; and September 28, 2002. The Borrower shall notify the Bank in
writing prior to the commencement of each subsequent Fiscal Year of the
last day of each Fiscal Quarter in such Fiscal Year.
1.47 Fiscal Year. "Fiscal Year" means a fiscal year of the
Borrower. The Borrower's current Fiscal Year ends on the last Saturday
of September of each calendar year.
1.48 Funded Debt. "Funded Debt" of any Person means all Debt
of such Person which would, in accordance with GAAP, constitute long-term
Debt, but including in any event (a) any Debt having a final maturity of
one or more than one year from the date of origin thereof (or which is
renewable or extendible at the option of the obligor for a period or
periods more than one year from the date of origin), including all
payments in respect thereof that are required to be made within one year
from the date of any determination of Funded Debt, whether or not the
obligation to make such payments shall constitute a current liability of
the obligor under GAAP, (b) any Debt outstanding under a revolving credit
or similar agreement or credit line or similar facility, (c) all
Capitalized Rentals of such Person, and (d) Guaranties by such Person of
Funded Debt of others.
1.49 Funding Date. "Funding Date" means the date of the
funding of a Working Capital Loan.
1.50 GAAP. "GAAP" means generally accepted accounting
principles in the United States in effect as of the Closing Date.
1.51 Governmental Approval. "Governmental Approval" means any
permit, license, variance, certificate, consent, letter, clearance,
closure, exemption, decision or action or approval of a Governmental
Authority.
1.52 Governmental Authority. "Governmental Authority" means
any international, foreign, federal, state, regional, county or local
person or body having governmental or quasi-governmental authority or
subdivision thereof.
1.53 Guaranties. "Guaranties" by any Person means all
obligations (other than endorsements in the ordinary course of business
of negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation,
any obligations as a general partner of a Joint Venture and all
obligations incurred through an agreement, contingent or otherwise, by
such Person: (a) to purchase such Indebtedness or obligation or any
property or assets constituting security therefor, (b) to advance or
supply funds (i) for the purchase or payment of such Indebtedness or
obligation, (ii) to maintain working capital or other balance sheet
condition or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation, (c) to lease
property or to purchase Securities or other property or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make payment of the
Indebtedness or obligation, or (d) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Amended
and Restated Loan Agreement, a Guaranty in respect of any Indebtedness
for borrowed money shall be deemed to be Indebtedness equal to the
principal amount of such Indebtedness for borrowed money which has been
guaranteed, and a Guaranty in respect of any other obligation or
liability or any dividend shall be deemed to be Indebtedness equal to the
maximum reasonably anticipated amount of such obligation, liability or
dividend as determined by such Person in good faith.
1.54 Hazardous Material. "Hazardous Material" means any
substance, chemical, compound, product, solid, gas, liquid, waste,
byproduct, pollutant, contaminant or material which is hazardous or
toxic, and includes, without limitation (a) asbestos, polychlorinated
biphenyls and petroleum (including crude oil or any fraction thereof) and
(b) any such material classified or regulated as "hazardous" or "toxic"
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Preauthorization Act of 1986, 42 U.S.C. Sections 9601 et seq., Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
Sections 6901 et seq., Federal Water Pollution Control Act, as amended
by the Clean Water Act of 1977, 33 U.S.C. Sections 1251 et seq., Clean
Air Act of 1966, as amended, 42 U.S.C. Sections 7401 et seq., Toxic
Substances Control Act of 1976, 15 U.S.C. Sections 2601 et seq., or
Hazardous Materials Transportation Act, 49 U.S.C. App. Sections 1801 et
seq.
1.55 Hazardous Material Activity. "Hazardous Material
Activity" means any activity, event or occurrence involving a Hazardous
Material, including, without limitation, the manufacture, possession,
presence, use, generation, transportation, treatment, storage, disposal,
Release, threatened Release, abatement, removal, remediation, handling
of or corrective or response action to any Hazardous Material.
1.56 Indebtedness. "Indebtedness" of any Person means and
includes all obligations of such Person which in accordance with GAAP
shall be classified upon a balance sheet of such Person as liabilities
of such Person, and in any event shall include all (a) obligations of
such Person for borrowed money or which has been incurred in connection
with the acquisition of property or assets, (b) obligations secured by
any Lien upon property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such
obligations, (c) obligations creating or arising under any conditional
sale or other title retention agreement with respect to property acquired
by such Person, notwithstanding the fact that the rights and remedies of
the seller, lender or lessor under such agreement in the event of default
are limited to repossession or sale of property, (d) Capitalized Rentals,
and (e) Guaranties of obligations of others of the character referred to
in this definition.
1.57 Interest Charges. "Interest Charges" for any period means
all interest and all amortization of debt discount and expense on any
particular Indebtedness for which such calculations are being made.
1.58 Interest Coverage Ratio. "Interest Coverage Ratio" shall
mean, at any time, the ratio of (a) Consolidated EBITDA for the period
of four consecutive Fiscal Quarters ending on, or most recently ended
prior to, such time to (b) all Interest Charges on all Indebtedness
(including Capitalized Rentals) of the Borrower and its Subsidiaries for
such period. Notwithstanding the foregoing, in the fourth Fiscal Quarter
of Fiscal Year 2003 and each of the first three Fiscal Quarters of Fiscal
Year 2004, the Interest Coverage Ratio shall be annualized by multiplying
Consolidated EBITDA for the actual number of Fiscal Quarters elapsed
since the end of the third Fiscal Quarter of Fiscal Year 2003 at the time
of computation by a fraction, the numerator of which is four and the
denominator of which is the actual number of Fiscal Quarters elapsed
since the end of the third Fiscal Quarter of Fiscal Year 2003.
1.59 Inventory. "Inventory" means all "Inventory," as such
term is defined in Section 9-109(4) of the Uniform Commercial Code, now
or hereafter owned, acquired or held by the Borrower and, in any event,
shall mean and include, but not be limited to, all inventory,
merchandise, goods and other personal property now or hereafter owned by
the Borrower which is held for sale, rental or lease or is furnished or
is to be furnished under a contract of service or which constitutes raw
materials, work in process or materials used or consumed or to be used
or consumed in the Borrower's business, or the processing, packaging,
delivery or shipping of the same, and all finished goods.
1.60 Investments. "Investments" means all investments, in cash
or by delivery of property made, directly or indirectly in any Person,
whether by acquisition of shares of capital stock, indebtedness or other
obligations or Securities or by loan, advance, capital contribution or
otherwise; provided, however, that "Investments" shall not mean or
include routine investments in property to be used or consumed in the
ordinary course of business.
1.61 Joint Venture. "Joint Venture" means a joint venture,
partnership or similar arrangement, whether in corporate, partnership or
other legal form, provided, that as to any such arrangement in corporate
form, such corporation shall not, as to any Person of which such
corporation is a Subsidiary, be considered a Joint Venture to which such
Person is a party.
1.62 Legal Requirement. "Legal Requirement" means any treaty,
convention, statute, law, regulation, ordinance, Governmental Approval,
injunction, judgment, order, consent decree or other requirement of any
Governmental Authority.
1.63 Letter of Credit Fee. "Letter of Credit Fee" has the
meaning assigned to that term in Section 2.6(e)(1) hereof.
1.64 Letter of Credit Usage. "Letter of Credit Usage" means,
as at any date of determination thereof, the sum of (a) the maximum
aggregate amount which is or at any time thereafter may become available
for drawing under all Letters of Credit then outstanding, plus (b) the
aggregate amount of all drawings under all Letters of Credit honored by
the Bank and not theretofore reimbursed by the Borrower to the Bank,
whether by virtue of the Bank making a Working Capital Loan to the
Borrower to enable the Borrower to reimburse the Bank for such drawing,
or otherwise.
1.65 Letters of Credit. "Letters of Credit" means any letter
of credit or similar instrument issued by the Bank for the account of the
Borrower pursuant to this Amended and Restated Loan Agreement for the
purpose of securing the performance, payment, deposit or surety
obligations of the Borrower, other than in connection with the purchase
by the Borrower of materials, goods or services, pursuant to contracts
and/or Capitalized Leases entered into or proposed to be entered into or
assumed or proposed to be assumed by the Borrower.
1.66 Lien. "Lien" means 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 but not limited to the security interest or lien
arising from a mortgage, encumbrance, pledge, conditional sale or trust
receipt or a Capitalized Lease, consignment or bailment or security
purposes, or the signing or filing of a financing statement which names
such Person as debtor, or the signing of any security agreement by any
such Person authorizing any other party as the secured party thereunder
to file any financing statement naming such Person as debtor. The term
"Lien" shall include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, Capitalized Leases
and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements) affecting the property. For the
purposes of this Amended and Restated Loan Agreement, the Borrower or a
Subsidiary shall be deemed to be the owner of any property which it has
acquired or holds subject to a conditional sale agreement, Capitalized
Lease or other arrangement pursuant to which title to the property has
been retained by or vested in some other Person for security purposes and
such retention or vesting shall constitute a Lien.
1.67 Loan Instruments. "Loan Instruments" means this Amended
and Restated Loan Agreement, the Amended and Restated Working Capital
Line of Credit Note, the Mortgage, the Assignment of Rents and Leases,
the Security Agreement, UCC Financing and Fixture Filings, the
Environmental Indemnity Agreement, each Application and Agreement for
Letter of Credit, and all other documents or certificates executed in
favor of Bank relating to the Letters of Credit, all Borrowing
Certificates, all Compliance Certificates delivered to the Bank, and all
other agreements, documents and instruments pertaining to the Working
Capital Line of Credit.
1.68 Margin Stock. "Margin Stock" has the meaning assigned to
that term in Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
1.69 Master Equipment Lease. "Master Equipment Lease" shall
mean that certain Master Equipment Lease, dated as of September 29, 2000,
between the Borrower and Fifth Third Bank, Ohio Valley, as amended,
restated, supplemented or otherwise modified from time to time.
1.70 Material Adverse Effect. "Material Adverse Effect" means
a material adverse effect on (a) the business, operations, affairs,
financial condition, assets or properties of the Borrower and its
Subsidiaries taken as a whole, or (b) the ability of the Borrower to
perform its obligations under this Amended and Restated Loan Agreement
and the Amended and Restated Working Capital Line of Credit Note, or (c)
the validity or enforceability of this Amended and Restated Loan
Agreement or the Amended and Restated Working Capital Line of Credit
Note.
1.71 Minority Interests. "Minority Interests" means any shares
of stock of any class of a Subsidiary (other than directors' qualifying
shares as required by law) that are not owned by the Borrower and/or one
or more of its Subsidiaries. Minority Interests shall be valued by
valuing Minority Interests constituting preferred stock at the voluntary
or involuntary liquidating value of such preferred stock, whichever is
greater, and by valuing Minority Interests constituting common stock at
the book value of capital and surplus applicable thereto adjusted, if
necessary, to reflect any changes from the book value of such common
stock required by the foregoing method of valuing Minority Interests in
preferred stock.
1.72 Multiemployer Plan. "Multiemployer Plan" shall have the
same meaning as in ERISA.
1.73 Net Outstanding Amount of Eligible Accounts. "Net
Outstanding Amount of Eligible Accounts" means the net outstanding amount
of Eligible Accounts after deducting from the aggregate face amount
thereof all payments, adjustments and credits applicable thereto and all
amounts due thereon reasonably considered by the Bank difficult to
collect or uncollectible by reason of return, rejection, repossession,
loss or damage of or to the merchandise giving rise thereto or other
disputes between the account debtor and the Borrower or the insolvency
or questionable creditworthiness of the account debtor, or otherwise, all
as determined by the Bank in its reasonable discretion.
1.74 Net Security Value of Eligible Billet Inventory. "Net
Security Value of Eligible Billet Inventory" means the net value of
Eligible Billet Inventory after taking into account charges and Liens
(other than those in favor of the Bank) of all kinds against the Eligible
Billet Inventory, changes in the market value thereof, and
transportation, processing and other handling charges affecting the value
thereof, all as determined by the Bank in its reasonable discretion. The
Bank agrees that the Inventory currently classified as Work in Process
Billet Inventory by the Borrower on its operating and financial
statements is eligible for inclusion in the Borrowing Base, and may be
used by the Borrower as a basis in obtaining Working Capital Loans and
Letters of Credit.
1.75 Net Security Value of Eligible Finished Goods Inventory.
"Net Security Value of Eligible Finished Goods Inventory" means the net
value of Eligible Finished Goods Inventory after taking into account
charges and Liens (other than those in favor of the Bank) of all kinds
against the Eligible Finished Goods Inventory, changes in the market
value thereof, and transportation, processing and other handling charges
affecting the value thereof, all as determined by the Bank in its
reasonable discretion. The Bank agrees that the Inventory currently
classified as finished goods Inventory by the Borrower on its operating
and financial statements is eligible for inclusion in the Borrowing Base,
and may be used by the Borrower as a basis in obtaining Working Capital
Loans and Letters of Credit.
1.76 Net Security Value of Eligible Scrap Inventory. "Net
Security Value of Eligible Scrap Inventory" means the net value of
Eligible Scrap Inventory after taking into account charges and Liens
(other than those in favor of the Bank) of all kinds against the Eligible
Scrap Inventory, changes in the market value thereof, and transportation,
processing and other handling charges affecting the value thereof, all
as determined by the Bank in its reasonable discretion. The Bank agrees
that the Inventory currently classified as scrap and additives Inventory
by the Borrower on its operating and financial statements is eligible for
inclusion in the Borrowing Base, and may be used by the Borrower as a
basis in obtaining Working Capital Loans and Letters of Credit.
1.77 Obligations. "Obligations" means: (a) the entire unpaid
principal balance of and all interest now accrued or hereafter to accrue
on the Amended and Restated Working Capital Line of Credit Note, (b) the
performance of all of the covenants, agreements and obligations of the
Borrower hereunder and under the other Loan Instruments, and (c) all
other liabilities, obligations, covenants and duties owing by the
Borrower to the Bank arising under or pursuant to this Amended and
Restated Loan Agreement or the other Loan Instruments of any kind or
nature, present or future, and whether or not evidenced by any note,
guaranty or other instrument. The term "Obligations" includes, without
limitation, all interest, charges, expenses, reasonable attorneys' fees
and any other sums chargeable to the Borrower under this Amended and
Restated Loan Agreement and/or any other Loan Instrument.
1.78 Officer's Certificate. "Officer's Certificate" means a
certificate executed on behalf of the Borrower by an Authorized Officer.
1.79 PBGC. "PBGC" means the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all of its functions
under ERISA.
1.80 Person. "Person" means any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, other entity or group,
institution, party or government, whether federal, state, county, city,
municipal or other, or agency or division thereof.
1.81 Plan. "Plan" means a "pension plan," as such term is
defined in ERISA, established or maintained by the Borrower or any ERISA
Affiliate or as to which the Borrower or any ERISA Affiliate contributed
or is a member or otherwise may have any liability.
1.82 Prime Rate. "Prime Rate" means, for any day, the "Prime
Rate" of interest generally charged by the Bank on such day to its most
substantial and credit-worthy commercial borrowers for 90-day unsecured
loans, it being understood and agreed to by the Borrower that the "Prime
Rate" is the rate of interest designated by the Bank as its "Prime Rate,"
and such term does not necessarily mean or imply that it is the lowest
or best rate then available from the Bank on floating rate loans to
specific borrowers of the class described above. All changes in the Prime
Rate shall become effective immediately without prior notice to the
Borrower.
1.83 RCRA. "RCRA" means the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and
Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Sections 6901 et
seq., and any future amendments.
1.84 Release. "Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing into the indoor or outdoor environment, including,
without limitation, the abandonment or discharging of barrels, drums,
containers, tanks and other receptacles containing or previously
containing any Hazardous Material.
1.85 Rentals. "Rentals" means and includes as of the date of
any determination thereof all fixed payments (including as such all
payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by the
Borrower or a Subsidiary, as lessee or sublessee under a lease of real
or personal property, but shall be exclusive of any amounts required to
be paid by the Borrower or a Subsidiary (whether or not designated as
rents or additional rents) on account of maintenance, repairs, insurance,
taxes and similar charges. Fixed rents under any so-called "percentage
leases" shall be computed solely on the basis of the minimum rents, if
any, required to be paid by the lessee regardless of sales volume or
gross revenues.
1.86 Reportable Event. "Reportable Event" means a "reportable
event" as described in Section 4043 of ERISA for which the notice
requirement to the PBGC has not been waived (provided that the loss of
qualification of a Plan and the failure to meet the minimum funding
standard of Section 412 of the Code or Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any waiver of the
reporting requirement by the PBGC).
1.87 Restricted Investments. "Restricted Investments" means
all Investments made by the Borrower and its Subsidiaries, except for the
following:
(a) Investments by the Borrower and its Subsidiaries in and
to Subsidiaries in lines of business reasonably related to the Borrower's
existing lines of business, as determined in good faith by the Board of
Directors of the Borrower, including any Investment in a corporation
which, after giving effect to such Investment, will become a subsidiary;
(b) Investments in commercial paper which, at the time of
acquisition by the Borrower or any Subsidiary, is rated A-1 or better by
S&P or P-1 or better by Moody's;
(c) Investments in United States Governmental Securities,
provided that such obligations mature in twelve months or less from the
date of acquisition thereof;
(d) Investments in certificates of deposit maturing within
one year from the date of issuance thereof, or in bankers acceptances
issued by an Acceptable Bank;
(e) Investments in Repurchase Agreements;
(f) loans or advances in the usual and ordinary course of
business to officers, directors and employees, provided such outstanding
loans do not exceed Seven Hundred Fifty Thousand Dollars ($750,000.00)
in the aggregate at any time;
(g) receivables arising from the sale of goods and services
in the ordinary course of business of the Borrower and its Subsidiaries;
(h) money market preferred stock (including MAPs) rated A
or better by S&P and Moody's;
(i) Investments in Affiliates or Joint Ventures in lines of
business reasonably related to the Borrower's existing lines of business
(assuming compliance with Section 7.5 hereof), as determined in good
faith by the Board of Directors of the Borrower;
(j) Investments in or commitments to purchase foreign
currency to the extent the Borrower and its Subsidiaries are obligated
to make payments to others in such currencies;
(k) tax-exempt floating rate option tender bonds backed by
letters of credit from an Acceptable Bank;
(l) other investments of the Borrower and/or its
Subsidiaries existing on the Closing Date which are described in Exhibit
H attached to this Amended and Restated Loan Agreement; and
(m) the purchase, redemption or retirement (directly,
indirectly or through a Subsidiary) of any shares of the Borrower's
capital stock of any class or any rights or options to purchase or
acquire any shares of its capital stock to the extent permitted by
Section 7.4(b) of this Amended and Restated Loan Agreement.
In valuing any Restricted Investments, such Restricted Investments
shall be taken at the original cost thereof, without allowance for any
subsequent write-offs or appreciation or depreciation therein, but less
any amount repaid or recovered on account of capital or principal.
As used in this definition of "Restricted Investments":
"Acceptable Bank" means any bank or trust company (a) which
is organized under the laws of the United States of America
or any State thereof, (b) which has capital, surplus and
undivided profits aggregating at least $100,000,000, and
(c) whose long-term unsecured debt obligations (or the
long-term unsecured debt obligations of the bank holding
company owning all of the capital stock of such bank or trust
company) shall have been given a rating of "AA" or better by
S&P, "Aa" or better by Moody's or an equivalent rating by any
other credit rating agency of recognized national standing.
"Acceptable Broker-Dealer" means any Person other than a
natural person (a) which is registered as a broker or dealer
pursuant to the Securities Exchange Act of 1934, as amended,
and (b) whose long-term unsecured debt obligations shall have
been given a rating of "A" or better by S&P, "A2" or better
by Moody's or an equivalent rating by any other credit rating
agency of recognized national standing.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Repurchase Agreement" means any written agreement:
(a) that provides for (i) the transfer of one or more
United States Governmental Securities in an aggregate
principal amount at least equal to the amount of the Transfer
Price (defined below) to the Borrower or any of its
Subsidiaries from an Acceptable Bank or an Acceptable
Broker-Dealer against a transfer of funds (the "Transfer
Price") by the Borrower or such Subsidiary to such Acceptable
Bank or Acceptable Broker-Dealer, and (ii) a simultaneous
agreement by the Borrower or such Subsidiary, in connection
with such transfer of funds, to transfer to such Acceptable
Bank or Acceptable Broker-Dealer the same or substantially
similar United States Governmental Securities for a price not
less than the Transfer Price plus a reasonable return thereon
at a date certain not later than 365 days after such transfer
of funds,
(b) in respect of which the Borrower or such Subsidiary
shall have the right, whether by contract or pursuant to
applicable law, to liquidate such agreement upon the
occurrence of any default thereunder, and
(c) in connection with which the Borrower or such
Subsidiary, or an agent thereof, shall have taken all action
required by applicable law or regulations to perfect a Lien
in such United States Governmental Securities.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc.
"United States Governmental Security" means any direct
obligation of, or obligation guaranteed by, the United States
of America, or any agency controlled or supervised by or
acting as an instrumentality of the United States of America
pursuant to authority granted by the Congress of the United
States of America, so long as such obligation or guarantee
shall have the benefit of the full faith and credit of the
United States of America which shall have been pledged
pursuant to authority granted by the Congress of the United
States of America.
1.88 Restricted Payments. "Restricted Payments" shall have the
meaning set forth in Section 7.4 hereof.
1.89 Security. "Security" shall have the meaning as in section
2(1) of the Securities Act of 1933, as amended.
1.90 Senior Note Agreement. "Senior Note Agreement" means that
certain Note Agreement dated as of November 1, 1995, between the Borrower
and the Noteholders, as amended, together with all future amendments and
modifications thereto, pursuant to which the Borrower has issued the
Senior Notes.
1.91 Senior Notes. "Senior Notes" means the Borrower's 7.66%
Senior Notes due November 1, 2005, in the original principal amount of
Twenty Million Dollars ($20,000,000.00) issued pursuant to the Senior
Note Agreement, together with all amendments, modifications, extensions,
renewals, restatements and replacements thereof.
1.92 Significant Subsidiary. "Significant Subsidiary" means
at any time any Subsidiary that would at such time constitute a
"significant subsidiary" (as such term is defined in Regulation S-X of
the Securities and Exchange Commission as in effect on the Closing Date)
of the Borrower.
1.93 Subordinated Debt. "Subordinated Debt" means the
principal of and premium if any, and interest on all Indebtedness of the
Borrower, whether currently outstanding or hereafter created, for money
borrowed, or any Indebtedness incurred in connection with an acquisition
or lease of property or with a merger, consolidation, or acquisition of
assets which is expressly subordinate in right of payment pursuant to its
terms to the Amended and Restated Working Capital Line of Credit Note
(whether or not they are subordinated to other Indebtedness of the
Borrower).
1.94 Subsidiary. "Subsidiary" means as to any particular
parent corporation any corporation of which more than 50% (by number of
votes) of the Voting Stock shall be beneficially owned, directly or
indirectly, by such parent corporation. The term "Subsidiary" means a
subsidiary of the Borrower.
1.95 Tax. "Tax" or "Taxes" means any present or future tax,
levy, impost, duty, charge, governmental fee, deduction or withholding
of any nature and whatever called, by whomsoever, on whomsoever and
wherever imposed, levied, collected, withheld or assessed; provided that
"Tax on the overall net income" of a Person shall be construed as a
reference to a tax imposed by the jurisdiction in which that Person's
principal office (and/or, in the case of the Bank, its lending office)
is located on all or part of the net income, profits or gains of that
Person (whether worldwide, or only insofar as such income, profits or
gains are considered to arise in or to relate to a particular
jurisdiction, or otherwise).
1.96 Tax Transferee. "Tax Transferee" means any Person who
acquires any interest in the Working Capital Loans (whether or not by
operation of law) or in the office to which the Bank has transferred its
Working Capital Loans for purposes of determining where the Working
Capital Loans are made, accounted for or booked.
1.97 Total Utilization of Working Capital Commitment. "Total
Utilization of Working Capital Commitment" means, as at any date of
determination thereof, the sum of (a) the aggregate principal amount of
all outstanding Working Capital Loans, plus (b) the Letter of Credit
Usage.
1.98 Voting Stock. "Voting Stock" means Securities of any
class or classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors
(or Persons performing similar functions).
1.99 Wholly-Owned. "Wholly-Owned" when used in connection with
any Subsidiary means a Subsidiary of which all of the issued and
outstanding shares of stock (except shares required as directors'
qualifying shares) and all Debt shall be owned by the Borrower and/or one
or more of its Wholly-Owned Subsidiaries.
1.100 Working Capital Commitment. "Working Capital Commitment"
shall have the meaning set forth in Section 2.1(a) hereof.
1.101 Working Capital Line of Credit. "Working Capital Line
of Credit" means the revolving line of credit in the original principal
amount of Eighteen Million Dollars ($18,000,000.00) established by the
Bank in favor of the Borrower pursuant to this Amended and Restated Loan
Agreement.
1.102 Working Capital Line of Credit Termination Date.
"Working Capital Line of Credit Termination Date" means the earliest of
(a) November 1, 2005, (b) the date as of which the Obligations shall have
become immediately due and payable pursuant to Section 8 hereof, or
(c) the date on which all of the Obligations are paid in full to the Bank
(including, without limitation, the repayment, expiration, termination
or cash collateralization of Letters of Credit pursuant to this Amended
and Restated Loan Agreement) and the Working Capital Commitment is
terminated by the Borrower.
1.103 Working Capital Loans. "Working Capital Loans" means the
Working Capital Loans which the Bank has agreed to maintain or make
pursuant to Section 2.1(a) hereof.
1.104 Accounting Terms and Financial Information.
(a) For purposes of this Amended and Restated Loan
Agreement, all accounting terms not otherwise defined herein shall have
the meanings assigned to then in conformity with GAAP and all financial
statements and certificates and reports as to financial matters required
to be delivered to the Bank hereunder shall (unless otherwise disclosed
to the Bank in writing at the time of delivery thereof in the manner
described in Section 1.104(b) hereof) be prepared in accordance with GAAP
applied on a basis consistent with GAAP as applied in the preparation of
the latest financial statements furnished to the Bank hereunder.
(b) The Borrower shall deliver to the Bank at the same time
as the delivery of any annual or monthly financial statement under
Section 6.3 hereof, (i) a description in reasonable detail of any
variation between the application of accounting principles employed in
the preparation of such statement and the application of accounting
principles employed in the preparation of the next preceding annual or
quarterly financial statements (which variation materially affects the
presentation of the financial position or results of operations of the
Borrower) and (ii) reasonable estimates of the difference between such
statements arising as a consequence thereof.
1.105 Other Definitional Provisions. Any reference in this
Amended and Restated Loan Agreement (a) to a Section, a Schedule or an
Exhibit is a reference to a section hereof, a schedule hereto or an
exhibit hereto, respectively; and (b) to a subsection or a clause is,
unless otherwise stated, a reference to a subsection or a clause of the
Section or subsection in which the reference appears. In this Amended
and Restated Loan Agreement, the singular includes the plural and the
plural the singular; "hereof," "herein," "hereto," "hereunder" and the
like mean and refer to this Amended and Restated Loan Agreement as a
whole and not merely to the specific section, paragraph or clause in
which the respective word appears; words importing any gender include the
other genders; references to statutes are to be construed as including
all statutory provisions consolidating, amending or replacing the statute
referred to; references to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible visible
form; the words "including," "includes" and "include" shall be deemed to
be followed by the words "without limitation"; references to agreements
and other contractual instruments shall be deemed to include all
subsequent amendments, supplements, assignments, and other modifications
thereto, but only to the extent. such modifications are not prohibited
by the terms of this Amended and Restated Loan Agreement, and references
to Persons include their respective permitted successors and assigns or,
in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons.
2. WORKING CAPITAL LINE OF CREDIT. Subject to the terms and conditions
of this Amended and Restated Loan Agreement, the Bank hereby establishes
the Working Capital Line of Credit in favor of the Borrower in the
principal amount not to exceed Eighteen Million Dollars ($18,000,000.00).
Pursuant to the Working Capital Line of Credit, the Borrower may obtain
Working Capital Loans and Letters of Credit pursuant to, and subject to
the terms and conditions set forth in, this Amended and Restated Loan
Agreement for the purposes set forth in Section 2.5(a) hereof. The
Working Capital Line of Credit shall be subject to the following terms
and conditions:
2.1 Working Capital Commitment; Working Capital Loans.
(a) Working Capital Commitment. The Bank agrees to lend to
the Borrower from time to time during the period from the Closing Date
to but excluding the working Capital Line of Credit Termination Date an
aggregate amount not exceeding in the aggregate at any one time
outstanding the lesser of (a) Eighteen Million Dollars ($18,000,000.00),
or (b) the Borrowing Base. The Bank's commitment to make Working Capital
Loans to the Borrower and to issue Letters of Credit for the account of
the Borrower pursuant to this Section 2 is herein called its "Working
Capital Commitment." The amount of the Working Capital Commitment shall
be reduced from time to time by the amount of any reductions thereto made
pursuant to Section 2.4(c) hereof (it being understood that all
references to the Working Capital Commitment of the Bank set forth in
this Amended and Restated Loan Agreement shall mean the initial Working
Capital Commitment of the Bank, as reduced by voluntary reductions of the
Working Capital Commitment effected by the Borrower pursuant to
Section 2.4(c) hereof). The Bank's Working Capital Commitment shall
expire on the Working Capital Line of Credit Termination Date, and all
Working Capital Loans and all other amounts owed hereunder with respect
to the Working Capital Loans and the Working Capital Commitment shall be
paid in full no later than that date. Amounts borrowed under this
Section 2.1(a) may be repaid and reborrowed to but excluding the Working
Capital Line of Credit Termination Date, subject to the provisions of
Section 2.4(c) hereof.
Anything contained in this Amended and Restated Loan Agreement to
the contrary notwithstanding, the Working Capital Loans and the Working
Capital Commitment shall be subject to the following limitations (and the
Borrower may be obligated to prepay Working Capital Loans outstanding by
virtue of such limitations):
(1) The Total Utilization of Working Capital
Commitment shall not exceed the lesser of the Working Capital Commitment
or the Borrowing Base at any time; and
(2) The amount otherwise available for borrowing
under the Working Capital Line of Credit (other than to reimburse the
Bank for the amount of any drawings under any Letters of Credit honored
by the Bank and not theretofore reimbursed by the Borrower) shall be
reduced by an amount equal to the Letter of Credit Usage as of such time
of determination.
(b) Term of Working Capital Line of Credit. The Working
Capital Line of Credit shall become effective immediately as of the date
hereof, and as of the date hereof the Borrower may obtain Working Capital
Loans and Letters of Credit under the Working Capital Line of Credit from
the Bank subject to the other terms and conditions contained herein. The
working capital Line of Credit shall continue in effect until November
1, 2005, unless sooner terminated (a) by the Bank upon the occurrence and
during the continuation of an Event of Default, or (b) by the Borrower
at any time in its sole and absolute discretion. Upon termination of the
Working Capital Line of Credit, the entire unpaid principal balance of
and all accrued and unpaid interest on the Amended and Restated Working
Capital Line of Credit Note shall be due and payable in full to the Bank
on the then Working Capital Line of Credit Termination Date, subject at
all times to the Bank's absolute right to accelerate the maturity date
of the Working Capital Line of Credit and the Amended and Restated
Working Capital Line of Credit Note upon the occurrence and during the
continuation of an Event of Default. Upon the termination of the Working
Capital Line of Credit by the Bank upon the occurrence and during the
continuation of an Event of Default, or by the Borrower at any time in
its sole and absolute discretion, the entire unpaid principal balance of
and all accrued and unpaid interest on the Amended and Restated Working
Capital Line of Credit Note shall be due and payable in full to the Bank.
The termination of the Working Capital Line of Credit, for whatever
reason, shall not in any way release or relieve the Borrower from its
obligations incurred hereunder or in connection herewith or under the
Amended and Restated Working Capital Line of Credit Note or the other
Loan Instruments, and the provisions hereof and of the Amended and
Restated Working Capital Line of Credit Note and the other Loan
Instruments shall continue in full force and effect until the Amended and
Restated Working Capital Line of Credit Note and all other obligations
have been paid in full to the Bank. In the event the Borrower terminates
the Working Capital Line of Credit, which the Borrower has the right to
do at any time in its sole and absolute discretion, the Borrower shall
be obligated to pay the Amended and Restated Working Capital Line of
Credit Note, and all other obligations in full to the Bank.
In addition, on September 30, 2003, provided an Event of Default
has not occurred and is continuing hereunder and provided that the making
of such payment will not result in the occurrence of an Event of Default
hereunder, the Borrower shall make a mandatory payment of principal on
the Amended and Restated Working Capital Line of Credit Note in an amount
equal to thirty percent (30%) of the outstanding principal amount of the
Working Capital Line of Credit as of September 30, 2003, which amount
shall be applied by the Bank in accordance with the provisions of the
Amendment to Participation Agreement of even date herewith between the
Bank and SunTrust Bank.
(c) Borrowing Mechanics. Working Capital Loans made on any
Funding Date shall be in a minimum amount of $5,000.00 and integral
multiples of $1,000.00 in excess of that, amount whenever the Borrower
desires that the Bank make a Working Capital Loan to the Borrower, the
Borrower shall deliver to the Bank a Borrowing Certificate no later than
11:00 A.M. (Louisville, Kentucky, time) on the proposed Funding Date.
Each Working Capital Loan requested by the Borrower shall be made to the
Borrower on the Funding Date selected by the Borrower unless the
Borrowing Certificate pertaining to such Working Capital Loan is
delivered to the Bank after the date and time, as applicable, specified
above, in which event the Bank has the option to make the particular
Working Capital Loan to the Borrower on the first Business Day that
qualifies as a Funding Date in accordance with the provisions of this
Section 2.1(c). The Borrowing Certificate shall be in the form of
Exhibit D annexed hereto and shall specify (i) the proposed Funding Date
(which shall be a Business Day), and (ii) that the amount of the proposed
Working Capital Loan will not cause the Total Utilization of Working
Capital Commitment to exceed the lesser of the Working Capital Commitment
or the Borrowing Base. In lieu of delivering the above described
Borrowing Certificate, the Borrower may give the Bank telephonic notice
by the required time of the requested Working Capital Loan under this
Section 2; provided that such notice shall be promptly confirmed in
writing by delivery of a Borrowing Certificate to the Bank on or before
12:00 Noon on the requested Funding Date.
The Bank shall not incur any liability to the Borrower in acting
upon any telephonic notice referred to above which the Bank believes in
good faith to have been given by a duly Authorized Officer or other
Person authorized to borrow on behalf of the Borrower or for otherwise
acting in good faith under this Section 2.1(c) and, upon funding of any
Working Capital Loan by the Bank in accordance with this Amended and
Restated Loan Agreement pursuant to any telephonic notice, the Borrower
shall have effected such Working Capital Loan hereunder.
(d) Disbursement of Working Capital Loans. Upon satisfaction
or waiver of the conditions precedent specified in Section 4.1 in the
case of the initial Working Capital Loan on the initial Funding Date and
Section 4.3 in the case of a Working Capital Loan on any subsequent
Funding Date, the Bank shall make the proceeds of each Working Capital
Loan requested by the Borrower available to the Borrower on the Funding
Date by causing an amount of same day funds equal to such Working Capital
Loan to be credited to the Borrower's Loan Account.
(e) Records. The Bank shall record the Working Capital Loans
made to the Borrower from time to time and each repayment or prepayment
in respect of the principal amount of the Working Capital Loans in the
Bank's electronic records. Any such recordation in accordance with the
terms of this Amended and Restated Loan Agreement shall be conclusive and
binding on the Borrower absent manifest error; provided, the failure to
make any such recordation, or any error in such recordation, shall not
affect the Borrower's obligation to repay all Working Capital Loans to
the Bank in accordance with this Amended and Restated Loan Agreement and
the Amended and Restated Working Capital Line of Credit Note.
(f) Borrower's Loan Account.
(1) The Bank shall enter all Working Capital Loans
made to the Borrower as debits in the Borrower's Loan Account. The Bank
shall also record in the Borrower's Loan Account in accordance with
customary accounting practice all other charges, expenses and other items
properly chargeable to the Borrower; all payments made by the Borrower
on account of the Working Capital Loans; and other appropriate debits and
credits. The debit balance of the Borrower's Loan Account shall reflect
the unpaid principal balance of the Working Capital Loans from time to
time. At least once each month the Bank shall render a statement of
account for the Borrower's Loan Account, which statement shall be
considered correct and accepted by the Borrower and conclusively binding
upon the Borrower unless the Borrower notifies the Bank to the contrary
within thirty (30) days from the receipt of said statement by the
Borrower or unless the Bank committed manifest error, bad faith, willful
misconduct or gross negligence in the preparation of such statement.
(2) Any and all principal, interest, charges and
expenses, attorneys' fees and taxes now or hereafter due and owing under
the Amended and Restated Working Capital Line of Credit Note and any of
the other Loan Instruments may be charged to any deposit account of the
Borrower with the Bank or to the Borrower's Loan Account.
(g) Borrowing Base Report. The Borrower shall deliver to the
Bank a Borrowing Base Report, substantially in the form of Exhibit C
attached hereto and made a part hereof, on a daily basis. The Borrowing
Base Report will be updated daily as to sales and accounts receivable
with Line 6 "ineligible collateral" being updated each Friday. If Friday
is a holiday, it would be updated the last working day before Friday.
Inventory will be updated monthly, but at the option of the Borrower,
it may update the inventory section each week. The Borrower shall also
deliver a Borrowing Base Report to the Bank prior to the funding of any
Working Capital Loan if the funding of such Working Capital Loan would
cause the Total Utilization of Working Capital Commitment to exceed the
Borrowing Bass based upon the most recent Borrowing Base Report delivered
to the Bank. Each Borrowing Base Report shall be certified to be true,
correct and accurate by an Authorized Officer of the Borrower. The
Borrower shall, in addition, from time to time deliver to the Bank such
other information concerning the Borrower's Accounts Receivable and
Inventory as the Bank may reasonably request. The Bank reserves the
right to audit, from time to time, the Borrower's Accounts Receivable and
Inventory.
(h) Loss or Deprecation of Inventory, Returns, Disputed
Accounts, Set-offs. Discounts. Adjustments and Credits in Accounts
Receivable. Subject to the proviso set forth below, the Borrower shall
promptly notify the Bank of (a) any event causing loss or depreciation
in value of Eligible Inventory and the amount of such loss or
depreciation, (b) all cases involving the return, rejection,
repossession, loss or damage of or to merchandise covered by Eligible
Accounts and of any request for credit for, or adjustment of, any
merchandise, or of any other dispute arising with respect to Eligible
Accounts, and (c) generally all happenings and events affecting Eligible
Inventory or Eligible Accounts or the value or amount thereof. All loss
or depreciation in value of Eligible Inventory shall be immediately
reflected in the Net Security Value of Eligible Inventory, and all
adjustments and credits to Eligible Accounts shall be immediately
reflected in the Net Outstanding Amount of Eligible Accounts; provided
however, the Borrower shall not be required to give notice to the Bank
of the occurrence of any of the events described in this Section 2.1(h)
unless and until the aggregate loss or depreciation in the value of
Eligible Inventory and all adjustments and credits to Eligible Accounts
exceeds One Hundred Thousand Dollars ($100,000.00) in any month.
2.2 Interest on the Amended and Restated Working Capital Line
of Credit Note.
(a) Borrowing Rate. Subject to provisions of Section 2.2(d)
hereof, the unpaid principal balance of the Amended and Restated Working
Capital Line of Credit Note outstanding from time to time commencing on
the date hereof shall bear interest (hereinafter referred to as the
"Borrowing Rate," as the same may change from time to time) at the Prime
Rate plus 2.50% per annum for as long as the ratio of the Borrower's
Funded Debt to EBITDA is 4.0xx or greater, based on a rolling four
quarter average (for any four consecutive quarters) and commencing on
December 30, 2001, for the second Fiscal Quarter of 2002. The Bank
agrees that the Borrowing Rate shall be reduced (i) to the Prime Rate
plus 2% per annum if the ratio of the Borrower's Funded Debt to EBITDA
is between 3.0xx and 3.9xx, and (ii) to the Prime Rate plus 1% per annum
if the ratio of the Borrower's Funded Debt to EBITDA is below 3.0xx, in
either event based on a rolling four quarter average (for any four
consecutive quarters) and commencing on December 30, 2001, for the second
Fiscal Quarter of 2002.
(b) Availability Fee. The Borrower agrees to pay to the
Bank an annual availability fee for the period from and including the
Closing Date to and excluding the Working Capital Line of Credit
Termination Date equal to one half of 1% per annum times the positive
difference, if any, between (a) the Working Capital Commitment, and (b)
the Total Utilization of Working Capital Commitment, calculated on a
daily basis for the relevant period, such availability fee to be
calculated on the basis of a 360-day year and the actual number of days
elapsed and to be payable monthly in arrears on the first day of each
month, commencing on the first such date to occur after the Closing Date,
and on the Working Capital Line of Credit Termination Date.
(c) Interest Payments. Subject to the provisions of Section
2.2(d) hereof, interest on the unpaid principal balance of the Amended
and Restated Working Capital Line of Credit Note as the same shall exist
from time to time shall be payable monthly to the Bank on the first (1st)
day of each and every month until the Working Capital Line of Credit
Termination Date.
(d) Post-Maturity Interest. Any principal of the Amended
and Restated Working Capital Line of Credit Note not paid when due and,
to the extent permitted by applicable law, any interest payments on the
Amended and Restated Working Capital Line of Credit Note or any fees or
other amounts owed hereunder not paid when due, in each case whether at
stated maturity, by notice of prepayment, by acceleration or otherwise,
shall thereafter bear interest (including post-petition interest in any
proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable on demand at a rate equal to the Default Rate. Payment or
acceptance of the increased rates of interest provided for in this
Section 2.2(d) is not a permitted alternative to timely payment and shall
not constitute a waiver of any Event of Default or otherwise prejudice
or limit any rights or remedies of the Bank by virtue of any default in
the payment of any principal of and/or accrued interest on the Amended
and Restated Working Capital Line of Credit Note.
(e) Computation of Interest. Interest on the unpaid
principal balance of the Amended and Restated Working Capital Line of
Credit Note shall be computed on the basis of a 360-day year, in each
case for the actual number of days elapsed in the period during which it
accrues.
2.3 Fees.
(a) Collateral Agent Fee. In consideration of the Bank
administering the Working Capital Line of Credit as the Collateral Agent,
the Borrower shall pay to the Bank an annual agent fee in the amount of
Thirty Thousand Dollars ($30,000.00), due on or before January 14 of each
year, commencing on January 14, 2002. The foregoing fee shall be deemed
fully earned and nonrefundable by the Bank, as agent, upon the payment
thereof to the Bank, an agent, and the Bank shall have no obligation
whatsoever to share such fee with any of the Eligible Assignees.
(b) Restructure Fee. The Borrower agrees to pay a
"Restructure Fee" on the Closing Date in the amount of $ 433,338.00,
which amount represents 1.25% of the amounts owed to the Bank (based on
the maximum amount of the Working Capital Line of Credit) and the
Noteholders as of the date hereof, which Restructure Fee shall be shared
among the Lenders in accordance with the amounts of the respective
Indebtedness owed by the Borrower to the Lenders. Twenty percent (20%)
of the Restructure Fee ($86,667) shall be nonrefundable. The Borrower
shall be entitled to a refund of a portion of the Restructure Fee if the
Borrower consummates refinancing of all of its Indebtedness acceptable
to the Bank and the Noteholders within the following specified time
periods:
Portion of Refundable
Restructure
Closing of Refinancing Fee to be Refunded
to Borrower
Within six months following the
Closing Date 75% or $ 260,000
Within twelve months following
the Closing Date 50% or $ 173,335
The Borrower shall not be entitled to any refund of the Restructure Fee
if such refinancing fails to close within twelve (12) months following
the Closing Date.
2.4 Prepayments and Payments; Reductions in Working Capital
Commitment.
(a) Prepayments. The Borrower may at any time and from time
to time pay any portion of the unpaid principal balance of the Amended
and Restated Working Capital Line of Credit Note to the Bank. In the
event the Working Capital Loans outstanding at any one time and the
Letter of Credit Usage exceed the Borrowing Base, the Borrower shall
immediately prepay to the Bank an amount of principal of the Working
Capital Loans sufficient to cause the aggregate unpaid principal balance
of the Working Capital Loans to equal or be less than the Borrowing Base
then existing.
(b) General Provisions Regarding Prepayment.
(1) Manner and Time of Payment. All payments of
principal, interest and fees hereunder and under the Amended and Restated
Working Capital Line of Credit Note by the Borrower shall be made without
defense, setoff and counterclaim and in same day funds and delivered to
the Bank not later than 11:00 A.M. (Louisville, Kentucky time) on the
date due at its office located at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx; funds received by the Bank after that time shall be deemed to
have been paid by the Borrower on the next succeeding Business Day.
(2) Payments on Business Days. Whenever any payment
to be made hereunder or under the Amended and Restated Working Capital
Line of Credit Note shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding Business
Day (unless no further Business Day occurs in such month, in which case
payment shall be made on the next preceding Business Day) and such
extension of time shall be included in the computation of the payment of
interest hereunder or under the Amended and Restated Working Capital Line
of Credit Note or of the availability fee due under Section 2.2(b)
hereof, as the case may be.
(c) Voluntary Reduction of Working Capital Commitment. The
Borrower shall have the right, at any time and from time to time, to
terminate in whole or permanently reduce in part, without premium or
penalty, the Working Capital Commitment in an amount up to the amount by
which the Working Capital Commitment exceeds the Total Utilization of
Working Capital Commitment. The Borrower shall give not less than five
Business Days' prior written notice to the Bank designating the date
(which shall be a Business Day) of such termination or reduction and the
amount of any partial reduction of the Working Capital Commitment. Such
termination or partial reduction of the Working Capital commitment shall
be effective on the date specified in the Borrower's notice. Any such
partial reduction of the Working Capital Commitment shall be in an
aggregate minimum amount of $1,000,000.00.
2.5 Use of Proceeds.
(a) Working Capital Loans. The proceeds of the Working
Capital Loans shall be used by the Borrower to fund its working capital
needs, capital expenditures, and to fund debt owed to its lenders.
(b) Margin Regulations. No portion of the proceeds of any
Working Capital Loans has been used or will be used to purchase or carry
any Margin Stock, to extend credit to others for the purpose of
purchasing or carrying Margin Stock or for any purpose proscribed by
Regulation G, Regulation T, Regulation U or Regulation X of the Board of
Governors of the Federal Reserve System. If requested by the Bank, the
Borrower shall execute and deliver to the Bank a completed F.R. Form U-1.
2.6 Letters of Credit. Subject to the terms and conditions,
of this Amended and Restated Loan Agreement and in reliance upon the
representations and warranties of the Borrower set forth herein, the
Borrower may request, in accordance with the provisions of this
Section 2.6, that on and after the Closing Date, the Bank issue Letters
of Credit for the account of the Borrower denominated in U.S. Dollars.
Issuances of Letters of Credit shall be subject to the following
limitations:
(a) Dollar Limitations. The Borrower shall not request that
the Bank issue any Letter of Credit if, after giving effect to such
issuance, (y) the total Letter of Credit Usage would exceed
$2,500,000.00, or (z) the Total Utilization of Working Capital Commitment
would exceed the lesser of the Working Capital Commitment, as the amount
available under the Working Capital Commitment may be reduced from time
to time pursuant to Section 2.4(c) hereof, or the Borrowing Base.
(b) Expiration Dates. In no event shall the Bank issue,
reissue, amend or permit the extension of: (y) any Letter of Credit
having an expiration date later than the Working Capital Line of Credit
Termination Date in effect at the time of issuance, re-issuance,
amendment or extension (automatic or otherwise) thereof; or (z) subject
to the foregoing clause (y), any Letter of Credit having an expiration
date more than one year after its date of issuance; provided that subject
to the foregoing clause (y), this clause (z) shall not prevent the Bank
from agreeing that a Letter of Credit will automatically be extended
annually for one or more periods each not to exceed one year if the Bank
does not cancel such extension.
It shall be a condition precedent to the issuance of any Letter of
Credit in accordance with the provisions of this Section 2.6 that each
condition set forth in Sections 4.1 and 4.3 of this Amended and Restated
Loan Agreement shall have been satisfied.
Each Letter of Credit may provide that the Bank may (but shall not
be required to) pay the beneficiary thereof upon the occurrence of an
Event of Default and the acceleration of the stated maturity date of the
Amended and Restated Working Capital Line of Credit Note or, if payment
is not then due to the beneficiary, provide for the deposit of funds in
an account to secure payment to the beneficiary and that any funds so
deposited shall be paid to the beneficiary of the Letter of Credit if
conditions to such payment are satisfied or returned to the Bank (or, if
all of the Obligations shall have been indefeasibly paid in full to the
Bank, to the Borrower) if no payment to the beneficiary has been made and
thirty (30) days after the final date available for drawings under the
Letter of Credit has passed. Each payment or deposit of funds by the
Bank as provided in this paragraph shall be treated for all purposes of
this Amended and Restated Loan Agreement as a drawing duly honored by the
Bank under the related Letter of Credit.
(c) Notice of Issuance. Whenever the Borrower desires the
issuance of a Letter of Credit, the Borrower shall deliver to the Bank
an Application and Agreement for Letter of Credit in the form of Exhibit
B annexed hereto and a Borrowing Certificate no later than 10:00 A.M.
(Louisville, Kentucky, time) at least ten (10) Business Days, or in each
case such shorter period as may be agreed to by the Bank in any
particular instance, in advance of the proposed date of issuance. The
Application and Agreement for Letter of Credit shall specify (i) the
proposed date of issuance (which shall be a Business Day under the laws
of the Commonwealth of Kentucky), (ii) the face amount of the Letter of
Credit, (iii) the expiration date of the Letter of Credit, (iv) the name
and address of the beneficiary, and (v) a summary of the purpose and
contemplated terms of such Letter of Credit. Prior to the date of
issuance of any Letter of Credit, the Borrower shall specify a precise
description of the documents and the proposed text of any certificate to
be presented by the beneficiary under such Letter of Credit which, if
presented by the beneficiary prior to the expiration date of the Letter
of Credit, would require the Bank to make payment under the Letter of
Credit; provided that the Bank, in its sole reasonable judgment, may
require changes in any such documents and certificates; provided further
that no Letter of Credit shall require payment against a conforming draft
to be made thereunder on the same Business Day (under the laws of the
Commonwealth of Kentucky) that such draft is presented if such
presentation is made after 11:00 A.M. (Louisville, Kentucky, time) on
such Business Day. In determining whether to pay under any Letter of
Credit, the Bank shall be responsible only to determine that the
documents and certificates required to be delivered under that Letter of
Credit have been delivered and that they comply on their face with the
requirements of that Letter of Credit; provided, further, nothing
contained in this Section 2.6(c) shall be deemed to prejudice the right
of the Borrower to recover from the Bank in respect of any amounts paid
by the Bank under any Letter of Credit in the event that it is determined
by a court of competent jurisdiction that the payment with respect to
such Letter of Credit by the Bank constituted gross negligence or willful
misconduct on the part of the Bank.
(d) Payment of Amounts Due Under Letters of Credit. In the
event of any drawing under any Letter of Credit by the beneficiary
thereof, the Bank shall promptly notify the Borrower thereof, and the
Borrower shall reimburse the Bank on the date on which such drawing is
honored in an amount in same day funds equal to the amount of such
drawing. Each drawing under a Letter of Credit honored by the Bank,
until an amount equal thereto is reimbursed by the Borrower to the Bank,
shall be deemed a Working Capital Loan hereunder and shall bear interest
at the rates set forth in and shall be payable on the dates and otherwise
upon the terms and conditions set forth in this Amended and Restated Loan
Agreement and the Amended and Restated Working Capital Line of Credit
Note.
(e) Compensation. The Borrower agrees to pay, without
duplication, the following amounts to the Bank with respect to each
Letter of Credit issued by it:
(1) with respect to each Letter of Credit, an annual
letter of credit fee (the "Letter of Credit Fee") payable to the Bank
equal to 2% per annum multiplied by the maximum amount available from
time to time to be drawn under such Letter of Credit, payable in advance
on the date of issuance of such Letter of Credit and on the date, if such
should occur, of each renewal of such Letter of Credit.
(2) with respect to each draft honored by the Bank
under any Letter of Credit issued by the Bank pursuant to this Amended
and Restated Loan Agreement, a drawing fee equal to the greater of (y)
one fourth of one percent per annum (1/4 of 1%) of the amount of such
draft, or (z) $100.
(3) with respect to drawings made under any Letter of
Credit, interest, payable in immediately available funds to the Bank on
demand, on the amount paid by the Bank in respect of each such drawing
from the date of the drawing through the date such amount is reimbursed
by the Borrower at a variable rate equal to the rate specified in
Section 2.2(a); and
(4) with respect to the issuance, amendment or
transfer of each Letter of Credit, documentary and processing charges
payable to the Bank in accordance with the Bank's standard schedule for
such charges in effect at the time of such issuance, amendment, transfer
or drawing, an the case may be.
(f) Obligations Absolute. Subject to the right of the
Borrower to seek damages in the event that a court of competent
jurisdiction determines that the Bank committed gross negligence or
willful misconduct in honoring any draft presented under any Letter of
Credit issued by the Bank, the obligation of the Borrower to reimburse
the Bank for drawings made under the Letters of Credit issued by it shall
be unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Amended and Restated Loan Agreement under all
circumstances including, without limitation, the following circumstances:
(1) any lack of validity or enforceability of any
Letter of Credit;
(2) the existence of any claim, set-off, defense or
other right which the Borrower may have at any time against a beneficiary
or any transferee of any Letter of Credit (or any persons or entities for
whom any such transferee may be acting), the Bank or any other Person,
whether in connection with this Amended and Restated Loan Agreement, the
transactions contemplated herein or any unrelated transaction (including
any underlying transaction between the Borrower and the beneficiary for
which the Letter of Credit was procured);
(3) any draft, demand, 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;
(4) payment by the Bank under any Letter of Credit
against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit, provided
that such payment does not constitute bad faith, gross negligence or
willful misconduct on the part of the Bank as determined by a court of
competent jurisdiction;
any other circumstance or happening whatsoever, which is similar to any
of the foregoing; or the fact that an Event of Default under this Amended
and Restated Loan Agreement shall have occurred and be continuing.
(g) Additional Payments. If by reason of (i) any change in
applicable law, regulation, rule, decree or regulatory requirement or any
change in the interpretation or application by any judicial or regulatory
authority of any law, regulation, rule, decree or regulatory requirement
or (ii) compliance by the Bank with any direction, request or requirement
(whether or not having the force of law) of any governmental or monetary
authority including, without limitation, Regulation D:
(1) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any Letters of
Credit issued by the Bank; or
(2) there shall be imposed on the Bank any other
condition regarding any Letter of Credit; and the result of the foregoing
is to directly or indirectly increase the cost to the Bank of issuing,
making or maintaining any Letter of Credit, or to reduce the amount
receivable in respect thereof by the Bank, then and in any such case the
Bank may, at any time within a reasonable period after the additional
cost is incurred or the amount received is reduced, notify the Borrower,
and the Borrower shall pay on demand such amounts as the Bank may specify
to be necessary to compensate the Bank for such additional cost or
reduced receipt, together with interest on such amount from ten (10) days
after the date of such demand until payment in full thereof at a rate
equal at all times to the Floating Rate. The determination by the Bank
of any amount due pursuant to this Section 2.6(g) as set forth in a
certificate setting forth the calculation thereof in reasonable detail,
shall, in the absence of manifest or demonstrable error, be final and
conclusive and binding on the Borrower.
(h) Indemnification; Nature of the Bank's Duties. In
addition to amounts payable as elsewhere provided in this subsection (i),
the Borrower hereby agrees to protect, indemnify, pay and save the Bank
harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees and allocated costs of internal counsel) which the Bank
may incur or be subject to as a consequence, direct or indirect, of (i)
the issuance of the Letters of Credit, other than as a result of the bad
faith, gross negligence or willful misconduct of the Bank as determined
by a court of competent jurisdiction, or (ii) the failure of the Bank to
honor a drawing under any Letter of Credit an a result of any act or
omission, whether rightful or wrongful, of any present or future de jure
or de facto government or governmental authority (all such acts or
omissions herein called "Government Acts").
As between the Borrower and the Bank, the Borrower assumes all
risks of the acts and omissions of, or misuse of the Letters of credit
issued by the Bank by, the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, the Bank
shall not be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of such Letters
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such 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; (iii) for failure
of the beneficiary of any such Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of Credit; (iv) for
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; (v) for errors in interpretation of technical
terms; (vi) for any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Letter of
Credit or of the proceeds thereof; (vii) for the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing
under such Letter of credit; and (viii) for any consequences arising from
causes beyond the control of the Bank, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent the
vesting of any of the Bank's rights or powers hereunder; provided,
however, that the Bank shall be responsible for any payment the Bank
makes under any Letter of Credit against presentation of a demand, draft
or certificate or other document which does not comply with the terms of
such Letter of Credit in the event such payment constitutes bad faith,
gross negligence or willful misconduct of the Bank as determined by a
court of competent jurisdiction.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Bank
under or in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith and without bad
faith, gross negligence or willful misconduct, shall not put the Bank
under any resulting liability to the Borrower.
Notwithstanding anything to the contrary contained in this Section
2.6, the Borrower shall have no obligation to indemnify the Bank in
respect of any liability incurred by the Bank arising out of the bad
faith, gross negligence or willful misconduct of the Bank, as determined
by a court of competent jurisdiction, or out of the wrongful dishonor by
the Bank of proper demand for payment made under the Letters of Credit
issued by it.
(i) Computation of Interest. Interest payable pursuant to
this Section 2.6 shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the period during which it accrues.
(j) Amendments. The Borrower may request that the Bank
enter into one or more amendments of any Letter of Credit issued by the
Bank by delivering to the Bank an Application and Agreement For Letter
of Credit specifying (i) the proposed date of the amendment, and (ii) the
requested amendment. The Bank shall have sole discretion in determining
whether to enter into any amendment with respect to the Letters of Credit
issued by it, and any such amendment extending the expiry date or
increasing the stated amount of any Letter of Credit shall only be
permitted if the Bank would be permitted to issue a new Letter of Credit
having such an expiry date or stated amount under this Section 2.6(j) on
the date of the amendment.
3. SECURITY FOR THE INDEBTEDNESS. The Indebtedness, including the
Amended and Restated Line of Credit Note, is and shall be secured by and
entitled to the benefits of all the following:
3.1 Security Interest. A first priority, perfected and
continuing security interest in favor of the Collateral Agent, covering
all assets of the Borrower, as more fully described in that certain
Security Agreement of even date herewith between the Collateral Agent
and the Borrower, and accompanying UCC Financing Statements. The
Security Agreement shall include "immediate lockbox" provisions, pursuant
to which all of the Borrower's account debtors shall make payments of all
Accounts directly to the Collateral Agent for the account of the
Borrower.
3.2 Right of Offset. The right of offset specified in
Section 9.2 hereof.
3.3 Mortgage. That certain Mortgage of even date herewith made
by the Borrower in favor of the Collateral Agent, granting the
Collateral Agent a first and prior lien on certain real property and all
improvements thereon located in Xxxx County, Kentucky, as more fully
described therein (the "Mortgage").
3.4 Assignment of Rents and Leases. That certain Assignment
of Rents and Leases of even date herewith between the Borrower and the
Collateral Agent, granting the Bank a first and prior lien on the rents
and leases applicable to the property more fully described therein (the
"Assignment of Rents and Leases").
3.5 Other Security. Other security and instruments, if any,
granted by Borrower to the Collateral Agent, whether of even date
herewith or hereafter or heretofore granted, to secure the Amended and
Restated Working Capital Line of Credit Note and/or any other
Indebtedness.
4. CONDITIONS PRECEDENT. The obligation of the Bank to establish the
Working Capital Line of Credit in favor of the Borrower pursuant to and
upon the terms and conditions set forth in this Amended and Restated Loan
Agreement is subject to the Bank entering into an Amendment to its
existing Participation Agreement with SunTrust Bank, and the Bank
entering into an Intercreditor and Collateral Agency Agreement with the
Borrower and the Noteholders. In addition, the obligation of the Bank
to establish the Working Capital Line of Credit in favor of the Borrower
is subject to the satisfaction of all of the following conditions:
4.1 Initial Closing Conditions. The obligation of the Bank to
make the initial Working Capital Loans to the Borrower is subject to the
condition that, in addition to the satisfaction of the conditions
precedent specified in Section 4.3 hereof as of the Closing Date, the
Bank shall have received the following from the Borrower, dated as of the
Closing Date or such other date as shall be acceptable to the Bank, all
of which must be acceptable to the Bank and its counsel in form and
substance:
(a) this Amended and Restated Loan Agreement, duly executed
and delivered by the Borrower;
(b) the Amended and Restated Working Capital Line of Credit
Note, duly executed and delivered by the Borrower;
(c) duly executed counterparts of the Amendment No. 2 to
Note Agreement and Waiver among the Borrower and the Noteholders;
(d) one or more duly executed 9.00% Senior Notes;
(e) duly executed counterparts of the Security Agreement,
the Mortgage, the Assignment of Rents and Leases, UCC Financing and
Fixture Filings, and the Environmental Indemnity Agreement, each in form,
scope and substance satisfactory to the Bank, executed and delivered by
the Borrower;
(f) evidence that all other actions necessary or desirable
to perfect and protect the security interests created by the Loan
Agreements have been taken;
(g) duly executed counterparts of the Collateral Agency
Agreement, in form, scope and substance satisfactory to each Noteholder,
executed and delivered by the Borrower and all other parties thereto;
(h) certificate of the Secretary or Assistant Secretary of
the Borrower attaching and certifying copies of (i) the certificate of
incorporation, as amended, of the Borrower, certified by the Secretary
of State of Delaware, (ii) the bylaws, as amended, of the Borrower, (iii)
the resolutions of the board of directors of the Borrower, authorizing
the execution, delivery and performance of the Loan Instruments and the
"Note Documents" (as defined in the Note Agreement), and (iv) the name,
title and true signature of each officer of the Borrower executing such
documents;
(i) current appraisals pertaining to the Borrower's real
property, plant, equipment and inventory;
(j) Phase I environmental site assessment reports with
respect to any real property to be owned or leased by the Borrower from
and after the Effective Date;
(k) evidence that the Borrower has entered into
documentation amending the Master Equipment Lease to (i) waive all
existing Defaults and Events of Default as defined therein, and
(ii) amend the financial covenants contained therein to be consistent
with the financial covenants contained herein;
(l) evidence that each of Fifth Third Bank and General
Electric Capital Corporation has consented to the execution and delivery
of an appropriate Amendment by the Borrower;
(m) an opinion from Xxxxx Xxxxx Xxxx LLC, counsel for the
Borrower;
(n) an opinion from VanAntwerp, Monge, Xxxxx & Xxxxxxx, LLP,
counsel for the Borrower, containing the matters set forth on Exhibit F
hereto;
(o) audited Fiscal Year 2001 consolidated financial
statements of the Borrower and its Subsidiaries, together with the
unqualified report thereon by Xxxxxx Xxxxxxxx LLP marked "draft,"
delivered in accordance with the requirements of Section 6 hereof other
than those relating to the timing of the delivery thereof;
(p) payment to the Bank of the fees payable on the Closing
Date pursuant to Section 2.3 hereof, and reimbursement of the items
referred to in Section 12.12 hereof;
(q) each Noteholder shall have received, in immediately
available funds, interest accrued from and including November 1, 2001,
through January 14, 2002, on the unpaid principal amount of each of their
respective Senior Notes calculated at the rate of 9.00% per annum;
(r) payment of the Borrower to the Bank of all excess cash
on hand as of the date of Closing, to be applied towards reduction of the
Working Capital Line of Credit;
(s) there shall be no material adverse change in the
financial condition of the Borrower from the date of the Term Sheet;
(t) a duly executed original of the title insurance policy
issued by a title insurance company acceptable to the Bank, covering the
real property subject to the Mortgage and containing only such exceptions
as the Bank may approve in its sole discretion, with proof, satisfactory
to the Bank, that all premiums, search fees and other charges in
connection therewith have been paid in full (the "Title Insurance
Policy");
(u) the Bank shall have been provided with UCC, tax lien,
and judgment lien searches performed in such locations as the Bank shall
determine in the exercise of its sole discretion, which shall indicate
that all of the Borrower's assets are free and clear of all liens and
encumbrances, other than those liens and encumbrances expressly permitted
by the Bank;
(v) satisfactory proof that policies of insurance of the
types and coverage as specified in this Amended and Restated Loan
Agreement and the Loan Instruments are in full force and effect;
(w) the Bank shall have entered into an Amendment to
Participation Agreement; and
(x) such other documents, agreements and instruments as the
Bank may reasonably request.
4.2 Conditions to All Letters of Credit. The issuance of any
Letter of Credit by the Bank hereunder, in addition to the conditions
precedent specified in Section 4.3 hereof, is subject to the prior or
concurrent satisfaction of each condition set forth in Section 4.1
hereof.
4.3 Conditions to All Working Capital Loans and Letters of
Credit. The obligation of the Bank to make each Working Capital Loan on
each Funding Date and the obligation of the Bank to issue or extend the
stated expiration date of each Letter of Credit is subject to the
following further conditions precedent:
(a) The Bank shall have received with respect to each
Working Capital Loan, in accordance with the provisions of Section 2.1(c)
of this Amended and Restated Loan Agreement, an originally executed
Borrowing Certificate, in each case signed by an Authorized Officer of
the Borrower.
(b) The Bank shall have received with respect to each Letter
of Credit, in accordance with the provisions of Section 2.6(c) of this
Amended and Restated Loan Agreement, an originally executed Borrowing
Certificate and an Application and Agreement For Letter of Credit
relating to such Letter of Credit, in each case signed by an Authorized
Officer of the Borrower.
(c) As of the Funding Date of the Working Capital Loan or
the date of issuance or extension of the stated expiration date of the
Letter of Credit:
(1) The representations and warranties contained
herein shall be true and correct in all material respects on and as of
that date to the same extent as though made on and as of that date;
(2) No event shall have occurred and be continuing or
would result from the funding of the Working Capital Loan or the issuance
or extension of the stated expiration date of such Letter of Credit which
would constitute an Event of Default;
(3) The Borrower shall have performed in all material
respects all agreements and satisfied all conditions which this Amended
and Restated Loan Agreement and the other Loan Instruments provide shall
be performed by it on or before such date;
(4) No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or restrain
the Bank from making that Working Capital Loan or from issuing or
extending the stated expiration date of that Letter of Credit;
(5) There shall not be pending or, to the knowledge
of the Borrower threatened, any action, suit, proceeding or arbitration
or, to the knowledge of the Borrower, any governmental investigation
pending or threatened, against or affecting the Borrower or any property
of the Borrower, which is required by the terms of this Amended and
Restated Loan Agreement to be disclosed to the Bank and which has not
been disclosed by the Borrower pursuant to Sections 6.3 and 6.6 hereof
prior to the making of the last preceding Working Capital Loans (or, in
the case of the initial Working Capital Loans made hereunder, prior to
the execution of this Amended and Restated Loan Agreement) or the issuing
of the most recent Letter of Credit (or, in the case of the initial
Letter of Credit, prior to the execution of this Amended and Restated
Loan Agreement) or the most recent extension of the stated expiration
date of any Letter of Credit and there shall have occurred no development
not so disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed, which, in either event, in the
reasonable opinion of the Borrower, is likely to be determined adversely
to the Borrower and, in such event, is reasonably expected to have a
Material Adverse Effect. No injunction or other restraining order shall
have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed with respect
to any action, suit or proceeding seeking to enjoin or otherwise prevent
this Amended and Restated Loan Agreement or the making of the Working
Capital Loans or the issuing or extension of the respective stated
expiration dates of the Letters of Credit hereunder.
5. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Bank as follows, which representations and warranties
shall be deemed to be continuing representations and warranties until the
Amended and Restated Working Capital Line of Credit Note and the other
Obligations have been paid in full to the Bank and the Working Capital
Commitment has expired or has terminated, and shall survive the execution
and delivery of this Amended and Restated Loan Agreement:
5.1 Organization, Standing, etc. of the Borrower. The Borrower
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and the Borrower has all
requisite power and authority to own and operate its properties, to carry
on its business as now conducted and proposed to be conducted, to execute
and deliver into this Amended and Restated Loan Agreement and the other
Loan Instruments to which it is a party, to issue the Amended and
Restated Working Capital Line of Credit Note and to carry out. the
respective terms hereof and thereof. The Borrower has delivered to the
Bank a true and complete copy of its Certificate of Incorporation and
Bylaws as in effect on the date hereof.
5.2 Subsidiaries. The Borrower has no Subsidiaries.
5.3 Qualification. The Borrower is duly qualified to transact
business as a foreign corporation and is in good standing as a foreign
corporation in the commonwealth of Kentucky and in each other
jurisdiction in which the character of the properties owned or leased by
the Borrower or the nature of the activities conducted or proposed to be
conducted by the Borrower makes such qualification necessary.
5.4 Use of Proceeds. The Borrower's uses of the Working
Capital Loans will at all times be legal and proper corporate uses duly
authorized by the Board of Directors of the Borrower, and such uses are
consistent with all applicable laws and statutes as in effect as of the
date hereof.
5.5 Intellectual Property. The Borrower owns or possesses
adequate assets, licenses, patents, patent applications, copyrights,
trademarks, trademark applications, trade names, franchises, consents,
authorizations and service marks and rights with respect to the foregoing
necessary for the conduct of its business as presently conducted and as
proposed to be conducted without any known conflict with the rights of
others.
5.6 Contracts. The Borrower is not in default under any
contract, agreement, judgment, decree or order which, if not cured or
waived, would reasonably be likely to have a Material Adverse Effect.
5.7 Disclosure. Neither this Amended and Restated Loan
Agreement nor any other Loan Instrument furnished to the Bank by or on
behalf of the Borrower in connection with the transactions contemplated
hereby taken as a whole contains any statement of any material fact which
is untrue or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading. There is no
fact known to the Borrower (other than as is hereafter disclosed in any
document filed by the Borrower with the Securities and Exchange
Commission or is otherwise disclosed by the Borrower in writing to the
Bank) which materially adversely affects or in the future will (so far
as the Borrower can now reasonably foresee) materially adversely affect
the properties, business, operations, affairs or financial condition of
the Borrower and its Subsidiaries taken as a whole which has not been set
forth in this Amended and Restated Loan Agreement or in the other Loan
Instruments furnished to the Bank by or on behalf of the Borrower in
connection with the transactions contemplated hereby. The Borrower is
currently solvent, and neither the issuance and delivery of the Amended
and Restated Working Capital Line of Credit Note to the Bank, nor the
performance of the transactions contemplated hereunder, will render the
Borrower insolvent, inadequately capitalized to undertake the
transactions contemplated hereunder or to undertake the business in which
it is presently engaged or about to engage or render the Borrower unable
to pay its debts as they become due. The Borrower is not contemplating
either the filing of a petition by it or the commencement of a case by
it under the Bankruptcy Code or any state insolvency laws or the
liquidation of all or a major portion of its property, and the Borrower
has no knowledge of any Person contemplating the filing of any such
petition or commencement of any such case against the Borrower.
5.8 Funded Debt and Capitalized Leases. Upon the funding of
the initial Working Capital Loan, the Borrower has no outstanding Funded
Debt or Capitalized Leases other than the Senior Notes, the Funded Debt
or Capitalized Leases identified on Exhibit G attached hereto and made
a part hereof, and the Obligations.
5.9 Title to Properties; Liens. Except for a Mortgage in favor
of Republic Corporation as shown on the Title Insurance Policy, the
Borrower has good and marketable title to all of its properties and
assets (other than the mineral interest in the Borrower's real property,
which was previously severed from the real property), and none of such
properties or assets is or will be, upon the funding of the initial
Working Capital Loan, subject to any Lien except the Liens permitted
hereunder and other Liens which in the aggregate are not substantial in
amount, do not secure any Indebtedness, do not in any case materially
detract from the value of the property subject thereto or materially
impair the operations of the Borrower and have not arisen other than in
the ordinary course of business. The Borrower represents and warrants
that the maximum amount of the Lien in favor of Republic Corporation
referred to above does not exceed $250,000, and will not exceed $250,000
at any time hereafter.
5.10 Litigation, etc. There is no action, proceeding or
investigation pending or, to the best knowledge of the Borrower,
threatened (or any basis therefor known to the Borrower) (a) which
questions the validity of this Amended and Restated Loan Agreement, the
Amended and Restated Working Capital Line of Credit Note or the other
Loan Instruments or any action taken or to be taken pursuant hereto or
thereto, or (b) which in. the Borrower's reasonable judgment is likely
to be determined adversely to the Borrower and, as a result of such
adverse determination to the Borrower, will in the Borrower's reasonable
judgment result, either in any case or in the aggregate, in a Material
Adverse Effect.
5.11 Authorization; Compliance with Other Instruments. The
execution, delivery and performance of this Amended and Restated Loan
Agreement, the Amended and Restated Working Capital Line of Credit Note
and the other Loan Instruments have been duly authorized- by all
necessary corporate action on the part of the Borrower, will not result
in any violation of or be in conflict with or constitute a default under
the Certificate of Incorporation or By-Laws of the Borrower or any
agreement, instrument,, judgment, decree, order, statute, rule or
governmental regulation applicable to the Borrower, or result in the
creation of any Lien upon any of the properties or assets of the
Borrower. The Borrower is not in material violation of its Certificate
of Incorporation or By-Laws or, to the Borrower's best knowledge, any
judgment, decree, order, statute, rule or governmental regulation
applicable to the Borrower except as otherwise disclosed in writing to
the Bank. Without limiting the generality of the foregoing, to the best
knowledge of the Borrower, the Borrower is in compliance in all material
respects with all federal and state laws and all rules, regulations and
administrative orders of all state and local commissions or authorities
which are applicable to the Borrower or to the operation of its business.
5.12 Governmental Consent. To the best knowledge of the
Borrower, the Borrower is not required to obtain any order, consent,
approval or authorization of, and is not required to make any declaration
or filing with, any governmental authority in connection with the
execution and delivery of this Amended and Restated Loan Agreement or the
negotiation, offer, issue, sale and delivery of the Amended and Restated
Working Capital Line of Credit Note to the Bank, or in connection with
the execution, delivery and performance of the other Loan Instruments,
except such as have been obtained.
5.13 Eligible Accounts. Each Eligible Account shall be a good
and valid Account Receivable representing an undisputed, bona fide
indebtedness incurred by the debtor named therein, for merchandise
shipped or delivered pursuant to a contract of sale, or for services
theretofore performed by the Borrower with or for said debtor. There
shall be no setoffs or counter-claims against any Eligible Account, and
no agreement under which any deduction or discount may be claimed shall
have been made with the debtor of any Eligible Account except as
indicated in a written list, statement or invoice furnished to the Bank
with reference thereto.
5.14 Investment Company Act Status. The Borrower is not an
"investment company," as such term is defined in the Investment Company
Act of 1940, as amended.
5.15 Regulation G, etc. The Borrower does not own, or have any
present intention of acquiring, any Margin Stock. None of the Working
Capital Loans will be used, directly or indirectly, by the Borrower for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any Margin Stock or for any other purpose
which might constitute the transactions contemplated hereby a "purpose
credit" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System, or cause this Amended and Restated Loan
Agreement to violate Regulation U, Regulation T, Regulation X or any
other regulation of the Board of Governors of the Federal Reserve System
or the Securities Exchange Act of 1934.
5.16 Holding Company Act. The Borrower is not a "Holding
Company" or a "Subsidiary Company" of a "Holding Company," or an
"Affiliate" of a "Holding Company" or of a "Subsidiary Company" of a
"Holding Company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
5.17 Employee Retirement Income Security Act of 1974. The
Borrower has not incurred (a) any material accumulated funding deficiency
within the meaning of ERISA, or (b) any material liability to the PBGC
established under ERISA (or any successor thereto under ERISA) in
connection with any Plan established, maintained or assumed by the
Borrower, nor has the Borrower had any tax assessed against it by the
Internal Revenue Service for any alleged violation under Section 4975 of
the Code. To the Borrower's knowledge, no prohibited transaction within
the meaning of Section 4975 of the Code has occurred with respect to any
Plan established, maintained or assumed by the Borrower.
5.18 Accuracy of Financial Reports. The audited consolidated
financial statements of the Borrower for its Fiscal Year 2000 and the
interim unaudited consolidated financial statements of the Borrower and
its Subsidiaries as at and for the Fiscal Quarters ended December 30,
2000; March 31, 2001; June 30, 2001; and September 29, 2001, in each case
which have been delivered to the Bank, have been prepared in accordance
with GAAP and fairly and accurately present the financial condition of
the Borrower as of the dates and for the periods ended reflected in such
financial statements; provided, such interim financial statements shall
be without footnotes and shall be subject to normal year-end adjustments.
There have been no material adverse changes in the financial condition
of the Borrower subsequent to the periods ended reflected in such
financial statements.
5.19 Bank Accounts. All of the Borrower's current operating,
deposit, and other bank depository accounts have been listed and
described in a letter from the Borrower to the Bank of even date
herewith.
6. AFFIRMATIVE COVENANTS. The Borrower hereby covenants and agrees
that until the Amended and Restated Working Capital Line of Credit Note
and the other obligations have been paid in full to the Bank and the
Working Capital Commitment has expired or has terminated, the Borrower
will perform and observe all of the following provisions:
6.1 Maintenance of Properties. The Borrower will, insofar as
it is not prevented by causes beyond its control, maintain or cause to
be maintained in good repair, working order and condition all properties
used or useful in the business of the Borrower (whether owned in fee or
a leasehold interest) and from time to time the Borrower will, insofar
as it is not prevented by causes beyond its control, make or. cause to
be made all appropriate repairs, renewals and replacements thereof so
that the efficiency thereof shall be maintained in all material respects.
6.2 Monetary Obligations.
(a) The Borrower will pay and discharge promptly as they
become due and payable all taxes, assessments and other governmental
charges levied upon it or its income or upon any of its properties or
assets or in respect of its franchises, business, income or profits, or
upon any part thereof, as well as all lawful claims of any kind
(including claims for labor, materials and supplies) which, if unpaid,
might by law become a lien or a charge upon its property before any of
the same become delinquent; provided, however, the Borrower shall not be
obligated to pay any such tax, assessment or charge if the Borrower is
contesting the amount or validity of, or its liability for, any such
taxes, assessments or charges in good faith and by appropriate
proceedings promptly initiated and diligently conducted by the Borrower
and if the Borrower shall have established such reserve or other
appropriate provision, if any, as shall be required by GAAP in respect
thereof.
(b) The Borrower will pay in full all its other debts,
obligations and liabilities allowed hereunder before the same become
delinquent, to the extent the failure to pay the same would reasonably
be likely to have a Material Adverse Effect, unless the same are being
contested in good faith by the Borrower, the Borrower has established
adequate reserves for the payment of the same in accordance with GAAP,
and the contesting thereof does not involve the risk of forfeiture or
loss of a material portion of the assets of the Borrower and its
Subsidiaries taken as a whole.
6.3 Financial Statements and Other Reports. The Borrower will
furnish to the Bank:
(a) a Borrowing Certificate duly completed by the Borrower
and certified to be true, accurate and complete by the Chief Financial
Officer of the Borrower on each date specified in Section 2.1(c) hereof;
(b) as soon as prepared and in any event within thirty (30)
days following the close of each Fiscal Year, a comprehensive business
and financial plan for the current Fiscal Year (for the Borrower and its
Subsidiaries on a consolidated basis), which annual business/financial
plan shall include quarterly financial projections and forecasts and
planned Capital Expenditures for such Fiscal Year; and
(c) as soon as reasonably possible, and in any event within
thirty (30) days after the end of each month in each Fiscal Year (other
than the last month in each Fiscal Year, in which case such financial
statements shall be delivered within 45 days after the end of such Fiscal
Year), an unaudited consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such month, and related unaudited
consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for such month, which will compare actual results to the
Borrower's projections delivered pursuant to Section 6.3(b), including,
without limitation, a monthly cash flow analysis showing monthly
variances from the beginning of the relevant Fiscal Year, all in
reasonable detail, prepared in accordance with GAAP consistently applied
and certified to be true, accurate and complete by the Chief Financial
Officer of the Borrower; provided, such interim financial statements
shall be without footnotes and shall be subject to normal year-end
adjustments;
(d) as soon as reasonably possible, and in any event within
ninety (90) days after the end of each Fiscal Year of the Borrower, the
audited consolidated balance sheet of the Borrower and its Subsidiaries
as at the end of such Fiscal Year, and the related audited consolidated
statements of income and cash flows of the Borrower and its Subsidiaries
for such Fiscal Year, setting forth in comparative form the figures for
the previous Fiscal Year, all in reasonable detail and accompanied by the
opinion thereon of independent public accountants selected by the
Borrower and reasonably acceptable to the Bank, which opinion shall be
in a form generally recognized as unqualified and shall state that such
financial statements have been prepared in accordance with GAAP and that
the audit by such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards; provided, the delivery within the time period specified above;
(e) the Borrower's Annual Report on Form 10-K for such
Fiscal Year (together with the Borrower's annual report to shareholders,
if any, at the time such annual report is sent to shareholders) prepared
pursuant to Rule 14a-3 under the Securities and Exchange Act of 1934, as
amended, prepared in accordance with the requirements therefor and filed
with the Securities and Exchange Commission, together with the
accountants' opinion described above, shall be deemed to satisfy the
requirements of this Section 6.3(e); together with each delivery of
financial statements pursuant to subsections (b), (c), and (d) above,
a Compliance Certificate (i) stating that the Chief Financial Officer of
the Borrower has reviewed the relevant terms of this Amended and Restated
Loan Agreement and has no knowledge of any event or condition which
constitutes a default under this Amended and Restated Loan Agreement or
an Event of Default hereunder, or, if any such condition or event existed
or exists, specifying the nature and period of existence thereof and what
action the Borrower has taken or is taking or proposes to take with
respect thereto, and (ii) demonstrating in reasonable detail compliance
at the end of such accounting period with Section 7.1, relating to
mergers, consolidations and sales of assets; Section 7.3, relating to
Liens, Section 7.4, relating to Restricted Payments, Section 7.7, related
to Funded Debt, Sections 7.11 through 7.15, relating to financial
covenants, Section 7.8, relating to Transactions with Affiliates, and
Section 7.9, relating to Guaranties (and, with respect to all financial
covenants, including with each Compliance Certificate appropriate work
papers demonstrating the Borrower's method of calculating the various
financial information included in the Compliance Certificate);
(f) forthwith upon any principal officer of the Borrower
obtaining knowledge of, or receiving notice of any claim of or action
taken with respect to, any condition or event which constitutes a default
under this Amended and Restated Loan Agreement or an Event of Default
hereunder (including, without limitation, knowledge that any claim by any
creditor has been made that there exists, or that any action has been
taken by any creditor with respect to, any default as set forth in
Section 6.3(i)), an Officers' Certificate specifying the nature and
period of existence thereof and what action the Borrower has taken or is
taking or proposes to take with respect thereto;
(g) Upon request by the Bank, copies of any reports
submitted to the Borrower by its independent certified public accountants
in connection with the examination of the financial statements of the
Borrower made by such accountants;
(h) Promptly upon their becoming available, one copy of each
financial statement, report, notice or proxy statement sent by the
Borrower to stockholders generally and of each regular or periodic
report, and any registration statement or prospectus filed by the
Borrower or any Subsidiary with any securities exchange or the Securities
and Exchange Commission or any successor agency, and copies of any orders
which are material in relation to the business, operations, affairs,
financial condition, assets or properties of the Borrower and its
Subsidiaries taken as a whole in any proceedings to which the Borrower
or any of its Subsidiaries is a party, issued by any governmental agency,
Federal or state, having jurisdiction over the Borrower or any of its
Subsidiaries;
(i) Promptly upon an Authorized Officer of the Borrower
becoming aware of the occurrence thereof, written notice of (i) a
Reportable Event with respect to any defined benefit Plan (in which event
such notice shall be given when the Reportable Event is required to be
reported to the PBGC) ; (ii) the institution of any steps by the
Borrower, any ERISA Affiliate, the PBGC or any other Person to terminate
any defined benefit Plan; (iii) the institution of any steps by the
Borrower or any ERISA Affiliate to withdraw from any defined benefit
Plan; (iv) a non-exempt "prohibited transaction" within the meaning of
Section 406 of ERISA in connection with any Plan (in which event such
notice shall be given when either Form 5330 or Form 5500 is filed with
the Internal Revenue Service or the Department of Labor, respectively,
with respect to such prohibited transaction); (v) any material increase
in the contingent liability of the Borrower or any Subsidiary with
respect to any post-retirement welfare liability; or (vi) the taking of
any action by, or the threatening of the taking of any action by, the
Internal Revenue Service, the Department of Labor or the PBGC with
respect to any of the foregoing;
(j) With reasonable promptness, such other information and
data with respect to the Borrower as from time to time may be reasonably
requested by the Bank.
The Bank shall keep confidential all of the financial statements
and other information furnished to the Bank pursuant to this Amended and
Restated Loan Agreement, except the Bank shall have the right to furnish
copies of such financial statements and other information furnished to
the Bank (i) to any proposed participant in any of the Working Capital
Line of Credit, subject to such participant executing a Confidentiality
Agreement as required under Section 10(a) hereof, (ii) to governmental
agencies having jurisdiction over the Bank and which request copies of
such financial statements and/or other information, (iii) if required to
under applicable rules of civil procedure to any appropriate Person in
any litigation involving or affecting the Bank, provided, the Bank shall
seek an appropriate protective order in such litigation preserving the
confidentiality of any non-public information furnished to the Bank, and
(iv) to any appropriate Person in connection with the enforcement by the
Bank of its rights under this Amended and Restated Loan Agreement and the
other Loan Instruments.
6.4 Financial Records; Inspection.
(a) The Borrower will maintain a system of accounting
established and administered in accordance with GAAP consistently
applied, and will set aside on its books all such proper reserves as
shall be required by GAAP.
(b) The Borrower will permit the Bank and its authorized
representatives to inspect any of the properties of the Borrower,
including its books of account (and to make copies thereof and to take
extracts therefrom), to make field exams on a regular (at least
quarterly) basis, and to discuss its affairs, finances and accounts with
its officers and with its independent accountants, all at such reasonable
times and as often as may be reasonably requested. Such inspection shall
be for the information and benefit of the Bank and, unless otherwise
publicly available, any information obtained thereby or otherwise
pursuant thereto shall not be divulged to others except in connection
with the enforcement of the rights of the Bank upon the occurrence of an
Event of Default hereunder or in connection with any sale of any
participation in the Working Capital Line of Credit, and except as may
be required by law or by any governmental authority having jurisdiction
over the Bank. The Borrower shall be responsible for payment of the
reasonable fees and expenses incurred by the Bank or its agents in
connection with such field exams and inspections.
6.5 Permits, Certificates, Leases, Licenses, etc.. The
Borrower will obtain, maintain and substantially comply at all times with
all permits, certificates, licenses, approvals, authorizations, leases
and other instruments necessary or appropriate for the conduct of its
business in all material respects as presently conducted or as
contemplated to be conducted in the future.
6.6 Notice. The Borrower will notify the Bank in writing,
within no more than ten (10) Business Days (and without the benefit of
any grace period afforded in any provision of this Amended and Restated
Loan Agreement or any other Loan Instrument) after the Borrower learns
of any of the following: (a) the existence or occurrence of any default
under this Amended and Restated Loan Agreement and/or any of the other
Loan Instruments, (b) that any representation or warranty made herein or
in the other Loan Instruments shall, for any reason, not be or shall
cease in any material respect to be true and complete and not misleading,
(c) the entry of a final uninsured, non-appealable judgment against the
Borrower which exceeds Two Hundred Fifty Thousand Dollars ($250,000.00),
together with a copy of such judgment and a statement of the Borrower of
the actions which the Borrower intends to take with respect to such
judgment, or (d) the occurrence of any labor strikes or work stoppages
by the employees of the Borrower.
6.7 Further Assurances. The Borrower will from time to time
hereafter execute and deliver, or will cause to be executed and
delivered, such additional instruments, certificates or documents, will
pay all filing fees and taxes in connection therewith and will take all
such further actions, as the Bank may reasonably request for the purposes
of implementing or effectuating the provisions of this Amended and
Restated Loan Agreement and/or the other Loan Instruments. Upon the
exercise by the Bank of any power, right, privilege or remedy pursuant
to the Loan Instruments which requires any consent, approval,
registration, qualification or authorization of any Person, the Borrower
will execute and deliver, or will cause the execution and delivery of,
all applications, certificates, instruments and other documents and
papers that the Bank requires in order to obtain any such consent,
approval, registration, qualification or authorization.
6.8 Payment of Obligations. The Borrower will remit all excess
cash on hand to the Bank on a daily basis, to be applied towards
reduction of the Working Capital Line of Credit. All Payments on the
Amended and Restated Working Capital Line of Credit Note and all other
Obligations shall be made to the Bank in "good, and collected funds," at
the principal office of the Bank as set forth in Section 12.2 hereof, not
later than 11:00 A.M., Louisville, Kentucky time, on the date due; funds
received by the Bank after that hour shall be deemed to have been
received on the next following Business Day.
6.9 Preservation of Existence, Leases, etc. Borrower will at
all times preserve and keep in full force and effect its corporate
existence, rights, patents, trademarks, service marks, trade names,
copyrights, licenses, consents and authorizations, other than any changes
to any of the same effected by the Borrower in the ordinary course of
business, provided that the foregoing shall not prevent any transaction
permitted by Section 7.1 hereof, and the Borrower shall comply in all
material respects with all applicable laws and regulations of the United
States of America and of any state or municipality or other political
subdivision thereof.
6.10 Insurance. The Borrower shall keep its insurable
properties adequately insured at all times by financially sound and
respectable insurers and maintain such other insurance, including
deductibles, and against such risks as are presently maintained by the
Borrower.
6.11 Environmental Matters. The Borrower at its sole expense
shall, and shall cause its Subsidiaries to, do the following, except
where the failure to do so would not reasonably be likely to have a
Material Adverse Effect:
(a) comply in all material respects with any applicable
Environmental Law;
(b) obtain and maintain in full force and effect all
material Governmental Approvals required by any applicable Environmental
Law for its operations;
(c) cure any material violation by it or at its properties
of applicable Environmental Laws;
(d) not allow the presence or operation at its properties
of any (i) landfill or dump, or (ii) hazardous waste management facility
or solid waste disposal facility as defined pursuant to RCRA or any
comparable state or federal law, other than for solid waste management
facilities managing K061 waste as allowed under RCRA or any comparable
state of federal laws;
(e) within thirty (30) days notify the Bank in writing of
and provide any reasonably requested documents upon learning of any of
the following in connection with the Borrower or any Subsidiary;
(1) any material liability for response or corrective
action, natural resource damage or other harm pursuant to CERCLA, RCRA
or any comparable state law;
(2) any material Environmental claim;
(3) any material violation of an Environmental Law or
material Release, threatened Release or disposal of a Hazardous Material;
or
(4) any material environmental, natural resource,
health or safety condition; and,
(f) conduct at its expense any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation or other
response action necessary to remove, remediate, clean up or xxxxx any
material Release, threatened Release or disposal of a Hazardous Material
as required by any applicable Environmental Law, unless the Borrower or
such Subsidiary, as the case may be, is contesting the validity or
applicability of such Environmental Law or any amount relating to the
application of such Environmental Law in good faith by appropriate
actions or proceedings and the Borrower or such Subsidiary shall set
aside on its books, reserves deemed by it to be adequate with respect
thereto.
7. NEGATIVE COVENANTS. The Borrower hereby covenants and agrees that
until the Amended and Restated Working Capital Line of Credit Note and
the other obligations have been respectively paid in full to the Bank and
the Working Capital Commitment has expired or has terminated, the
Borrower will perform and observe all of the following provisions except
to the extent the Bank otherwise expressly consents in writing.
7.1 Mergers, Consolidations and Sales of Assets.
(a) The Borrower will not, and will not permit any
Subsidiary to, (i) consolidate with or be a party to a merger with any
other corporation or (ii) engage in any Asset Disposition involving any
"substantial part of the consolidated assets of the Borrower and its
Subsidiaries" (as defined in paragraph (c) of this Section 7.1);
provided, however, that any Subsidiary may merge or consolidate with or
into the Borrower or any Wholly-Owned Subsidiary so long as in any merger
or consolidation involving the Borrower, the Borrower shall be the
surviving or continuing corporation.
(b) As used in this Section 7.1, "Asset Disposition" means
and includes (i) a sale, lease or other disposition of assets by the
Borrower or any Subsidiary (other than in the ordinary course of
business, Excluded Asset Dispositions, as defined in subsection (c)
hereof and the sale, lease or other dispositions of assets to the
Borrower or to a Wholly-Owned Subsidiary), (ii) the issuance or sale by
any Subsidiary of any shares of stock of any class (including as "stock"
for the purposes of this Section 7.1, any warrants, rights or options to
purchase or otherwise acquire stock or other Securities exchangeable for
or convertible into stock) of such Subsidiary (except to qualify
directors) to any Person other than the Borrower or a Wholly-Owned
Subsidiary, and, (iii) the sale, transfer or other disposition by the
Borrower of any shares of stock of any Subsidiary (except to qualify
directors) to any Person other than a Wholly-Owned Subsidiary and the
sale, transfer or other disposition by any Subsidiary (except to the
Borrower or a Wholly-Owned Subsidiary) of any shares of stock of any
other Subsidiary.
(c) As used in this Section 7.1, an Asset Disposition shall
be deemed to be a "substantial part of the consolidated assets of the
Borrower and its Subsidiaries" if the book value of the assets subject
to such Asset Disposition, when added to the book value of all other
assets subject to Asset Dispositions (i) during the 12-month period
ending with the date of such Asset Disposition exceeds two percent (2%)
of the Consolidated Total Assets, determined as of the end of the
immediately preceding Fiscal Quarter, or (ii) during the period from and
after the Closing Date to and including the date of such Asset
Disposition shall in the aggregate exceed twenty-five percent (25%) of
Consolidated Total Assets determined as of the end of the immediately
preceding Fiscal Quarter. As used herein, the term "Excluded Asset
Dispositions" means Asset Dispositions to the extent that the net
proceeds thereof are applied to the prepayment, purchase or redemption
of outstanding Senior Debt of the Borrower or its Subsidiaries. Any such
prepayment, purchase or redemption made by the Borrower shall be made
ratably to the holders of all outstanding Senior Debt of the Borrower and
its Subsidiaries, including the Bank.
In any event, the Borrower shall promptly notify the Bank when
either (i) the aggregate book value of assets subject to Asset
Dispositions in any fiscal year exceeds two percent (2%) of Consolidated
Total Assets, determined as of the need of the immediately preceding
Fiscal Quarter, or (ii) the aggregate book value of assets subject to
Asset Dispositions during the period beginning on the Closing Date and
ending with the date of such Asset Dispositions exceeds 25% of
Consolidated Total Assets, determined as of the end of the immediately
preceding Fiscal Quarter.
For purposes of this Section 7.1, if a Wholly-Owned Subsidiary
shall for any reason cease to be a Wholly-Owned Subsidiary but shall
continue to be a Subsidiary, then any assets or shares of stock of any
other Subsidiary which were the subject of an Asset Disposition from such
other Subsidiary to such Wholly-Owned Subsidiary previously permitted by
this Section 7.1 shall be deemed to be the subject of a new Asset
Disposition at the time such Wholly-Owned Subsidiary ceases to be a
Wholly-Owned Subsidiary.
7.2 Use of Assets. The Borrower will not use, or cause or
permit the use of, any of its assets in any manner prohibited by law,
governmental regulations or applicable insurance policies.
7.3 Limitation of Liens. The Borrower will not, and will not
permit any Subsidiary to, create or incur, or suffer to be incurred or
to exist, any Lien on its or their property or assets, whether now owned
or hereafter acquired, or upon any income or profits therefrom, or
transfer any property for the purpose of subjecting the same to the
payment of obligations in priority to the payment of its or their general
creditors, unless in the case of any Lien securing Indebtedness, the
Amended and Restated Working Capital Line of Credit Note shall be secured
equally and ratably with, or prior to, any such Indebtedness in a manner
reasonably satisfactory to the Bank, provided, however, that the
foregoing restrictions shall not apply to the following Liens, which
Liens are permitted without regard to the above restrictions:
(a) Liens for property taxes and assessments or governmental
charges and levies and Liens securing claims or demands of mechanics and
materialmen which are not overdue, or, if the Borrower or such
Subsidiary, as the case may be, is contesting the validity, applicability
or amount thereof in good faith by appropriate actions or proceedings and
the Borrower or such subsidiary shall set aside on its books, reserves
deemed by it to be adequate with respect thereto;
(b) Liens of or resulting from any judgment or award, the
time for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Borrower or a Subsidiary shall at any
time in good faith be prosecuting an appeal or proceeding for a review
and in respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured;
(c) Liens (other than any Lien imposed by ERISA) arising in
the ordinary course of business or incidental to the ownership of
properties and assets (including Liens in connection with worker's
compensation, unemployment insurance and other like laws, warehousemen's
and attorneys' liens and statutory landlords' liens) and Liens to secure
the performance of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other Liens of like
general nature incurred in the ordinary course of business and not in
connection with the borrowing of money and which do not in the aggregate
materially impair the operation of the business of the Borrower and its
Subsidiaries taken as a whole; provided in each case, the obligation
secured is not overdue or, if overdue, is being contested in good faith
by appropriate actions or proceedings;
(d) Survey exceptions and encumbrances, easements and
reservations, and rights of others for rights-of-way, utilities and other
similar purposes, and zoning and other restrictions an to the use of real
properties, which are necessary for the conduct of the activities of the
Borrower and its Subsidiaries or which customarily exist on properties
of corporations engaged in similar activities and similarly situated and
which do not in any event. materially- impair their use in the operation
of the business of the Borrower and its Subsidiaries taken as whole;
(e) Liens securing Indebtedness of a Subsidiary to the
Borrower or to a Wholly-Owned Subsidiary and Liens securing Indebtedness
of the Borrower to a Wholly-Owned Subsidiary;
(f) Liens existing as of the Closing Date and reflected on
Exhibit G hereto and any extension, renewal or replacement thereof in
respect of the same property theretofore subject to such Lien, incurred
in connection with any extension, renewal or refunding of the
Indebtedness secured thereby (without increase in principal amount) which
is permitted by the limitations contained in Section 7.7(a).
(g) Liens incurred in connection with obtaining or
performing government contracts;
(h) Liens (including without limitation, Capitalized Leases)
incurred after the Closing Date given to secure the payment of the
purchase price or cost of construction incurred in connection with the
acquisition or construction of fixed assets (i.e., property, plant and
equipment) intended to be used in carrying on the business of the
Borrower or a Subsidiary, including Liens existing on such fixed assets
at the time of acquisition thereof or at the time of acquisition by the
Borrower or a Subsidiary of any business entity then owning such fixed
assets, whether or not such existing Liens were given to secure the
payment of the purchase price of the fixed assets to which they, attach,
provided that (i) the Lien shall attach solely to the fixed assets
acquired or purchased, (ii) at the time of acquisition or construction
of such fixed assets, the aggregate amount remaining unpaid on all
Indebtedness secured by Liens on such fixed assets whether or not assumed
by the Borrower or a Subsidiary shall not exceed an amount equal to 100%
of the lesser of the total purchase price or fair market value at the
time of acquisition or construction of such fixed assets (as determined
in good faith by the Board of Directors of the Borrower), (iii) any such
Lien shall be created contemporaneously with, or within 270 days after,
the acquisition or the completion of construction of such fixed assets
and (iv) all such Indebtedness shall have been incurred within the
applicable limitations provided in Section 7.7 hereof.
(i) The interest of a lessor or lessee in any leased
property of the Borrower and its Subsidiaries subject to a lease that is
not a Capitalized Lease; and
(j) Liens not otherwise permitted by the preceding clauses
(a) through (i), inclusive, securing Funded Debt of the Borrower or any
Subsidiary, provided that all Funded Debt secured by such wholly-owned
liens shall be permitted by the provisions of Section 7.7(a)(4) hereof.
For purposes of this Section 7.3, if a Wholly-Owned Subsidiary
shall for any reason cease to be a Wholly-Owned Subsidiary but shall
continue to be a Subsidiary, then any existing Liens granted to such
Subsidiary securing Indebtedness of the Borrower or another Subsidiary
to such Wholly-Owned Subsidiary and previously permitted by this Section
7.3 shall be deemed to be re-incurred by the Borrower or such other
Subsidiary at the time such Wholly-Owned Subsidiary ceases to be a
Wholly-Owned Subsidiary.
7.4 Restricted Payments. The Borrower will not, except as
hereinafter provided:
(a) Declare or pay any dividends, either in cash or
property, on any shares of its capital stock of any class (except
dividends or other distributions payable solely in shares of capital
stock of the Borrower);
(b) Directly or indirectly, or through any Subsidiary,
purchase, redeem or retire any shares of its capital stock of any class
or any warrants, rights or options to purchase or acquire any shares of
its capital stock;
(c) Make any other payment or distribution, either directly
or indirectly or through any Subsidiary, in respect of its capital stock;
(d) Make any optional prepayment, either directly or
indirectly or through any Subsidiary, of any Subordinated Debt of the
Borrower or any Subsidiary; or
(e) Make, or permit any Subsidiary to make, any Restricted
Investment;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options and all such
other payments or distributions and such Restricted Investments being
herein collectively called "Restricted Payments"), in any Fiscal Quarter
if after giving effect thereto any Event of Default shall have occurred
and be continuing or the aggregate amount of Restricted Payments made
during such Fiscal Quarter would exceed the Restricted Payment Pool
applicable to such Fiscal Quarter.
Notwithstanding the foregoing, this provision shall not prevent the
payment of any dividend by the Borrower within sixty (60) days after the
date of its declaration (if the declaration of such dividend was
permitted at the time of such declaration).
For the purposes of this Section 7.4, the amount of any Restricted
Payment declared, paid or distributed in property shall be deemed to be
the greater of the book value or fair market value (as determined in good
faith by the Board of Directors of the Borrower) of such property at the
time of the making of the Restricted Payment in question.
For purposes of this Section 7.4, at any time when a corporation
becomes a Subsidiary, all investments of such corporation at such time
shall be doomed to have been made by such corporation, as a Subsidiary,
at such time.
7.5 Nature of Business. Neither the Borrower nor any
Subsidiary will engage in any business if, as a result, the general
nature of the business, taken on a consolidated basis, which would then
be engaged in by the Borrower and its Subsidiaries would be substantially
changed from the general nature of the business engaged in by the
Borrower and its Subsidiaries on the date of this Amended and Restated
Loan Agreement; provided, however, that in any event, the Borrower and
its Subsidiaries shall be permitted to engage in lines of business which
the Board of Directors of the Borrower determines in good faith to be
reasonably related to those of the Borrower on the date of this Amended
and Restated Loan Agreement.
7.6 Agreements and Licenses. The Borrower will not transfer,
terminate, cancel, modify or amend, other than in the ordinary course of
business, or encumber, except pursuant to the Loan Instruments, or commit
a default under, any Capitalized Lease to which the Borrower is a party
or any license, permit, consent, approval or authorization necessary or
appropriate for the conduct of the Borrower's business, to the extent any
of the actions or events described in this Section 7.6 would reasonably
be likely to have a Material Adverse Effect.
7.7 Limitations on Funded Debt.
(a) The Borrower will not, and will not permit any
Subsidiary to, directly or indirectly, create, incur, assume, guarantee
or otherwise become directly or indirectly liable with respect to, any
Funded Debt (including liabilities under Capitalized Leases), except:
(1) Funded Debt evidenced by the Senior Notes;
(2) Funded Debt evidenced by the Amended and Restated
Working Capital Line of Credit Note;
(3) Funded Debt of the Borrower and its Subsidiaries
outstanding as of the date of this Amended and Restated Loan Agreement
and reflected on Exhibit G hereto;
(4) Capitalized Leases to the extent permitted by
Section 7.15 hereof; or
(5) Funded Debt of a Subsidiary to the Borrower or to
a Wholly-Owned Subsidiary and Funded Debt of the Borrower to a
Wholly-Owned Subsidiary.
(b) Any corporation which becomes a Subsidiary after the
date hereof shall for all purposes of this Section 7.6 be deemed to have
created, assumed or incurred at the time it becomes a Subsidiary all
Funded Debt of such corporation existing immediately after it becomes a
Subsidiary.
(c) For purposes of this Section 7.6, if a Wholly-Owned
Subsidiary shall for any reason cease to be a Wholly-Owned Subsidiary but
shall continue to be a Subsidiary, then any Funded Debt of another
Subsidiary or the Borrower issued to such Subsidiary previously permitted
by this Section 7.6 shall be deemed to be re-incurred by the Borrower or
such other Subsidiary at the time such Wholly-Owned Subsidiary ceases to
be a Wholly-Owned Subsidiary.
7.8 Transactions with Affiliates. The Borrower will not
directly or indirectly enter into any Capitalized Lease or other
transaction with any Affiliate of the Borrower on terms that are less
favorable to the Borrower than those which might be obtained at the time
from Persons who are not an Affiliate of the Borrower; the burden of
proving that such terms are not less favorable to the Borrower as
aforesaid shall be on the Borrower.
7.9 Guaranties. The Borrower will not, and will not permit any
Subsidiary to, become liable in respect of any Guaranty except Guaranties
in favor of the Bank.
7.10 ERISA Compliance.
(a) The Borrower will not, and will not permit any
subsidiary to, permit any defined benefit Plans (subject to the minimum
funding standards of Section 412 of the Code) at any time maintained by
the Borrower or any Subsidiary to have any Unfunded Vested Pension
Liabilities, except where the existence of such Unfunded Vested Pension
Liabilities would not reasonably be likely to materially and adversely
affect the properties, business, prospects, profits or condition of the
Borrower and its Subsidiaries taken as a whole. As used herein "Unfunded
Vested Pension Liability" means an, excess of the actuarial present value
of accumulated vested defined benefit Plan benefits as at the end of the
immediately preceding Plan year of such defined benefit Plans (or as of
any more recent valuation date) over the net assets allocated to such
defined benefit Plans which are available for benefits, all an determined
and disclosed in the most recent actuarial valuation report for such
defined benefit Plans.
(b) All assumptions and methods used to determine the
actuarial valuation of vested employee benefits under all defined benefit
Plans at any time maintained by the Borrower or any Subsidiary and the
present value of assets of such defined benefit Plans shall be reasonable
in the good faith judgment of the Borrower and shall comply with all
requirements of law.
(c) The Borrower will not, and will not permit any
Subsidiary to, cause any defined benefit Plan which it maintains at any
time to engage in any "prohibited transaction" (as such term is defined
in ERISA).
(d) The Borrower will not, and will not permit any
Subsidiary to:
(1) fail to contribute the minimum amounts required
under Section 302 of ERISA or Section 412 of the Code to any defined
benefit Plan which it maintains; or
(2) terminate any such defined benefit Plan in a
manner which could result in the imposition of a lien on any property of
the Borrower or any of its Subsidiaries pursuant to ERISA.
(e) The Borrower will not, and will not permit any
Subsidiary to, permit any condition to exist in connection with any
defined benefit Plan which would constitute grounds for the PBGC to
institute proceedings to have such Plan terminated or a trustee appointed
to administer such defined benefit Plan.
(f) The Borrower will not, and will not permit any
Subsidiary to, withdraw from any Multiemployer Plan if such withdrawal
shall subject the Borrower or any Subsidiary to withdrawal liability (as
defined under Part 1 of Subtitle E to Title IV of ERISA).
7.11 Minimum Consolidated Tangible Net Worth. The Borrower
will not, at any time during any period set forth below, permit
Consolidated Tangible Net Worth to be less than the amount set forth
opposite such period below:
Minimum Consolidated
Period Tangible Net Worth
Fiscal Year 2002 $11,000,000
Fiscal Year 2003 $ 9,000,000
First two Fiscal Quarters
of Fiscal Year 2004 $10,000,000
Third Fiscal Quarter of $11,000,000 plus and
aggregate amount
Fiscal Year 2004 and equal to 50% of
Consolidated Net Earnings
thereafter (but, in each case) only
if a positive number) for
each completed Fiscal Quarter
beginning with the third
Fiscal Quarter of Fiscal Year
2004
7.12 Minimum Consolidated EBITDA.
(a) The Borrower will not, on the last day of any Fiscal
Quarter set forth below, permit Consolidated EBITDA calculated using
Consolidated EBITDA for the Fiscal Year to date as of the end of each
such period (except as otherwise indicated with respect to the last two
periods below) to be less than the amount set forth opposite such period
below:
Period (FQ = Fiscal Quarter) Minimum Consolidated
EBITDA
First FQ of Fiscal Year 2002 ($2,300,000)
Second FQ of Fiscal Year 2002 ($3,800,000)
Third FQ of Fiscal Year 2002 ($4,150,000)
Fourth FQ of Fiscal Year 2002 ($4,300,000)
First FQ of Fiscal Year 2003 ($250,000)
Second FQ of Fiscal Year 2003 $535,000
Third FQ of Fiscal Year 2003
(Consolidated EBITDA for such FQ only) $1,438,000
Fourth FQ of Fiscal Year 2003
(Consolidated EBITDA for such FQ only) $1,356,000
(b) If Consolidated Tangible Net Worth on the last day of
any Fiscal Quarter set forth below is less than $14,000,000, the Borrower
will not, on the last day of such Fiscal Quarter, permit Consolidated
EBITDA for such Fiscal Quarter to be less than the amount set forth
opposite such period below:
Period (FQ = Fiscal Quarter) Minimum Consolidated
EBITDA
First FQ of Fiscal Year 2004 $1,666,000
Second FQ of Fiscal Year 2004 $1,666,000
Third FQ of Fiscal Year 2004 $1,666,000
Fourth FQ of Fiscal Year 2004 $1,666,000
First FQ of Fiscal Year 2005 and thereafter $2,441,000
7.13 Interest Coverage Ratio. The Borrower will not, for any
Fiscal Quarter commencing with the Fiscal Quarter ending in September
2003, permit the Interest Coverage Ratio to be less than 1.10 to 1.00.
7.14 Debt Service Coverage Ratio. The Borrower will not, for
any Fiscal Quarter commencing with the Fiscal Quarter ending in September
2003, permit the Debt Service Coverage Ratio to be less than 1.00 to
1.00.
7.15 Capital Expenditures. The Borrower will not, and will not
permit any Subsidiary to, make or become committed to make (without
duplication) any Capital Expenditure if the aggregate amount of all
Capital Expenditures made or committed to be made by the Borrower and its
Subsidiaries in (a) Fiscal Year 2002 would exceed $1,500,000, (b) Fiscal
Year 2003 would exceed $1,500,000, plus an amount equal to the maximum
amount of Capital Expenditures which could have been incurred in
compliance with this Section 7.15 in Fiscal Year 2002 but were not
incurred during Fiscal Year 2002, (c) Fiscal Year 2004 would exceed
$2,000,000 plus an amount (which shall in no event exceed $1,000,000)
equal to the maximum amount of Capital Expenditures which could have been
incurred in compliance with this Section 7.15 in Fiscal Year 2003 but
were not incurred during Fiscal Year 2003 and (iv) Fiscal Year 2005 and
each Fiscal Year thereafter would exceed $3,000,000. Notwithstanding
anything to the contrary contained in this Section 7.15, the foregoing
limitations on Capital Expenditures for any Fiscal Year shall be adjusted
upward for any Capital Expenditures that are necessary for compliance
with requirements of the United States Environmental Protection Agency
or any other Governmental Authority.
8. EVENTS OF DEFAULT; ACCELERATION. Each of the following events shall
constitute an "Event of Default" under this Amended and Restated Loan
Agreement:
(a) If the Borrower shall default in the payment of any
interest on and/or any principal of the Amended and Restated Working
Capital Line of Credit Note when the same becomes due and payable, and
such default continues for ten (10) days after the Bank has given written
notice of such default to the Borrower.
(b) If the Borrower shall breach or default in the
performance or observance of any of the provisions of Sections 7.3, 7.4
or 7.7 hereof.
(c) If the Borrower shall breach or default in the
performance or observance of any of the provisions of Section 7 hereof
(other than Sections 7.3, 7.4 or 7.7 hereof for which no cure period is
provided), and such breach or default is not cured within thirty (30)
days after the earlier of (i) the date the Borrower first obtains
knowledge of the particular breach or default, or (ii) the date written
notice of the particular breach or default is given to the Borrower by
the Bank.
(d) If the Borrower shall default in the performance of or
compliance with any covenant, obligation or provision contained in this
Amended and Restated Loan Agreement or any of the other Loan Instruments,
and not otherwise referred to in this Section 8, and such default shall
not have been remedied (i) within thirty (30) days after written notice
of such default shall have been delivered to the Borrower, or (ii) if
such default cannot be cured within such thirty (30) day period, within
such longer period of time as may be necessary to effect such cure, but
in any event within sixty (60) days after written notice of such default
shall have been delivered to the Borrower, provided that the Borrower
commences to cure the particular default within such thirty (30) day
period and prosecutes the cure to completion with due diligence within
sixty (60) days after written notice of such default shall have been
delivered to the Borrower.
(e) If any material representation or warranty made in
writing by or on behalf of the Borrower herein or pursuant hereto or
otherwise in connection with the transactions contemplated hereby shall
have been materially false or misleading or incorrect when made and the
Borrower shall have known or should have known of the falsity, misleading
nature of or incorrectness of such representation or warranty when it was
made, and the Borrower fails to cause such representation or warranty to
cease to be materially false, misleading or incorrect within ton (10)
days after written notice of such materially false, misleading or
incorrect representation or warranty shall have been delivered to the
Borrower.
(f) If the Borrower shall default (as principal or guarantor
or other surety or otherwise) in the payment of any principal of or
premium, if any, or interest on any Indebtedness which, at the time of
the Borrower's default in the payment thereof, has an unpaid balance in
excess of Two Million Dollars ($2,000,000.00), or if the Borrower
defaults in the performance of or compliance with any term of any
evidence of such Indebtedness or of any mortgage, indenture or other
agreement relating thereto, and such default shall continue for more than
the period of grace, if any, specified therein and shall not have been
waived pursuant thereto; provided, however, to the extent the Borrower
is contesting the amount or validity of any such Indebtedness claimed to
be in default and/or is contesting whether it has defaulted in the
performance or compliance with any term or provision of any document of
the type referenced in this subsection (f), in each case in good faith
and by appropriate proceedings promptly initiated and diligently
conducted by the Borrower, any such default of the type referred to in
this subsection (f) shall not constitute an Event of Default.
(g) The occurrence of any Event of Default under and as
defined in the Senior Note Agreement, or a default by the Borrower under
the Master Equipment Lease or any Funded Debt.
(h) If the Borrower shall discontinue its business or shall
make an assignment for the benefit of its creditors, or shall fail
generally to pay its debts as such debts become due, or shall apply for
or consent to the appointment of or taking possession by a trustee,
receiver or liquidator (or other similar official) of any substantial
part of its property, or shall commence a case or have an order for
relief entered against it under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or if the Borrower shall
take any action in furtherance of the dissolution or liquidation of the
Borrower.
(i) If, within sixty (60) days after the commencement
against the Borrower of a case under the Bankruptcy Code, as now or
hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, such case shall have been
consented to or shall not have been dismissed or all orders or
proceedings thereunder affecting the operations or the business of the
Borrower shall not have been stayed, or if the stay of any such order or
proceeding shall thereafter be set aside, or if within sixty (60) days
after the entry of a decree appointing a trustee, receiver or liquidator
(or other similar official) of any substantial part of the property of
the Borrower, such appointment shall not have been vacated.
(j) If a final uninsured, non-appealable judgment which,
with other outstanding final judgments against the Borrower exceeds an
aggregate of Two Hundred Fifty Thousand Dollars ($250,000.00) shall be
rendered against the Borrower and (i) if, prior to the availability of
any execution thereon, such judgment shall not have been discharged or
execution thereof shall not have been stayed pending appeal, or if, after
the expiration of any such stay, such judgment shall not have been
discharged, or (ii) the Borrower shall not have established adequate
reserves on its books in respect of such final uninsurable judgment or
judgments.
Upon the occurrence of any Event of Default described in subsection
(h) or (i) of this Section 8, the respective unpaid principal balances
of the Amended and Restated Working Capital Line of Credit Note together
with all accrued interest thereon and all other Obligations shall
automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are
hereby expressly waived by the Borrower. Further, upon the occurrence of
any other Event of Default referred to in this Section 8, the Bank may
at any time at its option, by written notice to the Borrower, declare the
respective unpaid principal balances of the Amended and Restated Working
Capital Line of Credit Note together with all accrued interest thereon
and all other obligations to be due and payable in full to the Bank,
without presentment, demand, protest or other requirements of any kind,
all of which are hereby waived by the Borrower.
9. REMEDIES.
9.1 Defaults. Upon the occurrence and during the continuation
of any Event of Default, the Bank may proceed to protect and enforce its
rights by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement
contained herein or in the other Loan Instruments, or for an injunction
against a violation of any of the terms hereof or thereof, or in aid of
the exercise of any power granted hereby or thereby or by law. In case
of a default in the payment of any principal of or premium, if any, or
interest on the Amended and Restated Working Capital Line of Credit Note,
or upon acceleration thereof, the Borrower will pay to the Bank such
further amount as shall be sufficient to cover the cost and expenses of
collection thereof, including (to the extent permitted by law), without
limitation, reasonable attorneys' fees, expenses and disbursements.
9.2 Offset. If any Event of Default shall occur and be
continuing and regardless of whether or not the Bank has accelerated the
respective stated maturity dates of the Amended and Restated Working
Capital Line of Credit Note or any of the other Obligations, or if the
Borrower shall fail to pay any principal of the Amended and Restated
Working Capital Line of Credit Note to the Bank on the due date thereof,
the Bank shall have the right then, or at any time thereafter, to setoff
against any and all deposit balances and other sums and Indebtedness and
other property then held or owned by the Bank to or for the credit or
account of the Borrower, all without notice to or demand upon the
Borrower or any other Person, all such notices and demands being hereby
expressly waived by the Borrower.
9.3 Rights Cumulative. All of the rights and remedies of the
Bank upon the occurrence of an Event of Default hereunder shall be
cumulative to the greatest extent permitted by law, and shall be in
addition to all those rights and remedies afforded the Bank at law or in
equity or under the other Loan Instruments.
9.4 Payment of Costs and Expenses. All of the costs, expenses,
damages and liabilities, including, without limitation, all reasonable
attorneys' fees, incurred by and imposed upon the Bank with respect to,
in connection with or as a result of any action taken or omitted to be
taken pursuant to this Amended and Restated Loan Agreement, the Amended
and Restated Working Capital Line of Credit Note and the other Loan
Instruments shall be paid by, and shall be the sole responsibility of,
the Borrower.
10. ASSIGNMENTS AND PARTICIPATIONS.
(a) The Bank shall have the right at any time, with the
prior written consent of the Borrower, to sell, assign, transfer or
negotiate all or any part of its Working Capital Commitment to one or
more commercial banks, insurance companies, savings and loan
associations, savings banks or other financial institutions, pension
funds or mutual funds or other accredited investors ("Eligible
Assignees"); provided that prior to receiving any confidential or other
material information regarding the Borrower or the transactions
contemplated by this Amended and Restated Loan Agreement, any Eligible
Assignee shall have entered into a Confidentiality Agreement in form and
substance satisfactory to the Borrower, provided, further, the Bank shall
at all times retain at least sixty percent (60%) of the Working Capital
Commitment and will retain the right to administer the Working Capital
Commitment and the Loan Instruments on behalf of itself and the Eligible
Assignees which acquire interests in the working capital Commitment. In
the case of any sale, assignment, transfer or negotiation of all or part
of the Working Capital Commitment authorized under this Section 10, the
assignee, transferee or recipient shall have, to the extent of such sale,
assignment, transfer or negotiation, the same rights, benefits and
obligations as it would if it were a Bank hereunder, including, without
limitation (i) the right to approve or disapprove actions which, in
accordance with the terms hereof, require the approval of the Bank, and
(ii) the obligation to fund Working Capital Loans directly to the
Borrower pursuant to Section 2 hereof.
(b) The Bank may sell participations in all or any part of
the Working Capital Commitment to one or more Eligible Assignees with the
prior written consent of the Borrower; provided that (i) the Borrower
hereby consents to the sale of participation interests in the Working
Capital Commitment to SunTrust Bank; (ii) any such sale shall not,
without the consent of the Borrower, require the Borrower to file a
registration statement with the Securities and Exchange Commission or
apply to qualify the Amended and Restated Working Capital Line of Credit
Note under the blue sky law of any state; (iii) the holder of any such
participation, other than an Affiliate of the Bank, shall not be entitled
to require the Bank to take or omit to take any action hereunder, subject
to the rights of each holder of any such participation under each and
every participation agreement to which the Bank and such holder is a
party; and (iv) the Bank shall at all times retain at least sixty percent
(60%) of the Working Capital Commitment and will retain the right to
administer the Working Capital Commitment and the Loan Instruments on
behalf of itself and the Eligible Assignees which acquire interests in
the Working Capital Commitment. For purposes of Section 9.2 hereof, the
Borrower hereby acknowledges and agrees that any sale of any
participation interest in the Working Capital Commitment will give rise
to a direct obligation of the Borrower to the participant and the
participant shall be considered to be a "Bank" hereunder.
(c) Notwithstanding the foregoing provisions of this Section
10, the Bank may at any time sell, assign, transfer, or negotiate all or
any part of the Working Capital Commitment to any Affiliate of the Bank;
provided that an Affiliate to whom such disposition has been made shall
not be considered a "Bank" for purposes of this Amended and Restated Loan
Agreement other than for purposes of Section 9.2 hereof, provided further
that the Borrower shall not incur any additional expenses solely as a
result of such sale, assignment, transfer or negotiation.
(d) The Bank shall not, as between the Borrower and the
Bank, be relieved of any of its obligations hereunder as a result of any
granting of participations in all or any part of the Working Capital
Commitment. The Bank shall, as between the Borrower and the Bank, be
relieved of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of all or any part of the Working
Capital Commitment made in accordance with Section 10(a) hereof.
11. INDEMNITY. The Borrower shall indemnify and hold harmless the
Bank, its successors, assigns, agents and employees, from and against any
and all claims, actions, suits, proceedings, costs, expenses, damages,
fines, penalties and liabilities, including, without limitation,
reasonable attorneys' fees and costs, arising out of, connected with or
resulting from the operation of the business of the Borrower. Provided,
the Borrower shall have no obligation to indemnify the Bank for any loss
to the extent caused by the Bank's bad faith, gross negligence or willful
misconduct. At the Bank's request, the Borrower shall, at its own cost
and expense, defend or cause to be defended any and all such actions or
suits that may be brought against the Bank and, in any event, shall
satisfy, pay and discharge any and all judgments, awards, penalties,
costs and fines that may be recovered against the Bank in any such
action, plus all attorneys' fees and costs related thereto to the extent
permitted by applicable law; provided, however, that the Bank shall give
the Borrower, to the extent the Bank seeks indemnification from the
Borrower under this Section 11, written notice of any such claim, demand
or suit as soon as practicable after the Bank has received written notice
thereof, and the Bank shall not settle any such claim, demand or suit,
if the Bank seeks indemnification therefor from the Borrower, without
first giving notice to Borrower of the Bank's desire to settle and
obtaining the consent of Borrower to the same, which consent the Borrower
hereby agrees not to unreasonably withhold.
12. MISCELLANEOUS.
12.1 Role of the Bank. Notwithstanding any of the terms or
conditions hereof or of the other Loan Instruments to the contrary, the
Bank shall not have, and by its execution and acceptance of this Amended
and Restated Loan Agreement hereby expressly disclaims, any obligation
or responsibility for the management, conduct or operation of the
business and affairs of the Borrower. Any term or condition hereof, or
of any of the other Loan Instruments, permitting the Bank to take or
refrain from taking any action with respect to the Borrower shall be
deemed solely to permit the Bank to audit and review the management,
operation and conduct of the business and affairs of the Borrower and may
not be relied upon by any other Person. Further, the Bank shall not have,
has not assumed, and by its execution and acceptance of this Amended and
Restated Loan Agreement hereby expressly disclaims, any liability or
responsibility for the payment or performance of any indebtedness or
obligation of the Borrower, and no term or condition hereof, or of any
of the other Loan Instruments, shall be construed otherwise.
12.2 Notices. All notices required or permitted to be given
hereunder shall be given in writing and shall be personally delivered or
sent by telecopier (with confirmation by mail to follow), by express
courier service or by registered or certified United States mail, return
receipt requested, postage prepaid, addressed-as follows (or to such
other address as to which either party hereto shall have given the other
written notice):
If to the Borrower: Kentucky Electric Steel, Inc.
U.S. Highway 60 (Coalton)
P.0. Box 3500
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
cc: Xxxxxxx X. Xxxxx, Xx., Esq.
VanAntwerp, Monge, Xxxxx & Xxxxxxx
0000 Xxxxxxxxxx Xxxxxx, 5th Floor
P. 0. Xxx 0000
Xxxxxxx, XX 00000-0000
cc: Xxxxxxx X. Xxxx Esq.
Xxxxx Xxxxx Xxxx LLC
2200 PNC Center
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
If to the Bank: National City Bank of Kentucky
10th Floor, National City Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxx
cc: Xxxxx X. Xxxxxxx, Esq.
Xxxxxxxxxx Xxxx & XxXxxxxx PLLC
3300 National City Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
All notices hereunder shall be deemed given upon the earliest of
(a) actual delivery in person or by telecopier (with confirmation by mail
to follow), (b) one (1) Business Day after delivery to an express courier
service, or (c) three (3) Business Days after having been deposited in
the United States mails, in accordance with the foregoing.
12.3 Waiver. No course of dealing in respect of, nor any
omission or delay in the exercise of, any right, power, remedy or
privilege by the Bank shall operate as a waiver thereof, nor shall any
right, power, remedy or privilege of the Bank be exclusive of any other
right, power, remedy or privilege referred to herein or in any related
document or now or hereafter available at law, in equity, in bankruptcy,
by statute or otherwise. Each such right, power, remedy or privilege may
be exercised by the Bank, either independently or concurrently with
others, and as often and in such order as the Bank may deem expedient.
No waiver or consent granted by the Bank in respect of this Amended and
Restated Loan Agreement or the other Loan Instruments shall be binding
upon the Bank unless specifically granted in writing by a duly authorized
officer of the Bank, which writing shall be strictly construed.
12.4 Survival of Representations and Warranties. All
representations, warranties and covenants of the Borrower contained
herein or in the other Loan Instruments or made pursuant hereto shall
survive the execution and delivery of the Loan Instruments and shall
continue throughout the term hereof. Further, the indemnities set forth
in Sections 4, 6.11 and 10 hereof shall survive the payment of the
obligations to the Bank.
12.5 Invalidity. If any part of this Amended and Restated Loan
Agreement shall be adjudged invalid or unenforceable, whether in general
or in any particular circumstance, then such partial invalidity or
enforceability shall not cause the remainder of this Amended and Restated
Loan Agreement to be or to become invalid or unenforceable, and if a
provision hereof is held invalid or unenforceable in one or more of its
applications, the parties hereto agree that said provision shall remain
in effect in all valid applications that are severable from the invalid
be unenforceable application or applications.
12.6 Assignment. This Amended and Restated Loan Agreement may
not be assigned by the Borrower without the prior written consent of the
Bank. All rights of the Bank hereunder shall inure to the benefit of its
successors and assigns, subject to the provisions of Section 10 hereof,
and all obligations, covenants and agreements of the Borrower shall bind
its successors and assigns, if any.
12.7 Governing Law. This Amended and Restated Loan Agreement
and the rights and obligations of the parties hereunder shall, in all
respects, be governed by and construed in accordance with the laws of the
Commonwealth of Kentucky.
12.8 Section Headings. The section headings of this Amended
and Restated Loan Agreement are inserted herein solely for convenience
of reference and shall not affect the construction or interpretation of
the provisions hereof.
12.9 Entire Agreement. This Amended and Restated Loan
Agreement and the other Loan Instruments constitute the entire agreement
between the Bank and the Borrower with respect to the subject matter
hereof and supersedes all prior written or oral agreements between the
Borrower and the Bank pertaining to the subject matter hereof.
12.10 Time of the Essence. Time shall be of the essence in the
payment and performance of all of the Borrower's obligations under this
Amended and Restated Loan Agreement, the Amended and Restated Working
Capital Line of Credit Note and the other Loan Instruments.
12.11 No Oral Modifications. This Amended and Restated Loan
Agreement may be modified only in writing executed by the Bank and the
Borrower.
12.12 Costs and Expenses. The Borrower agrees to reimburse the
Bank for all charges, expenses, out-of-pocket costs and fees incurred by
the Bank in the preparation, negotiation and execution of the Loan
Instruments (including the Term Sheet), including without limitation, all
documentary, stamp or other tax liabilities, all security deposits and
agreed loan or commitment fees, and all costs of printing, documentation,
recording, credit reports and lien searches. All obligations of the
Borrower under this Section 12.12 shall survive the termination or
cancellation of this Amended and Restated Loan Agreement for any reason
whatsoever.
12.13 Right to Request Waivers. The Borrower reserves the
right from time to time to request the Bank to waive one or more of the
terms and provisions of this Amended and Restated Loan Agreement;
provided, the Bank shall have no obligation to consent to any such waiver
requested by the Borrower, and nothing set forth in this Amended and
Restated Loan Agreement shall be construed to the contrary.
12.14 Supersession of Original Loan Agreement. This Amended
and Restated Loan Agreement amends, restates and supersedes in its
entirety the Prior Loan Agreement, which is terminated and shall be of
no further force and effect as of the date hereof.
12.15 Termination of Export Line of Credit. The Export Line
of Credit referred to in the Prior Loan Agreement is canceled and
terminated.
12.16 Waiver. Effective as of November 1, 2001, the Bank
waives the Event of Default of the Borrower as described in Paragraph C
of the Recitals hereto.
13. RELEASE OF BANK. As a material inducement to the Bank to enter
into this Amended and Restated Loan Agreement, the Borrower hereby
releases and forever discharges the Bank and its officers, directors,
attorneys, agents, representatives, employees, predecessors and
successors-in-interest, and assigns, of and from any and all known or
reasonably discoverable claims, demands, obligations, actions, causes of
action, damages, costs, losses of services, expenses and compensation of
any nature whatsoever, whether based on a tort, including but not limited
to, breach of fiduciary duty, bad faith, conversation, breach of
contract, or other theory or recovery which the Borrower has or may have
against the Bank, or which may exist or which might be claimed to exist
at or prior to the date of this Amended and Restated Loan Agreement on
account of, or in any way arising out of the banking relationship between
the Borrower and the Bank. The Borrower specifically agrees and
acknowledges that the release of the Bank for the consideration herein
is complete, final, unqualified, and not subject to any condition
precedent or condition subsequent, it being the express intention that
this shall constitute an unconditional general release for the benefit
of the Bank and have immediate effect and shall not be subject to any
contingency or condition whatsoever. The Borrower further acknowledges
that it expressly waives any right to subsequently attach the enforcement
of this Amended and Restated Loan Agreement or release based upon claim
of mutual mistake of fact or law. The Borrower additionally agrees that
no action shall be commenced by it for any future claim against the Bank
arising from or in any way connected with the transaction between the
Borrower and the Bank for the execution and performance of the various
agreements herein or in the Loan Agreement, unless notice shall be given
to the Bank, specifically setting forth the claim. Such notice must be
given within sixty (60) calendar days after the discovery of the
occurrence of the event upon which the Borrower shall base such claim.
Failure to give such notice within such sixty (60)-day period shall
constitute a waiver by the Borrower of any such claim. In the
construction of this paragraph, as in the entirety of this Amended and
Restated Loan Agreement, time shall be of the essence.
14. Waiver of Jury Trial. Borrower hereby knowingly, voluntarily
and intentionally waives the right it may have to a trial by jury in
respect to any litigation or any other proceeding based on, or arising
out of, under or in connection with this Amended and Restated Loan
Agreement or any other loan document or out of any course of conduct,
course of dealing, statements (whether written or oral) or actions of
the Borrower or the Bank.
[SIGNATURE PAGE FOLLOWS]
In Witness Whereof, the parties hereto have caused this Amended and
Restated Loan Agreement to be duly executed as of the day and year first
above written.
Kentucky Electric Steel, Inc.
By: \s\Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx,
Chief Executive Officer
(the "Borrower")
National City Bank of Kentucky
By: \s\Xxxxxx X. Xxxxx
Title: Senior Vice President
(the "Bank")
Exhibit D
Borrowing Certificate
(Working Capital Loan)
THIS BORROWING CERTIFICATE ("Borrowing Certificate") is being delivered
to NATIONAL CITY BANK OF KENTUCKY, a national banking association (the
"Bank"), pursuant to Section 2 of that certain Amended and Restated Loan
Agreement dated as of January __, 2002, between KENTUCKY ELECTRIC STEEL,
INC., a Delaware corporation (the "Borrower"), and the Bank (together
with all amendments, modifications and supplements thereto and all
restatements thereof, the "Loan Agreement"). All capitalized terms used
herein without definition shall have the same meaning as in the Loan
Agreement. The Borrower hereby requests the Bank to make a Working
Capital Loan to Borrower in the amount of $_______________ on __________
__, 200_ (the "Funding Date"). The proceeds of the Working Capital Loan
requested pursuant to this Borrowing Certificate shall be deposited in
the Borrower's account maintained with the Bank.
The undersigned officer on behalf of the Borrower, to the best of
his knowledge, and the Borrower certify that:
(a) The amount of the Working Capital Loan requested pursuant to
this Borrowing Certificate will not cause the Total Utilization of
Working Capital Commitment to exceed the Working Capital Commitment in
effect as of the date hereof or the Borrowing Base;
(b) The representations and warranties contained in the Loan
Agreement are true and correct in all material respects on and as of the
date hereof, to the same extent as though made on and as of the date
hereof;
(c) No event has occurred and is continuing under the Loan
Agreement or will result from the disbursement of the Working Capital
Loan requested pursuant to this Borrowing Certificate which would
constitute an Event of Default;
(d) The Borrower has performed in all material respects all
agreements and satisfied all conditions which the Loan Agreement and the
other Loan Instruments provide shall be performed or satisfied by the
Borrower on or before the Funding Date of the Working Capital Loan
requested pursuant to this Borrowing Certificate;
(e) No order, judgment or decree of any court, arbitrator or
governmental authority purports to enjoin or restrain the Bank from
making the Working Capital Loan requested pursuant to this Borrowing
Certificate; and
(f) There is not pending or, to the knowledge of the Borrower,
threatened, any action, suit, proceeding or arbitration or, to the
knowledge of the Borrower, any governmental investigation, pending or
threatened, against or affecting the Borrower whish is required by the
terms of the Loan Agreement to be disclosed to the Bank and which has
not been disclosed by the Borrower to the Bank pursuant to the Loan
Agreement prior to the Funding Date of the last preceding Working Capital
Loan or, with respect to the initial Working Capital Loan requested by
the Borrower, prior to the date of the Loan Agreement, and there has
occurred no development not so disclosed in any such action, suit,
proceeding, governmental investigation or arbitration so disclosed,
which, in either event, in the reasonable opinion of the Borrower, is
likely to be determined adversely to the Borrower and, in such event, is
reasonably expected to have a Material Adverse Effect. Further, no
injunction or other restraining order has been issued and no hearing to
cause an injunction or other restraining order to be issued is pending
or noticed with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of the Loan Agreement or the
making of Working Capital Loans thereunder or the issuing of Letters of
Credit thereunder.
Dated: ____________________
KENTUCKY ELECTRIC STEEL, INC.
By:
Title:
(the "Borrower")
Exhibit D
Borrowing Certificate
(Letter of Credit)
THIS BORROWING CERTIFICATE ("Borrowing Certificate") is being delivered
to NATIONAL CITY BANK OF KENTUCKY, a national banking association (the
"Bank"), pursuant to Section 2 of that certain Amended and Restated Loan
Agreement dated as of January __, 2002, between KENTUCKY ELECTRIC STEEL,
INC., a Delaware corporation (the "Borrower"), and the Bank (together
with all amendments, modifications and supplements thereto and all
restatements thereof, the "Loan Agreement"). All capitalized terms used
herein without definition shall have the same meaning as in the Loan
Agreement. The Borrower hereby requests the Bank to issue a Letter of
Credit for the account of the Borrower in the amount of $_______________
on __________ __, 200_ (the "Issuance Date"). The Letter of Credit is
more particularly described in the accompanying Application for
Irrevocable Letter of Credit duly executed by the Borrower.
The undersigned officer on behalf of the Borrower, to the best of
his knowledge, and the Borrower certify that:
(a) The amount of the Letter of Credit requested pursuant to this
Borrowing Certificate will not cause the Total Utilization of Working
Capital Commitment to exceed the Working Capital Commitment in effect as
of the date hereof or the Borrowing Base;
(b) The representations and warranties contained in the Loan
Agreement are true and correct in all material respects on and as of the
date hereof to the same extent as though made on and as of the date
hereof;
(c) No event has occurred and is continuing under the Loan
Agreement or will result from the disbursement of the Letter of Credit
requested pursuant to this Borrowing Certificate which would constitute
an Event of Default;
(d) The Borrower has performed in all material respects all
agreements and satisfied all conditions which the Loan Agreement and the
other Loan Instruments provide shall be performed or satisfied by the
Borrower on or before the Issuance Date of the Letter of Credit requested
pursuant to this Borrowing Certificate;
(e) No order, judgment or decree of any court, arbitrator or
governmental authority purports to enjoin or restrain the Bank from
issuing the Letter of Credit requested pursuant to this Borrowing
Certificate; and
(f) There is not pending or, to the knowledge of the Borrower,
threatened, any action, suit, proceeding or arbitration or, to the
knowledge of the Borrower, any governmental investigation, pending or
threatened, against or affecting the Borrower whish is required by the
terms of the Loan Agreement to be disclosed to the Bank and which has
not been disclosed by the Borrower to the Bank pursuant to the Loan
Agreement prior to the Issuance Date of the last preceding Letter of
Credit or, with respect to the initial Letter of Credit requested by the
Borrower, prior to the date of the Loan Agreement, and there has occurred
no development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, which, in either
event, in the reasonable opinion of the Borrower, is likely to be
determined adversely to the Borrower and, in such event, is reasonably
expected to have a Material Adverse Effect. Further, no injunction or
other restraining order has been issued and no hearing to cause an
injunction or other restraining order to be issued is pending or noticed
with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of the Loan Agreement or the making
of Letter of Credits thereunder or the issuing of Letters of Credit
thereunder.
Dated: ____________________
KENTUCKY ELECTRIC STEEL, INC.
By:
Title:
(the "Borrower")
Exhibit E
Form of Compliance Certificate
THIS COMPLIANCE CERTIFICATE is being delivered to NATIONAL CITY BANK OF
KENTUCKY, a national banking association (the "Bank"), pursuant to Section
6.3(d) of that certain Amended and Restated Loan Agreement dated as of
January __, 2002, between KENTUCKY ELECTRIC STEEL, INC., a Delaware
corporation (the "Borrower"), and the Bank (together with all amendments,
modifications and supplements thereto and all restatements thereof, the
"Loan Agreement"). All capitalized terms used herein without definition
shall have the same meaning as in the Loan Agreement. The undersigned
officer on behalf of the Borrower, to the best of his knowledge, and the
Borrower certify that as of the last day of the most recently ended month
dated ___________ __, 200_ (the "Compliance Date"):
1. Ratio Requirements.
(a) The Borrower's Consolidated Tangible Net Worth is
$______________ [Reference Section 7.11 of the Loan Agreement];
(b) The Consolidated EBITDA of the Borrower is
$______________ [Reference Section 7.12 of the Loan Agreement];
(c) [to include starting 9/2003] The Borrower's Interest
Coverage Ratio is $_____________ [Reference Section 7.13 of the Loan
Agreement]; and
(d) [to include starting 9/2003] The Borrower's Debt
Service Coverage Ratio is $_____________ [Reference Section 7.14 of the
Loan Agreement];
2. Mergers, Consolidations and Sales of Assets. Neither the
Borrower nor any of its Subsidiaries has, during the preceding month,
taken or permitted to be taken any of the actions prohibited under
Section 7.1 of the Loan Agreement other than [if any such actions have
been taken or have been permitted to be taken, describe the same in
detail][Reference Section 7.1 of the Loan Agreement).
3. Liens. Neither the Borrower nor any of its Subsidiaries has,
during the preceding calendar month, granted any Liens in violation of
Section 7.3 of the Loan Agreement other than [if any such Liens have been
granted, describe the Lien in detail including the amount of the
Indebtedness secured by the Lien, the assets secured by the Lien and the
holder thereof][Reference Section 7.3 of the Loan Agreement].
4. Restricted Payments. The Borrower has not, during the
preceding month, made any Restricted Payments in violation of Section 7.4
of the Loan Agreement other than [if any such Restricted Payments have
been made by the Borrower, describe the amount thereof, the date of
making thereof and the date of payment thereof][Reference Section 7.4 of
the Loan Agreement].
5. Funded Debt. Neither the Borrower nor any of its
Subsidiaries has, during the preceding month, incurred, assumed or
guaranteed any new Funded Debt other than [if any such new or additional
Funded Debt has been incurred, assumed or guaranteed by the Borrower or
any of its Subsidiaries, describe the amount and nature of the Funded
Debt, the assets securing the same, if any and the holder
thereof][Reference Section 7.7 of the Loan Agreement].
6. Transactions with Affiliates. Neither the Borrower nor any
of its Subsidiaries has, during the preceding month, entered into any
transactions with Affiliates in violation of the provisions of Section
7.8 of the Loan Agreement other than [if the Borrower or any of its
Subsidiaries has entered into any transactions with Affiliates in
violation of the provisions of Section 7.8 of the Loan Agreement,
describe the nature of each such transaction, the Affiliate with whom
such transaction has been made, and the obligations incurred or assumed
by the Borrower or such Subsidiary pursuant to such
transaction.[Reference Section 7.8 of the Loan Agreement].
7. Guaranties. Neither the Borrower nor any of its Subsidiaries
has, during the preceding calendar month, executed or issued any
Guaranties in violation of the provisions of Section 7.9 of the Loan
Agreement.
The undersigned officer of the Borrower executing and delivering
this Compliance Certificate on behalf of the Borrower further certifies
that he has reviewed the Loan Agreement and has no knowledge of any event
or condition which constitutes a default or an Event of Default under the
Loan Agreement or the other Loan Instruments other than [if any default
or Event of Default has occurred, describe the same, the period of
existence thereof and what action the Borrower has taken or proposes to
take with respect thereto].
IN WITNESS WHEREOF, the Borrower has executed this Compliance
Certificate this 14th day of January, 2002.
KENTUCKY ELECTRIC STEEL, INC.
By:
Xxxxxxx X. Xxxxxxxx,
Chief Executive Officer
(the "Borrower")
Exhibit F
Provisions to Include in Opinion of Counsel to Borrower
An opinion of counsel to the Borrower, dated the date of this
Amended and Restated Loan Agreement, addressed to the Bank, and
satisfactory to counsel for the Bank, (a) to the effect that (i) this
Amended and Restated Loan Agreement and all of the Loan Documents have
been duly executed and delivered by the Borrower, and (ii) the applicable
Loan Documents have been recorded in all necessary public offices, and
the security interests and/or liens created thereby in favor of the Bank
have been duly perfected, and constitute the first and prior lien and
encumbrance on and against all of the collateral described or referred
to therein; (b) to the best of such counsel's knowledge, all of the
representations and warranties of the Borrower set forth in the Loan
Agreement are true and correct; (c) all corporate actions necessary or
appropriate for the execution and delivery of the Loan Documents have
been taken and all governmental approvals necessary for the due execution
and delivery of the Loan Documents have been obtained; (d) none of the
Loan Documents violate or contravene any provision of the Articles of
Incorporation or By-Laws of the Borrower or, to the knowledge of such
counsel, any agreement or instrument binding on the Borrower or any of
its properties.
GD&M 677798.6
January 14, 2002
TABLE OF CONTENTS
Section Page
GLOSSARY OF DEFINED TERMS
Term Section
GD&M 677798.6
January 14, 2002
