FORM OF CREDIT AGREEMENT
Published on
O'M&M
DRAFT
2/7/94
$250,000,000
CREDIT AGREEMENT
dated as of February 15, 1994
between
KAISER ALUMINUM & CHEMICAL CORPORATION,
KAISER ALUMINUM CORPORATION,
CERTAIN FINANCIAL INSTITUTIONS,
and
BANKAMERICA BUSINESS CREDIT, INC.,
as Agent
TABLE OF CONTENTS
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of February 15, 1994, is
between KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation (the
"Company"), KAISER ALUMINUM CORPORATION, a Delaware corporation (the "Parent
Guarantor"), the various financial institutions that are or may from time to
time become parties hereto pursuant to the terms hereof (collectively, the
"Lenders" and, individually, a "Lender"), and BANKAMERICA BUSINESS CREDIT,
INC., a Delaware corporation, as agent (in such capacity, together with its
successors and assigns in such capacity, the "Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Company, a direct Subsidiary of the Parent
Guarantor, is engaged, directly and through its various Subsidiaries and Joint
Venture Affiliates, in the business of the mining of bauxite, the refining of
bauxite into alumina, the production of primary aluminum and semi-fabricated
and fabricated aluminum products, and the sale of bauxite, alumina, primary
aluminum, and semi-fabricated and fabricated aluminum products to direct
customers and distributors; and
WHEREAS, the Company desires to obtain Commitments from the
Lenders pursuant to which Loans and other Credit Extensions, in a maximum
aggregate principal amount at any one time outstanding not to exceed
$250,000,000, will be made to or for the account of the Company from time to
time prior to the Revolving Commitment Termination Date; and
WHEREAS, each Lender, severally and for itself alone, is
willing, on the terms and subject to the conditions hereinafter set forth
(including Article VII), to extend its Commitments and make its Loans and other
Credit Extensions to or for the account of the Company; and
WHEREAS, the proceeds of any Loans made on the Initial
Borrowing Date will be applied by the Company, together with other funds, to
make payment in full of all Indebtedness of the Company identified in Item 1
("Indebtedness to be Paid") of the Disclosure Schedule; and
WHEREAS, in order to induce the Lenders to enter into this
Agreement and to extend their respective Commitments and make the Loans and
other Credit Extensions, the Parent Guarantor has agreed to unconditionally
guarantee all obligations of the Company hereunder and under the other Loan
Documents; and
WHEREAS, on the terms and subject to the conditions hereof, on
or prior to the Initial Borrowing Date, the following transactions shall occur
as provided below:
(a) as security for the Company's Obligations, the
Company shall execute and deliver to the Agent, on behalf of the
Secured Lenders:
(i) the Company Security Agreement, granting to
the Agent, on behalf of the Secured Lenders, a security
interest in the Company's personal property described therein;
(ii) the Company Pledge Agreement, pledging to
the Agent, on behalf of the Secured Lenders;
(A) all of the issued and outstanding
shares of capital stock of each first-tier, Domestic
Subsidiary of the Company listed on Schedule I
hereto;
(B) the percentage of the issued and
outstanding shares of capital stock of each
first-tier, non-Domestic Subsidiary or Joint Venture
Affiliate of the Company listed on such Schedule I
set forth opposite the name of such Subsidiary or
Joint Venture Affiliate;
(C) the KT Note; and
(D) all other promissory notes or other
debt instruments held by the Company; and
(iii) the Company Mortgages and Company Deeds of
Trust, mortgaging to the Agent (or one or more trustees
therefor) and granting to the Agent (or one or more trustees
therefor), on behalf of the Secured Lenders, a security
interest in all real property of the Company listed on
Schedule II hereto.
(b) as security for the Parent Guarantor's Obligations
under the Parent Guaranty, the Parent Guarantor shall execute and
deliver to the Agent, on behalf of the Secured Lenders:
(i) the Parent Security Agreement, granting to
the Agent, on behalf of the Secured Lenders, a security
interest in the Parent Guarantor's personal property described
therein; and
(ii) the Parent Pledge Agreement, pledging to
the Agent, on behalf of the Secured Lenders:
(A) all of the issued and outstanding
shares of capital stock of the Company held by the
Parent Guarantor; and
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(B) all promissory notes or other debt
instruments (other than the Equity Proceeds Notes)
held by the Parent Guarantor;
(c) each Subsidiary of the Company listed on Schedule III
hereto shall execute and deliver to the Agent, the Subsidiary
Guaranty, guaranteeing the Company's Obligations and each other such
Subsidiary's Obligations under the Subsidiary Guaranty;
(d) as security for such Subsidiary's Obligations under
the Subsidiary Guaranty, each Subsidiary of the Company listed on
Schedule IV hereto shall execute and deliver to the Agent, on behalf
of the Secured Lenders, the Subsidiary Pledge Agreement, pledging to
the Agent, on behalf of the Secured Lenders:
(i) all of the issued and outstanding shares of
capital stock of each first-tier, Domestic Subsidiary of such
Subsidiary listed on Schedule V hereto;
(ii) the percentage of the issued and
outstanding shares of capital stock of each first-tier,
non-Domestic Subsidiary of such Subsidiary listed on such
Schedule V set forth opposite the name of such Subsidiary;
(iii) any Intercompany Demand Note held by such
Subsidiary listed on Schedule VI hereto; and
(iv) all other promissory notes or other debt
instruments held by such Subsidiary;
(e) as security for such Subsidiary's Obligations under
the Subsidiary Guaranty, each Subsidiary of the Company listed on
Schedule IV hereto shall execute and deliver to the Agent the
Subsidiary Security Agreement, granting to the Agent, on behalf of the
Secured Lenders, a security interest in such Subsidiary's personal
property described therein; and
(f) each Subsidiary of the Company listed on Schedule VII
hereto which is not otherwise a party to the Subsidiary Pledge
Agreement shall execute and deliver to the Agent, on behalf of the
Secured Lenders, the Intercompany Note Pledge Agreement, pledging to
the Agent, on behalf of the Secured Lenders, any Intercompany Demand
Note held by such Subsidiary listed on Schedule VIII hereto;
NOW, THEREFORE, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms when used
in this Agreement, including its preamble and recitals, shall, except where the
context otherwise requires, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof):
"Account" means any present or future right to payment for goods sold
or leased or for services rendered, whether due or to become due, whether now
existing or hereafter arising and whether or not it has been earned by
performance.
"Account Debtor" means each Person obligated in any way on an Account.
"Adjusted Capital Expenditures" means, for any period,
(a) Capital Expenditures for such period (exclusive of
capitalized interest)
minus
(b) that portion of Capital Expenditures for such period
(exclusive of capitalized interest) attributable to any Subsidiary of
the Company which is equal to (i) the proportionate direct or indirect
ownership of Persons other than the Company and its Subsidiaries of
the voting stock of, or partnership interest in, such Subsidiary or
(ii) if the economic burden of such Capital Expenditures is borne or
to be borne by minority owners of such Subsidiary (other than the
Company and its Subsidiaries) in a proportion other than the
proportion of their direct or indirect ownership of the voting stock
of, or partnership interest in, such Subsidiary, the proportionate
share of the economic burden of such Capital Expenditures borne or to
be borne by such minority owners.
"Affected Lender" is defined in Section 4.11(b).
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by, or is under common control
with such Person (excluding any trustee under, or any committee with
responsibility for administering, any Plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly or
indirectly, power to
(a) vote 20% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of a
majority of directors or managing general partners;
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(b) vote sufficient securities of any class to control
the election of one or more directors or managing general partners; or
(c) direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.
"Agent" is defined in the preamble.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"AJI" means Alpart Jamaica Inc., a Delaware corporation.
"ALPART" means Alumina Partners of Jamaica, a Delaware general
partnership.
"Anglesey" means Anglesey Aluminum Limited, a United Kingdom
corporation.
"Asset Disposition" means any sale, transfer, lease which is accounted
for as a sale under GAAP, contribution, conveyance, or other disposition (other
than the grant of a Lien), in any case made after the Initial Borrowing Date,
of any assets of the Company or any of its Subsidiaries to any Person.
"Assignee Agreement to be Bound" means an Assignee Agreement to be
Bound in substantially the form of Exhibit M attached hereto.
"Assignee Lender" is defined in Section 12.11.1.
"Authorized Officer" means, with respect to any Obligor, those of its
officers whose signatures and incumbency shall have been certified to the Agent
and the Lenders pursuant to Section 7.1.1(a).
"Bank of America" means Bank of America National Trust and Savings
Association, a national banking association, in its individual capacity.
"Bank of America Rate" is defined in "Reference Rate".
"Borrowing" means the Revolving Loans made by all Lenders on the same
Business Day pursuant to the same Borrowing Request in accordance with Section
2.1.1 or the Swingline Loan made by Business Credit pursuant to a Borrowing
Request in accordance with Section 2.1.3.
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"Borrowing Base" means, at any time,
(a) an amount equal to 85% of the Net Amount of Eligible
Accounts as at such time
plus
(b) the lesser of (i) $175,000,000 and (ii) 65% of all
Eligible Inventory as at such time
minus
(c) all reserves, including any reserves for sales, excise or
similar taxes in respect of Eligible Accounts and any reserves for
rental expenses, processing fees or other expenses relating to
Eligible Inventory located at premises not owned by the Company or
KAII, which the Agent, after consultation with the Company, in its
commercially reasonable discretion deems necessary or desirable to
maintain with respect to the Company's account, including any amounts
which the Agent may be obligated to pay in the future for the account
of the Company;
provided, however, that (i) the Net Amount of Eligible Accounts of KAII
included in the Borrowing Base shall at no time exceed 20% of the Net Amount of
Eligible Accounts included in the Borrowing Base, (ii) the Net Amount of
Eligible Accounts of the Company owed by Foreign Account Debtors included in
the Borrowing Base shall at no time exceed 5% of the Net Amount of Eligible
Accounts of the Company included in the Borrowing Base and (iii) Convertor
Inventory that is located on the premises of a third party included in the
Borrowing Base shall at no time exceed 5% of Eligible Inventory included in the
Borrowing Base; and provided further that the limitation set forth in clause
(i) may, to the extent approved by the Agent in its sole discretion, be
increased by the amount, expressed in dollars, of any unused amount of the Net
Amount of Eligible Accounts of the Company owed by Foreign Account Debtors
permitted to be included in the Borrowing Base under clause (ii).
"Borrowing Base Calculation Date" means, with respect to the delivery
date of any Borrowing Base Certificate, the last day of the preceding month or
the last day of the next preceding month, as the case may be.
"Borrowing Base Certificate" means a certificate duly executed by a
Financial Authorized Officer of the Company in substantially the form of
Exhibit D-1 attached hereto.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the Company, (a) in respect of any Borrowing of
Revolving Loans, in substantially the form of Exhibit A-1(a) attached hereto,
or (b) in respect of any
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Borrowing of Swingline Loans, in substantially the form of Exhibit A-1(b)
attached hereto.
"Business Credit" means BankAmerica Business Credit, Inc., a Delaware
corporation.
"Business Day" means any day which is
(a) neither a Saturday or Sunday nor a legal holiday on which
banks are authorized or required to be closed in New York, New York or in San
Francisco, California; and
(b) relative to the making, continuing, converting, prepaying, or
repaying of any LIBO Rate Loans, also a day on which dealings in Dollars are
carried on in the London interbank market.
"Canadian Subsidiaries" means Kaiser Aluminum & Chemical Canada
Investment Limited, an Ontario corporation, and Kaiser Canada.
"Capital Expenditures" means, for any period, the aggregate
expenditures of the Company and its Subsidiaries on a consolidated basis for
fixed or capital assets made during such period which, in accordance with GAAP,
would be classified as capital expenditures (including the aggregate amount of
all Capitalized Lease Liabilities incurred during such period); provided,
however, that any repurchase or leaseback by the Company of a facility sold by
the Company in connection with the issuance of industrial revenue bonds by a
state, municipality or other subdivision of the United States of America or any
department, agency, public corporation or other instrumentality thereof shall
not in any event be deemed to be a Capital Expenditure.
"Capitalized Lease Liabilities" means all monetary obligations of the
Company or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as a capitalized lease,
and, for purposes of this Agreement and each other Loan Document, the amount of
such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP, and the stated maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than
one year after such time, issued or guaranteed by the United States
Government;
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(b) any certificate of deposit or bankers' acceptance,
maturing not more than one year after such time, which is issued or
accepted by either
(i) a commercial banking institution that is a
member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than
$500,000,000;
(ii) any Lender; or
(iii) with respect to certificates of deposit that
do not exceed $10,000,000 in the aggregate outstanding at any
time, any other commercial banking institution;
(c) commercial paper rated A-1 or better by Standard &
Poor's Corporation or Prime-1 or better by Moody's Investors Service,
Inc.;
(d) repurchase agreements with respect to any of the
foregoing, with any bank or trust company referred to above in clause
(b) or with any nationally recognized securities dealer having total
capital and surplus and undivided profits of not less than
$500,000,000; or
(e) investments in the Goldman, Sachs & Co. Institutional
Liquid Assets fund and other money market funds which have
substantially similar investment policies.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended or otherwise modified from time to time.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means the occurrence of any of the following
events: (a) MAXXAM not owning (other than by reason of the existence of a Lien
or other encumbrance but including by reason of the foreclosure of or other
realization upon a Lien or other encumbrance) direct or indirect sole
beneficial ownership (as defined under Regulation 13d-3 of the Securities
Exchange Act of 1934 as in effect on the date of this Agreement) of at least
51% of the total common equity, on a fully diluted basis, of the Parent
Guarantor or the Company; or (b) MAXXAM, through direct representation or
through persons nominated by it, not controlling a majority of the Board of
Directors of the Parent Guarantor or the Company necessary to effectuate any
actions by the Board of Directors of the Parent Guarantor or the Company; or
(c) any person or group (as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934 as in effect on the date of this Agreement), directly or
indirectly, owning more of the total voting power entitled to vote generally in
the election of
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directors of the Parent Guarantor or the Company than MAXXAM; or (d) Charles
Hurwitz, members of his immediate family and trusts for the benefit thereof
(each such person, including Mr. Hurwitz and any trustee of such trusts, being
herein called a "Beneficiary") not having (other than by reason of death,
incapacity, bankruptcy, reorganization, insolvency or similar proceeding or in
connection with the resolution of any litigation outstanding as of the date of
the Subordinated Indenture or any similar litigation or the existence of a Lien
but including by reason of the foreclosure of or other realization upon a Lien
or other encumbrance) direct or indirect sole beneficial ownership (as defined
under Regulation 13d-3 of the Securities Exchange Act of 1934 as in effect on
the date of this Agreement) of at least the Minimum Percentage (defined below)
of the total equity of MAXXAM, other than as a result of new issuances of
equity securities by MAXXAM to third parties (other than to a third party who
is not a Beneficiary and who controls MAXXAM). "Minimum Percentage" means that
percentage obtained by multiplying (i) the percentage of the total equity of
MAXXAM, directly or indirectly, beneficially owned by the Beneficiaries as of
the date of the Subordinated Indenture and (ii) 80%.
"Code" means the Internal Revenue Code of 1986, as amended, reformed,
or otherwise modified from time to time.
"Collateral" means all Property and rights on or in which a Lien is
granted to the Agent (or to any agent, trustee, or other Person acting on the
Agent's behalf) pursuant to this Agreement, any of the Collateral Documents, or
any other Instruments provided for herein or therein or delivered or to be
delivered hereunder or thereunder or in connection herewith or therewith, as
any of the foregoing may be amended, supplemented, restated, or otherwise
modified from time to time in accordance with the provisions hereof or thereof.
"Collateral Documents" means, collectively, the Parent Collateral
Documents, the Company Collateral Documents, the Subsidiary Collateral
Documents, the Collection Bank Agreements, the Concentration Bank Agreement,
and each other Instrument or document pursuant to which a Lien is granted to
the Agent (or perfected in favor of the Agent) (or to or in favor of any agent,
trustee, or other Person acting on the Agent's behalf) as security for any of
the Obligations, as any of the foregoing may be amended, supplemented,
restated, or otherwise modified from time to time in accordance with the
provisions hereof or thereof.
"Collection Bank" means any bank at which the Company maintains a
collection or lockbox account or other similar collection arrangement.
"Collection Bank Agreement" means any agreement between the Company,
the Agent, and any Collection Bank and delivered pursuant to Section 7.1.19, in
substantially the form of Exhibit G attached hereto, as any such agreement may
be amended,
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supplemented, restated, or otherwise modified from time to time in accordance
with the provisions hereof or thereof.
"Commitment" means, as the context may require, a Lender's Revolving
Commitment, or Business Credit's Swingline Commitment.
"Commitment Termination Event" means
(a) any Event of Default described in clauses (a) through
(e) of Section 10.1.10 with respect to the Company shall have
occurred; or
(b) any other Event of Default shall have occurred and be
continuing and the Agent, acting at the direction of the Required
Lenders, gives written notice to the Company pursuant to clause (a) of
Section 10.3 that the Commitments have been terminated.
"Company" is defined in the preamble.
"Company Collateral Documents" means the Company Pledge Agreement, the
Company Security Agreement, the Company Patent Security Agreement, the Company
Trademark Security Agreement, each Company Deed of Trust, each Company
Mortgage, and the Louisiana Security Documents.
"Company Deed of Trust" means any deed of trust executed and delivered
by the Company pursuant to Section 7.1.8, each in substantially the form of
Exhibit I-1 attached hereto, as amended, supplemented, restated, or otherwise
modified from time to time in accordance with the provisions hereof or thereof.
"Company Mortgage" means any mortgage executed and delivered by the
Company pursuant to Section 7.1.8, each in substantially the form of Exhibit
I-2 attached hereto, as amended, supplemented, restated, or otherwise modified
from time to time in accordance with the provisions hereof or thereof.
"Company Patent Security Agreement" means the patent security
agreement executed and delivered by the Company pursuant to Section 7.1.7, in
substantially the form of Exhibit F-3 attached hereto, as amended,
supplemented, restated, or otherwise modified from time to time in accordance
with the provisions hereof or thereof.
"Company Pledge Agreement" means the pledge agreement executed and
delivered by the Company pursuant to Section 7.1.5, in substantially the form
of Exhibit F-1 attached hereto, as amended, supplemented, restated, or
otherwise modified from time to time in accordance with the provisions hereof
or thereof.
"Company Security Agreement" means the security agreement executed and
delivered by the Company pursuant to Section 7.1.6, in substantially the form
of Exhibit F-2 attached hereto, as
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amended, supplemented, restated, or otherwise modified from time to time in
accordance with the provisions hereof or thereof.
"Company Trademark Security Agreement" means the trademark security
agreement executed and delivered by the Company pursuant to Section 7.1.7, in
substantially the form of Exhibit F-4 attached hereto, as amended,
supplemented, restated, or otherwise modified from time to time in accordance
with the provisions hereof or thereof.
"Compliance Certificate" means a certificate of the Company duly
executed by a Financial Authorized Officer of the Company, in substantially the
form of Exhibit D-2 attached hereto, with such changes as the Agent and the
Company may from time to time agree upon for purposes of monitoring the
Company's compliance herewith.
"Concentration Account" is defined in the Concentration Bank Agreement.
"Concentration Bank Agreement" means an agreement between the Company,
the Agent, and Bank of America, as concentration bank, and delivered pursuant
to Section 7.1.19, in substantially the form of Exhibit H attached hereto, as
amended, supplemented, restated, or otherwise modified from time to time in
accordance with the provisions hereof or thereof.
"Confidential Information" is defined in clause (c) of Section 9.1.5.
"Contingent Liability" means any agreement, undertaking, or
arrangement by which any Person guarantees, endorses, agrees to purchase, or
otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to supply
funds to, or otherwise to invest in, a debtor, or otherwise to assure a
creditor against loss) the debt, obligation, or other liability of any other
Person (other than by endorsements of Instruments in the course of collection),
or guarantees the payment of dividends or other distributions upon the shares
of any other Person. The amount of any Person's obligation under any
Contingent Liability shall (subject to any limitation set forth therein) be
deemed to be the outstanding principal amount (or maximum outstanding principal
amount, if larger) of the debt, obligation, or other liability guaranteed
thereby.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Company, in substantially the form of Exhibit A-2 attached hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control
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which, together with the Company, are treated as a single employer under
Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.
"Credit Extension" means
(a) any disbursement of Revolving Loans by the Lenders;
(b) any disbursement of Swingline Loans by Business
Credit; or
(c) any issuance or extension by an Issuer Bank of a
Letter of Credit.
"Convertor Inventory" means raw materials, work-in-process or other
goods delivered to a third party pursuant to a bailment arrangement with such
third party under which such Inventory is to be processed, improved or
otherwise altered by such third party.
"Credit Request" means any Borrowing Request or Revolving L/C Request.
"Deconsolidation Tax Allocation Agreement" means the Tax Allocation
Agreement dated June 30, 1993 between the Company and the Parent Guarantor a
copy of which has been delivered to the Agent and the Lenders prior to the date
hereof, as amended from time to time with the written consent of the Agent.
"Default" means any Event of Default or any condition, occurrence, or
event which, after notice or lapse of time or both, would constitute an Event
of Default.
"Disbursement" means any payment or disbursement made under a Letter
of Credit by the Issuer Bank thereof to the beneficiary thereunder.
"Disbursement Date" is defined in clause (a) of Section 5.5.
"Disclosure Schedule" means the Disclosure Schedule dated as of
February 15, 1994 delivered by the Company to the Agent and each Lender prior
to the execution and delivery of this Agreement, as it may be amended,
supplemented, or otherwise modified from time to time by the Company with the
prior written consent of the Agent.
"Distributions" is defined in clause (a) of Section 9.2.6.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, with respect to any Lender, the office of
such Lender designated as such below its signature
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hereto, or designated in the Assignee Agreement to be Bound pursuant to which
such Lender became a party hereto, or such other office of a Lender (or any
successor or assign of such Lender) within the United States as may be
designated from time to time by written notice from such Lender, as the case
may be, to each other Person party hereto.
"Domestic Subsidiary" means a Subsidiary that is created or organized
in or under the laws of the United States, any state thereof, or the District
of Columbia.
"EBITDA" means, for any Fiscal Quarter, an amount equal to:
(a) Net Income for such Fiscal Quarter (including
extraordinary gains and extraordinary losses, in each case as
determined in accordance with GAAP);
plus
(b) the aggregate amount deducted, in determining Net
Income for such Fiscal Quarter, in respect of all foreign, federal,
state, and local income taxes of the Company and its Subsidiaries,
calculated on a consolidated basis in accordance with GAAP;
plus
(c) the aggregate amount of interest expense (excluding
amortization of deferred financing costs and, to the extent not paid
in cash, interest on the PIK Note and the Equity Proceeds Notes) of
the Company and its Subsidiaries for such Fiscal Quarter, calculated
on a consolidated basis in accordance with GAAP,minus the amount of
interest income of the Company and its Subsidiaries which was included
in the calculation of Net Income for such Fiscal Quarter in accordance
with GAAP;
plus
(d) the aggregate amount of depreciation expense of the
Company and its Subsidiaries for such Fiscal Quarter, calculated on a
consolidated basis in accordance with GAAP;
plus
(e) the aggregate amount of amortization expense of the
Company and its Subsidiaries for such Fiscal Quarter, calculated on a
consolidated basis in accordance with GAAP;
plus
(f) the aggregate amount of the noncash portion of the
FAS 106 charge of the Company and its Subsidiaries calculated on a
consolidated basis in accordance with GAAP;
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minus
(g) that portion of the amounts set forth in clauses (b),
(c), (d), (e), and (f) above attributable to (i) the proportionate
direct or indirect ownership of Persons other than the Company and its
Subsidiaries of the voting stock of, or partnership interest in, any
Subsidiary or (ii) if the economic burden of the amounts set forth
inclauses (b), (c), (d), (e) and (f) above is borne or to be borne by
minority owners of such Subsidiary (other than the Company and its
Subsidiaries) in a proportion other than the proportion of their
direct or indirect ownership of the voting stock of, or partnership
interest in, such Subsidiary, the proportionate share of the economic
burden of such amounts borne or to be borne by such minority owners.
"Effective Date" is defined in Section 12.8.
"Eligible Account" means, at any time, all Accounts of the Company and
KAII that are not ineligible as the basis for Credit Extensions, based on the
following criteria and on such other criteria as the Agent may, after
consultation with the Company, from time to time establish in its commercially
reasonable discretion. Without intending to limit the Agent's discretion to
establish other criteria of eligibility pursuant to the preceding sentence,
Eligible Accounts shall not include any Account:
(a) with respect to which any of the representations,
warranties, covenants, and agreements contained in Section ___ of the
Company Security Agreement or Section ____ of the Subsidiary Security
Agreement are not or have ceased to be complete and correct or have
been breached;
(b) which represents a Progress Billing other than
Progress Billings in an amount not to exceed $5,000,000 in the
aggregate;
(c) which represents a sale on a bill-and-hold,
guaranteed sale, sale and return, sale on approval, consignment,
repurchase or return basis, other than, in each case, a Product Swap
or an Account that represents the balance of an Account Debtor's
minimum annual purchase commitment to the Company provided that the
documents relating to such Account provide that title to the Inventory
purchased by the Account Debtor and held by the Company has passed to
the Account Debtor;
(d) which is evidenced by a promissory note or other
instrument or by chattel paper;
(e) with respect to which more than 90 days, in the case
of an Account as to which National Southwire is the Account Debtor,
have elapsed since the date of the original
14
invoice therefor or with respect to which more than 65 days, in the
case of all other Accounts, have elapsed since the date of the
original invoice therefor;
(f) which is not evidenced by an invoice rendered to the
Account Debtor or which is evidenced by an invoice dated later than
the date of shipment to the Account Debtor or more than 60 days after
the date of performance of the relevant service for the Account
Debtor;
(g) owed by an Account Debtor which is a director,
officer, shareholder, employee or Affiliate of the Company or KAII;
(h) if the aggregate dollar amount of all Accounts owed
by the Account Debtor thereon exceeds 5% (15% in respect of Accounts
owed by the Account Debtors identified in Item 12 ("Major Account
Debtors") of the Disclosure Schedule) of the aggregate amount of all
Accounts at such time, but only to the extent of such excess;
(i) which is owed by an Account Debtor which, at the time
of any determination of Eligible Accounts, owes any amount with
respect to any Account that has been outstanding more than 60 days
past the due date with respect thereto, other than amounts which in
total do not exceed 20% of the aggregate of all Accounts owing by such
Account Debtor and which are the subject of bona fide disputes between
such Account Debtor and the Company or KAII;
(j) which are owed by the government of the United States
of America, or any department, agency, public corporation, or other
instrumentality thereof, unless the Federal Assignment of Claims Act
of 1940, as amended, and any other steps necessary to perfect the
Agent's Security Interest therein, have been complied with to the
Agent's reasonable satisfaction with respect to such Account;
(k) which is owed by any state, municipality, or other
political subdivision of the United States of America, or any
department, agency, public corporation, or other instrumentality
thereof and as to which the Agent determines that the Agent's Security
Interest therein is not or cannot be perfected;
(l) except as provided in clause (j) above, as to which
either the perfection, enforceability, or validity of the Security
Interest in such Account, or the Agent's right or ability to obtain
direct payment to the Agent of the Proceeds of such Account, is
governed by any federal, state, or local statutory requirements other
than those of the Uniform Commercial Code;
15
(m) with respect to which, in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the
payment of money has been received, presented for payment and returned
uncollected for any reason;
(n) which is owed by an Account Debtor to which the
Company or KAII is indebted in any way unless the Account Debtor has
entered into an agreement acceptable to the Agent in its commercially
reasonable judgment to waive setoff rights; or if the Account Debtor
thereon has disputed liability, asserted a right of setoff or made any
claim with respect to any other Account due from such Account Debtor;
but in each such case only to the extent of such indebtedness, setoff,
dispute, or claim;
(o) as to which any one or more of the following events
has occurred with respect to the Account Debtor on such Account: death
or judicial declaration of incompetency of an Account Debtor who is an
individual; the filing by or against the Account Debtor of a request
or petition in a proceeding that is then pending for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy,
insolvency, or similar laws of the United States, any state or
territory thereof, or any foreign jurisdiction, now or hereafter in
effect; the making of any general assignment by the Account Debtor for
the benefit of creditors in a proceeding that is then pending; the
appointment of a receiver or trustee for the Account Debtor or for any
of the assets of the Account Debtor, including the appointment of or
taking possession by a "custodian," as defined in the Federal
Bankruptcy Code in a proceeding that is then pending; the institution
by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or
otherwise) or of any formal or informal proceeding for the dissolution
or liquidation of, settlement of claims against, or winding up of
affairs of, the Account Debtor in a proceeding that is then pending;
the nonpayment generally by the Account Debtor of its debts as they
become due; or the cessation of the business of the Account Debtor as
a going concern;
(p) if the Agent believes in its commercially reasonable
judgment that the prospect of collection of such Account is impaired
or that the Account may not be paid by reason of the Account Debtor's
financial inability to pay;
(q) which is owed by an Account Debtor which the Agent,
in its commercially reasonable judgment, otherwise deems to be
uncreditworthy;
16
(r) which is owed by a Foreign Account Debtor; except to
the extent that such Account (i) is secured or payable by a letter of
credit or acceptance, (ii) insured under foreign credit insurance, on
terms and conditions satisfactory to the Agent in its commercially
reasonable discretion, or (iii) is owed by an Account Debtor
identified in Item 13 of the Disclosure Schedule ("Major Foreign
Account Debtor") unless the Agent, in its commercially reasonable
judgment, otherwise deems such Account Debtor to be creditworthy;
(s) which is not payable in the United States other than
Accounts in an aggregate amount not to exceed $2,000,000 payable in
the United Kingdom;
(t) which is not payable in Dollars, other than Accounts
in an aggregate amount not to exceed $2,000,000 payable in Pounds
Sterling, unless the Company or KAII, as the case may be, has executed
an appropriate Hedging Agreement acceptable to the Agent with respect
thereto; and
(u) which has arisen from Inventory which, at the time of
the determination of Eligible Accounts, constituted Eligible
Inventory.
"Eligible Assignee" is defined in Section 4.11(b).
"Eligible Inventory" means, at any time, any Inventory of the Company
arising in the ordinary course of the Company's business that:
(a) is not, in the reasonable opinion of the Agent,
obsolete or unmerchantable;
(b) is located in the United States or in route to the
United States; provided that such Inventory is insured in accordance
with the Company's normal practice and to the reasonable satisfaction
of the Agent and title to such Inventory has passed to the Company;
(c) upon which the Agent has a first priority perfected
Security Interest;
(d) is not stores Inventory, Tolling Inventory, repair
and maintenance Inventory, or Inventory delivered to the Company on
consignment;
(e) is not evidenced by any warehouse receipts, bills of
lading, or other documents of title, unless such receipts, bills of
lading, or documents have been delivered to the Agent;
(f) is not ineligible as the basis for Credit Extensions
based on such other criteria as the Agent may,
17
after consultation with the Company, from time to time establish in
its commercially reasonable discretion; and
(g) has not given rise to any Account which, at the time
of the determination of Eligible Inventory, constituted an Eligible
Account.
"Environmental Laws" means all applicable federal, state, or local
statutes, laws, ordinances, codes, rules, regulations, requirements, and
guidelines (including consent decrees and administrative orders to which the
Company, any of its Subsidiaries, or any Obligor is subject) relating to
protection of the environment or human health or imposing liability or
standards of conduct concerning any Hazardous Material, as any of the foregoing
may be from time to time amended or supplemented.
"Environmental Reports" means the "Environmental Assessments" report,
dated ______________, 1993, prepared by Kennedy/Jenks/Chilton, copies of which
have been delivered to the Agent and each Lender prior to the date hereof.
"Equity Proceeds Notes" means the Amended and Restated Senior
Subordinated Intercompany Note dated June 30, 1993, substantially in the form
of Exhibit P-1 attached hereto, the Senior Subordinated Intercompany Note,
substantially in the form of Exhibit P-2 attached hereto, or one or more Senior
Subordinated Intercompany Notes issued by the Company on or after the Initial
Borrowing Date, in substantially the form of Exhibit P-3 attached hereto, in
any case in an aggregate principal amount not to exceed 50% of the net proceeds
of all offerings of securities of the Parent Guarantor consummated on or after
the Initial Borrowing Date if the net proceeds of such offerings are loaned to,
contributed to, or used to purchase the stock of, the Company, as each such
promissory note may be amended or otherwise modified from time to time in
accordance with the provisions hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, 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 also refer to any successor sections.
"Event of Cash Dominion" means (a) the occurrence of any of the
following events and the delivery by the Agent of written notice thereof to the
Company (i) the Revolving Commitment Availability is less than $40,000,000 at
any time or (ii) the Revolving Commitment Availability is less than $50,000,000
for three consecutive Business Days or (b) the occurrence of a Default and the
continuance of such Event of Default for five consecutive days after delivery
by the Agent of written notice thereof to the Company. An Event of Cash
Dominion shall terminate, provided no Default shall have occurred and be
continuing, if the Revolving Commitment Availability is greater
18
than $50,000,000 for each day during a period of three consecutive months and
the Agent delivers written notice of such termination to the Company.
"Event of Default" is defined in Section 10.1.
"Executive Officers" means, with respect to any corporation, such
corporation's chairman, president, chief financial officer, treasurer, any vice
president, any attorney in the office of the Company's general counsel, and any
officer who performs a similar policy- making function for such corporation.
"Existing Letters of Credit" means the letters of credit listed on
Schedule IX hereto.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal (for each day during such period) to
(a) the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York; or
(b) if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by Bank of America from three federal funds
brokers of recognized standing selected by it.
"Fee Letter" is defined in Section 3.5.3.
"Financial Authorized Officer" means, with respect to any Obligor,
those of its Authorized Officers who occupy the offices of chief financial
officer, chief accounting officer, controller, assistant controller, treasurer,
or assistant treasurer.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on the last day of December; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., the "1994 Fiscal Year") refer to the
Fiscal Year ending on the last day of December of such calendar year. The
current fiscal year of the Company will end on December 31, 1994.
"Fixed Charge Coverage Ratio" means, as of any date of determination,
the ratio of (a) the aggregate amount of EBITDA for the four Fiscal Quarters
immediately prior to such date to (b) the aggregate Fixed Charges for the
Fiscal Quarter in which such date occurs and the three Fiscal Quarters
immediately subsequent to such Fiscal Quarter (based upon the pro forma amount
of Indebtedness to be outstanding on such date), assuming
19
for the purposes of this measurement that the interest rates on which floating
interest rate obligations are based equal such rates in effect on the date of
determination; provided, however, that if the Company or any of its
Subsidiaries has incurred Hedging Obligations which would have the effect of
changing the interest rate on any Indebtedness for such four Fiscal Quarter
period (or any portion thereof), the resulting rate shall be used for such four
Fiscal Quarter period or portion thereof; and provided, further, that any Fixed
Charges with respect to Indebtedness incurred during the Fiscal Quarter in
which the date of determination occurs shall be calculated as if such
Indebtedness was so incurred on the first day of the Fiscal Quarter in which
the date of determination occurs.
"Fixed Charges" means (without duplication), for any period, the sum
of:
(a) the interest expense of the Company and its
Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP (less, to the extent included therein, (i) the
portion of the interest expense required to be funded or economically
borne by the Company's minority partners in the Company's joint
ventures,
(b) all fees, commissions, discounts and other charges of
the Company and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP, with respect to letters of
credit and bankers' acceptances and the costs (net of benefits)
associated with Hedging Obligations,
(c) the aggregate amount of dividends paid or other
similar distributions made by the Company and its Subsidiaries during
such period with respect to preferred stock (including preference
stock) of the Company or its Subsidiaries determined on a consolidated
basis in accordance with GAAP, and
(d) amortization or write-off of debt discount in
connection with any Indebtedness of the Company and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP.
"Foreign Account Debtor" means an Account Debtor which (i) does not
maintain its chief executive office and principal place of business in the
United States; or (ii) is not organized under the laws of the United States or
any state thereof; or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
20
"Fundamental Loan Documents" means this Agreement, the Company
Collateral Documents, the Subsidiary Guaranty, the Subsidiary Collateral
Documents, the Parent Guaranty and the Parent Collateral Documents.
"Furukawa" means Furukawa Kaiser Forged Products Company, a
corporation organized under the laws of Japan.
"GAAP" means generally accepted accounting principles as set forth in
the opinions and pronouncements of the Securities and Exchange Commission and
the Accounting Principles Board of the American Institute of Certified Public
Accountants and the statements and pronouncements of the Financial Accounting
Standards Board and in such other statements and pronouncements by such other
Person as may be approved by a significant segment of the accounting profession
and concurred in by the independent certified public accountants certifying the
relevant audited financial statement.
"Gross Proceeds" means, with respect to any sale, transfer, lease
which is accounted for as a sale under GAAP, contribution, conveyance, or other
disposition (other than the grant of a Lien) (collectively, for purposes of
this definition, a "disposition"), in any case made after the Initial Borrowing
Date, of any assets of the Company or any of its Subsidiaries to any Person (in
a single transaction or related series of transactions), the sum of (a) the
gross cash proceeds received or to be received by the Company and its
Subsidiaries from such disposition, (b) the face amount of any promissory note
or deferred payment obligations or other security to be taken by the Company
and its Subsidiaries in connection with such disposition, (c) the aggregate
amount of Indebtedness of the Company and its Subsidiaries which is to be
assumed by the purchaser or transferee of any assets which are the subject of
such disposition, and (d) the fair market value (as determined in good faith by
the Board of Directors of the Company) of all other Property (except
indemnities and the assumption of unmatured contractual obligations) of any
kind and nature received or receivable by the Company and its Subsidiaries in
exchange for such assets.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous,
or toxic chemical, material, or substance regulated under or within
the meaning of any other Environmental Law.
21
"Hedging Agreement" means (a) any interest rate swap, cap, or collar
agreement or similar arrangement entered into by the Company and any financial
institution to protect the Company against interest rate risk and (b) any
agreement or arrangement entered into by the Company and any financial
institution to protect the Company against fluctuations in currency exchange
rates.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under any Hedging Agreement or other interest rate
or currency swap agreements, interest rate or currency cap agreements, and
interest rate or currency collar agreements, and all other agreements or
arrangements designed to protect such Person against interest rate risk or
fluctuations in currency exchange rates.
"herein", "hereof", "hereto", "hereunder", and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph, or provision of this Agreement or such other Loan Document.
"Highest Lawful Rate" is defined in clause (b) of Section 3.4.6.
"Impermissible Qualification" means, with respect to the opinion or
certification of any independent public accountant as to any financial
statement of any Obligor, any qualification, emphasis point, or exception to
such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of
matters relevant to such financial statement; or
(c) which relates to the treatment or classification of
any item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause such Obligor to be in default of any of its
obligations underSection 9.2.4.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement which is followed by or
referable to an enumeration of specific matters to matters similar to the
matters specifically mentioned.
22
"Indebtedness" means, with respect to any Person, without duplication:
(a) all obligations of such Person in respect of
principal for borrowed money, all obligations of such Person in
respect of principal (including the principal amount of any obligation
incurred in lieu of the cash payment of interest) evidenced by bonds,
debentures, notes, or other similar instruments and all obligations of
such Person in respect of interest on borrowed money or obligations
evidenced by bonds, debentures, notes, or other similar instruments to
the extent accrued and unpaid for a period exceeding seven months;
(b) all obligations, contingent or otherwise, relative to
the face or stated amount (as reduced from time to time) of all
letters of credit (including the Letters of Credit), whether or not
drawn, and bankers' acceptances issued and outstanding for the account
of such Person;
(c) all obligations of such Person as lessee under leases
which have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Liabilities;
(d) net liabilities of such Person in respect of Hedging
Obligations which, in accordance with GAAP, would be included as
liabilities on the liability side of the balance sheet of such Person
as of the date at which Indebtedness is to be determined;
(e) all obligations of such Person to pay the deferred
purchase price of Property (except trade accounts payable and other
current liabilities arising in the ordinary course of business);
(f) all obligations listed in clauses (a) through (e)
secured by a Lien (other than a Lien on any assets of KAAC or any of
its Subsidiaries securing the obligations of QAL) on Property owned or
being purchased by such Person (including Indebtedness arising under
conditional sales or other title retention agreements), whether or not
such Indebtedness shall have been assumed by such Person or is limited
in recourse;
(g) any Redeemable Stock issued by such Person;
(h) all Contingent Liabilities of such Person in respect
of any Indebtedness of any other Person; and
(i) all advance payments to such Person of more than
$5,000,000 in the aggregate from any single customer of such Person
relating to the delivery of goods or the performance of services by
such Person (other than advance payments to the extent held in
segregated accounts), but only to the
23
extent that such payments originally were received more than six
months before the date on which such Person was required to deliver
such goods or perform such services, and which have not yet been
earned by such delivery or performance;
provided, however, the obligations of any Person arising from the honoring by a
bank or other financial institution of a check, draft, or similar Instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business shall not constitute
Indebtedness; provided that such obligations are extinguished within two
Business Days of their incurrence (or, in the case of foreign overdrafts,
within five Business Days of their incurrence) unless covered by an overdraft
credit line.
"Indemnified Liability" and "Indemnified Liabilities" are defined in
Section 12.4.
"Indemnified Parties" is defined in Section 12.4.
"Indemnified Persons" is defined in clause (b) of Section 11.1.
"Initial Borrowing Date" means the date on which the initial Credit
Extensions are made.
"Instrument" means any contract, agreement, indenture, mortgage,
document, or writing (whether by formal agreement, letter or otherwise) under
which any obligation is evidenced, assumed, or undertaken, or any Lien (or
right or interest therein) is granted or perfected.
"Intercompany Demand Note" means an intercompany demand revolving
note, in substantially the form of Exhibit O-1 attached hereto (or, with
respect to any such note in favor of KFC, in substantially the form of Exhibit
0-2 attached hereto, or, with respect to any such note in favor of KAAC, in
substantially the form of Exhibit 0-3 attached hereto), with appropriate
insertions, issued by the Company to any Person listed on Schedules IV and VII
hereto (or to any other Person as required by Section 9.1.12), or issued by any
Subsidiary of the Company to KFC or by KFC to KAAC, and endorsed, pledged, and
delivered by such Person, KFC, or KAAC, as the case may be, to the Agent, on
behalf of the Secured Lenders, pursuant to the Subsidiary Pledge Agreement or
the Intercompany Note Pledge Agreement, as each such promissory note may be
amended, endorsed, or otherwise modified from time to time in accordance with
the provisions hereof, and also means any other promissory note accepted from
time to time in substitution therefor or renewal thereof, in accordance with
the provisions hereof.
"Intercompany Note Pledge Agreement" means the intercompany note
pledge agreement executed and delivered by certain Subsidiaries of the Company
pursuant to Section 7.1.11 or 9.1.12,
24
as the case may be, in substantially the form of Exhibit K-3 attached hereto,
as amended, supplemented, restated, or otherwise modified from time to time in
accordance with the provisions hereof or thereof.
"Interest Coverage Ratio" means, for any period, the ratio of
(a) (i) the sum of EBITDA for all of the Fiscal Quarters
comprising such period minus (ii) the aggregate Adjusted Capital
Expenditures for all of the Fiscal Quarters comprising such period
to
(b) (i) the aggregate amount of interest expense
(excluding amortization of deferred financing costs and, to the extent
not paid in cash, interest on the PIK Note and the Equity Proceeds
Notes) of the Company and its Subsidiaries for all of the Fiscal
Quarters comprising such period, calculated on a consolidated basis in
accordance with GAAP, minus (ii) the amount of interest income of the
Company and its Subsidiaries which was included in the calculation of
Net Income, in accordance with GAAP, for all of the Fiscal Quarters
comprising such period,minus (iii) that portion of the amount set
forth in clause (i) above attributable to (A) the proportionate direct
or indirect ownership of Persons other than the Company and its
Subsidiaries of the voting stock of, or partnership interest in, any
Subsidiary or (B) if the economic burden of the amount set forth
inclause (i) above is borne or to be borne by minority owners of such
Subsidiary (other than the Company and its Subsidiaries) in a
proportion other than the proportion of their direct or indirect
ownership of the voting stock of, or partnership interest in, such
Subsidiary, the proportionate share of the economic burden of such
amount borne or to be borne by such minority owners.
"Interest Period" means, with respect to any LIBO Rate Loan, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or
3.4.2 and ending on (but excluding, for purposes of determining accrued
interest) the day which numerically corresponds to such date one, two, three,
or six months thereafter (or, if such month has no numerically corresponding
day, on the last Business Day of such month), as the Company may select in its
relevant notice pursuant to Section 2.3 or 3.4.2; provided, however, that
(a) no more than seven different Interest Periods may be
in effect at one time with respect to all Revolving Loans;
25
(b) if such Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the
next following Business Day (unless such next following Business Day
is the first Business Day of a calendar month, in which case such
Interest Period shall end on the Business Day next preceding such
numerically corresponding day); and
(c) no Interest Period may end later than the date set
forth in clause (a) of the definition of "Stated Maturity Date".
"Inventory" means goods (whether consisting of whole goods, spare
parts or components), merchandise, and other personal property, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work-in-process, finished goods, returned goods, and
materials and supplies of any kind, nature or description which are or might be
used or consumed in the Company's business or used in connection with the
manufacture, packing, shipping, advertising, selling, or finishing of such
goods, merchandise, and such other personal property, and all documents of
title or other documents representing them.
"Investment" means, with respect to any Person,
(a) any loan or advance made by such Person to any other
Person (excluding commission, travel, relocation, and similar
advances) and any purchase or other acquisition made by such Person of
any bond, debenture, note, or similar instrument of any other Person;
and
(b) any ownership or similar interest held by such Person
in any other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made
by the transfer or exchange of Property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such Property.
"Issuer Bank" means any Affiliate, office, branch, or agency of Bank
of America, or any other Lender, which has agreed to issue and has issued one
or more Letters of Credit at the request (such request to be made with the
consent of the Company, which consent shall not be unreasonably delayed or
withheld) of the Agent.
"Issuer Party" and "Issuer Parties" are defined in Section 5.10.
26
"Joint Venture Affiliate" means QAL, KJBC, Anglesey, Furukawa, and any
other Person (a) which is not a Subsidiary of the Company, (b) in which the
Company or its Subsidiaries own an equity interest of more than 5% (and in
which no Restricted Affiliate has an equity interest, other than through a
direct or indirect ownership interest in the Company), and (c) which supplies
or processes bauxite, alumina, or aluminum to or for the Company or any of its
Subsidiaries or sells to third parties bauxite, alumina, aluminum or aluminum
products purchased from the Company or any of its Subsidiaries.
"KAII" means Kaiser Aluminium International, Inc., a Delaware
corporation.
"KATSI" means Kaiser Aluminum Technical Services, Inc., a California
corporation.
"KBC" means Kaiser Bauxite Company, a Nevada corporation.
"KFC" means Kaiser Finance Corporation, a Delaware corporation.
"Kaiser Canada" means Kaiser Aluminum & Chemical of Canada Limited, an
Ontario corporation.
"KJBC" means Kaiser Jamaica Bauxite Company, a Jamaica partnership.
"KACC" means Kaiser Alumina Australia Corporation, a Delaware
corporation.
"KJC" means Kaiser Jamaica Corporation, a Delaware corporation.
"KT Note" means the promissory note dated December 21, 1989, as amended
by Amendment dated as of July 1, 1993, executed by the Parent Guarantor and
delivered to the Company, a copy of which has been delivered to the Agent and
each Lender prior to the date hereof, and endorsed, delivered, and pledged to
the Agent, on behalf of the Secured Lenders, pursuant to the Company Pledge
Agreement or the Subsidiary Pledge Agreement, as such promissory note may be
amended, endorsed, or otherwise modified from time to time in accordance with
the provisions hereof, and also means any other promissory note accepted from
time to time in substitution therefor or renewal thereof, in accordance with
the provisions hereof.
"L/C Collateral Account" is defined in Section 5.8.1.
"Lenders" is defined in the preamble.
"Letter of Credit" is defined in Section 5.1 and includes the Existing
Letters of Credit.
27
"Letter of Credit Outstandings" means, at any time, an amount equal to
the sum of
(a) the then aggregate amount which is undrawn and available
under all issued and outstanding Letters of Credit
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations with respect to issued and outstanding
Letters of Credit.
"LIBO Rate" means, relative to any Interest Period, the rate of
interest determined by the Agent to be the rate per annum at which Dollar
deposits in immediately available funds are offered to Bank of America in the
London interbank market as at or about 11:00 a.m., London time, two Business
Days prior to the beginning of such Interest Period for delivery on the first
day of such Interest Period, and in an amount approximately equal to the amount
of each LIBO Rate Loan to which such Interest Period applies and for a period
equal to such Interest Period.
"LIBO Rate Loan" means all or any portion of a Loan bearing interest,
at all times during an Interest Period applicable to such Loan or portion
thereof, at a fixed rate determined by reference to the LIBO Rate (Reserve
Adjusted).
"LIBO Rate (Reserve Adjusted)" means, relative to any Interest Period,
a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined pursuant to the following formula:
LIBO Rate = LIBO Rate
-------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for each LIBO Rate Loan to which such
Interest Period applies will be determined by the Agent.
"LIBOR Office" means, with respect to any Lender, the office, if any,
of such Lender designated as such below its signature hereto, or designated in
the Assignee Agreement to be Bound pursuant to which such Lender became a party
hereto, or such other office of a Lender as designated from time to time by
written notice from such Lender to the Company and the Agent, whether or not
outside the United States, which shall be making or maintaining LIBO Rate Loans
of such Lender hereunder.
"LIBOR Reserve Percentage" means, relative to any Interest Period, a
percentage (expressed as a decimal) equal to the daily average during such
Interest Period of the percentages in effect on each day of such Interest
Period, as prescribed by the F.R.S. Board, for determining the maximum
aggregate reserve requirements (including any emergency, supplemental, or other
marginal reserve
28
requirement) applicable to "Eurocurrency Liabilities" pursuant to Regulation D
or any other applicable regulation issued from time to time by the F.R.S. Board
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as currently defined in Regulation D having a term approximately equal or
comparable to such Interest Period.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment for security purposes, deposit arrangement for security purposes,
encumbrance, lien (statutory or other), or other similar arrangement of any
kind or nature.
"Loan" means, as the context may require, a Revolving Loan of any
type, or a Swingline Loan.
"Loan Document" means this Agreement, all Letters of Credit, each
Credit Request, the Subsidiary Guaranty, the Collateral Documents, and each
other agreement, document, or Instrument executed and delivered or to be
executed and delivered by the Parent Guarantor, the Company, or any Subsidiary
of the Parent Guarantor or the Company in connection with this Agreement, as
any and all of the foregoing may be amended, supplemented, restated, or
otherwise modified from time to time in accordance with the provisions hereof
or thereof, but excluding, however, the Intercompany Demand Notes, the KT Note
and the Equity Proceeds Notes.
"Materially Adverse Effect" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding), a materially adverse
effect on:
(a) the assets of or the then-existing or projected
business, revenues, financial condition, or operations, of the Parent
Guarantor, the Company, any other Obligor which is a Significant
Subsidiary, any Joint Venture Affiliate (other than KJBC), ALPART, or
VALCO; or
(b) the ability of the Parent Guarantor, the Company, or
any other Obligor which is a Significant Subsidiary to perform any of
its payment or other material obligations under this Agreement or any
other Loan Document to which it is a party.
"MAXXAM" means MAXXAM Inc., a Delaware corporation (formerly known as
MCO Holdings, Inc.).
"Minimum Net Worth" means $410,000,000 plus 50% of Net Income (but not
loss) for each Fiscal Quarter of the Company commencing with the Fiscal Quarter
ending March 31, 1997.
"Net Amount of Eligible Accounts" means the gross amount of Eligible
Accounts less the sum of (a) all returns, discounts, claims, credits, and
allowances of any nature at any time issued
29
in respect thereof and (b) all unapplied advance payments or deposits in
respect thereof.
"Net Disposition Proceeds" means, with respect to any Asset
Disposition by the Company or any Subsidiary of the Company, the excess of
(a) the sum of
(i) the gross cash proceeds received by the Company
of such Subsidiary from such disposition
plus
(ii) immediately upon receipt thereof by the Company
or such Subsidiary, the gross cash proceeds in respect of
principal from or in respect of any promissory note or
deferred payment obligations or other security taken in
connection with such disposition (including as a result of any
sale or other disposition of any such note, obligations, or
security, or as a result of any financing with respect
thereto)
minus
(b) the sum of
(i) all legal, consulting, brokerage, investment
banking, and accounting fees and disbursements and all
governmental fees incurred (or reasonably expected to be
incurred) in connection with such sale that, in any case,
except for payments for legal fees and expenses to a law firm
of which an Affiliate of the Company is a member, are not
payable to Affiliates of the Company
plus
(ii) all taxes actually paid or to be paid in
connection with such sale
plus
(iii) to the extent the proceeds described in clause
(a) are applied (or to be applied with reasonable promptness)
in payment thereof, all Indebtedness secured, directly or
indirectly (i.e., such disposition is permitted by the terms
of the Instruments evidencing or applicable to such
Indebtedness, or by the terms of a consent granted thereunder,
only on the condition that the proceeds or such disposition be
applied to such Indebtedness), by such assets.
30
"Net Income" means, for any period, all amounts which, in conformity
with GAAP, would be included under net income on a consolidated income
statement of the Company and its Subsidiaries for such period; provided that
there shall be excluded (a) the income (or loss) of any Person (other than a
Subsidiary of the Company) in which any other Person (other than the Company or
any of its Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to the Company or any
of its Subsidiaries by such Person during such period, (b) the income (or loss)
of any Person accrued prior to the date it becomes a Subsidiary of the Company
or is merged into or consolidated with the Company or any of its Subsidiaries
or that Person's assets are acquired by the Company or any of its Subsidiaries,
(c) the income of any Subsidiary of the Company to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, and (d) any after-tax
gains or losses attributable to Asset Dispositions or returned surplus assets
of any Pension Plan.
"Net Worth" means the consolidated net worth of the Company and its
Subsidiaries, calculated in accordance with GAAP; provided, however, that (a)
the cumulative effect, in an amount not to exceed $508,000,000, of the changes
in accounting principles attributable to the adoption of FAS 106, 109 and 112
recorded in the first Fiscal Quarter of the 1993 Fiscal Year, shall be
excluded, and (b) the effect of any issuance after the Initial Borrowing Date
of any class of the capital stock of the Company or any of its Subsidiaries
shall be excluded.
"Nonrecourse Indebtedness" means, with respect to any Person,
Indebtedness that is nonrecourse to the credit of such Person.
"Non-United States Person" means a Person who is not (a) a citizen or
resident of the United States, (b) a corporation, partnership, or other entity
created or organized under the laws of the United States, or (c) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
"Obligations" means all obligations (monetary or otherwise) of the
Company and each other Obligor arising under or in connection with this
Agreement, the Letters of Credit, and each other Loan Document.
"Obligor" means the Parent Guarantor, the Company and each of their
Subsidiaries obligated under any Loan Document.
"Organic Document" means, with respect to any Obligor, its articles or
certificate of incorporation, its by-laws, and all
31
shareholder agreements, voting trusts, and similar arrangements applicable to
any of its authorized shares of capital stock.
"Parent Collateral Documents" means the Parent Pledge Agreement and
the Parent Security Agreement.
"Parent Guarantor Preferred Stock" means preferred stock of any class
or series issued by the Parent Guarantor.
"Parent Guarantor" is defined in the preamble.
"Parent Guaranty" is defined in Section 6.1.
"Parent Pledge Agreement" means the pledge agreement executed and
delivered by the Parent Guarantor pursuant to Section 7.1.4, in substantially
the form of Exhibit E-1 attached hereto, as amended, supplemented, restated, or
otherwise modified from time to time in accordance with the provisions hereof
or thereof.
"Parent Security Agreement" means the security agreement executed and
delivered by the Parent Guarantor pursuant to Section 7.1.6, in substantially
the form of Exhibit E-2 attached hereto, as amended, supplemented, restated, or
otherwise modified from time to time in accordance with the provisions hereof
or thereof.
"Participant" is defined in Section 12.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), of which the
Company or any corporation, trade, or business that is, along with the Company,
a member of a Controlled Group, is a contributing sponsor, as such term is
defined in section 4001(a)(13) of ERISA, or to which any Controlled Group
member has a reasonable possibility of any liability by reason of having been a
substantial employer within the meaning of section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
"Percentage" means, with respect to any Lender, the percentage set
forth opposite its name on the signature pages of this Agreement, or set forth
in the Assignee Agreement to be Bound pursuant to which such Lender became a
party hereto, as such percentage may be adjusted from time to time pursuant to
Assignee Agreement(s) to be Bound executed by such Lender and its Assignee
Lender(s) and delivered pursuant to Section 12.11.1.
32
"Person" means any natural person, corporation, firm, association,
government, governmental agency, or any other entity, whether acting in an
individual, fiduciary, or other capacity.
"PIK Note" means the Senior Subordinated Intercompany Note of the
Company dated December 15, 1992 executed by the Company in the original
principal amount of $2,500,000, a copy of which has been delivered to the Agent
and each Lender prior to the date hereof, as such promissory note may be
amended or otherwise modified from time to time in accordance with the
provisions hereof .
"Plan" means any Pension Plan or Welfare Plan.
"Pledge Agreement(s)" means, individually, the Parent Pledge
Agreement, the Company Pledge Agreement, the Intercompany Note Pledge
Agreement, or the Subsidiary Pledge Agreement, as the context may require, and,
collectively, the Parent Pledge Agreement, the Company Pledge Agreement, the
Intercompany Note Pledge Agreement, and the Subsidiary Pledge Agreement.
"Preferred Stock (USWA)" means shares of the Company's Cumulative
(1985 Series A) Preference Stock and shares of the Company's Cumulative (1985
Series B) Preference Stock which have been or may in the future be issued in
connection with the Kaiser Aluminum USWA Employee Stock Ownership Plan or the
Kaiser Aluminum Salaried Employee Stock Ownership Plan.
"Proceeds" means all products and proceeds (as defined in the Uniform
Commercial Code) of any Collateral, and all proceeds of such proceeds and
products, including all cash and credit balances, all payments under any
indemnity, warranty, or guaranty payable with respect to any Collateral, all
awards for taking by eminent domain, all proceeds of fire or other insurance,
and all money and other Property obtained as a result of any claims against
third parties or any legal action or proceeding with respect to Collateral.
"Product Swap" means an agreement by the Company or KAII to deliver
bauxite, alumina or aluminum products to or on behalf of an Account Debtor in
exchange for (i) an agreement by such Account Debtor to deliver like or related
products to or on behalf of the Company or KAII, as the case may be, and (ii)
the payment of cash in the ordinary course of business on ordinary trade terms.
"Progress Billing" means any invoice for goods sold or leased or
services rendered under a contract or agreement pursuant to which the Account
Debtor's obligation to pay such invoice is conditioned upon the completion of
any further performance by the Company or KAII under the contract or agreement.
33
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed or tangible or intangible.
"QAL" means Queensland Alumina Limited, a Queensland, Australia
corporation.
"Quarterly Payment Date" means the last day of each March, June,
September, and December or, if any such day is not a Business Day, the next
succeeding Business Day.
"Redeemable Stock" means any equity security or option or warrant
related thereto that by its terms or otherwise is required to be purchased or
redeemed, or is redeemable at the option of the holder thereof, in either case
at any time prior to March 31, 1999.
"Reference Rate" means the higher of (a) the Federal Funds Rate plus
one-half of one percent (1/2%) and (b) the rate of interest (the "Bank of
America Rate") publicly announced from time to time by Bank of America in San
Francisco, California, as its reference rate. The Bank of America Rate is a
rate set by Bank of America based upon various factors including Bank of
America's cost and desired return, general economic conditions, and other
factors, and is used as a reference point for pricing some loans, which loans
may be priced at, above, or below the Bank of America Rate. Any change in the
Bank of America Rate shall take effect at the opening of business on the day
specified in the public announcement of such change.
"Reference Rate Loan" means all or any portion of a Loan bearing
interest at a fluctuating rate determined by reference to the Reference Rate.
"Reimbursement Obligation" is defined in Section 5.6.
"Release" means a "release", as such term is defined in CERCLA.
"Required Lenders" means, at any time, Lenders holding at least 67% of
the then aggregate outstanding principal amount of the Revolving Credit
Outstandings, or, if no such principal amount is then outstanding, Lenders
having at least 67% of the Revolving Commitments.
"Restated Certificate of Incorporation" means the restated certificate
of incorporation of the Company dated July 25, 1989.
"Restricted Affiliate" means the Parent Guarantor, MAXXAM, and any
Affiliate of either thereof (in each case other than the Company, its
Subsidiaries which are not Restricted Subsidiaries, any Joint Venture
Affiliate, and any Subsidiary of a Joint Venture Affiliate in which neither the
Parent Guarantor, MAXXAM, nor any Affiliate of either thereof (other than the
Company, its Subsidiaries which are not Restricted Subsidiaries, or any Joint
34
Venture Affiliate) has any equity interest other than through a direct or
indirect ownership interest in the Company).
"Restricted Subsidiary" means any Subsidiary of the Company in which a
Restricted Affiliate has an interest, other than through such Restricted
Affiliate's direct or indirect ownership interest in the Company.
"Revolving Commitment" is defined in clause (b) of Section 2.1.1.
"Revolving Commitment Amount" is defined in clause (b) of Section
2.1.1.
"Revolving Commitment Availability" means, at any time, the excess of
(a) the lesser of (i) the Revolving Commitment Amount at
such time and (ii) the Borrowing Base as in effect at such time
over
(b) the Revolving Credit Outstandings at such time.
"Revolving Commitment Termination Date" means the earliest of
(a) March 31, 1994 (unless the Initial Borrowing Date
shall have occurred before the close of business, San Francisco time,
on such date);
(b) February 15, 1999;
(c) the date on which the Revolving Commitment Amount is
reduced to zero pursuant to Section 2.2; and
(d) the date on which any Commitment Termination Event
occurs.
Upon the occurrence of any event described in clause (a), (b), (c), or (d), the
Revolving Commitment of each Lender and the Swingline Commitment of Business
Credit shall terminate automatically and without any further action.
"Revolving Credit Outstandings" means, at any time, the sum of (a) the
aggregate outstanding principal amount of all Revolving Loans at such time, (b)
the aggregate outstanding principal amount of all Swingline Loans at such time,
and (c) the Letter of Credit Outstandings at such time.
"Revolving L/C Request" means a request and certificate, duly executed
by an Authorized Officer of the Company, in substantially the form of Exhibit B
attached hereto, which
35
request shall include a duly completed application for the issuance or
extension of a standby or commercial letter of credit in the form specified
from time to time by the proposed Issuer Bank of a Letter of Credit, as such
application may be amended, supplemented, restated, or otherwise modified from
time to time. Each Revolving L/C Request shall specify, among other things,
the date on which the proposed Letter of Credit is to be issued and whether
such Letter of Credit shall be transferable in whole or in part. All Revolving
L/C Requests and all documents submitted by the Company in support of Revolving
L/C Requests shall be in form and substance satisfactory to the relevant Issuer
Bank.
"Revolving Loans" is defined in clause (a)(i) of Section 2.1.1.
"Secured Lenders" means the Agent, each Lender and each Issuer Bank,
together with any successors and assigns thereto.
"Security Agreement(s)" means, individually, the Parent Security
Agreement, the Company Security Agreement, or the Subsidiary Security
Agreement, as the context may require, and, collectively, the Parent Security
Agreement, the Company Security Agreement, and the Subsidiary Security
Agreement.
"Security Interest" means, collectively, the Liens granted to the
Agent, on behalf of the Secured Lenders, in the Collateral pursuant to the
Collateral Documents.
"Senior Debt" means Indebtedness of the Company or any of its
Subsidiaries under the Senior Notes, the Senior Indenture, or any guaranty of
such Indebtedness.
"Senior Debt Instruments" means the Senior Notes, the Senior
Indenture, and all other Instruments and agreements executed and delivered by
the Company or any of its Subsidiaries in connection therewith.
"Senior Indenture" means the indenture dated as of , 1994
between the Company, and KFC, KAAC, AJI and KJC, as Subsidiary Guarantors, and
First Trust National Association, as trustee, pursuant to which the Senior
Notes were issued, as amended, supplemented, restated, or otherwise modified
from time to time in accordance with the terms of such indenture and this
Agreement.
"Senior Notes" means the % Senior Notes due 2002 in a principal
amount not exceeding $ issued by the Company pursuant to the Senior
Indenture, as amended, supplemented, restated or otherwise modified from time
to time in accordance with the terms of the Senior Indenture and this Agreement
and all other promissory notes accepted from time to time in substitution
therefor or renewal thereof in accordance with the terms of the Senior
Indenture and this Agreement.
36
"Significant Subsidiary" means each Subsidiary of the Company that
(a) is designated with an asterisk in Item 2 ("Existing
Subsidiaries") of the Disclosure Schedule;
(b) accounted for at least 5% of consolidated revenues of
the Company and its Subsidiaries from sales to third parties for the
four Fiscal Quarters of the Company ending on the last day of the last
Fiscal Quarter of the Company immediately preceding the date as of
which any such determination is made; or
(c) has assets (other than assets which are eliminated in
consolidation) which represent at least 5% of the consolidated assets
of the Company and its Subsidiaries as of the last day of the last
Fiscal Quarter of the Company immediately preceding the date as of
which any such determination is made,
all of which, with respect to clauses (b) and (c), shall be as included in the
consolidated financial statements of the Company for the period, or as of the
date, in question.
"Solvent" means, with respect to any Person at any time, a condition
under which
(a) the fair saleable value of such Person's assets is,
at such time, greater than the total amount of such Person's
liabilities (including contingent and unliquidated liabilities) at
such time;
(b) such Person is able to pay all of its liabilities as
such liabilities mature; and
(c) such Person does not have unreasonably small capital
with which to conduct its business.
For purposes of this definition
(i) the amount of a Person's contingent or
unliquidated liabilities at any time shall be that amount
which, in light of all the facts and circumstances then
existing, represents the amount which can reasonably be
expected to become an actual or matured liability;
(ii) the "fair saleable value" of an asset shall be
the amount which may be realized within a reasonable time
either through collection or sale of such asset at its regular
market value; and
(iii) the "regular market value" of an asset shall
be the amount which a capable and diligent
37
business person could obtain for such asset from an interested buyer
who is willing to purchase such asset under ordinary selling
conditions.
"Stated Amount" of each Letter of Credit means the "stated amount" or
"face amount" (or other similar term) of such Letter of Credit, as defined
therein.
"Stated Expiry Date" is defined in clause (b)(ii) of Section 5.1.
"Stated Maturity Date" means (a) in the case of any Revolving Loan,
February 15, 1999, and (b) in the case of any Swingline Loan, the seventh
calendar day following the date such Swingline Loan is made.
"Subordinated Debt" means Indebtedness of the Company or any of its
Subsidiaries under the Subordinated Notes, the Subordinated Indenture, or any
guaranty of such Indebtedness.
"Subordinated Debt Instruments" means the Subordinated Notes, the
Subordinated Indenture, and all other Instruments and agreements executed and
delivered by the Company or any of its Subsidiaries in connection therewith.
"Subordinated Indenture" means the indenture dated as of February 1,
1993 between the Company, and KAAC, AJI and KJC, as Subsidiary Guarantors, and
The First National Bank of Boston, as trustee, pursuant to which the
Subordinated Notes were issued, as supplemented to make KFC an additional
Subsidiary Guarantor (as such term is defined therein), and as the same may be
further amended, supplemented, restated, or otherwise modified from time to
time in accordance with the terms of such indenture and this Agreement.
"Subordinated Notes" means the 12 3/4% Senior Subordinated Notes due
2003 in a principal amount not exceeding $400 million issued by the Company
pursuant to the Subordinated Indenture, as amended, supplemented, restated, or
otherwise modified from time to time in accordance with the terms of the
Subordinated Indenture and this Agreement and all other promissory notes
accepted from time to time in substitution therefor or renewal thereof in
accordance with the terms of the Subordinated Indenture and this Agreement.
"Subsidiary" means, with respect to any Person, any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the
occurrence of any contingency), or any other entity of which more than 50% of
the equity securities or other ownership interest, is or are at the time
directly or indirectly owned by such Person, by such
38
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person. Any determination of whether a Subsidiary
is directly or indirectly "wholly-owned" by any Person shall be made after
disregarding (a) any shares of such Subsidiary held by the officers, employees,
or directors of such Subsidiary and (b) any shares of such Subsidiary held by
Restricted Affiliates.
"Subsidiary Collateral Documents" means the Subsidiary Pledge
Agreement, the Subsidiary Security Agreement, and the Intercompany Note Pledge
Agreement.
"Subsidiary Guaranty" means the guaranty executed and delivered by any
Subsidiary of the Company pursuant to Section 7.1.9, in substantially the form
of Exhibit J attached hereto, as amended, supplemented, restated, or otherwise
modified from time to time in accordance with the provisions hereof or thereof.
"Subsidiary Pledge Agreement" means the pledge agreement executed and
delivered by any Subsidiary of the Company pursuant to Section 7.1.10, in
substantially the form of Exhibit K-1 attached hereto, as amended,
supplemented, restated, or otherwise modified from time to time in accordance
with the provisions hereof or thereof.
"Subsidiary Security Agreement" means the security agreement executed
and delivered by any Subsidiary of the Company pursuant to Section 7.1.6, in
substantially the form of Exhibit K-2 attached hereto, as amended,
supplemented, restated, or otherwise modified from time to time in accordance
with the provisions hereof or thereof.
"Swingline Commitment" is defined in Section 2.1.2.
"Swingline Loans" is defined in Section 2.1.2.
"Tax Allocation Agreement" means the Tax Allocation Agreement dated
December 21, 1989, between the Company and MAXXAM, a copy of which has been
delivered to the Agent and the Lenders prior to the date hereof, as amended
from time to time with the prior written consent of the Agent.
"Taxes" is defined in clause (a) of Section 4.6.
"Tolling Inventory" means raw materials, work-in-process or other
goods delivered to the Company by a third person pursuant to a bailment
arrangement with the Company under which such Inventory is to be processed,
improved, or otherwise altered by the Company.
"Transfer Agreement" means the Transfer Agreement dated as of December
21, 1989, between the Parent Guarantor and the Company, a copy of which has
been delivered to the Agent and the Lenders prior to the date hereof, as
amended, supplemented,
39
restated, or otherwise modified from time to time with the prior written
consent of the Agent.
"type" means, relative to any Revolving Loan, the portion thereof, if
any, being maintained as a Reference Rate Loan or a LIBO Rate Loan.
"Uniform Commercial Code" means the Uniform Commercial Code (or any
successor statute) of the State of New York or the Uniform Commercial Code (or
any successor statute) of any other state the laws of which are required by
Section 9-103 thereof to be applied in connection with the issue of perfection
of security interests.
"United States" or "U.S." means the United States of America, its
fifty States, and the District of Columbia.
"VALCO" means Volta Aluminium Company Limited, a Ghanaian corporation.
"Welfare Plan" means a "welfare plan", as such term is defined in
section 3(1) of ERISA.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or
the context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Credit Request, Continuation/Conversion Notice, Borrowing Base
Certificate, Compliance Certificate, Loan Document, notice, and other
communication delivered from time to time in connection with this Agreement or
any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Loan Document to any Article or
Section are references to such Article or Section of this Agreement or such
other Loan Document, as the case may be, and, unless otherwise specified,
references in any Article, Section, or definition to any clause are references
to such clause of such Article, Section, or definition.
SECTION 1.4. Accounting and Financial Determinations and Other
Terms. Unless otherwise specified, all accounting terms used herein or in any
other Loan Document shall be interpreted, all accounting determinations and
computations hereunder or thereunder shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared
in accordance with GAAP applied on a basis consistent with those used in the
preparation of the financial statements dated December 31, 1993 furnished to
the Lenders under this Agreement; provided, however, that if there is any
change in GAAP subsequent to the date of such financial statements, the Agent
and the Company shall each have the right to notify the other party that the
Required Lenders or the Company, as the case may be, wish to incorporate the
effect of any such change in GAAP on the
40
operation of any covenant contained in Article IX or on the Borrowing Base, the
Interest Coverage Ratio for purposes of Section 3.4.1 or any other provision
hereof. In the event that the party receiving such notice agrees with such
request to incorporate the effect of any such change, thereafter the Company's
compliance with such covenant, the Borrowing Base, the Interest Coverage Ratio
and all other calculations in respect of any other provision hereof will be
determined on the basis of GAAP including such change.
ARTICLE II
COMMITMENTS AND BORROWING PROCEDURES
SECTION 2.1. Commitments. On the terms and subject to the
conditions of this Agreement (including Article VII), each Lender, severally
and for itself alone, agrees to make Revolving Loans and other Credit
Extensions, and Business Credit agrees to make Swingline Loans, pursuant to the
Commitments described in this Section 2.1.
SECTION 2.1.1. Revolving Commitment.
(a) From time to time on any Business Day occurring
during the period commencing on the Initial Borrowing Date, and continuing to
(but not including) the Revolving Commitment Termination Date, each Lender will
(i) make Loans (relative to such Lender, its
"Revolving Loans") to the Company equal to such Lender's
Percentage of the aggregate amount of Revolving Loans
requested by the Company pursuant to Section 2.3(a) to be made
on such Business Day, and
(ii) (A) in the case of any Issuer Bank, issue
Letters of Credit for the account of the Company, for the
benefit of the Company or any Subsidiary of the Company, or
(B) in the case of each other Lender, participate in such
Letters of Credit, in each case in accordance with Article V.
(b) The Revolving Credit Outstandings at any time shall
not exceed the lesser of (x) $250,000,000 (such amount, as it may be reduced
from time to time pursuant to Section 2.2, being herein called the "Revolving
Commitment Amount") and (y) the Borrowing Base as then in effect. The
Commitment of each Lender to make Revolving Loans and to issue or participate
in Letters of Credit is herein referred to as its "Revolving Commitment".
(c) On the terms and subject to the conditions hereof,
the Company may from time to time (i) borrow, prepay, and reborrow Revolving
Loans and (ii) request the issuance of Letters of Credit, allow Letters of
Credit to expire undrawn or, if drawn
41
upon, repay Reimbursement Obligations relative thereto and request the issuance
of new Letters of Credit.
SECTION 2.1.2. Swingline Commitment.
(a) From time to time on any Business Day occurring during the
period commencing on the Initial Borrowing Date, and continuing to (but not
including) the Revolving Commitment Termination Date, Business Credit will make
a portion of the Revolving Commitment available to the Company by making Loans
("Swingline Loans") to the Company in an aggregate amount not to exceed
$25,000,000 outstanding at any one time, notwithstanding the fact that such
Borrowings may exceed Business Credit's Revolving Commitment. The Commitment
of Business Credit to make Swingline Loans from time to time is herein referred
to as its "Swingline Commitment."
(b) Business Credit at any time in its sole and absolute
discretion may require each other Lender on one Business Day's notice to make a
Revolving Loan in an amount equal to such Lender's Percentage of the aggregate
amount of Swingline Loans outstanding on the date notice is given. In the
event that Revolving Loans are made by Lenders other than Business Credit under
the immediately preceding sentence, each such Lender shall deposit with the
Agent same day funds in an amount equal to such Lender's Percentage of such
Revolving Loans. Such deposit will be made to an account which the Agent shall
specify from time to time by written notice to the Lenders. The proceeds of
such Revolving Loans shall be immediately applied to repay the outstanding
Swingline Loans and the Company authorizes the Agent to charge its account with
Bank of America (up to the amount available in such account) in order to
immediately pay Business Credit the amount of such Swingline Loans to the
extent amounts received from other Lenders are not sufficient to repay in full
the outstanding Swingline Loans. If any portion of any such amount paid to
Business Credit should be recovered by or on behalf of the Company from
Business Credit in bankruptcy, by assignment for the benefit of creditors, or
otherwise, the loss of the amount so recovered shall be ratably shared among
all Lenders in the manner contemplated by Section 4.8.
(c) Each Lender's obligation to make the Revolving Loans
referred to in clause (b) shall be absolute and unconditional and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against Business
Credit, the Company, or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of a Default; (iii) any adverse change in the
condition (financial or otherwise) of the Company; (iv) any breach of this
Agreement by the Company or any other Lender; or (v) any other circumstance,
happening, or event whatsoever, whether or not similar to any of the foregoing.
42
(d) Interest on each Swingline Loan shall accrue to
Business Credit from the date of making such Swingline Loan to and including
the earlier of (i) the date prior to the day on which payment of such Swingline
Loan is made by the Company or (ii) the date prior to the day of receipt by the
Agent from any Lender of its Percentage of any Revolving Loans made to repay
such Swingline Loan; provided that, from and after the date of the making of
any such Revolving Loans, interest shall accrue on such Lender's Percentage of
any such Revolving Loans for the account of such Lender.
SECTION 2.1.3 Lenders Not Required To Make Loans or Issue Letters
of Credit.
(a) No Lender shall be required to make any Revolving
Loan or issue (in the case of the relevant Issuer Bank) any Letter of Credit
and Business Credit shall not be required to make any Swingline Loan, if, after
giving effect thereto, the Revolving Credit Outstandings would exceed the
lesser of (x) the Borrowing Base as then in effect and (y) the Revolving
Commitment Amount as then in effect; and
(b) the Issuer Bank shall not be required to issue any
Letter of Credit if, after giving effect thereto, the Letter of Credit
Outstandings would exceed $125,000,000.
SECTION 2.1.4. Borrowing Base Determinations.
(a) Except during the continuance of an Event of Cash
Dominion, the Company will furnish to the Agent, on or before the 12th Business
Day of each month and on the date of the delivery of (i) any Borrowing Request
requesting the making of Revolving Loans, or (ii) any Revolving L/C Request, a
Borrowing Base Certificate setting forth the Company's calculation of the
Borrowing Base (with supporting calculations in reasonable detail) as of the
last day of the preceding calendar month (or, if the Credit Request described
in clause (i) or (ii) is delivered on or after the first day of any month but
before the 12th Business Day of such month (or, if earlier, the date the
Borrowing Base Certificate required to be delivered during such month is
actually delivered), as of the last day of the next preceding calendar month)
and certifying
(A) that the information contained in such
Borrowing Base Certificate is true and complete in all material
respects,
(B) that, except as is disclosed in such Borrowing
Base Certificate, the Company has no reason to believe that there has
been a material reduction in the Borrowing Base from the Borrowing
Base Calculation Date for such Borrowing Base Certificate to the date
on which such Borrowing Base Certificate is delivered,
43
(C) if a Credit Request is being delivered in
connection with the delivery of such Borrowing Base Certificate, that
as of the date of such Borrowing Base Certificate, the Revolving
Credit Outstandings do not (and, after giving effect to the making of
all Loans, or the issuance of all Letters of Credit, if any, being
requested in conjunction with the delivery of such Borrowing Base
Certificate, will not) exceed the Borrowing Base which was in effect
on the Borrowing Base Calculation Date for such Borrowing Base
Certificate, and
(D) as to such other matters as the Agent may
reasonably request,
(b) During the continuance of an Event of Cash Dominion,
the Company will furnish to the Agent at least weekly, on or before the third
day of each week, a collateral summary report duly executed by a Financial
Authorized Officer of the Company setting forth sales, credit memos,
collections, discounts and outstanding Loans as of the most recent practicable
date.
During the continuance of an Event of Cash Dominion, the Borrowing Base will be
determined by the Agent, after consultation with the Company, each day on the
basis of such relevant information as the Agent deems appropriate to consider
in calculating the actual Borrowing Base, including the collateral summary
reports and such other information regarding the Accounts of the Company and
KAII and the Inventory of the Company as the Agent shall obtain from the
Company and KAII pursuant to Section 9.1.9 or otherwise.
SECTION 2.2. Reduction of Revolving Commitment Amount. The
Company may, from time to time on any Business Day occurring after the Initial
Borrowing Date, voluntarily reduce the unutilized portion of the Revolving
Commitment Amount; provided, however, that (a) all such reductions that involve
prepayments of LIBO Rate Loans shall require at least three Business Days prior
notice to the Agent, (b) all other reductions, including any such reductions
that involve prepayments of Reference Rate Loans, shall require at least one
Business Days prior notice to the Agent, (c) each such reduction shall be
permanent, and (d) any such partial reduction of the Revolving Commitment
Amount that involves prepayments of LIBO Rate Loans shall be in an amount of
not less than $5,000,000. All notices referred to in the foregoing sentence
shall be given prior to 10:00 a.m., San Francisco time, on the day of such
notice.
SECTION 2.3. Borrowing Procedure.
(a) By delivering a Borrowing Request to the Agent on or
before 10:00 a.m., San Francisco time, on a Business Day, the Company, on
advance notice of at least (i) three Business Days, in the case of any
disbursement of LIBO Rate Loans, or (ii) one Business Day, in the case of any
disbursement of Reference Rate
44
Loans, but in no case more than five Business Days, may from time to time
request that the Lenders make a disbursement of Revolving Loans. Each request
for a disbursement of Reference Rate Loans shall specify an aggregate principal
amount of at least $1,000,000 and integral multiples of $1,000,000 in excess
thereof, and each request for a disbursement of LIBO Rate Loans shall specify
an aggregate principal amount of at least $5,000,000 and integral multiples of
$1,000,000 in excess thereof. On the terms and subject to the conditions of
this Agreement, each Borrowing shall be comprised of the Loans of the type(s)
and Interest Period(s) specified in such Borrowing Request and shall be made on
the Business Day specified in such Borrowing Request. The Agent shall promptly
notify each Lender by telephone (promptly confirmed in writing) of any such
Borrowing Request on the day such Borrowing Request is received by the Agent.
Prior to 9:30 a.m., San Francisco time, on the Business Day specified in such
Borrowing Request, each Lender shall deposit with the Agent same day funds in
an amount equal to such Lender's Percentage of the requested Borrowing. Such
deposit will be made to an account which the Agent shall specify from time to
time by written notice to the Lenders. To the extent funds are received from
the Lenders by 9:30 a.m., San Francisco time, on any Business Day, the Agent
shall deposit such funds into the Company's account number 12339-11101 at Bank
of America not later than 10:30 a.m., San Francisco time, on such Business Day.
No Lender's obligation to make any Loan shall be affected by any other Lender's
failure to make any Loan.
(b) By delivering a Borrowing Request to the Agent on or
before 1:00 p.m., San Francisco time, on a Business Day, the Company may from
time to time request that Business Credit make a disbursement of a Swingline
Loan. Each request for a disbursement of a Swingline Loan shall specify an
aggregate principal amount of at least $500,000 and integral multiples of
$10,000 in excess thereof. All Swingline Loans shall be Reference Rate Loans
and no Swingline Loan may be outstanding for more than seven calendar days.
Business Credit shall deposit same day funds in an amount equal to the
requested Swingline Loan into the Company's account number 12339-11101 at Bank
of America not later than 3:00 p.m., San Francisco time, on such Business Day.
(c) In lieu of delivering the above-described Borrowing
Requests, the Company may give the Agent telephone notice by the required time
of any proposed Borrowing; provided that such notice shall be promptly
confirmed in writing by delivery of a Borrowing Request on or prior to the
proposed borrowing date. Each telephone request for a Revolving Loan or a
Swingline Loan shall be conclusively presumed to be made by a Person authorized
by the Company to do so and crediting a Revolving Loan or a Swingline Loan to
the Company's deposit account shall conclusively establish the obligation of
the Company to repay such Revolving Loan or Swingline Loan as provided herein.
45
SECTION 2.4. Agent's Books and Records; Monthly Statements. The
Agent will charge all Revolving Loans, Swingline Loans and, as and when they
become due and payable, other monetary Obligations to a loan account of the
Company maintained by the Agent. All fees, commissions, costs, expenses, and
other charges under or pursuant to the Loan Documents not paid when due may, at
the Agent's option, be charged as Revolving Loans to the Company's loan account
as of the date due from the Company or the date paid or incurred by the Agent,
as the case may be. The Company agrees that the Agent's books and records
showing the monetary Obligations and the transactions pursuant to this
Agreement and the other Loan Documents shall be admissible in any action or
proceeding arising therefrom, and shall constitute prima facie proof thereof,
irrespective of whether any Obligation is also evidenced by a promissory note
or other instrument. The Agent will provide to the Company a monthly statement
of Loans, payments, and other transactions pursuant to this Agreement. Such
statement shall be deemed correct, accurate, and binding on the Company and as
an account stated (except for reversals and reapplications of payments made as
provided in Section 4.7 and corrections of errors discovered by the Agent),
unless the Company notifies the Agent in writing to the contrary within 60 days
after such statement is rendered. In the event a timely written notice of
objection is given by the Company, only the items to which exception is
expressly made will be considered to be disputed by the Company.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST, AND FEES
SECTION 3.1. Repayments. The Company shall repay in full the
unpaid principal amount of each Loan upon the Stated Maturity Date therefor.
SECTION 3.2. Voluntary Prepayments. Prior to repayment in full of
each Loan pursuant to Section 3.1, and except during the continuance of an
Event of Cash Dominion, the Company may, from time to time on any Business Day,
make a voluntary prepayment, in whole or in part, without premium or penalty
(except as may be required by Section 4.4), of the outstanding principal amount
of the Loans; provided, however, that
(a) if any such prepayment of any LIBO Rate Loan is made
on any day other than the last day of the Interest Period for such
Loan the Company shall comply with the provisions ofSection 4.4;
(b) all such voluntary partial prepayments of LIBO Rate
Loans (i) shall be in an aggregate amount of not less than $5,000,000
and integral multiples of $1,000,000 in excess thereof, unless such
prepayment is a prepayment of
46
the entire outstanding principal amount of LIBO Loans of all Lenders,
and (ii) shall be appliedpro rata to such LIBO Rate Loans of all
Lenders;
(c) all such voluntary partial prepayments of Reference
Rate Loans shall be, in the case of Revolving Loans, in an aggregate
amount of not less than $1,000,000 and integral multiples of
$1,000,000 in excess thereof, unless such prepayment is a prepayment
of the entire outstanding principal amount of Reference Rate Loans of
all Lenders, and, in the case of Swingline Loans, in an aggregate
amount of not less than $250,000 and integral multiples of $10,000 in
excess thereof, unless such prepayment is a prepayment of the entire
outstanding principal amount of Swingline Loans;
(d) all such voluntary partial prepayments of Reference
Rate Loans shall be applied first to Swingline Loans and then pro
ratato the Reference Rate Loans of all Lenders;
(e) all such voluntary prepayments of LIBO Rate Loans
shall require at least five Business Days prior written notice to the
Agent;
(f) all such voluntary prepayments of Reference Rate
Loans that are Revolving Loans shall require at least one but no more
than five Business Days prior written notice to the Agent; and
(g) all such voluntary prepayments of Reference Rate
Loans that are Swingline Loans may be made without any prior written
notice.
SECTION 3.3. Mandatory Prepayments. Prior to repayment in full of
each Loan pursuant to Section 3.1, the Company shall make mandatory
prepayments, without premium or penalty (except as may be required by Section
4.4), in accordance with this Section 3.3.
SECTION 3.3.1. Prepayment Under, or Cash Collateralization of,
Revolving Commitment. Except during the continuance of an Event of Cash
Dominion, the Company shall, on the second Business Day after the date of
delivery of any Borrowing Base Certificate indicating that the Revolving Credit
Outstandings on the date of such Borrowing Base Certificate exceed the
Borrowing Base as shown on such Certificate, make a mandatory prepayment of the
then aggregate outstanding principal amount of all Swingline Loans and, if all
Swingline Loans have been prepaid, shall make a mandatory prepayment of the
then aggregate outstanding principal amount of all Revolving Loans (or a
repayment of outstanding Reimbursement Obligations with respect to Letters of
Credit), and, if all Revolving Loans have been prepaid, shall furnish cash
collateral with respect to Letters of Credit, in an aggregate amount equal to
such excess. If the Company shall fail to
47
deliver a Borrowing Base Certificate when due hereunder and the Agent
determines that the Revolving Credit Outstandings on the date such Borrowing
Base Certificate was due exceeded the Borrowing Base, as of the last day of the
preceding month, the Company shall on the second Business Day after receipt of
notice from the Agent, make a mandatory prepayment of the then aggregate
outstanding principal amount of all Swingline Loans and, if all Swingline Loans
have been prepaid, shall make a mandatory prepayment of the then aggregate
outstanding principal amount of all Revolving Loans (or a repayment of
outstanding Reimbursement Obligations with respect to Letters of Credit), and,
if all Revolving Loans have been prepaid, shall furnish cash collateral with
respect to Letters of Credit, in an aggregate amount equal to such excess. On
the terms and subject to the conditions hereof, the Company may reborrow
amounts applied to the prepayment of Swingline Loans and Revolving Loans
pursuant to this Agreement.
SECTION 3.3.2. Payments from Asset Distributions. During the
continuance of an Event of Cash Dominion, the Company will deposit, or cause to
be deposited, all Net Disposition Proceeds received from any Asset Disposition
pursuant to Section 9.2.11(i) in the Concentration Account, which Net
Disposition Proceeds shall be applied to the prepayment of the then aggregate
outstanding principal amount of all Swingline Loans and, if all Swingline Loans
have been prepaid, to the prepayment of the then aggregate outstanding
principal amount of all Revolving Loans. On the terms and subject to the
conditions hereof, the Company may reborrow amounts applied to the prepayments
of Swingline Loans and Revolving Loans pursuant to this Agreement.
SECTION 3.3.3. Cash Dominion. During the continuance of an Event of
Cash Dominion (a) all collected funds on deposit in the Concentration Account
pursuant to the Concentration Bank Agreement shall be applied on a daily basis
to the prepayment of the then aggregate outstanding principal amount of all
Swingline Loans and, if all Swingline Loans have been prepaid, to the
prepayment of the then aggregate outstanding principal amount of all Revolving
Loans, (b) on any day on which Revolving Credit Outstandings exceed the
Borrowing Base, as calculated as of such date, the Company shall make a
mandatory prepayment of the then aggregate outstanding principal amount of all
Swingline Loans, and, if all Swingline Loans have been prepaid, shall make a
mandatory prepayment of the then aggregate outstanding principal amount of all
Revolving Loans (or a repayment of outstanding Reimbursement Obligations with
respect to Letters of Credit), and, if all Revolving Loans have been prepaid,
shall furnish cash collateral with respect to Letters of Credit, in an
aggregate amount equal to such excess, and (c) the Company shall deposit, or
cause to be deposited, all remittances and payments received by the Company in
respect of Accounts (except Accounts of Subsidiaries and Joint Venture
Affiliates paid by accounting entries), Instruments (other than Intercompany
Demand Notes), or sales of Inventory for cash and all prepayments, deposits,
and
48
other advance payments in respect of sales of Inventory, tax refunds, insurance
proceeds and other amounts received from third parties other than in the
ordinary course of business shall be deposited in the Concentration Account.
On the terms and subject to the conditions hereof, the Company may reborrow
amounts applied to the prepayment of Swingline Loans and Revolving Loans
pursuant to this Agreement.
SECTION 3.3.4. Acceleration. The Company shall, immediately upon
any acceleration of the Stated Maturity Date of any Loans pursuant to Section
10.2 or Section 10.3, repay all Loans which are so accelerated.
SECTION 3.4. Interest Provisions. Interest on the outstanding
principal amount of Loans shall accrue and be payable in accordance with this
Section 3.4, in each case computed on the basis of the actual number of days
elapsed in a 360-day year.
SECTION 3.4.1. Rates. The Company shall pay interest on the unpaid
principal amount of each Revolving Loan and Swingline Loan made to the Company
from time to time outstanding as follows:
(a) if any portion of the unpaid principal amount of such
Loan is a Reference Rate Loan, the Company shall pay interest on such
portion at a rate per annum equal to the sum of (i) the Reference Rate
from time to time in effect and (ii) a margin of 1-1/2%; and
(b) if any portion of the unpaid principal amount of such
Loan is a LIBO Rate Loan, during each Interest Period applicable
thereto, the Company shall pay interest on such portion at a rate per
annum equal to the sum of (i) the LIBO Rate (Reserve Adjusted) for
such Interest Period and (ii) a margin of 3-1/4%;
provided, however, that,
(i) so long as no Default shall have occurred and be
continuing, if as of the last day of any Fiscal Quarter, commencing
with the second Fiscal Quarter of the 1995 Fiscal Year, the Interest
Coverage Ratio for the four Fiscal Quarter period ended on such last
day is greater than or equal to 1.25 to 1.00 but less than 1.50 to
1.00, and the Agent receives a Compliance Certificate pursuant to
clause (c) of Section 9.1.1 to such effect, then, for each day during
the Fiscal Quarter in which such Compliance Certificate is required to
be delivered, the margins set forth in clauses (a) and (b) above and
any fees payable pursuant to clause (a)(ii) of Section 5.3 (in each
case without giving effect to any previous increase or reduction
pursuant to this proviso) shall each be reduced by 1/2 of 1% per
annum; and
49
(ii) so long as no Default shall have occurred and be
continuing, if as of the last day of any Fiscal Quarter, commencing
with the second Fiscal Quarter of the 1995 Fiscal Year, the Interest
Coverage Ratio for the four Fiscal Quarter period ended on such last
day is greater than or equal to 1.50 to 1.00 but less than 2.00 to
1.00, and the Agent receives a Compliance Certificate pursuant to
clause (c) of Section 9.1.1 to such effect, then, for each day during
the Fiscal Quarter in which such Compliance Certificate is required to
be delivered, the margins set forth in clauses (a) and (b) above and
any fees payable pursuant to clause (a)(ii) of Section 5.3 (in each
case without giving effect to any previous increase or reduction
pursuant to this proviso) shall each be reduced by 1% per annum; and
(iii) so long as no Default shall have occurred and be
continuing, if as of the last day of any Fiscal Quarter, commencing
with the second Fiscal Quarter of the 1995 Fiscal Year, the Interest
Coverage Ratio for the four Fiscal Quarter period ended on such last
day is greater than or equal to 2.00 to 1.00, and the Agent receives a
Compliance Certificate pursuant to clause (c) of Section 9.1.1 to such
effect, then, for each day during the Fiscal Quarter in which such
Compliance Certificate is required to be delivered, the margins set
forth in clauses (a) and (b) above and any fees payable pursuant to
clause (a)(ii) of Section 5.3 (in each case without giving effect to
any previous increase or reduction pursuant to this proviso) shall
each be reduced by 1-1/2% per annum.
Prior to the date in any Fiscal Quarter on which the Agent receives
the Compliance Certificate which is required to be delivered during such Fiscal
Quarter, the interest margin and letter of credit fees shall be the same as
were applicable to the immediately preceding Fiscal Quarter. If such
Compliance Certificate shall indicate that such interest margin or letter of
credit fees should be increased pursuant to this proviso, the Company shall, on
the date of delivery of such Compliance Certificate, pay to the Agent for the
account of those Lenders which received underpayment thereof an amount equal to
the difference between (A) the aggregate amount of interest and letter of
credit fees which would theretofore have been payable during such Fiscal
Quarter had such increase been made on the first day of such Fiscal Quarter and
(B) the amounts of interest and letter of credit fees which were actually paid
during such Fiscal Quarter. If such Compliance Certificate shall indicate that
the Company paid more interest or letter of credit fees than would have been
required if any reduction therein required by this proviso had commenced on the
first day of such Fiscal Quarter, any such excess payment shall be credited to
future payments of interest or letter of credit fees, as the case may be,
payable to those Lenders which received over-payments thereof and, if the
Company shall not have received full credit for any
50
such excess payment from any Lender at the time when such Lender's Commitments
hereunder terminate and all monetary Obligations owing to such Lender are paid
in full, then such Lender shall pay to the Company any such excess payment,
without interest, at such time.
In the event that any accountant's report delivered pursuant to clause
(b)(iii) of Section 9.1.1 shall indicate any miscomputation of the Interest
Coverage Ratio in any Compliance Certificate, if such accountant's report shall
indicate that the interest margin or letter of credit fees should have been
increased pursuant to this proviso for any Fiscal Quarter during the relevant
Fiscal Year, the Company shall, within ten Business Days after such
accountant's report is delivered, pay the Agent, for the account of the
Lenders, additional interest on the Loans and letter of credit fees for the
Letters of Credit in an aggregate amount equal to the excess of (A) the
aggregate amount of interest which would have been payable on the Loans and
letter of credit fees which would have been payable on the Letters of Credit
for any period of time if the Compliance Certificate in respect of the Fiscal
Quarter in question had shown the same Interest Coverage Ratio for the four
Fiscal Quarter period ended on the last day of such Fiscal Quarter as did such
accountant's report, over (B) the aggregate of the interest which was actually
paid on the Loans and the letter of credit fees which were actually paid on the
Letters of Credit in respect of such period of time. If such accountant's
report shall indicate that the Company paid more interest or letter of credit
fees than would have been required if any reduction therein had commenced on
the first day of any Fiscal Quarter during the relevant Fiscal Year, any such
excess payment shall be credited to future payments of interest or letter of
credit fees, as the case may be, payable to those Lenders which received
over-payments thereof and, if the Company shall not have received full credit
for any such excess payment from any Lender at the time when such Lender's
Commitments hereunder terminate and all monetary Obligations owing to such
Lender are paid in full, then such Lender shall pay to the Company any such
excess payment, without interest, at such time.
Upon termination of the Lenders' Commitments hereunder, no further
retroactive adjustments shall be made to the interest or letter of credit fees
paid during the term of this Agreement.
All LIBO Rate Loans shall bear interest from (and including) the first
day of the applicable Interest Period to (but excluding) the last day of such
Interest Period at the interest rate determined as applicable to such LIBO Rate
Loan; provided, however, that any margin reduction or increase resulting from
the Interest Coverage Ratio test set forth in this Section 3.4.1 shall become
effective at any time during any Interest Period.
SECTION 3.4.2. Continuation and Conversion Elections. By delivering
a Continuation/Conversion Notice to the Agent on or
51
before 10:00 a.m., San Francisco time, on a Business Day, the Company may from
time to time irrevocably elect, on
(a) not less than three nor more than five Business Days
notice (in the case of continuations of or conversions into LIBO Rate
Loans), or
(b) not less than one nor more than five Business Days
notice (in the case of conversions into Reference Rate Loans)
that all or any portion of any outstanding Revolving Loan be (i) converted into
a LIBO Rate Loan, (ii) converted into a Reference Rate Loan, or (iii) continued
as a LIBO Rate Loan. All conversions of Revolving Loans that are Reference
Rate Loans shall be made pro rata among all such Reference Rate Loans of all
Lenders. All conversions or continuations of Revolving Loans that are LIBO
Rate Loans shall be made pro rata among all such LIBO Rate Loans of all
Lenders. In the absence of delivery of a Continuation/Conversion Notice with
respect to any LIBO Rate Loan within the time periods specified above before
the last day of the then current Interest Period with respect thereto, such
LIBO Rate Loan shall, on such last day, automatically convert to a Reference
Rate Loan. No portion of the outstanding principal amount of any Revolving
Loan may be continued as, or be converted into, a LIBO Rate Loan during the
continuation of any Event of Default. No Swingline Loans may be converted into
a LIBO Rate Loan.
SECTION 3.4.3. Funding. Each Lender may, if it so elects, fulfill
its obligation to make, continue, or convert any LIBO Rate Loan hereunder by
causing one of its foreign branches or Affiliates (or an international banking
facility created by such Lender) to make or maintain such LIBO Rate Loan;
provided, however, that such LIBO Rate Loan shall nonetheless be deemed to have
been made and to be held by such Lender, and the obligation of the Company to
repay such LIBO Rate Loan shall nevertheless be to such Lender for the account
of such foreign branch, Affiliate, or international banking facility. In
addition, the Company hereby consents and agrees that, for purposes of any
determination to be made for purposes of Section 4.2, 4.3, or 4.4, it shall be
conclusively assumed that each Lender elected to fund all LIBO Rate Loans by
purchasing Dollar deposits in the London interbank eurodollar market.
SECTION 3.4.4. Default Rates. During the continuation of any Event
of Default,
(a) the Company shall pay interest (after as well as
before judgment) on the principal amount of all Loans outstanding to
it at a rate per annum which is determined by increasing each of the
interest rates set forth inclauses (a) and (b) of Section 3.4.1 by 2%
per annum;
52
(b) the letter of credit fees payable pursuant to clause
(a)(ii) of Section 5.3 shall be increased by 2% per annum for all
Letters of Credit; and
(c) the Company shall pay interest on any other
Obligations which are then due and payable (other than Reimbursement
Obligations which are accruing interest pursuant toSection 5.5) to the
extent permitted by applicable law, at a rate per annum equal to the
Reference Rate plus 3-1/2%.
SECTION 3.4.5. Interest Payment Dates. Interest accrued on each
Loan shall be payable
(a) with respect to Reference Rate Loans, in arrears on
the first day of each month;
(b) with respect to LIBO Rate Loans, (i) except during
the continuance of any Event of Default, on the last day of each
applicable Interest Period and, if such Interest Period shall exceed
three months, on the day which numerically corresponds to the first
day of such Interest Period and falls in the third month thereafter
(or, if there is no such numerically corresponding date, on the last
Business Day of such third month) and (ii) during the continuance of
an Event of Default, in arrears on the first day of each month; and
(c) on that portion of any Loan the Stated Maturity Date
of which is accelerated pursuant to Section 10.2 or Section 10.3,
immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.4.6. Maximum Interest. It is the intention of the parties
hereto to conform strictly to applicable usury laws and, anything herein or in
any other Loan Document to the contrary notwithstanding, the obligations of the
Obligors to each Lender under this Agreement and the other Loan Documents shall
be subject to the limitation that payments of interest to such Lender shall not
be required to the extent that receipt thereof would be contrary to provisions
of law applicable to such Lender limiting rates of interest which may be
charged or collected by such Lender. Accordingly, if the transactions
contemplated hereby would be usurious under applicable law (including the
federal and state laws of the United States, or of any other jurisdiction whose
laws may be mandatorily applicable) with respect to any Lender then, in that
event, notwithstanding
53
anything to the contrary in this Agreement or any other Loan Document, it is
agreed as follows:
(a) the provisions of this Section 3.4.6 shall govern and
control with respect to payments to such Lender;
(b) the aggregate of all consideration which constitutes
interest under applicable law that is contracted for, charged, or
received under this Agreement, under any of the other Loan Documents,
or otherwise in connection with this Agreement or any other Loan
Document by such Lender in respect of any Obligor, shall under no
circumstances exceed the maximum amount of interest allowed by
applicable law (such maximum lawful interest rate, if any, with
respect to such Lender being herein called the "Highest Lawful Rate"),
and any excess shall be credited to such Obligor by such Lender (or,
if such consideration shall have been paid in full, such excess
refunded to such Obligor);
(c) all sums paid, or agreed to be paid, to such Lender
for the use, forbearance, and detention of the Indebtedness of any
Obligor to such Lender hereunder or under the other Loan Documents
shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full term of such
Indebtedness until payment in full so that the actual rate of interest
is uniform throughout the full term thereof;
(d) if at any time the interest provided to be payable to
such Lender pursuant to Section 3.4.1, Section 3.4.4, and Section 5.5,
together with any other fees and additional amounts payable to such
Lender pursuant to this Agreement and the other Loan Documents, and
deemed interest under applicable law, exceeds that amount which would
have accrued at the Highest Lawful Rate, the amount of interest and
any such fees and additional amounts payable to such Lender pursuant
to this Agreement and the other Loan Documents shall be limited,
notwithstanding anything to the contrary in this Agreement or any
other Loan Document, to that amount which would have accrued at the
Highest Lawful Rate, but any subsequent reductions in the interest
rate which would otherwise apply to the Obligations payable to such
Lender, as applicable, shall not reduce the interest to accrue to such
Lender pursuant to this Agreement and the other Loan Documents below
the Highest Lawful Rate until the total amount of interest accrued to
such Lender pursuant to this Agreement and the other Loan Documents,
and such fees and additional amounts deemed to be interest, equals the
sum of (i) the amount of interest which would have accrued to such
Lender if a varying rate per annum equal to the interest provided
pursuant toSection 3.4.1, Section 3.4.4, or Section 5.5, as
applicable, had at all times been in effect, plus (ii) the amount of
fees and additional amounts which
54
would have been received but for the effect of this Section 3.4.6; and
(e) if the total amount of interest paid or accrued,
together with any other fees and additional amounts payable pursuant
to this Agreement and the other Loan Documents, and deemed interest
under applicable law, by any Obligor with respect to such Lender
pursuant to this Agreement and the other Loan Documents under the
foregoing provisions of this Section 3.4.6 is less than the total
amount of interest which would have accrued if a varying rate per
annum equal to the interest provided pursuant to Section 3.4.1,
Section 3.4.4, or Section 5.5, as applicable, had at all times been in
effect and all fees and additional amounts provided to be paid to such
Lender in this Agreement and the other Loan Documents had been paid,
any subsequent reductions in the rates per annum provided pursuant
toSection 3.4.1, Section 3.4.4, and Section 5.5, shall not reduce the
interest to accrue pursuant to such Sections below the Highest Lawful
Rate until the total amount of interest accrued thereunder equals the
amount of interest that would have accrued to such Lender thereunder
if the rate provided in Section 3.4.1, Section 3.4.4, or Section 5.5,
as the case may be, had at all times been in effect. If at the date
of termination of this Agreement the total amount of interest and fees
accrued under this Agreement is less than the total amount of interest
that would have accrued if the rates per annum provided in Section
3.4.1, Section 3.4.4, and Section 5.5, as the case may be, had at all
times been in effect then such Obligor agrees to pay to such Lender an
amount equal to the difference between (i) the lesser of (A) the
amount of interest and fees which would have accrued to such Lender if
the Highest Lawful Rate had at all times been in effect, and (B) the
amount of interest and fees which would have accrued if a varying rate
per annum equal to the interest provided pursuant toSection 3.4.1,
Section 3.4.4, or Section 5.5, as applicable, had at all times been in
effect and all fees provided for in this Agreement and the other Loan
Documents to be payable to such Lender had been paid, and (ii) the
amount of interest, fees and additional amounts accrued to such Lender
in accordance with the other provisions of this Agreement and the
other Loan Documents.
For purposes of Article 5069-1.04, Vernon's Texas Civil statutes, as amended,
to the extent, if any, applicable to any Lender, each Obligor agrees that the
Highest Lawful Rate shall be the "indicated (weekly) rate ceiling" as defined
in said Article, provided that each Lender may also rely, to the extent
permitted by applicable laws, on alternative maximum rates of interest under
other laws applicable to such Lender if greater.
SECTION 3.5. Fees. The Company and the Parent Guarantor, jointly
and severally, agree to pay the fees set forth in this Section 3.5.
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SECTION 3.5.1. Commitment Fee. The Company and the Parent
Guarantor, jointly and severally, agree to pay to the Agent for the account of
each Lender, for the period (including any portion thereof when any of its
Commitments are suspended by reason of the Company's inability to satisfy any
condition of Article VII) commencing on the Effective Date and continuing
through the Revolving Commitment Termination Date, a commitment fee at the rate
of 1/2 of 1% per annum on such Lender's Percentage of the sum of the average
daily unused portion of the Revolving Commitment Amount. Such commitment fees
shall be payable by the Company in arrears on each Quarterly Payment Date,
commencing with the first such day following the Effective Date, and on the
Revolving Commitment Termination Date.
SECTION 3.5.2. Audit Fees. The Company and the Parent Guarantor,
jointly and severally, agree to pay to the Agent an audit fee equal to $500 per
day per auditor for each audit of the Collateral undertaken pursuant to Section
9.1.5 and to pay all out-of-pocket expenses of each auditor incurred in
connection with such Collateral audits; provided, however, that, except during
the continuance of an Event of Cash Dominion, the Company and the Parent
Guarantor shall not be required to pay for more than one collateral audit
during any 180-day period and, during the continuance of an Event of Cash
Dominion, shall not be required to pay for more than one collateral audit
during any 90-day period.
SECTION 3.5.3. Other Fees. The Company and the Parent Guarantor,
jointly and severally, agree to pay to the Agent certain other fees set forth
in clause (iii) of the confidential letter dated January 24, 1994 from Bank of
America to the Company (the "Fee Letter") for retention by the Agent as set
forth in the Fee Letter.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. Illegality.
(a) If any Lender shall determine (which determination
shall, upon written notice thereof to the Company and the other
Lenders, be conclusive and binding on the Company) that the
introduction of or any change in (or in the interpretation of) any law
makes it unlawful, or any central bank or other governmental authority
asserts that it is unlawful, for such Lender to make, continue, or
maintain any Loan as, or to convert any Loan into, a LIBO Rate Loan,
the obligations of all Lenders to make, continue, maintain, or convert
any such Loans shall, upon such determination, forthwith be suspended
until such Lender shall notify the Agent that the circumstances
causing such suspension no longer exist, and all LIBO Rate Loans shall
automatically convert into Reference Rate Loans at the end of the then
56
current Interest Periods with respect thereto or sooner, if required
by such law or assertion.
(b) If any Lender shall determine (which determination
shall, upon written notice thereof to the Company and the other
Lenders, be conclusive and binding on the Company) that the
introduction of or any change in (or in the interpretation of) any law
makes it unlawful, or any central bank or other governmental authority
asserts that it is unlawful, for such Lender to issue or amend (in the
case of an Issuer Bank) or to participate in (in the case of each
other Lender) any additional Letters of Credit, the obligations of all
Lenders so to issue, amend, or participate in additional Letters of
Credit shall, upon such determination, forthwith terminate, and the
Agent shall, by written notice to the Company and each Lender, declare
that such obligations have so terminated. If circumstances
subsequently change so that such affected Lender shall determine that
it is no longer so affected, such obligations shall, upon such
determination (and telephonic notice thereof immediately confirmed in
writing to the Agent, each other Lender, and the Company), forthwith
be reinstated, and the Agent shall, by written notice to the Company
and each Lender, declare that such obligations have been so
reinstated.
SECTION 4.2. Deposits Unavailable. If the Agent shall have
reasonably determined that
(a) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to Bank of America in the
relevant market; or
(b) by reason of circumstances affecting Bank of
America's relevant market, adequate means do not exist for
ascertaining the interest rate applicable hereunder to LIBO Rate
Loans,
then, upon written notice from the Agent to the Company and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 3.4.2 to make or
continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall
forthwith be suspended until the Agent shall notify the Company and the Lenders
that the circumstances causing such suspension no longer exist.
SECTION 4.3. Increased Costs, etc. The Company agrees to
reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender in respect of,
issuing, maintaining, or participating in the Letters of Credit, or making,
continuing, or maintaining (or of its obligation to make, continue, or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans. Such Lender shall promptly notify the Agent and
the Company in writing of the occurrence of any such
57
event, such notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate such Lender for such increased
cost or reduced amount as well as the calculation of such additional amount.
Such additional amounts shall be payable by the Company directly to such Lender
within 15 days of its receipt of such notice, and such notice shall, in the
absence of manifest error, be conclusive and binding on the Company.
SECTION 4.4. Funding Losses. In the event any Lender shall incur
any loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue, or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a LIBO
Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the
principal amount of any LIBO Rate Loans on a date other than the
scheduled last day of the Interest Period applicable thereto, whether
pursuant toSection 3.1, 3.2, 3.3, or 3.4.2 or otherwise,
(b) any Loans not being made as LIBO Rate Loans in
accordance with the Borrowing Request therefor (other than as a result
of a determination pursuant toSection 4.1 or 4.2), or
(c) any Loans not being continued as, or converted into,
LIBO Rate Loans in accordance with the Continuation/ Conversion Notice
therefor (other than as a result of a determination pursuant to
Section 4.1 or 4.2),
then, upon the written notice of such Lender to the Company (with a copy to the
Agent), the Company shall, within 15 days of its receipt thereof, pay directly
to such Lender such amount as will (in the reasonable determination of such
Lender) reimburse such Lender for such loss or expense. Such written notice
(which shall include calculations in reasonable detail) shall, in the absence
of manifest error, be conclusive and binding on the Company.
SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation, or
phase-in of, any law or regulation, directive, guideline, decision, or request
(whether or not having the force of law) of any court, central bank, regulator,
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Commitments or the Credit Extensions (including the
disbursement of Loans and the issuance of or participation in Letters of
58
Credit) made by such Lender is reduced to a level below that which such Lender
or such controlling Person could have achieved but for the occurrence of any
such circumstance, then, in any such case upon written notice from time to time
by such Lender to the Company, with a copy to the Agent, the Company shall,
within 15 days of its receipt of such notice, pay directly to such Lender
additional amounts sufficient to compensate such Lender or such controlling
Person for such reduction in rate of return. A statement of such Lender as to
any such additional amount or amounts (including calculations thereof in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on the Company. In determining such amount, such Lender may use any
method of averaging and attribution that it (in its sole and absolute
discretion) shall deem applicable, subject in each case to Section 4.12.
SECTION 4.6. Taxes, etc.
(a) All payments by the Company and each other Obligor
to the Agent or any Lender in respect of any Obligation shall be made
without any setoff or counterclaim, and free and clear of and without
deduction or withholding for or on account of, any present or future
Taxes now or hereafter imposed on the Agent or any Lender with respect
to such payments by any governmental or other authority, except to the
extent that such deduction or withholding is compelled by law. As
used herein, the term "Taxes" shall include all excise and other taxes
of whatever nature imposed on the Agent or any Lender with respect to,
or arising out of, such payments or the transactions contemplated
hereby (other than taxes generally assessed on the net income of the
Agent or any Lender, as the case may be, by the government of the
country, or any political subdivision or taxing authority thereof or
therein, in which the Agent or such Lender is incorporated or in which
such Lender's Domestic Office or such Lender's LIBOR Office is
located) as well as all levies, imposts, duties, charges, or fees of
whatever nature. If any Obligor is compelled by law to make any such
deduction or withholding it will:
(i) pay to the relevant authorities the full amount
required to be so withheld or deducted;
(ii) (except to the extent that such deduction or
withholding results from the breach, by the recipient of a
payment, of its agreement contained in clause (b) below, or
would not be required if such recipient's representation and
warranty contained in clause (b) below were true) pay such
additional amounts as may be necessary in order that the net
amount received by the Agent and each Lender, after such
deduction or withholding (including any required deduction or
withholding on such additional amounts) shall equal the
59
amount such payee would have received had no such deduction or
withholding been made; and
(iii) promptly forward to the Agent (for delivery to
such payee) an official receipt or other documentation
satisfactory to the Agent evidencing such payment to such
authorities.
Moreover, if any Taxes are directly asserted against the Agent or any
Lender with respect to any payment made in respect of, or arising out
of, any Obligation, such payee may pay such Taxes, and each Obligor
which is obligated to pay such Obligation agrees promptly to pay such
additional amount (including any penalties, interest or expenses) as
may be necessary in order that the net amount received by such payee
after the payment of such taxes (including any Taxes on such
additional amount) shall equal the amount such payee would have
received had no such Taxes been asserted (except to the extent that
such Taxes result from the breach, by such payee, of its agreement
contained inclause (b) below or would not be asserted if such payee's
representation and warranty contained in clause (b) below were true).
For purposes of this Section 4.6, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be
deemed to be a payment by the applicable Obligor.
(b) Each Lender which is a Non-United States Person
agrees (to the extent it is permitted to do so under the laws and any
applicable double taxation treaties of the United States, the
jurisdiction of such Lender's incorporation, and the jurisdictions in
which such Lender's Domestic Office and such Lender's LIBOR Office are
located) to execute and deliver to the Agent for delivery to the
Company, before the first scheduled payment date in each year, either
(i) three United States Internal Revenue Service Forms 1001 or (ii)
three United States Internal Revenue Service Forms 4224 together with
three United States Internal Revenue Service Forms W-9, or any
successor forms, as appropriate, properly completed and claiming
complete or partial, as the case may be, exemption from withholding
and deduction of United States federal Taxes. Each Lender which is a
Non-United States Person represents and warrants to each Obligor and
to the Agent that, at the date of this Agreement, (i) its Domestic
Office and its LIBOR Office are entitled to receive payments of
principal, interest, Reimbursement Obligations, and fees hereunder and
under the other Loan Documents without deduction or withholding for or
on account of any Taxes imposed by the United States or any political
subdivision thereof and (ii) it is permitted to take the actions
described in the preceding sentence under the laws and any applicable
double taxation treaties of the jurisdictions specified in the
preceding sentence. Each Lender which is a Non-United States Person
further agrees
60
that, to the extent any form claiming complete or partial exemption
from withholding and deduction of United States federal Taxes
delivered under this clause (b) is found to be incomplete or incorrect
in any material respect, such Lender shall (to the extent it is
permitted to do so under the laws and any double taxation treaties of
the United States, the jurisdiction of its incorporation, and the
jurisdictions in which its Domestic Office and its LIBOR Office are
located) execute and deliver to the Agent a complete and correct
replacement form.
(c) Each Lender agrees to use reasonable efforts to
change its Domestic Office or LIBOR Office to avoid or to minimize any
amounts otherwise payable underclause (a) of this Section 4.6, in each
case solely if such change can be made in a manner so that such
Lender, in its sole determination, suffers no legal, economic, or
regulatory disadvantage.
SECTION 4.7. Payments, Computations, etc.
(a) Unless otherwise expressly provided, all payments by
the Company pursuant to this Agreement or any other Loan Document
shall be made by the Company to the Agent for thepro rata account of
the Lenders entitled to receive such payment. Except for Proceeds
received directly by the Agent, all such payments required to be made
to the Agent shall be made, without setoff, deduction or counterclaim,
not later than 9:30 a.m., San Francisco time, or, with respect to
payments which are to be funded by other Credit Extensions, 10:30
a.m., San Francisco time, in either case on the date due, in same day
or immediately available funds, to such account as the Agent shall
specify from time to time by written notice to the Company. Funds
received after that time shall be deemed to have been received by the
Agent on the next succeeding Business Day. The Agent shall promptly
remit to each Lender such Lender's share, if any, of such payments
received by the Agent not later than 9:30 a.m., San Francisco time, or
10:30 a.m., San Francisco time, as applicable, for the account of such
Lender in same day funds on the day received. If the Agent fails so
to remit such funds to such Lender, the Agent shall pay to such Lender
interest on the amount of such Lender's share of such payments at the
daily average Federal Funds Rate for each day on which such failure
continues excluding the day on which such remittance is made. All
interest and commitment fees shall be computed on the basis of the
actual number of days (including the first day but excluding the last
day) occurring during the period for which such interest or fee is
payable over a year comprised of 360 days. Whenever any payment to be
made shall otherwise be due on a day which is not a Business Day, such
payment shall (except as otherwise required byclause (b) of the
definition of the term Interest Period" with respect to LIBO Rate
Loans) be made
61
on the next succeeding Business Day and such extension of time shall
be included in computing interest, if any, in connection with such
payment.
(b) If after receipt of any payment of, or Proceeds
applied to the payment of, all or any part of the Obligations, the
Lenders, the Issuer Bank, or the Agent is for any reason compelled to
surrender such payment or Proceeds to any Person, because such payment
or Proceeds is invalidated, declared fraudulent, set aside, determined
to be void or voidable as a preference, impermissible set off, or a
diversion of trust funds, or for any other reason, the Obligations or
part thereof intended to be satisfied shall be revived and continue
and this Agreement shall continue in full force as if such payment or
Proceeds had not been received by the Lenders, the Issuer Bank, or the
Agent; and the Company shall be liable to the Lenders, the Issuer
Bank, and the Agent, and hereby does indemnify the Lenders, the Issuer
Bank, and the Agent and hold the Lenders, the Issuer Bank, and the
Agent harmless for, the amount of such payment or Proceeds
surrendered. The provisions of this Section 4.7 shall be and remain
effective notwithstanding any contrary action which may have been
taken by the Lenders, the Issuer Bank, and the Agent in reliance upon
such payment or Proceeds, and any such contrary action so taken shall
be without prejudice to the rights of the Lenders, the Issuer Bank,
and the Agent under this Agreement and shall be deemed to have been
conditioned upon such payment or Proceeds having become final and
irrevocable.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff, or otherwise) on account of any Letter of Credit it has issued or in
which it is a participant, or on account of any Loan (other than pursuant to
the terms of Sections 4.3, 4.4, 4.5, and 4.6) in each case in excess of its pro
rata share of payments then or therewith obtained by all Lenders, such Lender
shall purchase from the other Lenders such participations in the Letters of
Credit in which they have participated or they have issued, or in Loans made by
them, as the case may be, as shall be necessary to cause such purchasing Lender
to share the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Lender, the purchase
shall be rescinded and each Lender which has sold a participation to the
purchasing Lender shall repay to the purchasing Lender the purchase price to
the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of
(a) the amount of such selling Lender's required
repayment to the purchasing Lender
62
to
(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Company agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section 4.8
may, to the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 4.9) with respect to such participation as fully
as if such Lender were the direct creditor of the Company in the amount of such
participation. If under any applicable bankruptcy, insolvency, or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section 4.8 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent
with the rights of the Lenders entitled under this Section 4.8 to share in the
benefits of any recovery on such secured claim.
SECTION 4.9. Setoff. Each Lender shall, with the prior written
consent of the Required Lenders, during the continuance of any Event of
Default, have the right to appropriate and apply to the payment of the
Obligations owing to it (whether or not then due), and (as security for such
Obligations) the Company hereby grants to each Lender a continuing security
interest in, any and all balances, credits, deposits, accounts, or moneys of
the Company then or thereafter maintained with such Lender, excluding any
specifically designated trust account; provided, however, that any such
appropriation and application shall be subject to the provisions of Section
4.8. Each Lender agrees promptly to notify the Company and the Agent after any
such setoff and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section 4.9 are in addition
to other rights and remedies (including other rights of setoff under applicable
law or otherwise) which such Lender may have.
SECTION 4.10. Use of Proceeds. The Company shall apply the
proceeds of each Loan and shall use each Letter of Credit in accordance with
the fourth recital and for general corporate and working capital purposes of
the Company and its Subsidiaries. No proceeds of any Loan and no Letter of
Credit will be used to purchase or carry (a) any equity security not issued by
the Company of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934, or (b) any "margin stock", as defined in
F.R.S. Board Regulation U.
63
SECTION 4.11. Change of Lending Office, Replacement of Lender, etc.
(a) Each Lender agrees that, upon the occurrence of any
event giving rise to the operation of Section 4.1, 4.3, or 4.5 with
respect to such Lender, it will, if requested by the Company and to
the extent permitted by law or by the relevant governmental authority,
in consultation with the Agent, for a period of thirty days use
reasonable efforts in good faith to avoid the illegality or to avoid
or minimize the increase in costs or reduction in payments resulting
from such event (including using reasonable efforts to change its
Domestic Office or LIBOR Office);provided that such avoidance or
minimization can be made in such a manner so that such Lender, in its
sole determination, suffers no legal, economic, or regulatory
disadvantage.
(b) If any Lender (an "Affected Lender") shall make a
determination under Section 4.1 or shall make a demand for payment
under Section 4.3, 4.5, or 4.6, and the Company shall find a Lender or
other entity capable of being an Assignee Lender under Section
12.11.1(an "Eligible Assignee") which offers in writing to
(i) purchase all, but not less than all, Loans of
and Reimbursement Obligations owed (directly or by way of
participation) to such Affected Lender,
(ii) purchase a 100% participation in all
obligations of such Affected Lender in respect of all Letters
of Credit issued or participated in by such Affected Lender,
and
(iii) assume all the Commitments of such Affected
Lender,
in each case without recourse for the full amount thereof on a
specified date, together with accrued and unpaid interest and
commitment fees thereon to the date of purchase, and all other amounts
owing to such Affected Lender hereunder and under the other Loan
Documents, and such Eligible Assignee tenders the purchase price of
such amounts on such specified date, and if, in the sole determination
of such Affected Lender, its acceptance of such offer would be
permitted by law and all relevant governmental authorities and would
not result in any legal, economic, or regulatory disadvantage to such
Affected Lender, then the Company shall be excused from the payment of
any increased costs claimed by such Affected Lender under any of such
Sections accruing after the first interest payment date pursuant to
Section 3.4.5 for each Loan of such Affected Lender on or following
such specified date, if the Affected Lender demanding payment under
any such Section declines such purchase offer. If such Affected
Lender shall accept such purchase offer, upon consummation
64
of such purchase in accordance with Section 12.11.1, such Affected
Lender shall cease to be a Lender hereunder. Any reasonable expenses
actually incurred by such Affected Lender or the Agent under
thisSection 4.11 shall be paid by the Company upon delivery to the
Company of a certificate as to the amount of such expenses, which
certificate shall in the absence of manifest error be conclusive and
binding.
SECTION 4.12. Computation of Additional Amounts Due. In
determining any additional amounts due from the Company under Section 4.3, 4.4,
or 4.5 hereof, each Lender shall act reasonably and in good faith and will, to
the extent that the increased costs or reductions in amounts received or
receivable relate to such Lender's loans generally and are not specifically
attributable to the Loans hereunder, use averaging and attribution methods
which are reasonable and equitable and which cover all loans similar to the
Loans made by such Lender whether or not the loan documentation for such other
loans permits such Lender to receive increased costs of the type described in
such Sections of this Agreement.
ARTICLE V
LETTERS OF CREDIT
SECTION 5.1. Requests.
(a) By delivering to the Agent and the relevant Issuer
Bank one or more Revolving L/C Requests on or before 10:00 a.m., San
Francisco time, at least three (or such shorter period as may be
agreed among the Company, the Agent, and such Issuer Bank), but not
more than eight, Business Days before the proposed date of issuance,
the Company may request that such Issuer Bank issue, on any Business
Day on or after the Initial Borrowing Date and prior to the Revolving
Commitment Termination Date, irrevocable standby or commercial letters
of credit for its account (each such letter of credit, as it may be
amended, supplemented, extended, restated, or modified from time to
time, a "Letter of Credit"). Each Letter of Credit and Revolving L/C
Request shall be acceptable as to form, substance, beneficiary, and
purpose to the Agent and such Issuer Bank in their sole and absolute
discretion, and each Letter of Credit shall be used by the Company in
each case solely for the purposes described in Section 4.10.
(b) Upon receipt of a Revolving L/C Request under clause
(a), the Agent shall promptly notify the Lenders in writing thereof.
Each Letter of Credit shall, by its terms:
(i) be issued in a Stated Amount which, (A) when
added to the Letter of Credit Outstandings immediately
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prior to the issuance of such Letter of Credit, would not
exceed $125,000,000;
(ii) be stated to expire on a date (its "Stated
Expiry Date") no later than the tenth Business Day immediately
preceding February 15, 1999;
(iii) on or prior to its Stated Expiry Date, except
as the Issuer Bank thereof and the Agent may otherwise agree
in their sole and absolute discretion,
(A) terminate immediately upon irrevocable
notice to the Issuer Bank thereof from the
beneficiary thereunder that all obligations supported
thereby have been terminated, paid, or otherwise
satisfied in full, and
(B) terminate 30 Business Days after notice to
the beneficiary thereunder from the Issuer Bank
thereof that an Event of Default has occurred and is
continuing;
(iv) not require the Issuer Bank thereof to make
payment to any beneficiary thereof prior to the third Business
Day after a conforming demand for payment is made thereunder;
and
(v) not provide for the presentation of drafts
other than drafts payable at sight; and
(c) The Issuer Bank will make available to the
beneficiary thereunder (with a copy to the Agent) the original of each
Letter of Credit which it issues in accordance with the Revolving L/C
Request therefor and will notify the beneficiary thereof (with a copy
to the Agent) of any extension of the Stated Expiry Date thereof
pursuant toSection 5.2.
(d) On the Initial Borrowing Date, the Existing Letters
of Credit shall automatically be deemed to be Letters of Credit and
shall be subject to all the terms and conditions of this Agreement and
the Company's reimbursement obligations in respect of the Existing
Letters of Credit shall automatically be deemed to have been satisfied
by the incurrence of its Reimbursement Obligations, pursuant to this
Article V, in respect of the Letters of Credit;provided that the Agent
shall have received satisfactory evidence that each issuer of the
Existing Letters of Credit shall have consented to the termination of
such reimbursement obligations in respect of the Existing Letters of
Credit.
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SECTION 5.2. Issuance and Extensions.
(a) Subject to the terms and conditions of this Agreement
(including Article VII), each Issuer Bank shall issue Letters of
Credit in accordance with the Revolving L/C Requests made therefor.
By delivery to an Issuer Bank and the Agent of a Revolving L/C Request
at least three Business Days but not more than 45 days prior to the
Stated Expiry Date of any Letter of Credit, the Company may request
such Issuer Bank to extend the Stated Expiry Date of such Letter of
Credit for an additional period. Unless otherwise directed by the
Agent in accordance with Section 7.2, no Issuer Bank shall issue, or
extend the Stated Expiry Date of, any Letter of Credit if it shall
have received from any Obligor, the Agent, or any Lender actual notice
of a then-continuing Default or of any other failure to satisfy any of
the conditions precedent to Credit Extensions set forth inArticle VII.
(b) Notwithstanding any provision of any Revolving L/C
Request to the contrary, it is understood that in the event of any
conflict between the terms of any such Revolving L/C Request and the
terms of this Agreement, the terms of this Agreement shall control
with respect to events of default, representations and warranties, and
covenants, except that such Revolving L/C Request may provide for
further warranties relating specifically to the transaction or affairs
underlying the relevant Letter of Credit. To the extent that a
Revolving L/C Request is submitted on Bank of America Form
FX-149(7-85), or another form containing language similar to that used
in such form, (i) the term "loan" and the term "advance" shall each be
deemed to refer to the principal amount paid to the beneficiary of any
Letter of Credit pursuant to a demand for payment under such Letter of
Credit, (ii) the "maturity" of each "loan" or "advance" shall be
deemed to be the date on which the Company's Reimbursement Obligation
in respect of the relevant payment under a Letter of Credit becomes
due and payable pursuant toSection 5.6, and (iii) all references to
payments of "loans" or "advances" shall be deemed to be references to
payment of outstanding Reimbursement Obligations. The terms and
conditions of this Agreement shall be deemed to be incorporated by
reference into each Revolving L/C Request regardless of whether
expressly so stated in such Revolving L/C Request.
SECTION 5.3. Fees and Expenses.
(a) The Company agrees to pay to the Agent with respect
to each Letter of Credit,
(i) for the account of the Issuer Bank, a fronting
fee equal to three-eighths of 1% per annum on the average
daily aggregate Letter of Credit Outstandings
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(excluding, however, in the case of fees payable under
thisclause(a)(i), that portion of Letter of Credit Outstandings
constituting Reimbursement Obligations accruing interest pursuant to
Section 5.5), and
(ii) for the account of the Lenders, pro rata
according to their respective Percentages, a letter of credit
fee of 3% per annum (subject to adjustment as provided in
Section 3.4.1 and 3.4.4) on the average daily aggregate Letter
of Credit Outstandings (excluding, however, in the case of
fees payable under this clause (a)(ii), that portion of Letter
of Credit Outstandings constituting Reimbursement Obligations
accruing interest pursuant to Section 5.5) under or with
respect to all Letters of Credit accruing, as to each Letter
of Credit (other than the Existing Letters of Credit), from
and including the date of issuance thereof to and excluding
the earlier of the date such Letter of Credit is drawn in
full, expires, or is terminated and the Revolving Commitment
Termination Date and, as to each Existing Letter of Credit,
from and including the Initial Borrowing Date to and excluding
the earlier of the date such Existing Letter of Credit is
drawn in full, expires, or is terminated and the Revolving
Commitment Termination Date.
(b) Such fronting and letter of credit fees shall be
computed for the actual number of days elapsed on the basis of a 360-
day year and shall be payable in arrears on each Quarterly Payment
Date for the period ending on (but excluding) such Quarterly Payment
Date. The Company further agrees to pay to the Agent for the account
of each Issuer Bank all customary administrative fees and expenses of
such Issuer Bank in connection with the issuance and maintenance of
each Letter of Credit issued by it.
SECTION 5.4. Other Lenders' Participation. Concurrently with the
issuance of each Letter of Credit in accordance with the terms and conditions
of this Agreement, and on the Initial Borrowing Date with respect to the
Existing Letters of Credit, the Issuer Bank thereof shall be deemed to have
sold and transferred to each other Lender, and each other Lender shall be
deemed irrevocably and unconditionally to have purchased and received from such
Issuer Bank, without recourse, representation, or warranty, an undivided
interest and participation, to the extent of such other Lender's Percentage, in
such Letter of Credit and the Company's Reimbursement Obligations with respect
thereto, and each Lender shall, to the extent of its Percentage, be entitled to
receive from such Issuer Bank a ratable portion of the letter of credit fees
received by such Issuer Bank pursuant to clause (a)(ii) of Section 5.3 with
respect to each Letter of Credit. Each Lender shall, to the extent of its
Percentage, be responsible to reimburse promptly such Issuer Bank for
Reimbursement Obligations which have not been reimbursed by the
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Company in accordance with Section 5.5 (other than any Reimbursement
Obligations arising out of any wrongful Disbursement made by such Issuer Bank
as a result of acts or omissions constituting gross negligence or willful
misconduct on the part of such Issuer Bank).
SECTION 5.5. Disbursements.
(a) Each Issuer Bank will notify the Company and the
Agent in writing promptly of the presentment of any demand for payment
under any Letter of Credit issued by such Issuer Bank, together with
notice of the date (the "Disbursement Date") such payment shall be
made. On the terms and subject to the conditions of such Letter of
Credit and this Agreement, the Issuer Bank shall make such payment to
the beneficiary (or its designee) of such Letter of Credit. Prior to
10:30 a.m., San Francisco time, on the Disbursement Date, the Company
will reimburse such Issuer Bank for all amounts which it has disbursed
or is required to disburse under such Letter of Credit on such
Disbursement Date. To the extent such Issuer Bank is not reimbursed
in full in accordance with the foregoing sentence of this clause (a),
the Company's Reimbursement Obligation shall accrue interest at a rate
per annum equal to the Reference Rate from time to time in effect plus
a margin of 3-1/2% per annum, payable on demand.
(b) Upon notice by the Issuer Bank to the Company of any
Disbursement pursuant to clause (a) of this Section 5.5, the Lenders
(including such Issuer Bank) shall, upon satisfaction by the Company
of the conditions in Section 7.2 or the waiver of the conditions
ofSection 7.2 by the Agent as permitted therein, and to the extent
that the Revolving Commitment is then available, fund the
Reimbursement Obligation therefor by making Revolving Loans as
provided inSection 2.1.1 (without giving effect to such Reimbursement
Obligation for purposes of determining the Revolving Commitment
Availability).
SECTION 5.6. Reimbursement. The Company's obligation (a
"Reimbursement Obligation") under Section 5.5 to reimburse an Issuer Bank with
respect to each Disbursement (including interest thereon) shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim, or defense to payment which the Company may have or have had
against a beneficiary or transferee of any Letter of Credit (or any Person or
Persons for whom any such transferee may be acting) or against the Agent or any
Lender, including any defense based upon the failure of any Disbursement to
conform to the terms of the applicable Letter of Credit (if, in the Issuer
Bank's good faith opinion, such Disbursement is determined to be appropriate)
or any non-application or misapplication by the beneficiary of the proceeds of
such Disbursement or the legality, validity, form, regularity, or
enforceability of such Letter of Credit; provided,
69
however, that nothing herein shall adversely affect the right of the Company to
commence any proceeding against an Issuer Bank for any wrongful Disbursement
made by such Issuer Bank under a Letter of Credit as a result of acts or
omissions constituting gross negligence or willful misconduct on the part of
such Issuer Bank.
SECTION 5.7. Mandatory Payment to Agent of Letter of Credit
Outstandings. The Company agrees that, upon the occurrence of any event
described in Section 10.2 or any termination of the Commitments pursuant to
Section 10.3, it will immediately, upon written notice from the Agent, acting
at the direction of the Required Lenders, pay to the Agent in Dollars and in
immediately available funds an amount equal to the then aggregate Letter of
Credit Outstandings. Any amounts so received by the Agent pursuant to the
provisions of the foregoing sentence, after application against outstanding
Reimbursement Obligations, shall be deposited by the Agent into the L/C
Collateral Account pursuant to Section 5.8.1.
SECTION 5.8. L/C Collateral Account.
SECTION 5.8.1. Deposit. The Agent shall deposit all funds paid by
the Company to the Agent pursuant to Section 3.3.1 as cash collateral and
Section 5.7 (to the extent required to be deposited in the L/C Collateral
Account) to the credit of a deposit account owned by the Agent (the "L/C
Collateral Account"). As security for the payment of all Obligations, the
Company hereby grants, conveys, assigns, pledges, sets over, and transfers to
the Agent, and creates in the Agent's favor a lien on and security interest in,
all money, instruments, and securities at any time held in or acquired in
connection with the L/C Collateral Account, together with all proceeds thereof,
for the benefit of the Secured Lenders. The Company shall not have any right
to withdraw or to cause the Agent to withdraw any funds deposited in the L/C
Collateral Account. At any time and from time to time, upon the Agent's
request, the Company promptly shall execute and deliver any and all such
further instruments and documents (including financing statements and bond
powers executed in blank) as may be necessary, appropriate, or desirable in the
Agent's judgment to obtain the full benefits (including perfection and
priority) of the security interest created or intended to be created by this
Section 5.8.1 and of the rights and powers herein granted. The Company shall
not create or suffer to exist any Lien on any amounts or investments held in
the L/C Collateral Account other than the Lien granted under this Section
5.8.1.
SECTION 5.8.2. Investment. The Company, no more than three times in
any calendar month, may direct the Agent to invest the funds held in the L/C
Collateral Account (so long as the aggregate amount of such funds exceeds any
relevant minimum investment requirement) in one or more certificates of deposit
issued by the Person which is then acting as Agent or by Bank of
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America, with such maturities as the Company may specify, pending application
of such funds on account of Reimbursement Obligations or on account of other
Obligations, as the case may be. In the absence of any such direction from the
Company, the Agent shall invest the funds held in the L/C Collateral Account in
one or more certificates of deposit issued by the Person which is then acting
as Agent or by Bank of America with maturities not to exceed 30 days, unless
the aggregate amount of such funds which are not then otherwise invested is
less than the smallest certificate of deposit offered by such Person, in which
case the Agent shall have no obligation to invest such funds. All such
investments shall be made in the Agent's name. The Company recognizes that any
losses or taxes with respect to such investments shall be borne solely by the
Company, and the Company agrees to hold the Agent and the Lenders harmless from
any such losses or taxes. Unless the Company otherwise makes direct payment,
the Agent shall liquidate any investment held in the L/C Collateral Account in
order to apply the proceeds of such investment on account of Reimbursement
Obligations (or on account of other Obligations, as the case may be) without
regard to whether such investment has matured and without liability for any
penalties or other fees incurred (with respect to which the Company hereby
fully indemnifies the Agent) as a result of such application.
SECTION 5.8.3. Application of Funds. The Agent shall apply funds in
the L/C Collateral Account (a) on account of Reimbursement Obligations when the
same become due and payable if and to the extent that the Company fails
directly to pay such Reimbursement Obligations, (b) if there are Letter of
Credit Outstandings, and the balance of the L/C Collateral Account exceeds the
aggregate Letter of Credit Outstandings for five consecutive Business Days, on
account of the Obligations (other than Reimbursement Obligations) in such order
as the Agent may elect to the extent of such excess on the day of application,
and (c) after the date on which all Letters of Credit shall have expired and
the Company finally shall have paid in full all outstanding Reimbursement
Obligations, on account of the other Obligations in such order as the Agent may
elect if the Agent shall have received actual notice of the occurrence of an
Event of Default on or before such date which is continuing on such date.
Except in the case described in clause (c) above, the Agent shall release all
funds and transfer all investments remaining in the L/C Collateral Account to
the Company within five Business Days after the date on which all Letters of
Credit shall have expired and the Company finally shall have paid in full all
outstanding Reimbursement Obligations. If the Agent resigns, the outgoing
Agent and the new Agent shall effect a transfer to the new Agent of all of the
outgoing Agent's right, title, and interest in and to the L/C Collateral
Account concurrently with the effectiveness of such resignation.
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SECTION 5.8.4. Fees. The Company shall pay to the Agent fees
customarily charged by the Agent with respect to the maintenance of accounts
similar to the L/C Collateral Account.
SECTION 5.9. Nature of Reimbursement Obligations. The Company
shall assume all risks of the acts, omissions, or misuse of any Letter of
Credit by the beneficiary thereof. Neither any Issuer Bank nor the Agent or
any Lender (except to the extent of its own gross negligence or wilful
misconduct) shall be responsible for:
(a) the form, validity, sufficiency, accuracy,
genuineness, or legal effect of any Letter of Credit or any document
submitted by any party in connection with the application for and
issuance of a Letter of Credit, even if it should in fact prove to be
in any or all respects invalid, insufficient, inaccurate, fraudulent,
or forged;
(b) the form, validity, sufficiency, accuracy,
genuineness, or legal effect of any Instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or
the rights or benefits thereunder or proceeds thereof in whole or in
part, which may prove to be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with
conditions required in order to demand payment under a Letter of
Credit;
(d) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise; or
(e) any loss or delay in the transmission or otherwise of
any document or draft required in order to make a Disbursement under a
Letter of Credit or of the proceeds thereof.
None of the foregoing shall affect, impair, or prevent the vesting of any of
the rights or powers granted any Issuer Bank, the Agent, or any Lender
hereunder. In furtherance and extension and not in limitation or derogation of
any of the foregoing, any action taken or omitted to be taken by such Issuer
Bank in good faith shall be binding upon the Company and each Lender and shall
not put such Issuer Bank under any resulting liability to the Company or any
Lender, except to the extent incurred by such Issuer Bank's gross negligence or
willful misconduct.
SECTION 5.10. Indemnification by Lenders. The Lenders severally
agree to indemnify each Issuer Bank (acting in its capacity as such) and each
officer, director, employee, agent, and Affiliate of each Issuer Bank
(collectively, the "Issuer Parties" and individually, an "Issuer Party"),
ratably according to their respective Percentages, to the extent not reimbursed
by
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the Company, from and against any and all actions, causes of action, suits,
losses, liabilities, damages, and expenses which may at any time (including at
any time following the payment of any of the Reimbursement Obligations) be
imposed on, incurred by, or asserted against such Issuer Party in any way
relating to or arising out of the issuance of, transfer of, or payment or
failure to pay under any Letter of Credit issued in accordance with the terms
of this Agreement or the use of proceeds of any payment made under any Letter
of Credit issued in accordance with the terms of this Agreement; provided, that
no Lender shall be liable for the payment to such Issuer Party of any portion
of such actions, causes of action, suits, losses, liabilities, damages, and
expenses which have arisen by reason of such Issuer Party's gross negligence or
willful misconduct.
ARTICLE VI
PARENT GUARANTOR
SECTION 6.1. Parent Guaranty. In consideration for the Lenders
extending the Commitments, the Parent Guarantor hereby unconditionally
guarantees, as primary obligor and not merely as surety, the due and punctual
payment and performance of all Obligations of the Company when due according to
their terms (whether by required prepayment, declaration, demand, or
otherwise). The foregoing guaranty is herein referred to as the "Parent
Guaranty".
SECTION 6.2. Renewal, etc. of Obligations; Waiver. The Parent
Guarantor agrees that the Obligations of the Company may be extended or
renewed, in whole or in part, without notice to or further assent from the
Parent Guarantor and that it will remain bound upon the Parent Guaranty
notwithstanding any extension, renewal, or other alteration of any Obligation.
The Parent Guarantor waives presentation to, demand of, payment from, and
protest of any Obligation to the Company and also waives notice of protest for
nonpayment. The obligations of the Parent Guarantor under the Parent Guaranty
shall not be affected by
(a) the failure of the Agent, any Lender, any Issuer
Bank, or any other holder of any Obligation of the Company:
(i) to assert any claim or demand, or to enforce
any right or remedy against the Company under the provisions
of this Agreement or any other Loan Document or otherwise; or
(ii) to exercise any right or remedy against any
other guarantor of any Obligations;
(b) any extension or renewal of any thereof;
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(c) any rescission, waiver, amendment, or modification of
any of the terms or provisions of this Agreement or any other
Transaction Document; or
(d) the release of any of the security held by any Lender
for any Obligations.
The Parent Guarantor further agrees that the Parent Guaranty constitutes a
guaranty of payment when due and not of collection and waives any right to
require that any resort be had by the Agent, any Lender, any Issuer Bank, or
any other holder of any Obligation of the Company to any of the security held
for payment of any Obligation or to any balance of any deposit account or
credit on its books in favor of the Company or any other Person.
SECTION 6.3. No Impairment, etc. The obligations of the Parent
Guarantor under the Parent Guaranty shall not be subject to any reduction,
limitation, impairment, or termination for any reason, including any claim of
waiver, release, surrender, alteration, or compromise, and shall not be subject
to any defense or setoff, counterclaim, recoupment, or termination whatsoever
by reason of the invalidity, illegality, or unenforceability of the Obligations
of the Company or otherwise. Without limiting the generality of the foregoing,
the obligations of the Parent Guarantor under the Parent Guaranty shall not be
discharged or impaired or otherwise affected by the failure of the Agent, any
Lender, or any other holder of any Obligation of the Company to assert any
claim or demand or to enforce any remedy under this Agreement or any other
Transaction Document, by any waiver or modification of any thereof, by any
default, failure, or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
the Parent Guarantor, or would otherwise operate as a discharge of the Parent
Guarantor as a matter of law or equity.
SECTION 6.4. Reinstatement; Subrogation. The Parent Guarantor
agrees that the Parent Guaranty shall continue to be effective or be
reinstated, as the case may be, if, at any time payment, or any part thereof,
of principal of or interest on any Obligation is rescinded or must otherwise be
restored by the Agent, any Lender, or any other holder of any Obligation of the
Company upon the bankruptcy or reorganization of any Obligor or otherwise. The
Parent Guarantor hereby expressly waives, to the fullest extent permitted by
law, all rights of the Parent Guarantor against the Company, arising out of any
payment by the Parent Guarantor under the Parent Guaranty, or any exercise of
remedies under the Parent Pledge Agreement or the Parent Security Agreement,
whether arising by way of any right of subrogation, contribution,
reimbursement, indemnity, or otherwise and agrees that, if, and to the extent
that, any such rights may not be waived under applicable law, it will
contribute such rights to
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the Company as a capital contribution concurrently with the arising of such
rights.
ARTICLE VII
CONDITIONS TO EXTENSIONS OF CREDIT
SECTION 7.1. Initial Credit Extension. The obligations of the
Lenders and the Issuer Bank to make Credit Extensions on the Initial Borrowing
Date shall be subject to the prior or concurrent satisfaction of each of the
conditions precedent set forth in this Section 7.1.
SECTION 7.1.1. Resolutions, etc. The Agent shall have received from
each Obligor:
(a) a certificate, in form and substance satisfactory to
the Agent and the Lenders, dated the Initial Borrowing Date, of its
Secretary or Assistant Secretary as to
(i) resolutions of its Board of Directors then in
full force and effect authorizing the execution, delivery and
performance of this Agreement and each other Loan Document to
be executed by it;
(ii) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement, and
each other Loan Document to be executed by it; and
(iii) each of its Organic Documents, certified in a
manner satisfactory to the Agent,
upon which certificate the Agent and each Lender may conclusively rely
until it shall have received a further certificate of the Secretary or
Assistant Secretary of such Obligor canceling or amending such prior
certificate;
(b) a good standing certificate (or other equivalent
document or certificate satisfactory to the Agent and the Lenders)
certified by the secretary of state (or other appropriate government
official) in the jurisdiction of such Obligor's incorporation; and
(c) such other documents (certified, if requested) as the
Agent or any Lender (acting through the Agent) may reasonably request
with respect to any Organic Document.
SECTION 7.1.2. Insurance. The Agent shall have received a
certificate dated as of a recent date from Alexander & Alexander describing the
insurance policies maintained by the Parent Guarantor, the Company and each
Subsidiary of the Company executing a Subsidiary Security Agreement and
certifying that the
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insurance coverage maintained by the Parent Guarantor, the Company and such
Subsidiaries do not differ in any material respect from that described in the
"Insurance Program Review" dated October 1989, prepared by Tillinghast, a copy
of which has been delivered to the Agent and each Lender prior to the date
hereof and the insurance coverage described in such certificate shall be
satisfactory to the Agent and the Lenders. The Agent shall have received
evidence in the form of a certificate of the Company, executed by an Authorized
Officer, that all insurance policies and coverages required pursuant to Section
9.1.4, Section 6(h) of each Security Agreement and Section 1.7 of each Company
Mortgage and Company Deed of Trust are in effect, together with certificates of
insurance in form and substance satisfactory to the Agent, including evidence
satisfactory to the Agent that the Agent has been named as loss payee under
such policies as and to the extent required by each Security Agreement and each
Company Mortgage and Company Deed of Trust.
SECTION 7.1.3. Payment of Outstanding Indebtedness. Each item of
Indebtedness of the Company identified in Item 1 ("Indebtedness to be Paid") of
the Disclosure Schedule, together with all interest accrued thereon and all
prepayment premiums and other amounts payable in connection therewith, shall
have been paid in full or fully defeased. Each other item of Indebtedness of
the Company or of the Parent Guarantor shall have been disclosed in Item 4
("Ongoing Indebtedness") of the Disclosure Schedule or shall otherwise be
permitted by Section 9.2.2, and each holder whose Indebtedness is secured
(a) shall be designated in such Item 4 with an asterisk;
and
(b) unless the Agent and the Required Lenders shall have
otherwise agreed in writing, shall have released all of its Liens
(other than Liens permitted bySection 9.2.3) securing such
Indebtedness, and the Agent shall have received all UCC-3 termination
statements or other Instruments as shall be suitable or appropriate in
connection with such release.
In addition, the Agent shall have received evidence, satisfactory to the Agent,
that each issuer of the Existing Letters of Credit shall have consented to the
termination of the Company's reimbursement obligations in respect of the
Existing Letters of Credit.
SECTION 7.1.4. Parent Pledge Agreement. The Agent shall have
received the Parent Pledge Agreement, dated the Initial Borrowing Date, duly
executed by the Parent Guarantor and the Agent, and the Agent shall have
received
(a) the certificates evidencing all of the issued and
outstanding shares of capital stock of the Company owned by
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the Parent Guarantor (accompanied by undated stock powers duly
executed in blank) and
(b) any promissory notes or other debt instruments
required to be delivered pursuant to the Parent Guarantor Pledge
Agreement, endorsed (which endorsement may be on an allonge) to the
order of the Agent.
SECTION 7.1.5. Company Pledge Agreement. The Agent shall have
received the Company Pledge Agreement, dated the Initial Borrowing Date, duly
executed by the Company and the Agent, and the Agent shall have received
(a) the certificates evidencing (i) all of the issued and
outstanding shares of capital stock of each Domestic Subsidiary of the
Company which is listed on Schedule I attached hereto, and (ii) the
percentage of the issued and outstanding shares of capital stock of
each corporation listed on suchSchedule I which is not a Domestic
Subsidiary set forth opposite the name of such corporation, which
certificates shall in each case be accompanied by undated stock powers
duly executed in blank;
(b) the KT Note, duly executed by the Parent Guarantor
and endorsed to the order of the Agent; and
(c) all promissory notes or other debt instruments held
by the Company which have a face amount in excess of $100,000, in each
case endorsed (which endorsement may be on an allonge) to the order of
the Agent.
SECTION 7.1.6. Security Agreements. The Agent shall have received
the Parent Security Agreement, duly executed by the Parent Guarantor and the
Agent, the Company Security Agreement, duly executed by the Company and the
Agent, and the Subsidiary Security Agreement, duly executed by each Subsidiary
of the Company which is listed on Schedule IV hereto and the Agent, in each
case dated the Initial Borrowing Date, and the Agent shall have received
(a) duly executed financing statements (Form UCC-1),
naming the Parent Guarantor, the Company, or such Subsidiary, as the
case may be, as the debtor and the Agent as the secured party, or
other similar instruments or documents, suitable for filing under the
Uniform Commercial Code of all jurisdictions as may be necessary or,
in the reasonable opinion of the Agent, desirable to perfect the
security interests of the Agent in the Collateral granted pursuant to
the Security Agreements (other than fixtures which are not attached to
the real property covered by a Company Mortgage or Company Deed of
Trust) to the extent that perfection may be accomplished by filing
under the Uniform Commercial Code in any state in the United States or
the District of Columbia; and
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(b) with such exceptions as may have been approved by the
Agent, certified copies of Requests for Information or Copies (Form
UCC-11) (or similar search reports certified by a party reasonably
acceptable to the Agent), dated a date reasonably near the Initial
Borrowing Date, listing all effective financing statements which name
the Parent Guarantor, the Company, or any such Subsidiary (under any
present name and any previous names) as debtor and which are filed in
the jurisdictions in which filings were or are to be made pursuant to
clause (a), together with copies of such financing statements (none of
which, other than those relating to Liens described inItem 9
("Continuing Mortgages and Security Interests") of the Disclosure
Schedule, those for which executed copies of proper termination
statements (Form UCC-2 or Form UCC-3) have been delivered to the Agent
and those as to which the Agent shall have approved an exception to
this provision, shall cover any Collateral described in the Security
Agreements).
SECTION 7.1.7. Company Trademark Security Agreement; Company Patent
Security Agreement. The Agent shall have received the Company Trademark
Security Agreement and the Company Patent Security Agreement, in each case duly
executed by the Company and the Agent and dated the Initial Borrowing Date.
SECTION 7.1.8. Company Mortgages; Company Deeds of Trust. The Agent
shall have received Company Mortgages or Company Deeds of Trust, as required by
the Agent, duly executed by the Company, with respect to the real property
listed on Schedule II hereto, together with
(a) evidence of the completion of all recordings and
filings of the Company Mortgages and the Company Deeds of Trust as may
be necessary or, in the reasonable opinion of the Agent, desirable to
effectively create a valid, perfected, first-priority mortgage or deed
of trust Lien on, and security interest in, the properties purported
to be covered thereby (or evidence that provision entirely
satisfactory to the Agent and its counsel for the recording and filing
thereof and for the payment of all fees, taxes, and other expenses in
connection therewith has been made);
(b) with respect to each piece of real property covered
by a Company Mortgage or a Company Deed of Trust, one ALTA (except
with respect to real property in Texas which shall be governed by a
TLTA policy) lender's form title insurance policy in form reasonably
satisfactory to the Agent, insuring that on the Effective Date, the
Company owns a fee interest in the real property and that the Company
Mortgage or Company Deed of Trust, as the case may be, is a valid,
perfected, first-priority Lien on the real property, which policies
shall be issued to the Agent in amounts reasonably satisfactory to the
Agent by a title insurance company reasonably satisfactory to the
Agent in an
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aggregate amount of $125,000,000 for all such policies covering all
such properties, which amount shall be allocated to such properties as
set forth onSchedule II hereto, and each reinsured in amounts and with
insurance companies as reasonably required by the Agent, subject to no
exceptions other than such exceptions as are acceptable to the Agent,
and containing endorsements in form and substance satisfactory to the
Agent and the Lenders;provided, however, during the term of the Loan,
the Agent and the Lenders may require other endorsements to the title
insurance policies as may reasonably be required by any amendments to
this Agreement, in connection with any release of any real property
from the Lien of any Company Mortgage or Company Deed of Trust or any
surrender of any Company Mortgage or Company Deed of Trust;
(c) legible copies of all recorded documents noted as
exceptions in such title insurance policies;
(d) certified copies of all leases (including ground
leases) and, as to certain properties identified by the Agent, other
contracts materially affecting such real property, as requested by the
Agent or any Lender (acting through the Agent);
(e) certified rent rolls as to each property in a form
and scope satisfactory to the Agent;
(f) certified copies of all licenses, approvals, and
permits (including certificates indicating that certificates of
occupancy were issued) from federal, state, local, and other
governmental authorities materially affecting such real property that
are reasonably requested by the Agent or any Lender (acting through
the Agent);
(g) affidavits from the Company satisfactory to title
insurers; and
(h) such other approvals, consents, waivers, opinions
(including opinions of local counsel to the Company as to the
compliance of the mortgaged properties with zoning restrictions or
documents as the Agent or any Lender (acting through the Agent) may
reasonably request.
SECTION 7.1.9. Subsidiary Guaranty. The Agent shall have received
the Subsidiary Guaranty, dated the Initial Borrowing Date, duly executed by
each Subsidiary of the Company which is listed on Schedule III hereto.
SECTION 7.1.10. Subsidiary Pledge Agreement. The Agent shall have
received the Subsidiary Pledge Agreement, dated the Initial Borrowing Date,
duly executed by each Subsidiary of the
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Company listed on Schedule IV hereto and by the Agent, and the Agent shall have
received
(a) the certificates evidencing all of the shares of
capital stock required to be pledged pursuant to the Subsidiary Pledge
Agreement, which certificates shall in each case be accompanied by
undated stock powers duly executed in blank;
(b) each Intercompany Demand Note held by each such
Subsidiary, endorsed to the order of the Agent by such Subsidiary; and
(c) all promissory notes or other debt instruments held
by each such Subsidiary which have a face amount in excess of
$100,000, in each case endorsed (which endorsement may be on
anallonge) to the order of the Agent.
SECTION 7.1.11. Intercompany Note Pledge Agreement. The Agent shall
have received the Intercompany Note Pledge Agreement, dated the Initial
Borrowing Date, duly executed by each Subsidiary of the Company listed on
Schedule VII hereto which is not otherwise a party to the Subsidiary Pledge
Agreement and by the Agent, and the Agent shall have received each Intercompany
Demand Note held by each such Subsidiary, endorsed to the order of the Agent.
SECTION 7.1.12. Opinions of Counsel. The Agent shall have received
opinions, dated the Initial Borrowing Date and addressed to the Agent and all
Lenders, from
(a) Kramer, Levin, Naftalis, Nessen, Kamin & Frankel,
special outside counsel to the Obligors, in substantially the form of
Exhibit L-1 attached hereto;
(b) Anthony R. Pierno Esq., general counsel of the
Company, in substantially the form of Exhibit L-2 attached hereto;
(c) Andrew Barley, Esq., special patent and trademark
counsel to the Obligors, in substantially the form of Exhibit L-3
attached hereto;
(d) the local counsel listed in Schedule X hereto, in
substantially the forms set forth in Exhibit L-4 attached hereto; and
(e) O'Melveny & Myers, counsel to the Agent, in
substantially the form of Exhibit L-5 attached hereto.
SECTION 7.1.13. Closing Fees, Expenses, etc. The Agent shall have
received for its own account all fees, costs, and expenses due and payable
pursuant to Sections 3.5.3 and 12.3, if then invoiced.
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SECTION 7.1.14. Environmental Reports. The Agent shall have received
the Environmental Reports, in form, scope and substance satisfactory to all
Lenders, with respect to substantially all of the domestic real property owned
by the Company or any of its Subsidiaries.
SECTION 7.1.15. Investment Account Letter. The Agent shall have
received a letter, in substantially the form of Exhibit N attached hereto, with
such changes as may be approved by the Agent, duly executed by each Person with
which the Company maintains any account for investment in Cash Equivalent
Investments permitted hereunder.
SECTION 7.1.16. Sufficient Quantities, etc. The Agent shall have
received duly executed multiple original counterparts of each Loan Document
required to be executed and delivered pursuant to this Section 7.1 (other than
financing or termination statements, stock certificates or stock powers, and
such other documents where the Agent has not required delivery of counterparts)
for the Agent and each Lender together with such additional executed
counterparts as the Agent may reasonably request for filing or recordation
purposes.
SECTION 7.1.17. Availability. Following the making of the initial
Loans on the Initial Borrowing Date, the Revolving Commitment Availability
(calculated as though the Existing Letters of Credit were issued on the Initial
Borrowing Date) shall be at least $180,000,000.
SECTION 7.1.18. Issuance of Senior Debt and Equity. The Company
shall have issued the Senior Debt and the Parent Guarantor shall have issued
Parent Guarantor Preferred Stock, the aggregate gross proceeds of which shall
be at least $250,000,000. In addition, the Parent Guarantor shall have made a
capital contribution to the Company, purchased shares of capital stock of the
Company or made an intercompany loan to the Company, or any combination
thereof, in an aggregate amount equal to the cash proceeds received by the
Parent Guarantor from the issuance of such Parent Guarantor Preferred Stock,
net of all underwriting discounts and commissions and all legal, accounting and
other fees and expenses incurred in connection with the public offering of such
Parent Guarantor Preferred Stock. The Agent shall have received certificates
in substantially the form of Exhibit C-1 and C-2 attached hereto, dated the
Initial Borrowing Date, of an Authorized Officer of the Company as to the
satisfaction of the conditions set forth in this Section 7.1.18.
SECTION 7.1.19. Cash Management Arrangements. The Agent shall have
received each Collection Bank Agreement and the Concentration Bank Agreement,
duly executed by the Company, and, respectively, each Collection Bank, and Bank
of America, as concentration bank, together with such other documents,
releases, and agreements as reasonably required by the Agent or any Lender
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(acting through the Agent) in connection with perfecting its Lien in the
accounts established thereby.
SECTION 7.2. All Credit Extensions. The obligation of each
Lender to fund any Loan on the occasion of any Borrowing (including the initial
Borrowing), the obligation of Business Credit to fund any Swingline Loan, and
the obligation of any Issuer Bank to issue any Letter of Credit, as the case
may be, shall, except as provided in Section 2.1.3(b), be subject to the prior
or concurrent satisfaction (or waiver) of each of the conditions precedent set
forth in this Section 7.2. Notwithstanding the foregoing, the Lenders
acknowledge and agree that during the continuance of an Event of Cash Dominion,
in the event that the Agent, acting in its sole and absolute discretion, has
given notice of its election under the Concentration Bank Agreement to have
funds in the Concentration Account applied to repay Revolving Credit
Outstandings, (a) the Agent, acting in its sole and absolute discretion,
pursuant to Section 12.1, may waive the conditions of this Section 7.2 and
continue to make Revolving Loans and Swingline Loans, provided that the
Revolving Credit Outstandings after giving effect to such Loans do not exceed
the Borrowing Base, and instruct the applicable Issuer Bank to issue Letters of
Credit notwithstanding the existence of a Default and (b) if the Agent, acting
in its sole and absolute discretion, has determined that it is in the best
interests of the Lenders to continue to fund, the Lenders shall be obligated to
continue to make Revolving Loans and to reimburse the Agent for Swingline Loans
and shall be deemed to have purchased and received an undivided interest in
Letters of Credit made or issued after the giving of such notice by the Agent
of its election under the Concentration Bank Agreement unless and until the
Agent receives written instructions from the Required Lenders to cease making
Swingline Loans and Revolving Loans and instructing Issuer Banks to issue
Letters of Credit.
SECTION 7.2.1. Compliance with Warranties, No Default, etc. Both
immediately before and immediately after giving effect to any Credit Extension
(but, if any default of the nature referred to in Section 10.1.5 shall have
occurred with respect to any other Indebtedness, without giving effect to the
application, directly or indirectly, of the proceeds of such Credit Extension)
the following statements shall be true and correct:
(a) the representations and warranties set forth in
Article VIII (excluding, however, in the case of Borrowings other than
the Borrowing made on the Initial Borrowing Date, those contained
inSections 8.8 and 8.13 and the last sentence of Section 8.12) and in
each of the other Loan Documents shall be true and correct in all
material respects with the same effect as if then made (unless stated
to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all
material respects as of such earlier date), except that
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after the Initial Borrowing Date, for purposes of thisclause (a), the
words "has a reasonable possibility of having a Materially Adverse
Effect" which appear in Sections 8.7 and 8.10 shall be deemed to read
"could reasonably be expected to have a Materially Adverse Effect" and
the words "has no reasonable possibility of having a Materially
Adverse Effect" which appear in Section 8.1 shall be deemed to read
"could not reasonably be expected to have a Materially Adverse
Effect";
(b) except as disclosed by the Company to the Agent and
the Lenders in Item 3 ("Litigation") or Item 8 ("Environmental
Matter") of the Disclosure Schedule or in the Environmental Reports
(i) no labor controversy, litigation, arbitration,
or governmental proceeding, or governmental investigation
known to the Company's Executive Officers (including any
litigation or governmental proceeding or such governmental
investigation with respect to any environmental matter) shall
be pending or, to the knowledge of the Company's Executive
Officers, after due inquiry, threatened against the Parent
Guarantor, the Company, or any of their Subsidiaries which has
a reasonable possibility of having a Materially Adverse Effect
or which purports to affect the legality, validity, or
enforceability of this Agreement, or any other Transaction
Document; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration, or governmental
proceeding, or governmental investigation known to the
Company's Executive Officers (including any litigation or
governmental proceeding or such governmental investigation
with respect to any environmental matter) disclosed in Item 3
("Litigation") or Item 8 ("Environmental Matters") of the
Disclosure Schedule or in the Environmental Reports which has
a reasonable possibility of having a Materially Adverse
Effect;
provided, however, that after the Initial Borrowing Date, the words
"has a reasonable possibility of having a Materially Adverse Effect"
which appear inclauses (i) and (ii) of this clause (b) shall be deemed
to read "could reasonably be expected to have a Materially Adverse
Effect"; and
(c) no Default shall have then occurred and be
continuing; and neither the Parent Guarantor, the Company, any of
their Subsidiaries, nor any other Obligor shall be in violation of any
law, governmental regulation, or court order or decree where such
violation has a reasonable possibility of having a Materially Adverse
Effect;provided,
83
howeve, that after the Initial Borrowing Date, the words "has a
reasonable possibility of having a Materially Adverse Effect" which
appear in this clause (c) shall be deemed to read "could reasonably be
expected to have a Materially Adverse Effect".
SECTION 7.2.2. Credit Request; Borrowing Base Certificate. The
Agent shall have received a Credit Request, and, in connection with any request
for any Revolving Loan or the issuance of any Letter of Credit other than
during the continuance of an Event of Cash Dominion, a Borrowing Base
Certificate delivered pursuant to Section 2.4.1 for such Credit Extension. The
delivery of a Credit Request and the acceptance by the Company of the proceeds
of such Credit Extension shall constitute a representation and warranty by the
Company that, on the date of such Credit Extension (both immediately before and
after giving effect to such Credit Extension and the application of the
proceeds thereof), except as contemplated by the last sentence of Section 7.2,
the statements made in Section 7.2.1 are true and correct.
SECTION 7.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Parent Guarantor, the Company,
any of the Company's Subsidiaries, or any other Obligor shall be reasonably
satisfactory in form and substance to the Agent and its counsel and the Agent
and its counsel shall have received all information, approvals, opinions,
documents, or instruments as the Agent or its counsel may reasonably request.
SECTION 7.3. Conditions Subsequent. Within 60 days of the
Effective Date, the Collection Bank Agreements and the Concentration Bank
Agreement shall be amended to provide for such procedures and protections as
the Agent reasonably requests related to the occurrence of an Event of Cash
Dominion and the Company, each Collection Bank and Bank of America shall have
executed such other documents, releases, and agreements as reasonably required
by the Agent.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement, and to induce the Lenders to extend their Commitments and to make
Credit Extensions hereunder, the Parent Guarantor represents and warrants (and
the Company, to the extent that any such representation and warranty shall be
applicable to the Company, its Subsidiaries, or any of its or their Properties,
also represents and warrants) unto the Agent and each Lender as set forth in
this Article VIII.
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SECTION 8.1. Organization, etc. Each of the Obligors, the
Canadian Subsidiaries, VALCO, QAL, Anglesey, ALPART, KJBC, and each other
Significant Subsidiary of the Company is a corporation, partnership, or other
entity validly organized and existing and (in the case of non-Domestic
Subsidiaries and Joint Venture Affiliates, to the extent that "good standing"
is recognized under applicable law) in good standing under the laws of the
jurisdiction of its incorporation or organization, as the case may be; is duly
qualified to do business and (in the case of non-Domestic Subsidiaries and
Joint Venture Affiliates, to the extent that "good standing" is recognized
under applicable law) in good standing as a foreign corporation, partnership,
or other entity in each jurisdiction where the nature of its business or
activities requires such qualification; and has full corporate, partnership, or
other organizational power and authority and holds all requisite governmental
licenses, permits, and other approvals to own, lease, and operate its
Properties and to conduct its business substantially as now being operated and
conducted, except where the failure to be so qualified and in good standing or
to have such power, authority, licenses, permits, and other approvals has no
reasonable possibility of having a Materially Adverse Effect. The Parent
Guarantor, the Company, each Subsidiary of the Company, and each Obligor (a)
has full corporate power and authority to enter into and perform its respective
obligations under this Agreement, and the other Loan Documents and (b) holds
all requisite governmental licenses, permits, and other approvals to enter into
and perform its respective obligations under this Agreement, and the other Loan
Documents.
SECTION 8.2. Due Authorization, Non-Contravention, etc. The
execution, delivery, and performance by each Obligor of the Loan Documents to
which such Obligor is a party are within such Obligor's corporate powers, have
been duly authorized by all necessary corporate action, and do not
(a) contravene such Obligor's Organic Documents;
(b) contravene any contractual restriction where such a
contravention has a reasonable possibility of having a Materially
Adverse Effect, or contravene any law or governmental regulation or
court decree or order binding on or affecting such Obligor; or
(c) result in, or require the creation or imposition of,
any Lien on any of such Obligor's properties, other than pursuant to
the Loan Documents.
SECTION 8.3. Government Approval, Regulation, etc. No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or other Person is required for
the due execution, delivery, or performance by any Obligor of any Loan Document
to which it is a party, except for the filing or recording of financing
85
statements, the Company Mortgages, Company Deeds of Trust, Company Patent
Security Agreement, Company Trademark Security Agreement, any actions required
outside of the United States (with respect to Collateral located outside of the
United States or Collateral consisting of stock of foreign issuers), notations
on documents of title, and actions required under the Federal Assignment of
Claims Act of 1940 in order to perfect the security interests of the Agent in
the Collateral. None of the Parent Guarantor, the Company, or any of their
Subsidiaries is subject to regulation as an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or is 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",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
SECTION 8.4. Validity, etc. This Agreement, and all other Loan
Documents executed by the Company will, on the due execution and delivery
hereof and thereof by all parties hereto and thereto, constitute the legal,
valid, and binding obligations of the Company enforceable against the Company
in accordance with their respective terms; this Agreement and each other Loan
Document executed by the Parent Guarantor will, on the due execution hereof and
thereof by all parties hereto and thereto, constitute the legal, valid, and
binding obligations of the Parent Guarantor enforceable against the Parent
Guarantor in accordance with their respective terms; and each Loan Document
executed pursuant hereto by each other Obligor will, on the due execution and
delivery thereof by such Obligor and by all other parties thereto, constitute
the legal, valid, and binding obligation of such Obligor enforceable against
such Obligor in accordance with its terms; in each case, however, except as
enforceability may be limited by bankruptcy, insolvency, or other similar laws
of general application relating to or affecting the enforcement of creditors'
rights generally, and by general principles of equity.
SECTION 8.5. Financial Information.
(a) The consolidated balance sheet of the Company and its
Subsidiaries as of December 31, 1992 and the related statements of
consolidated income and consolidated cash flows for the year then
ended present fairly the financial position of the Company and its
Subsidiaries at December 31, 1992 and the results of their operations
and their cash flows for the year then ended in conformity with GAAP.
The consolidated balance sheet of the Company and its Subsidiaries as
of September 30, 1993 and the related statements of consolidated
income and consolidated statement of cash flows for the nine months
then ended present fairly (subject to normal year-end adjustments) the
financial position of the Company and its Subsidiaries at September
30, 1993 and the results of their operations and their cash
86
flows for the nine months then ended in conformity with GAAP for
interim financial information.
(b) The consolidated balance sheet of the Parent
Guarantor and its Subsidiaries as of December 31, 1992 and the related
statements of consolidated income and consolidated cash flows for the
year then ended present fairly the financial position of the Parent
Guarantor and its Subsidiaries at December 31, 1992 and the results of
their operations and their cash flows for the year then ended in
conformity with GAAP. The consolidated balance sheet of the Parent
Guarantor and its Subsidiaries as of September 30, 1993 and the
related statements of consolidated income and consolidated statement
of cash flows for the nine months then ended present fairly (subject
to normal year-end adjustments) the financial position of the Parent
Guarantor and its Subsidiaries at September 30, 1993 and the results
of their operations and their cash flows for the nine months then
ended in conformity with GAAP for interim financial information.
(c) The financial statements and projections of the
Company dated December 28, 1993 and January 26, 1994 were prepared on
the basis of the estimates and assumptions stated therein and
represented, at each such date, the Company's good faith forecasts and
projections of its future financial performance prepared after duly
diligent investigations; such estimates, assumptions, projections, and
forecasts were fair and reasonable, and reflected the Company's
estimates of the most likely future financial results and condition of
the Company, in the light of business conditions existing at the date
thereof; and any such estimates, assumptions, projections, and
forecasts, if prepared as of the date of this Agreement, would contain
estimates of the future financial performance of the Company which
would not materially and adversely differ from the respective
estimates contained in the financial projections and forecasts. As of
the date hereof and, in connection with the initial Credit Extension,
as of the Initial Borrowing Date, no material developments have
occurred since January 26, 1994 which would lead the Company to
believe that such projections and forecasts, taken as a whole, are not
reasonably attainable, subject to the uncertainties and approximations
inherent in any projections. It is understood by the Agent and the
Lenders that all of the estimates and assumptions on which such
projections and forecasts are based may not prove to be correct, that
actual future financial performance may vary from that projected, and
that nothing contained in this clause (c) shall be construed as a
warranty, or guarantee, of future financial performance.
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SECTION 8.6. No Material Adverse Effect.
(a) For purposes of Credit Extensions to be made on the
Initial Borrowing Date, no event or events have occurred since
September 30, 1993 which, individually or in the aggregate, have had
or have a reasonable possibility of having a Materially Adverse
Effect.
(b) For purposes of Credit Extensions requested to be
made after the Initial Borrowing Date, no event or events have
occurred since the Initial Borrowing Date which, individually or in
the aggregate, have had or could reasonably be expected to have a
Materially Adverse Effect.
SECTION 8.7. Absence of Default or Violation of Law. No Obligor
nor any Subsidiary thereof is (a) in default in the payment of (or in the
performance of any material obligation applicable to) any Indebtedness
outstanding in a principal amount exceeding $10,000,000 or (b) in violation of
any law, governmental regulation, or court decree or order where such violation
has a reasonable possibility of having a Materially Adverse Effect.
SECTION 8.8. Litigation, etc. There is no pending or, to the
knowledge, after due inquiry, of the Executive Officers of the Parent Guarantor
or the Company, threatened labor controversy, litigation, action, or proceeding
affecting the Parent Guarantor, the Company, or any of their Subsidiaries or
Joint Venture Affiliates, or any of their respective Properties, or revenues,
which has a reasonable possibility of having a Materially Adverse Effect or
which purports to affect the legality, validity, or enforceability of this
Agreement, or any other Loan Document, except as disclosed in Item 3
("Litigation") or Item 8 ("Environmental Matters") of the Disclosure Schedule
or in the Environmental Reports.
SECTION 8.9. Subsidiaries.
(a) The Parent Guarantor has no Subsidiaries except the
Company and its Subsidiaries. The Company has no Subsidiaries, except
those Subsidiaries
(i) which are identified in Item 2 ("Existing
Subsidiaries") of the Disclosure Schedule; or
(ii) which have been formed or acquired in
accordance with Section 9.2.5 or 9.2.10.
(b) Other than as set forth in Schedule XI hereto, as of
the Initial Borrowing Date neither the Parent Guarantor nor the
Company has any Subsidiaries having total assets greater than
$1,000,000 (exclusive of assets eliminated in consolidation) other
than those Subsidiaries set forth in Schedules III, IV and VII hereto.
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SECTION 8.10. Ownership of Properties.
(a) The Parent Guarantor, the Company, and each of their
Subsidiaries owns good title to all of its Properties, of any nature
whatsoever, which are material to the Parent Guarantor, the Company,
and their Subsidiaries as a whole or which, in the case of Properties
owned by the Company or any of its Significant Subsidiaries, are
material to the Company or such Significant Subsidiary, in each case
free and clear of all Liens or material claims except for "Permitted
Exceptions" (as defined in the Company Mortgages and Company Deeds of
Trust) or as permitted pursuant toSection 9.2.3.
(b) The Parent Guarantor, the Company, and each of their
Subsidiaries owns (or is licensed to use) and possesses all such
patents, trademarks, trade names, service marks, and copyrights as the
Parent Guarantor and the Company consider necessary for the conduct of
its business and the business of its Subsidiaries as now conducted
without, individually or in the aggregate, any infringement or alleged
infringement upon rights of other Persons which has a reasonable
possibility of having a Materially Adverse Effect.
SECTION 8.11. Taxes. The Parent Guarantor, the Company, and each
of their Domestic Subsidiaries and their other Significant Subsidiaries have
filed all federal, state, and all other material tax returns and reports
required by law to have been filed by it and have paid or caused to be paid all
material taxes and governmental charges thereby shown to be owing, except any
such taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
have been set aside on its books.
SECTION 8.12. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of each Credit Extension hereunder, no
actions have been taken by the Parent Guarantor, the Company, any member of
their Controlled Groups, or any other Person (with the requisite authority to
act) to terminate any Pension Plan that has insufficient assets to satisfy all
benefit liabilities thereunder (within the meaning of Section 4001(a)(16) of
ERISA), and no contribution failure has occurred with respect to any Pension
Plan sponsored or maintained by any Controlled Group member sufficient to give
rise to a Lien on assets of any Controlled Group member under section 302(f) of
ERISA, which failure has not been cured within 30 days of the applicable due
date. With respect to any Pension Plan, neither the Parent Guarantor, the
Company, nor any of their Subsidiaries has failed in any material respect to
comply with applicable provisions of ERISA and the Code and any regulations,
rulings, or notices issued thereunder. Item 7 ("Employee Benefit Plans") of
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the Disclosure Schedule lists all Welfare Plans of the Parent Guarantor, the
Company, or any of their Domestic Subsidiaries and sets forth the Company's
estimate of the expected aggregate contributions of the Parent Guarantor, the
Company, and their Domestic Subsidiaries to Pension Plans for the 1992 and 1993
Fiscal Years and the aggregate expected costs of the Parent Guarantor, the
Company and their Domestic Subsidiaries for medical benefits for the 1992 and
1993 Fiscal Years under Welfare Plans.
SECTION 8.13. Environmental Warranties. Except as set forth in
Item 8 ("Environmental Matters") of the Disclosure Schedule or in the
Environmental Reports:
(a) all facilities and Property (including underlying
groundwater) owned, operated, or leased by the Parent Guarantor, the
Company, or any of their Subsidiaries have been, and continue to be,
owned, operated, or leased by the Parent Guarantor, the Company, and
their Subsidiaries in material compliance with all Environmental Laws;
(b) there are no pending or, to the knowledge of the
Parent Guarantor's or the Company's Executive Officers, after due
inquiry, threatened
(i) claims, complaints, notices, or requests for
information received by the Parent Guarantor, the Company, or
any of their Subsidiaries, from any federal, state, or local
governmental agency or authority, or from any Person which has
commenced a legal proceeding against the Parent Guarantor, the
Company, or any of their respective Subsidiaries, with respect
to any alleged violation of any Environmental Law, or
(ii) complaints, notices, or inquiries to the Parent
Guarantor, the Company, or any of their Subsidiaries, from any
federal, state, or local governmental agency or authority, or
from any Person which has commenced a legal proceeding against
the Parent Guarantor, the Company, or any of their respective
Subsidiaries, regarding potential liability under any
Environmental Law;
(c) there have been no Releases of Hazardous Materials
at, on, into or under any Property now or previously owned, operated,
or leased by the Parent Guarantor, the Company, or any of their
Subsidiaries that, singly or in the aggregate, have a reasonable
possibility of having a Materially Adverse Effect;
(d) the Parent Guarantor, the Company, and their
Subsidiaries have been issued and are in material compliance with all
permits, certificates, approvals, licenses, and
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other authorizations relating to environmental matters and necessary
for their businesses;
(e) no Property now or previously owned, operated, or
leased by the Parent Guarantor, the Company, or any of their
Subsidiaries is listed or, to the knowledge of the Parent Guarantor's
or the Company's Executive Officers, after due inquiry, proposed for
listing (with respect to owned Property only) on the National
Priorities List pursuant to CERCLA or on the CERCLIS or, to the best
knowledge and belief of the Parent Guarantor's and the Company's
Executive Officers, on any similar state list of sites requiring
investigation or clean-up;
(f) there are no underground storage tanks (as defined in
40 C.F.R. Section 280.1, as the same may be amended, modified,
supplemented, or replaced from time to time), active or abandoned,
including petroleum storage tanks, on or under any Property now or
previously owned or leased by the Parent Guarantor, the Company, or
any of their Subsidiaries that, singly or in the aggregate, have a
reasonable possibility of having a Materially Adverse Effect;
(g) none of the Parent Guarantor, the Company, or any of
their Subsidiaries has, to the best knowledge and belief of each
Executive Officer of the Company, transported or arranged for the
transportation of any Hazardous Material to any location which is
listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list or
which is the subject of federal, state, or local enforcement actions
or other investigations which has a reasonable possibility of leading
to material claims against the Parent Guarantor, the Company or such
Subsidiary thereof for any remedial work, damage to natural resources,
or personal injury, including claims under CERCLA; and
(h) there are no polychlorinated biphenyls or friable
asbestos present at any real property now or previously owned or
leased by the Parent Guarantor, the Company, or any of their
Subsidiaries that, singly or in the aggregate, have a reasonable
possibility of having a Materially Adverse Effect.
SECTION 8.14. Regulations G, U, and X. No Obligor is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds of any Credit Extension will be used for a
purpose which violates, or would be inconsistent with, F.R.S. Board Regulation
G, U, or X. Terms for which meanings are provided in F.R.S. Board Regulation
G, U, or X or any regulations substituted therefor, as from time to time in
effect, are used in this Section 8.14 with such meanings.
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SECTION 8.15. Solvency. On and as of the date of each Credit
Extension, both before and after giving effect to
(a) all Indebtedness (including the Loans and the Letters
of Credit) being incurred, assumed, or guaranteed, and
(b) Liens created by the Company in connection therewith,
but in no case regarding the KT Note as an asset of the Company, the Company
and the Parent Guarantor will be Solvent.
SECTION 8.16. Senior Indebtedness.
(a) The monetary Obligations of the Company hereunder and
under the other Loan Documents constitute "Senior Indebtedness" of the
Company underclause (i) of the definition of the term "Senior
Indebtedness" and, to the extent that such monetary Obligations
constitute "Obligations" (as defined in the Subordinated Indenture),
"Specified Senior Debt" described in clause (i)(A) of the definition
of such term under the terms of the Subordinated Indenture; the
monetary Obligations of KFC, KAAC, AJI and KJC under the Loan
Documents constitute "Senior Indebtedness" of such corporations
underclause (i) of the definition of the term "Senior Indebtedness"
and, to the extent that such monetary Obligations constitute
"Obligations" (as defined in the Subordinated Indenture), "Guarantor
Specified Senior Debt" described in clause (i)(A) of the definition of
such term of such corporations under the terms of the Subordinated
Indenture; the subordination provisions of the Subordinated Indenture
are enforceable against the holders of the Subordinated Debt; and the
Agent and the Lenders will be entitled to the benefits of such
subordination provisions.
(b) The monetary Obligations of the Company hereunder and
under the other Loan Documents constitute "Senior Indebtedness of the
Company" (as defined in the PIK Note) under the terms of the PIK Note;
the subordination provisions of the PIK Note are enforceable against
the holder of the PIK Note; and the Agent and the Lenders will be
entitled to the benefits of such subordination provisions of the PIK
Note.
(c) The monetary Obligations of the Company hereunder and
under the other Loan Documents constitute (or, in the case of any
Equity Proceeds Note issued after the date hereof, will constitute)
"Senior Indebtedness of the Company" (as defined in each Equity
Proceeds Note) under the terms of each Equity Proceeds Note; the
subordination provisions of each Equity Proceeds Note are enforceable
(or, in the case of any Equity Proceeds Notes issued after the
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date hereof, will be enforceable) against the holder of such note; and
the Agent and the Lenders will be entitled to the benefits of such
subordination provisions of each Equity Proceeds Note.
SECTION 8.17. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of any Obligor in
writing to the Agent or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such factual
information hereafter furnished in writing by or on behalf of any Obligor to
the Agent or any Lender pursuant to or in connection with any Loan Document
will be, true and accurate in every material respect on the date as of which
such information is dated or certified, and such information is not, or shall
not be, as the case may be, incomplete by omitting to state any material fact
necessary to make such information not misleading in light of the circumstances
then prevailing.
SECTION 8.18. Joint Venture Contingent Liabilities. Item 11
("Joint Venture Contingent Liabilities") of the Disclosure Schedule contains a
fair summary of the types of the material Contingent Liabilities of the Company
and its Subsidiaries in respect of the businesses, operations, and financial
obligations of VALCO, ALPART, Anglesey, KJBC, and QAL.
SECTION 8.19. Mortgaged Property. The real property and
improvements which are mortgaged by the Company Mortgages and Company Deeds of
Trust, as the case may be, constitute, as of the date of this Agreement, all of
the real property and improvements owned or leased by the Company or any of its
Subsidiaries which comprise, or are part of, or are used in the operations of,
or are located contiguous to, the respective plants of the Company which are
located at the locations listed on Schedule II hereto, except for certain
unimproved property which is located contiguous to the Company's facilities at
Newark, Ohio, Mead, Washington and Greenwood County, South Carolina, but will
not be so mortgaged. Such unimproved property (a) is not a part of or used in
the operations of the Company's plants in Newark, Ohio, Mead, Washington or
Greenwood County, South Carolina which are to be mortgaged to the Agent, and
(b) does not have any material structures or improvements located on it.
ARTICLE IX
COVENANTS
SECTION 9.1. Affirmative Covenants. The Parent Guarantor agrees
(and the Company, to the extent that any such agreement of the Parent Guarantor
shall be applicable to the Company, any of its Subsidiaries, or any of its or
their properties, also agrees) with the Agent and each Lender that, until all
Commitments have
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terminated, no Letters of Credit are outstanding, and all outstanding monetary
Obligations have been paid in full:
SECTION 9.1.1. Financial Information, Reports, Notices, etc. The
Company will furnish, or will cause to be furnished, to the Agent, for itself
and for delivery to the Lenders, copies of the following financial statements,
reports, notices, and information:
(a) within 50 days after the end of each of the first
three Fiscal Quarters of each Fiscal Year of the Company, consolidated
and consolidating balance sheets of the Company and its Subsidiaries
as of the end of such Fiscal Quarter and consolidated and
consolidating statements of income of the Company and its Subsidiaries
for such Fiscal Quarter and for the period commencing at the end of
the previous Fiscal Year and ending with the end of such Fiscal
Quarter and a consolidated statement of cash flows of the Company and
its Subsidiaries for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal Quarter, certified
(subject to normal year-end adjustments) on behalf of the Company by a
Financial Authorized Officer of the Company;
(b) within 95 days after the end of each Fiscal Year of
the Company, (i) a copy of the annual audit report for such Fiscal
Year for the Company and its Subsidiaries, including therein a
consolidated balance sheet as at the close of such Fiscal Year, and
related consolidated statements of income and cash flows for such
Fiscal Year, of the Company and its Subsidiaries, in each case audited
(without any Impermissible Qualification) by Arthur Andersen & Co. or
other independent public accountants acceptable to the Agent and the
Required Lenders, (ii) a consolidating balance sheet at the close of
such Fiscal Year, and a related consolidating statement of income for
such Fiscal Year, of the Company and its Subsidiaries, certified on
behalf of the Company by a Financial Authorized Officer of the
Company, and (iii) a report from the accountants referred to in clause
(i), containing a computation prepared by the Company of each of the
financial covenants contained inSection 9.2.4 as at the end of such
Fiscal Year, and, commencing with the 1995 Fiscal Year, of the
Interest Coverage Ratio as of the end of each Fiscal Quarter of such
Fiscal Year (except the first Fiscal Quarter of the 1995 Fiscal Year),
which report shall specify that it has been prepared using the
procedures specified in the letter dated February __, 1994 from Arthur
Andersen & Co. to the Agent, a copy of which has been delivered to
each Lender, and reporting that, in making the audit necessary for the
signing of such annual report by such accountants, they have not
become aware of any material miscomputation by the Company of such
financial covenants, or of the Interest Coverage Ratio as of the end
of each of such Fiscal
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Quarters, or of any Default or Event of Default that has occurred and
is continuing, or, if they have become aware of such miscomputation,
Default, or Event of Default, describing such miscomputation, Default,
or Event of Default;
(c) as soon as available and in any event within 50 days
(or, in the case of the fourth Fiscal Quarter of any Fiscal Year, 95
days) after the end of each Fiscal Quarter, (i) a Compliance
Certificate, executed on behalf of the Company by a Financial
Authorized Officer of the Company, showing (in reasonable detail and
with appropriate calculations and computations in all respects
satisfactory to the Agent) compliance with the financial covenants set
forth inSection 9.2.4 and, commencing with the second Fiscal Quarter
of the 1995 Fiscal Year, the calculation of the Interest Coverage
Ratio for the four Fiscal Quarter Period ended on the last day of such
Fiscal Quarter and (ii) a detail schedule of Inventory by site (in
substantially the form currently produced by the Company, with such
changes as to which the Agent may consent, such consent not to be
unreasonably withheld);
(d) as soon as possible and in any event within three
Business Days after an Executive Officer of the Parent Guarantor or
the Company shall have become aware of the occurrence of
(i) any Default, a statement on behalf of the
Company by the chief financial Authorized Officer of the
Company setting forth details of such Default and the action
which the Company and/or the relevant other Obligor has taken
and proposes to take with respect thereto, or
(ii) any
(A) default or event of default (however
denominated) under any Subordinated Debt Instrument
(B) default or event of default (however
denominated) under any Senior Debt Instrument or
(C) default or event of default (however
denominated) under any agreement relating to any
Joint Venture Affiliate, ALPART, or VALCO or any
other material document or agreement to which the
Company or any of its Significant Subsidiaries is a
party, in each case where such a default or event of
default has a reasonable possibility of having a
Materially Adverse Effect,
notice and a description in reasonable detail thereof;
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(e) as soon as possible and in any event within three
Business Days after (i) the occurrence of any material adverse
development with respect to any labor controversy, litigation, action,
or proceeding described in Section 8.8 or (ii) the commencement of any
labor controversy, litigation, action, or proceeding of the type
described in Section 8.8, written notice thereof and copies of all
material documentation relating thereto;
(f) promptly after the sending or filing thereof, copies
of all publicly available reports which the Parent Guarantor or the
Company sends to any of its security holders, and all publicly
available reports and registration statements which the Parent
Guarantor or the Company or any of their Subsidiaries files with the
Securities and Exchange Commission or any national securities
exchange;
(g) as soon as possible and in any event within three
Business Days after an Executive Officer of the Parent Guarantor or
the Company shall have become aware of the taking of any action by the
Company or any other Person to terminate any Pension Plan that has
insufficient assets to satisfy all benefit liabilities thereunder
(within the meaning of Section 4001(a)(16) of ERISA), or the failure
to make a required contribution to any Pension Plan if such failure is
sufficient to give rise to a Lien against assets of any Controlled
Group member under section 302(f) of ERISA, or the taking of any
action with respect to a Pension Plan which could reasonably be
expected to result in the requirement that the Company or any
Controlled Group member furnish a bond or other security to the PBGC
or such Pension Plan, or the occurrence of any event relating to any
Pension Plan with respect to which there is a reasonable possibility
of the incurrence by the Company, the Parent Guarantor or any of their
Subsidiaries of any liability, fine, or penalty which would have a
Materially Adverse Effect, or any material increase in the contingent
liability of the Company with respect to any post-retirement Welfare
Plan benefit excluding liabilities occurring solely by operation of
any generally applicable law enacted after the date of this Agreement,
written notice thereof and copies of all material documentation
relating thereto;
(h) (i) promptly upon receipt thereof, a copy of all
notices, documents, or other Instruments received by the Company
pursuant to any Subordinated Debt Instrument or any Senior Debt
Instrument and not otherwise required to be delivered hereunder and
(ii) concurrently with the delivery thereof, a copy of all notices,
documents, or other Instruments delivered by the Company pursuant to
any Subordinated Debt Instrument or any Senior Debt Instrument and not
otherwise required to be delivered hereunder;
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(i) no later than five Business Days after the approval
thereof by the Company's Board of Directors, a copy of the annual
business plan, budget, and updated business projections of the Company
and its Subsidiaries, and upon the delivery to the Agent of any
financial statements relating to a Fiscal Quarter included in such
plan, budget, or projections, a summary comparing the Company's actual
financial performance during such Fiscal Quarter to that provided in
such plan, budget, or projections; and
(j) such other information respecting the condition or
operations, financial or otherwise, of the Parent Guarantor, the
Company, or any of their Subsidiaries as any Lender (acting through
the Agent) may from time to time reasonably request.
SECTION 9.1.2. Compliance with Laws, etc. The Parent Guarantor and
the Company will, and will cause each of their Subsidiaries to, comply in all
respects with all applicable laws, rules, regulations, and orders (except for
such noncompliance which could not reasonably be expected to have a Materially
Adverse Effect), including (and subject to the foregoing exception):
(a) subject to Section 9.2.10, the maintenance and
preservation of its corporate existence under the laws of its
jurisdiction of incorporation or organization, as the case may be, and
its qualification as a foreign corporation, partnership, or other
entity in each jurisdiction where the nature of its business requires
such qualification; and
(b) the payment, before the same become delinquent, of
all taxes, assessments, and governmental charges imposed upon it or
upon its Property, except to the extent being contested in good faith
by appropriate proceedings and for which adequate reserves in
accordance with GAAP have been set aside on its books.
SECTION 9.1.3. Maintenance of Properties. The Parent Guarantor and
the Company will, and will cause each of their Significant Subsidiaries to,
maintain, preserve, protect, and keep their material properties in good repair,
working order, and condition (ordinary wear and tear excepted), and make
necessary and proper repairs, renewals, and replacements so that their business
carried on in connection therewith may be properly conducted at all times
unless the Parent Guarantor or the Company determines in the exercise of its
good faith business judgment that the continued maintenance of any such
properties is no longer economically desirable.
SECTION 9.1.4. Insurance.
(a) The Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with
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financially sound and reputable insurance companies (including,
consistent with past practice, insurance companies affiliated with the
Company, insurance with respect to their Properties and business
(including business interruption insurance, fire insurance, public
liability insurance and flood insurance) in such amounts, of such
character and against such risks as are usually maintained by
companies engaged in the same or similar business or having comparable
properties, and in any case having a coverage which is not materially
less than the insurance of such type maintained by the Company and its
Subsidiaries on the date of this Agreement,provided, that to the
extent that any of the insurance required by thisclause (a) ceases to
be available at commercially reasonable rates, the Company may effect
substitute insurance coverage therefor in accordance with prudent
standards then being followed by other companies engaged in the same
or similar business or having comparable properties. In the event
that the Company wishes to effect substitute coverage pursuant to the
foregoing proviso, it will (i) notify the Agent of such intent as soon
as reasonably practicable, and (ii) in any event not less than three
Business Days prior to the termination of the coverage for which
substitution is to be made, furnish the Agent with a report of the
Company describing in reasonable detail the nature of such substitute
coverage and the reasons why the Company believes that such substitute
coverage is appropriate.
(b) The Company will cause:
(i) the Agent and the Lenders to be named as an
additional insured, for a total coverage of $10,000,000 for
all such Persons, under the public liability policies of the
Company and its Subsidiaries; and
(ii) the Agent to be named as loss payee under all
insurance policies of the Company and its Subsidiaries that
have executed the Subsidiary Security Agreement covering loss
of or damage to Property (pursuant to loss payable clauses
satisfactory to the Agent),
and will,
(A) as soon as practicable after effecting any
insurance policies of the Company or any of its Subsidiaries
(other than ALPART or VALCO) (and, with respect to any such
policies which are replacements for other insurance policies
which are required hereby, and which are terminating, in any
event within three Business Days after such termination),
furnish the Agent with an insurance broker's certificate or
binder in respect of such policies or replacement policies;
98
(B) if a replacement insurance policy for an
insurance policy which is required hereby and which is
terminating has not been effected prior to the third Business
Day before such termination, furnish the Agent on such third
Business Day a report of the Company describing in reasonable
detail the status of such replacement policies; and
(C) upon request of the Agent, furnish to the Agent
copies of all insurance policies at any time maintained by the
Parent Guarantor, the Company and each Subsidiary of the
Company executing a Security Agreement and furnish to the
Agent with copies for each Lender, on the ______ day of each
year, a certificate of an Authorized Officer of the Company
(and, if requested by the Agent, any insurance broker of the
Company) setting forth the nature and extent of all insurance
maintained by the Company, and its Significant Subsidiaries in
accordance with this Section 9.1.4 (and which, in the case of
a certificate of a broker, were placed through such broker).
SECTION 9.1.5. Books and Records; Audits; Confidentiality.
(a) Each of the Parent Guarantor and the Company will,
and will cause each of its Significant Subsidiaries to, maintain at
all times proper and complete (in all material respects) books,
records and accounts, in which complete and timely (in all material
respects) entries are made, which reflect all of its business affairs
and transactions in accordance with GAAP. The Company will and will
cause KAII to maintain at all times books and records pertaining to
the Collateral in such detail, form and scope as the Agent shall
reasonably require, including records , to the extent normally
maintained in accordance with accepted accounting principles, of (i)
all payments received and all credits and extensions granted with
respect to the Accounts, (ii) the return, rejection, repossession,
stoppage in transit, loss, damage or destruction of any Inventory, and
(iii) all other dealings affecting the Collateral.
(b) Each of the Parent Guarantor and the Company will
permit the Agent, and any Lender who wishes to accompany the Agent, or
any representatives thereof, at all reasonable times and intervals
(and at any time during the continuance of an Event of Default or an
Event of Cash Dominion), on reasonable notice during ordinary business
hours, to have access to examine, audit, make extracts from and
inspect the Company's and KAII's records, files, and books of account
and the Collateral and to discuss the Company's and KAII's affairs
with the Company's and KAII's officers and management and the
independent public accountant for the Company, KAII, and the Parent
Guarantor (and each of the Parent Guarantor and the Company hereby
authorizes such
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independent public accountant to discuss the Parent Guarantor's, the
Company's, or KAII's financial matters with the Agent and with each
Lender or its representatives). The Company will, and will cause KAII
to, deliver to the Agent, to the extent reasonably requested, any
instrument necessary for the Agent to obtain records from any service
bureau maintaining records for the Company or KAII. The Agent may, at
the Company's expense, make copies of all of the Company's and KAII's
books and records, or require the Company or KAII to deliver such
copies to the Agent. The Agent may, without expense to the Agent, use
such of the Company's and KAII's personnel, supplies, and premises as
may be reasonably necessary for maintaining or enforcing the Security
Interest. In addition, subject to the provisions ofSection 3.5.2, the
Parent Guarantor and the Company shall pay the reasonable fees of any
independent public accountant incurred in connection with the Agent's
exercise of its rights pursuant to this Section 9.1.5.
(c) Subject to the provisions of the next paragraph, the
Agent, each Lender, and each prospective purchaser of or participant
in any part of any Loan, Commitment, or any other interest under this
Agreement, each severally and for itself alone, agrees to maintain all
Confidential Information (as defined below) obtained by it in
connection with its rights under this Agreement or the other Loan
Documents, including its rights of access contained in thisSection
9.1.5 and information supplied pursuant to Section 9.1.1, confidential
and not disclose the same to any Person who is not an officer,
director, employee, legal counsel, or authorized agent or advisor of
the Agent, or any such Lender or any purchaser or prospective
purchaser of or participant in all or any part of any Loan,
Commitment, or any other interest under this Agreement pursuant to the
provisions of Section 12.11.2 who shall agree, by executing a letter
agreement substantially in the form attached hereto asExhibit Q, to be
bound by the provisions of this clause (c). The Agent, each Lender,
and each other Person bound hereby shall not use any Confidential
Information except for purposes relating to this Agreement, the other
Loan Documents, or otherwise in connection with its status as a
creditor or potential creditor of the Company pursuant to the
transactions contemplated hereby or thereby. The term "Confidential
Information" shall mean information specifically labelled or
identified as "Confidential" furnished by or on behalf of the Company
to the Agent, any Lender, or other Person exercising rights hereunder
and any information or documents (whether or not specifically labeled
or identified as "Confidential") obtained pursuant to Section 9.1.5(b)
by the Agent, any Lender or other Person exercising rights hereunder,
but shall not include any such information which (a) has become or
hereafter becomes available to the public other than as a result of a
disclosure by the Agent, any Lender, or other Person
100
exercising rights hereunder or required to be bound hereby, or (b) was
or became available to the Agent, any Lender, or other Person
exercising rights hereunder or required to be bound hereby on a
non-confidential basis prior to its disclosure by the Company, its
representatives, or its agents, or (c) becomes available to the Agent,
any Lender, or other Person exercising rights hereunder or required to
be bound hereby on a non-confidential basis from a source other than
the Company, its representatives, or its agents or another Lender or
other Person exercising rights hereunder or required to be bound
hereby.
The restrictions set forth in the preceding paragraph shall
not prevent the disclosure by the Agent, any Lender, or any other
Person required to be bound hereby of any such information
(i) with the prior written consent of the Company
or as expressly contemplated by this Agreement or any other
Loan Document;
(ii) upon order of any court or administrative
agency of competent jurisdiction, to the extent required by
such order and not effectively stayed on appeal or otherwise,
or as otherwise required by law;
(iii) in connection with any litigation or other
legal proceeding at law, in equity, or in bankruptcy to which
the Parent Guarantor or the Company or any Subsidiary of
either thereof and the Agent, such Lender, or other Person are
parties; or
(iv) to any Affiliate of any Lender who shall agree,
by executing a letter agreement substantially in the form
attached hereto as Exhibit Q, to be bound by the provisions of
this clause (c);
provided, however, that, in the case of any intended disclosure under
clause (ii), the Agent, the relevant Lender, or other Person shall
(unless otherwise required by applicable law) give the Company not
less than five Business Days prior notice (or such shorter period as
may be reasonable or required by any court or agency under the
circumstances), specifying the Confidential Information involved and
stating such Person's intention to disclose such Confidential
Information (including the manner and extent of such disclosure) in
order to allow the Company an opportunity to seek an appropriate
protective order.
SECTION 9.1.6. Environmental Covenant. The Parent Guarantor and the
Company will, and will cause each of their Subsidiaries to,
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(a) use and operate all of their respective facilities
and properties in material compliance with all Environmental Laws,
keep all necessary permits, approvals, certificates, licenses, and
other authorizations relating to environmental matters in effect and
remain in material compliance therewith, and handle all Hazardous
Materials in material compliance with all applicable Environmental
Laws;
(b) (i) as soon as possible and in any event no
later than 15 Business Days after an Executive
Officer of the Company shall have become aware of the
receipt thereof, notify the Agent and provide copies
of all written claims, complaints, notices, or
inquiries by a governmental or regulatory authority,
or any Person which has commenced a legal proceeding
against the Parent Guarantor, the Company, or any of
their Subsidiaries, relating to compliance by the
Company or its Subsidiaries with, or potential
liability of the Company or its Subsidiaries under,
Environmental Laws; and
(ii) with reasonable diligence cure all
environmental defects and conditions which are the
subject of any actions and proceedings against the
Parent Guarantor, the Company, or any of their
Subsidiaries relating to compliance with
Environmental Laws, except to the extent that such
actions and proceedings (or the obligation of the
Parent Guarantor, the Company, or any such Subsidiary
to cure such defects and conditions) are being
contested by the Parent Guarantor, the Company or any
of their Subsidiaries in good faith by appropriate
proceedings; and
(c) provide such information, access, and certifications
which the Agent may reasonably request from time to time to evidence
compliance with this Section 9.1.6.
SECTION 9.1.7. Performance of Instruments. Each of the Parent
Guarantor and the Company will, and will cause each of their Subsidiaries to,
perform promptly and faithfully all of their Obligations under each Loan
Document to which it is or is to be a party, subject to any applicable grace
periods.
SECTION 9.1.8. Maintenance of Collateral. The Parent Guarantor and
the Company will, and will cause their Subsidiaries having an interest in any
Property which is, or is intended to be, Collateral to,
(a) acquire and maintain such Property in a manner that
will enable the Parent Guarantor, the Company, or such Subsidiary, as
the case may be, to cause such Property to be subject to the Liens of
the Collateral Documents; and
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(b) obtain the consent or approval of any Person whose
consent or approval is required for the grant of Liens by the Parent
Guarantor, the Company, or any such Subsidiary in any such Property.
SECTION 9.1.9. Collateral Reporting. Except during the continuance
of an Event of Cash Dominion, the Company will, and will cause KAII to, provide
the Agent with the following documents, in form and scope satisfactory to the
Agent, on a monthly basis: (a) an accounts receivable summary aging report
together with a reconciliation to the previous month's accounts receivable
summary aging report; (b) a reconciliation of the account receivable summary
aging report to the accounts receivable general ledger; (c) a monthly listing
of delinquent accounts in excess of $100,000 that are thirty days past the due
date or sixty-five days past the invoice date, (d) monthly inventory summary
reports by category, (e) monthly inventory summary reports by location; and (f)
certificates of an officer of the Company certifying on behalf of the Company
as to the foregoing. During the continuance of an Event of Cash Dominion, the
Company will, and will cause KAII to, continue to provide the Agent with the
documents described in clauses (a) through (f) above. In addition, the Company
will, and will cause KAII to, provide the Agent with the following documents
immediately upon any written request therefor by the Agent: (a) copies of
shipping and delivery documents; (b) copies of invoices, customer statements,
credit memos, remittance advises and reports, and deposit slips; (c) copies of
purchase orders, invoices, and delivery documents for Inventory of the Company
acquired by the Company; and (d) such other reports as to the Collateral as the
Agent shall request from time to time. If any of the Company's or KAII's
records or reports of the Collateral are prepared by an accounting service or
other agent, the Company hereby authorizes such service or agent to deliver
such records, reports, and related documents to the Agent.
SECTION 9.1.10. Delivery; Further Assurances. The Parent Guarantor
and the Company will, and will cause each of their wholly owned Subsidiaries
to, at the expense of the Company,
(a) without any request by the Agent, within 10 Business
Days after the receipt thereof, deliver or cause to be delivered to
the Agent, in due form for transfer (i.e., endorsed in blank or, if
appropriate, accompanied by duly executed blank stock or bond powers),
all equity securities having a value, and all debt instruments (other
than the Equity Proceeds Notes, which shall not constitute Collateral)
having face amounts, in excess of $100,000, at any time representing
all or any of the Collateral, in due form for transfer i.e., endorsed
in blank or, if appropriate, accompanied by duly executed blank bond
powers);
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(b) upon forming or acquiring any Subsidiary, immediately
notify the Agent of such formation or acquisition, and if requested by
the Agent at the request of the Required Lenders, unless such
Subsidiary is acquired or formed by a Subsidiary of the Company which
is not a Domestic Subsidiary,
(i) pledge and deliver to the Agent pursuant
to the Company Pledge Agreement or the Subsidiary Pledge
Agreement, as the case may be, certificates evidencing all of
the issued and outstanding capital stock of such Subsidiary
owned directly or indirectly by the Company (or, if such
Subsidiary is not a Domestic Subsidiary, 65% of such capital
stock) accompanied by undated stock powers duly executed in
blank or pledge to the Agent pursuant to the Company Pledge
Agreement, the Subsidiary Pledge Agreement, the Company
Security Agreement, or the Subsidiary Security Agreement, as
the case may be, all of the Company's or such Subsidiary's
general or limited partnership interest in such Subsidiary;
(ii) if such pledgor is a Subsidiary of the
Company, cause such pledgor to execute and deliver to the
Agent a counterpart of the Subsidiary Guaranty and such other
items of documentation as shall be necessary in order for such
pledgor to assume the obligations under the Subsidiary
Guaranty (and such pledgor, if a Subsidiary of the Company,
may thereupon become a "Subsidiary Guarantor" (under and as
defined in the Subordinated Indenture or the Senior Indenture)
if and to the extent required to become a "Subsidiary
Guarantor" by Section 5.12(c) of the Subordinated Indenture or
Section of the Senior Indenture); and
(iii) cause such Subsidiary to deliver to the
Agent such evidence of due execution, and such other
information with respect to its Organic Documents and
contractual obligations, and as to the Collateral in which it
has an interest, as the Agent may request, and to take all
action necessary or as the Agent may request to create,
preserve, perfect, confirm, and validate the Liens created or
purported to be created by such Collateral Documents;
(c) if any Subsidiary of the Company is required to grant
a Lien to the Agent over any interest in real property pursuant to
clause (b) of Section 9.1.11, and if requested by the Agent at the
request of the Required Lenders,
(i) cause such Subsidiary to execute and
deliver to the Agent a counterpart of the Subsidiary Guaranty
and such other items of documentation as shall
104
be necessary in order for such Subsidiary to assume the obligations
under the Subsidiary Guaranty (and such Subsidiary may thereupon
become a "Subsidiary Guarantor" (under and as defined in the
Subordinated Indenture or the Senior Indenture) if and to the extent
required to become a "Subsidiary Guarantor" by Section 5.12(c) of the
Subordinated Indenture or Section of the Senior Indenture),
(ii) cause such Subsidiary to execute and
deliver to the Agent counterparts of the Subsidiary Security
Agreement, the Subsidiary Pledge Agreement, and such other
items of documentation as shall be necessary in order for such
Subsidiary to assume the obligations under the Subsidiary
Security Agreement and the Subsidiary Pledge Agreement, and
(iii) cause such Subsidiary to deliver to the
Agent such evidence of due execution, and such other
information with respect to its Organic Documents and
contractual obligations, and as to the Collateral in which it
has an interest, as the Agent may request, and to take all
action necessary or as the Agent may request to create,
preserve, perfect, confirm, and validate the Liens created or
purported to be created by such Collateral Documents;
(d) upon the opening of any account for investment in
Cash Equivalent Investments permitted hereunder by the Company or any
Obligor which has executed the Subsidiary Security Agreement, promptly
notify the Agent thereof and promptly deliver a letter, in
substantially the form of one of the letters contained inExhibit N
attached hereto, with such changes as the Agent may approve, duly
executed by the Person with which the Company or such Subsidiary
maintains such account;
(e) upon request of the Agent, furnish or cause to be
furnished to the Agent such opinions of counsel, and other documents
with respect to the Collateral as the Agent may reasonably specify;
and
(f) upon request of the Agent, forthwith execute and
deliver or cause to be executed and delivered to the Agent, in due
form for filing or recording (and pay the cost of filing or recording
the same in all public offices deemed necessary by the Agent), such
assignments, security agreements, pledge agreements, consents,
waivers, financing statements, stock or bond powers, and other
documents, and do such other acts and things, all as the Agent may
from time to time request, to establish and maintain to the
satisfaction of the Agent valid perfected Liens in all Collateral
(free of all other Liens, claims, and rights of third parties
whatsoever, except for Liens, claims, and
105
rights permitted by Section 9.2.3), provided, that the Company shall
not be required to register itself in Ghana or the United Kingdom for
this purpose.
SECTION 9.1.11. Real Property; Title Policies; Surveys. As further
security for the payment of the Obligations, the Parent Guarantor and the
Company will, and will cause their Subsidiaries to:
(a) obtain and maintain the consent or approval of any
Person whose consent or approval is required to the granting of a Lien
on any interest in real property which is, or is required by the terms
of this Agreement to be, subject to a mortgage or deed of trust in
favor of the Agent; and
(b) concurrently with or promptly after the purchase or
acquisition by the Company or any such Subsidiary of, or the formation
or acquisition by the Company or any such Subsidiary of any Subsidiary
with an interest in, any real property (including all improvements)
which is located in the United States and which is structurally
related to, or which is located contiguous to, real property upon
which there is an existing Lien in favor of the Agent pursuant to a
Company Mortgage or Company Deed of Trust,
(i) execute, acknowledge, and deliver to the Agent a
mortgage or deed of trust (or, if appropriate, an amendment or
supplement to an existing mortgage or deed of trust), in such
form and substance, and in such number of counterparts, as the
Agent may reasonably require, mortgaging and granting a
security interest in such interest in real property;
(ii) obtain, with respect to each such interest in
real property, a title insurance policy (in amounts reasonably
satisfactory to the Agent) with respect to, a survey of, and
such other documents relating to, such real property, in each
case conforming to the requirements of Section 7.1.9;
(iii) cause such mortgage or deed of trust to be
duly recorded or filed to create a valid, perfected,
first-priority mortgage or deed of trust lien on, and security
interest in the property purported to be covered thereby, and
pay all fees, taxes, and other expenses in connection
therewith; and
(iv) deliver to the Agent such other items of
documentation with respect to any of the foregoing as the
Agent shall reasonably request (including certificates as to
incumbency, resolutions, and opinions of counsel in all
relevant jurisdictions).
106
At the request of the Agent, the Company will cause (and, in any event, the
Company shall be permitted to cause) any real property which is required to be
mortgaged pursuant to clause (b) of this Section 9.1.11 and which is owned by a
Subsidiary of the Company, to be transferred to the Company prior to the
execution and delivery of such mortgage or deed of trust, as applicable. The
Agent and the Required Lenders shall have the right, in their sole and absolute
discretion, to accept or reject any such real property interest offered
pursuant to this Section 9.1.11.
SECTION 9.1.12. Intercompany Demand Notes. Within 60 days after the
last day of any Fiscal Quarter as of which the aggregate outstanding
Indebtedness of the Company to any wholly owned Domestic Subsidiary of the
Company exceeds $10,000,000, the Company will, if the same has not previously
been done, (a) execute and deliver to such Subsidiary an Intercompany Demand
Note payable to such Subsidiary, and (b) cause such Subsidiary to execute and
deliver the Intercompany Note Pledge Agreement and to pledge such note to the
Agent pursuant to the Intercompany Note Pledge Agreement.
SECTION 9.2. Negative Covenants. The Parent Guarantor agrees (and
the Company, to the extent that any such agreement of the Parent Guarantor
shall be applicable to the Company, any of its Subsidiaries, or any of its or
their properties, also agrees) with the Agent and each Lender that, until all
Commitments have terminated, no Letters of Credit are outstanding, and all
outstanding monetary Obligations have been paid in full:
SECTION 9.2.1. Business Activities. The Parent Guarantor will not
engage in any other business activity other than ownership of the Company and
such activities as may be incidental or related thereto including the offering
and sale of securities of the Parent Guarantor. The Company will not, and will
not permit any of its Subsidiaries to, engage in any business activity, except
those described in the first recital, those in which the Company and its
Subsidiaries are engaged on the Effective Date, and such activities as may be
incidental or related thereto or reasonably related extensions thereof.
SECTION 9.2.2. Indebtedness. The Parent Guarantor and the Company
will not, and will not permit any of their Subsidiaries to, create, incur,
assume, or suffer to exist or otherwise become or be liable in respect of any
Indebtedness, other than the following:
(a) In the case of the Parent Guarantor, the Company, and
their Subsidiaries,
(i) Indebtedness in respect of this Agreement and
the other Loan Documents;
(ii) Indebtedness identified inItem 1 ("Indebtedness
to be Paid") of the Disclosure Schedule,
107
provided that the conditions set forth in Section 7.1.4 in
respect of payment of such Indebtedness shall be satisfied on
the Initial Borrowing Date; and
(iii) Indebtedness existing as of the Effective Date
which is identified in Item 4 ("Ongoing Indebtedness") of the
Disclosure Schedule;
(b) In the case of the Company and its Subsidiaries,
(i) Indebtedness of the Company in respect of the
Senior Debt, and Contingent Obligations of AJI, KJC, KFC and
KAAC as a "Subsidiary Guarantor" (under and as defined in the
Senior Indenture) in respect of the Senior Debt;
(ii) subject to Section 9.2.18, Indebtedness owing
from (A) the Company to any wholly-owned Subsidiary of the
Company (other than KAAC) which (if required by Section
9.1.12) is evidenced by an Intercompany Demand Note which has
been pledged to the Agent pursuant to the Intercompany Note
Pledge Agreement or the Subsidiary Pledge Agreement, (B) any
wholly-owned Subsidiary of the Company to the Company,
provided that such Indebtedness is not evidenced by any
instrument, (C) any wholly- owned Subsidiary of the Company to
any other wholly-owned Subsidiary of the Company, provided
that with respect to any such Indebtedness to KFC or any such
Indebtedness of KFC to KAAC, such Indebtedness is evidenced by
an Intercompany Demand Note which has been pledged to the
Agent pursuant to the Subsidiary Pledge Agreement or the
Intercompany Note Pledge Agreement, and provided, further,
that with respect to any such Indebtedness other than to KFC
(or of KFC to KAAC), such Indebtedness is not evidenced by any
instrument, (D) VALCO or ALPART to the Company, its
Subsidiaries, or Persons (other than the Company, its
Subsidiaries or any Restricted Affiliate) having an equity
interest in VALCO or ALPART, as the case may be, (E) the
Company or its Subsidiaries to VALCO or ALPART, or (F) the
Company to KAAC, provided that any such Indebtedness (other
than Indebtedness in respect of accounts payable and other
current liabilities, in each case arising in the ordinary
course of business out of the purchase by the Company of
alumina from KAAC) shall be evidenced by an Intercompany
Demand Note which has been pledged to the Agent pursuant to
the Subsidiary Pledge Agreement and Indebtedness in respect of
such accounts payable and other current liabilities shall not
be evidenced by any instrument;
(iii) Indebtedness of the Company, KJC, AJI and
KAAC (including, without duplication, Contingent
108
Liabilities in respect of Indebtedness) in an aggregate amount
not to exceed $150,000,000 in respect of ALPART, $75,000,000
in respect of QAL and $25,000,000 in respect of VALCO;
provided, however, that for purposes of calculating the
aggregate amount of Indebtedness of the Company and its
Subsidiaries outstanding pursuant to this clause (b)(iii),
there shall be subtracted from the total amount of
Indebtedness of non-wholly-owned Subsidiaries an amount equal
to (A) that portion of such Indebtedness attributable to the
proportionate direct or indirect ownership of Persons other
than the Company and its Subsidiaries of the voting stock of,
or partnership interest in, such Subsidiary or (B) if the
economic burden of such Indebtedness is borne or to be borne
by minority owners of such Subsidiary (other than the Company
and its Subsidiaries) in a proportion other than the
proportion of their direct or indirect ownership of the voting
stock of, or partnership interest in, such Subsidiary, the
proportionate share of the economic burden of such
Indebtedness borne or to be borne by such minority owners;
(iv) Indebtedness incurred by the Company in
connection with the purchase, redemption, retirement, or other
acquisition by the Company of the Preferred Stock (USWA)
outstanding on the date hereof (plus additional shares of such
Preferred Stock (USWA) issued as dividends thereon or on such
shares issued as dividends) to the extent the purchase,
redemption, retirement, or acquisition thereof is required by
the Code and such Indebtedness is issued to the then holders
of or beneficial owners of such shares of Preferred Stock
(USWA);
(v) Indebtedness of the Company in an amount not
exceeding $5,000,000 at any time outstanding in respect of the
guaranty by the Company of the obligations of National
Refractories & Minerals Corporation under the Revolving Credit
and Term Loan Agreement dated as of April 30, 1985 (as the
same has been and may hereafter be amended, modified,
supplemented, restated, confirmed or replaced from time to
time) among Congress Financial Corporation (Western), National
Refractories & Minerals Corporation, National Refractories &
Minerals, Inc. and National Refractories Holding Co.;
(vi) the obligation of the Company to make advances
not exceeding $2,500,000 to National Refractories & Minerals
Corporation under the Standby Revolving Credit and Security
Agreement and Guaranty dated as of April 30, 1985 (as the same
has been and may hereafter be amended, modified, supplemented,
restated, confirmed or replaced from time to time) among the
Company, National Refractories & Minerals
109
Corporation, National Refractories & Minerals, Inc. and
National Refractories Holding Co.;
(vii) the guaranty by the Company of the payment of
certain shutdown, supplemental unemployment, pension, and
retiree health and life insurance benefits as provided under
the Agreement dated February 2, 1989 (as the same has been or
may be amended, supplemented, restated, modified, confirmed,
or replaced from time to time) between the Company and the
United Steelworkers of America relating to the sale by the
Company of its smelter and rolling mill in Ravenswood, West
Virginia, to Ravenswood Acquisition Corporation;
(viii) the obligations of the Company and any of its
Subsidiaries to purchase or sell goods, services, or
technology utilized in their bauxite, alumina, and aluminum
business and related extensions thereof, including on a
take-or-pay basis, pursuant to agreements entered into the
ordinary course of business consistent with past practice;
(ix) the obligations of QAL in respect of charters
of vessels;
(x) Indebtedness of the Company in respect of
unsecured Hedging Obligations;
(xi) Indebtedness of the Company and its
Subsidiaries (other than KAAC, AJI, KJC and KAII) in respect
of letters of credit (including any such letters of credit
identified in Item 4 ("Ongoing Indebtedness") of the
Disclosure Schedule) in an aggregate amount not to exceed
$15,000,000 at any one time outstanding issued for the account
of the Company or any of its Subsidiaries in support of
certain self-insurance and reinsurance obligations;
(xii) Indebtedness of the Company in respect of the
Redeemable Stock referred to in clause (i) or (ii) of Section
9.2.6(a);
(xiii) Indebtedness of the Company under the Equity
Proceeds Notes;
(xiv) Nonrecourse Indebtedness of Subsidiaries
of the Company that are not Obligors, the proceeds of which
are used to finance the construction, acquisition or
retrofitting of aluminum smelters, alumina refineries, or
fabrication plants, including, in either case, related
facilities or interests therein;
(xv) Indebtedness of the Company in an aggregate
principal amount not to exceed $25,000,000 outstanding
110
at any one time (excluding any such Indebtedness identified in
Item 4 ("Ongoing Indebtedness") of the Disclosure Schedule)
incurred in connection with one or more industrial revenue
bond financings; and
(xvi) other Indebtedness of the Company and its
Subsidiaries (other than KAAC, AJI, KJC and KAII) in an
aggregate principal amount not to exceed $30,000,000
outstanding at any one time; and
(c) in the case of the Parent Guarantor, Indebtedness
arising under the KT Note and Contingent Liabilities of the Parent
Guarantor in respect of any Indebtedness of the Company incurred
pursuant to clause (b) (other than subclause (xv) thereof) above.
SECTION 9.2.3. Liens. The Parent Guarantor will not create, incur,
assume, or suffer to exist any Lien over any of its Properties, revenues, or
assets, whether now owned or hereafter acquired, except for Liens of the type
described in clauses (a), (b), (e), and (h) of this Section 9.2.3. The Company
will not, and will not permit any of its Subsidiaries to, create, incur,
assume, or suffer to exist any Lien upon any of its Properties, revenues, or
assets, whether now owned or hereafter acquired, other than the following:
(a) Liens securing payment of the Obligations granted
pursuant to any Loan Document;
(b) Until the Initial Borrowing Date, Liens securing
payment of Indebtedness of the type permitted and described in clause
(a)(ii)of Section 9.2.2;
(c) Liens granted prior to the Effective Date and
identified in Item 5 ("Ongoing Liens") of the Disclosure Schedule;
(d) Liens granted to secure payment of Indebtedness
permitted by clause (b)(xvi) of Section 9.2.2 on any Property (other
than Accounts and Inventory) created at the time of the acquisition of
such Property in order to secure payment of the purchase price thereof
or in order to secure any loan incurred for the purpose of financing
such acquisition, and any Lien to which any Property is subject at the
time of its acquisition (including Property of a Subsidiary at the
time it becomes a Subsidiary), provided that the principal amount of
the Indebtedness secured by any such Lien does not exceed 80% of the
cost of such Property (except in the case of Liens on the Property of
a Subsidiary at the time it becomes a Subsidiary) and that no such
Lien may extend to other property, together with refundings or
extensions of the foregoing for amounts not exceeding the principal
amount of the Indebtedness so refunded or extended
111
and secured only by the Property theretofore securing the same;
(e) Liens for taxes, assessments, or other governmental
charges or levies to the extent that payment thereof shall not at the
time be required in accordance with the provisions of Section 9.1.2;
(f) Liens of carriers, warehousemen, mechanics, workmen,
repairmen, vendors, materialmen, and landlords and other similar Liens
incurred in the ordinary course of business for sums not overdue or
being contested in good faith by appropriate proceedings, and deposits
or Liens to obtain the release of any such Lien;
(g) Liens and deposits incurred or made in the ordinary
course of business in connection with worker's compensation,
unemployment insurance, or other forms of governmental insurance or
benefits, or in connection with, or to secure performance of, bids,
tenders, statutory obligations, and leases (other than, in each of
such cases, for borrowed money or the obtaining of advances or credit)
entered into in the ordinary course of business, or to secure
obligations on surety or appeal bonds, and other Liens and deposits
for purposes of like nature in the ordinary course of business;
(h) judgment Liens or similar awards in existence less
than 15 days after the entry thereof or with respect to which
execution has been stayed, or the payment of which is covered (subject
to a customary deductible) by insurance;
(i) mineral leases, easements, covenants, restrictions,
exceptions, or reservations in any Property of the Company or any
Subsidiary of the Company which do not materially impair the use of
such Property for the purposes for which it is held;
(j) zoning laws and ordinances, and rights reserved to or
vested in any municipality or government or proper authority to
control or regulate any Property of the Company or its Subsidiaries,
or to use such Property in any manner which does not materially impair
the use of such Property for the purposes for which it is held by the
Company or such Subsidiary;
(k) undetermined or inchoate Liens incident to
construction, maintenance, or current operations and Liens and charges
incident to such construction, maintenance, or operations which have
been filed of record but which are being contested in good faith by
appropriate proceedings;
(l) Liens reserved in leases for rent and to assure
compliance with the lease terms covering solely Property
112
kept at the leased premises and rights of lessees to Property being
leased from the Company or any of its Subsidiaries;
(m) Liens on any Property in which the Company or any of
its Subsidiaries has a leasehold estate, easement, right of way, or
similar interest and to which such interest is or may become subject,
and the rights reserved to the lessors or grantors thereof, and to
their successors and assigns, under applicable law or the instrument
creating such interest;
(n) Liens on Property (other than Accounts and Inventory)
created to secure the Company's or any Subsidiary's obligations under
agreements with respect to spot, forward, future and option
transactions, entered into in the ordinary course of business,
involving (or, in the case of futures and options, for or relating to)
the purchase and sale of aluminum, alumina, or bauxite and covering
only the Company's or such Subsidiary's rights under such agreements
and in the accounts in which such transactions are effected;
(o) minor defects and irregularities in the title to any
Property which do not in the aggregate materially impair the use of
such Property for the purposes for which it is held;
(p) Liens on Property of ALPART securing Indebtedness in
respect of ALPART permitted by clause (b)(iii) of Section 9.2.2 and
Liens on Property of VALCO securing Indebtedness in respect of VALCO
permitted byclause (b)(iii) of Section 9.2.2;
(q) Liens on Property of KAAC or its Subsidiaries
securing Indebtedness of KAAC in respect of QAL permitted by clause
(b)(iii) of Section 9.2.2;
(r) Liens on Property of Subsidiaries of the Company that
are not Obligors securing Nonrecourse Indebtedness; provided, howeve,
that no such Lien may extend to Property other than the Property
constructed, acquired or retrofitted with the proceeds of such
Nonrecourse Indebtedness or the capital stock of entities formed to
hold such interests;
(s) Liens on cash securing letters of credit in an amount
not to exceed $$15,000,000 at any one time outstanding;
(t) Liens on Property (other than Accounts and Inventory)
of the Company securing Indebtedness permitted by Section 9.2.2(b)(xv;
113
(u) Liens covering portions of the proceeds of Asset
Dispositions, which are held in escrow in connection with such Asset
Dispositions;
(v) Liens on Property (other than Accounts or Inventory)
of the Company securing Indebtedness permitted by clause (b)(iv) of
Section 9.2.2; and
(w) other Liens on Property (other than Accounts and
Inventory) of the Company and its Subsidiaries incidental to the
conduct of the business of the Company and its Subsidiaries or the
ownership of their Property which were not incurred in connection with
borrowed money or the obtaining of advances or credit and which do not
in the aggregate materially detract from the value of their Property
or materially impair the use thereof in the operation of their
business and which, in any event, do not secure obligations
aggregating in excess of $5,000,000.
SECTION 9.2.4. Financial Condition. The Company will not permit:
(a) Net Worth. The Company shall not permit Net Worth as
of the end of any Fiscal Quarter set forth below to be less than the
correlative amount indicated:
(b) Interest Coverage Ratio. The Company shall not
permit the Interest Coverage Ratio (i) for the one Fiscal Quarter
period ending March 31, 1996 to be less than 1.1 to 1.0, (ii) for the
two Fiscal Quarter period ending June 30, 1996 to be less than 1.2 to
1.0, (iii) for the three Fiscal Quarter period ending September 30,
1996 to be less than 1.3 to 1.0, and (iv) for the four Fiscal Quarter
period ending on the last day of each of the Fiscal Quarters set forth
below to be less than the correlative ratio indicated:
114
SECTION 9.2.5. Investments. The Parent Guarantor will not make,
incur, assume, or suffer to exist any Investment except for its ownership or
purchase of the shares of capital stock of the Company, Cash Equivalent
Investments, and Equity Proceeds Notes. The Company will not, and will not
permit any of its Subsidiaries to, make, incur, assume, or suffer to exist any
Investment in any other Person, other than the following:
(a) Investments existing on the Effective Date and
identified in Item 6 ("Ongoing Investments") of the Disclosure
Schedule;
(b) Cash Equivalent Investments;
(c) subject to Section 9.2.18, without duplication,
Indebtedness which is an Investment permitted by clause (b)(ii) of
Section 9.2.2;
(d) Investments made pursuant to the arrangements
described in clauses (b)(v) and (b)(vi) of Section 9.2.2, and deposits
permitted byclause (g) of Section 9.2.3;
(e) subject to Section 9.2.18, Investments made after
December 31, 1993 in the ordinary course of business in the Company
and its Subsidiaries;
(f) provided no Default or Event of Default under Section
10.1.1 shall have occurred and be continuing, Investments made after
December 31, 1993 in the ordinary course of business in QAL, Anglesey,
KJBC and Furukawa;
(g) Investments which are Capital Expenditures permitted
by Section 9.2.7;
(h) Investments of cash held in escrow accounts required
pursuant to the terms of any contract or agreement between the Parent
Guarantor, the Company, or any of its Subsidiaries and any Person as
in effect on the Effective Date (including escrows in existence on the
Effective Date) which are listed onSchedule XII hereto;
(i) Investments received in connection with Asset
Dispositions, and Investments in escrows established in connection
with Asset Dispositions which are permitted hereby;
115
(j) trade credit extended in the ordinary course of
business (including such credit represented by any bond, note,
debenture, or similar instrument) and advance payments, made in the
ordinary course of business, under contracts for the purchase of goods
or the receipt of services, and loans and advances made to any Person
in connection with the purchase of assets by such Person for lease by
such Person to the Company or any of its Subsidiaries to the extent
that such leases are otherwise permitted hereunder;
(k) Investments in the form of advance payments in
connection with spot, forward, future and option transactions, entered
into in the ordinary course of business, involving (or, in the case of
futures and options, for or relating to) the purchase and sale of
aluminum, alumina, or bauxite;
(l) Investments acquired in the settlement or other
resolution of disputes with any Person or of debts;
(m) Investments of any Person which are in existence at
the time such Person becomes a Subsidiary of the Company and which, in
the case of any such Investments which would breach any provision of
this Agreement if made directly by the Company,
(i) were not entered into in contemplation of such
Person becoming a Subsidiary of the Company, and
(ii) do not constitute more than 20% of the assets
of such Person at the time such Person becomes a Subsidiary of
the Company;
(n) any Investments (other than Investments in MAXXAM or
any Affiliate of MAXXAM) (other than the Company, its Subsidiaries
which are not Restricted Subsidiaries, or any Joint Venture Affiliate)
not otherwise permissible hereunder in an aggregate amount not to
exceed $20,000,000 at any time outstanding;
(o) provided (i) no Default or Event of Default shall
have occurred and be continuing (or would occur after giving effect to
such Investment) and (ii) that the Consolidated Fixed Charge Coverage
Ratio is greater than 2.0 to 1, Investments in Subsidiaries and Joint
Venture Affiliates not otherwise permissible hereunder in an aggregate
amount not to exceed
(A) the sum of:
(1) 50% of Net Income (or, if Net Income
for any such period shall be a deficit, minus 100% of such
deficit) accrued on a cumulative basis for the period (taken
as one accounting period) from January 1, 1994 to
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the end of the Company's most recently ended Fiscal Quarter,
and
(2) the aggregate net proceeds,
including the fair market value of Property other than cash,
received by the Company as capital contributions (other than
from a Joint Venture Affiliate or a Subsidiary of the Company)
to the Company after December 31, 1993, or from the issue or
sale (other than to a Joint Venture Affiliate or to a
Subsidiary of the Company), after December 31, 1993, of
capital stock other than Redeemable Stock (including capital
stock, other than Redeemable Stock, issued upon the conversion
of, or in exchange for, Indebtedness or Redeemable Stock, and
including upon exercise of warrants or options or other rights
to purchase such capital stock, issued after December 31,
1993), or from the issue or sale, after December 31, 1993 of
any debt or other security of the Company convertible or
exercisable into such capital stock that has been so converted
or exercised;
minus
(B) the aggregate amount of Investments than
outstanding pursuant to clause (n); and
(p) extensions and renewals of Investments permitted by
clauses (a), (h), (i), (j), (l) and (m) of this Section 9.2.5,
provided that the principal amount thereof is not increased.
SECTION 9.2.6. Restricted Payments, etc.
(a) The Company and the Parent Guarantor will not
declare, pay, or make any dividend or distribution (in cash, Property,
or obligations) on any shares of any class of capital stock (now or
hereafter outstanding) of the Company or the Parent Guarantor or on
any warrants, options, or other rights with respect to any shares of
any class of capital stock (now or hereafter outstanding) of the
Company or the Parent Guarantor (excluding dividends or distributions
payable in its common stock (other than Redeemable Stock) or warrants
to purchase its common stock or splitups or reclassifications of its
common stock into additional or other shares of its common stock) or
apply, or permit any of their respective Subsidiaries to apply, any of
its funds, or Property to the purchase, redemption, sinking fund, or
other retirement, or agree, or permit any of their respective
Subsidiaries to agree, to purchase or redeem, any shares of any class
of capital stock (now or hereafter outstanding) of the Company or the
Parent Guarantor, or warrants, options, or other rights with respect
to any shares of any class of capital stock (now or hereafter
outstanding) of the Company or the Parent Guarantor (all of the
foregoing non-excluded dividends,
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distributions, application of funds or Property, purchases, redemption
and similar payments collectively being herein called "Distributions")
except that
(i) the Company shall be permitted to purchase,
redeem, retire, or otherwise acquire and to declare, pay, or
make dividends or other distributions on its 4-1/8% Preference
Stock, par value $100 per share, 4-3/4% Preference Stock (1957
Series), par value $100 per share, 4-3/4% Preference Stock
(1959 Series), par value $100 per share, and 4-3/4% Preference
Stock (1966 Series), par value $100 per share, in each case
only in accordance with the terms of the Restated Certificate
of Incorporation, and in each case unless (A) an Event of
Default shall have occurred and be continuing and (B) the
Company shall have been instructed by the Agent in writing not
to make any such Distribution;
(ii) the Company shall be permitted to purchase,
redeem, retire, or otherwise acquire and to declare, pay, or
make dividends or other distributions on any shares of the
Preferred Stock (USWA), in each case unless (A) an Event of
Default shall have occurred and be continuing and (B) the
Company shall have been instructed by the Agent in writing not
to make any such Distribution;
(iii) the Company shall be permitted to pay for the
benefit of, or to reimburse, the Parent Guarantor for the
reasonable out-of-pocket expenses actually incurred (and
documented as such) by the Parent Guarantor for services
rendered to the Parent Guarantor by Persons who are not
Affiliates or employees of the Parent Guarantor, MAXXAM, the
Company or any of their respective Subsidiaries (provided that
payments of legal fees and expenses to a law firm of which an
Affiliate of the Company is a member shall be permitted) in
connection with the registration, issuance or sale of
securities of the Parent Guarantor to the extent that the net
proceeds of such issuance or sale are used by the Parent
Guarantor to make a loan or capital contribution to, or
purchase securities of, the Company;
(iv) the Company shall be permitted to make
Distributions to the Parent Guarantor of all or a portion of
the KT Note and accrued interest thereon;
(v) provided no Default shall have occurred and be
continuing (or will have occurred and be continuing
immediately following such Distribution), the Company shall be
permitted to make Distributions to the Parent Guarantor in
each Fiscal Quarter in an aggregate amount not exceeding the
dividends payable by the Parent Guarantor during such Fiscal
Quarter in respect of all then outstanding shares of the
Parent Guarantor Preferred
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Stock minus the amount of any payments made during such Fiscal
Quarter on the Equity Proceeds Notes;
(vi) the Parent Guarantor shall be permitted to make
Distributions to the holders of any outstanding shares of the
Parent Guarantor Preferred Stock (or depositary shares in
respect thereof) in an amount not to exceed the payments
received or receivable from time to time by the Parent
Guarantor from the Company under clause (v) of this Section
9.2.6(a) and in respect of the Equity Proceeds Notes; and
(vii) the Parent Guarantor shall be permitted to
convert shares of the Parent Guarantor Preferred Stock (or
depositary shares in respect thereof) into the common stock of
the Parent Guarantor or redeem shares of the Parent Guarantor
Preferred Stock (or depositary shares in respect thereof) in
exchange for the common stock of the Parent Guarantor plus an
amount in cash equal to all amounts payable by the Parent
Guarantor in respect of accrued and unpaid dividends in
connection with such conversion or redemption, in each case in
accordance with the Certificate of Designations governing such
shares of Parent Guarantor Preferred Stock (or the Depositary
Agreement in respect of such depositary shares).
(b) The Company will not, and will not permit any of its
Subsidiaries to,
(i) make any payment or prepayment of principal of,
or any prepayment of interest on, any Subordinated Debt
(including pursuant to Section 4.05, 4.06, or 4.07 of the
Subordinated Indenture) or make any payment of interest on, or
any payment in respect of, any Subordinated Debt which would
violate the subordination provisions of such Subordinated
Debt;
(ii) make any prepayment of principal of, or any
prepayment of interest on, any other Indebtedness (including
the Senior Debt); provided, however, that the Company may
prepay the principal of or interest on Indebtedness in respect
of this Agreement, the Company may repay Indebtedness in
connection with the refinancing of all or substantially all of
such Indebtedness and the Company may prepay Indebtedness
(other than Indebtedness owing to any Subsidiary of the
Company or any Joint Venture Affiliate) in an amount not to
exceed $10,000,000 in the aggregate;
(iii) make any payment or prepayment of principal
of, or interest on, the PIK Note; provided, however, that if
no Event of Cash Dominion shall have occurred and be
continuing (or will have occurred immediately following
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such payment) and provided no Default shall have occurred and
be continuing (or would occur as a result of such payment) the
Company may repay the PIK Note at or after the maturity
thereof;
(iv) redeem, purchase, or defease any Subordinated
Debt, any Senior Debt, the PIK Note or any Equity Proceeds
Note;
(v) make any payment or prepayment of principal
of, or interest on, the Equity Proceeds Notes except that the
Company may pay principal and interest from time to time on
the Equity Proceeds Notes in accordance with the provisions of
the Equity Proceeds Notes, subject to the subordination
provisions thereof; provided, however, that if any Equity
Proceeds Note is issued in connection with the issuance of
Parent Guarantor Preferred Stock that is convertible into
shares of the common stock of the Parent Guarantor,
immediately upon the conversion of all of such shares of the
Parent Guarantor Preferred Stock (or depositary shares in
respect thereof) into shares of the common stock of the Parent
Guarantor pursuant to the Certificate of Designations
governing such shares of the Parent Guarantor Preferred Stock
(or the Depositary Agreement in respect of such depositary
shares), (A) the Company shall, after the payment of all
amounts payable by the Parent Guarantor in respect of accrued
and unpaid dividends in connection with such conversion and in
accordance with the terms of such Equity Proceeds Note, defer
further principal and interest payments on such Equity
Proceeds Note until such time as no Senior Indebtedness of the
Company (as defined in such Equity Proceeds Note) under or in
connection with this Agreement or the other Loan Documents or
any refinancing of such Senior Indebtedness of the Company is
then outstanding and (B) the Parent Guarantor shall, after all
amounts payable by the Parent Guarantor in respect of accrued
and unpaid dividends in connection with such conversion have
been paid, if requested by the Agent, with the written consent
of the Required Lenders, deliver such Equity Proceeds Note to
the Company as a capital contribution and the Company shall
immediately cancel such Equity Proceeds Note; or
(vi) make any payment of principal of or interest
on the Indebtedness listed on Schedule XIII hereto.
(c) The Company and the Parent Guarantor will not, and
will not permit any of their respective Subsidiaries to, make any
deposit for any of the foregoing purposes.
SECTION 9.2.7. Capital Expenditures. The Company will not, and will
not permit any of its Subsidiaries to, make Adjusted Capital Expenditures in
any Fiscal Year set forth below in an
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aggregate amount in excess of the sum of (a) the Base Amount set forth below
opposite such Fiscal Year plus (b) in the case of each Fiscal Year commencing
with the 1995 Fiscal Year the Carryover Amount applicable to such Fiscal Year:
The "Carryover Amount" applicable to any Fiscal Year is equal to (i) the sum of
the Base Amounts applicable to all periods set forth which end prior to the
Fiscal Year for which the Carryover Amount is being calculated minus (ii) the
aggregate amount of Adjusted Capital Expenditures which were actually made by
the Company and its Subsidiaries during the 1994 Fiscal Year and during each
Fiscal Year thereafter prior to the Fiscal Year for which such Carryover Amount
is being calculated; provided, however, that the Carryover Amount shall not
exceed $10,000,000 for the 1995 Fiscal Year, $20,000,000 for the 1996 Fiscal
Year and $30,000,000 for any Fiscal Year thereafter.
SECTION 9.2.8. Rental Obligations. The Company will not, and will
not permit any of its Subsidiaries to, enter into at any time any arrangement
which does not create a Capitalized Lease Liability and which involves the
leasing by the Company or any of its Subsidiaries for terms which exceed, or
when added to the term of any extension which may be made at the sole option of
the Company or any such Subsidiary might exceed, one year from any lessor of
any Property (or any interest therein), except such arrangements which,
together with all other such arrangements which shall then be in effect, will
not require the payment of an aggregate amount of rentals by the Company and
its Subsidiaries on a consolidated basis (excluding escalations resulting from
a rise in the consumer price or similar index) in excess, for any Fiscal Year
of $35,000,000; provided, however, that any calculation made for purposes of
this Section 9.2.8 shall exclude any amounts required to be expended for
maintenance and repairs, insurance, taxes, assessments, and other similar
charges.
SECTION 9.2.9. Take or Pay Contracts. The Company will not, and
will not permit any of its Subsidiaries to, enter into or be a party to any
arrangement for the purchase of materials, supplies, other Property, or
services if such arrangement by its express terms requires that payment be made
by the Company or such Subsidiary regardless of whether such materials,
supplies, other Property, or services are delivered or furnished to it, except
those set forth in Item 10 ("Take or Pay and Similar Contracts") of the
Disclosure Schedule.
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SECTION 9.2.10. Consolidation, Merger, etc. The Parent Guarantor and
the Company will not, and will not permit any of their Subsidiaries to,
liquidate or dissolve, consolidate with, or merge into or with, any other
corporation, except that if no Default or Event of Default shall occur and be
continuing or shall exist at the time of any such merger or consolidation or
immediately thereafter and after giving effect thereto,
(a) any Subsidiary of the Company may liquidate or
dissolve into or may merge or consolidate with or into the Company if
the Company is the surviving corporation;
(b) any Subsidiary of the Company may liquidate or
dissolve into or may merge or consolidate with or into any other
wholly-owned Subsidiary of the Company that is an Obligor if the
Obligor is the surviving corporation;
(c) any Subsidiary of the Company that is not an Obligor
may liquidate or dissolve or merge or consolidate with or into any
other Subsidiary of the Company that is not an Obligor;
(d) the Parent Guarantor may, with the prior written
consent of the Required Lenders, merge with and into the Company and,
provided that the Parent Guarantor shall assume all of the Obligations
of the Company under this Agreement and the other Loan Documents, the
Company may, with the prior written consent of the Required Lenders,
merge with and into the Parent Guarantor; and
(e) the Company and its Subsidiaries may engage in Asset
Dispositions permitted by Section 9.2.11.
Notwithstanding the foregoing, neither the Company nor any Subsidiary may
engage in any such transaction unless at least five (or, in the case of any
such transaction involving the Company or any other Obligor, 30) Business Days
prior thereto, or such shorter period as shall be acceptable to the Agent, the
Company shall have delivered to the Agent a description of the proposed
transaction, in reasonable detail, and a certificate signed by an Authorized
Officer certifying that such transaction will not result in a Default or an
Event of Default.
SECTION 9.2.11. Asset Dispositions. The Company will not, and will
not permit any of its Subsidiaries to, make any Asset Disposition, other than
the following:
(a) the Company and its Subsidiaries may dispose of cash
or Cash Equivalent Investments;
(b) the Company or any wholly-owned Subsidiary of the
Company may dispose of its assets to the Company or any wholly-owned
Subsidiary of the Company;
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(c) the Company and its Subsidiaries may dispose of
Inventory in the ordinary course of business on ordinary trade terms;
(d) the Company and its Subsidiaries may license
technology or know-how on a nonexclusive basis in the ordinary course
of business and on ordinary trade terms;
(e) ALPART or VALCO may dispose of any of their
respective assets in the ordinary course of business;
(f) the Company may dispose of a facility that is
subsequently repurchased or leased by the Company in connection with
the issuance of industrial revenue bonds by a state, municipality or
other subdivision of the United States of America or any department,
agency, public corporation or other instrumentality thereof;
(g) the Company and its Subsidiaries may dispose of
assets (other than Accounts) with a fair market value of less than
$__________ (in a single transaction or related series of
transactions);
(h) the Company may dispose of any of its assets in
connection with the leaseback of such assets by the Company or any of
its Subsidiaries, provided that such leaseback is otherwise permitted
hereunder and such Asset Disposition occurs not later than twelve
months after such assets are placed in service;
(i) if no Default or Event of Default shall have occurred
and be continuing or shall occur after giving effect thereto, the
Company and its Subsidiaries may dispose of assets, in addition to
those dispositions permitted in clauses (a) through (h) above;
provided the fair market value of the assets disposed of pursuant to
this Section 9.2.11(g) does not exceed $25,000,000 in any Fiscal Year;
and
(j) transfers of Property permitted by Section 9.2.18.
Notwithstanding the foregoing, the Company will not, and will not permit any of
its Subsidiaries to, take any action which would require an "Asset Sale Offer"
(under and as defined in the Subordinated Indenture) to be made pursuant to
Section 5.12(b) of the Subordinated Indenture or to violate the provisions of
Section 5.12 of the Subordinated Indenture.
SECTION 9.2.12. Sale or Discount of Receivables. The Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
sell, sell with recourse, discount or otherwise sell for less than the face
value thereof, any of its notes or accounts receivable; provided, however, that
the Company and its Subsidiaries may sell, sell with recourse, discount or
otherwise sell for less than the face value thereof, to any Lender or
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Lenders, any notes or accounts receivable arising in connection with any sale
of product for delivery in the Commonwealth of Independent States in an
aggregate amount not to exceed $10,000,000 in any calendar month.
SECTION 9.2.13. Restrictions on Actions under Certain Agreements.
Neither the Parent Guarantor nor the Company will
(a) consent to any amendment, supplement, or other
modification of any of the terms or provisions contained in, or
applicable to, any document or instrument evidencing or governing any
Subordinated Debt or any Senior Debt, the PIK Note or any Equity
Proceeds Note other than any amendment, supplement, or other
modification which extends the date or reduces the amount of any
required repayment or any amendment, supplement or modification of the
PIK Note or any Equity Proceeds Note that is consented to in writing
by the Agent;
(b) designate any other Indebtedness as "Specified Senior
Debt" under the Subordinated Indenture or designate or permit any
Subsidiary of the Company to designate any other Indebtedness of such
Subsidiary as "Guarantor Specified Senior Debt" under the Subordinated
Indenture;
(c) take, or permit any of its Subsidiaries to take any
action, or permit, or allow any of its Subsidiaries to permit, to
exist any condition, which in any such case would require (i) the
Company to cause any of its present or future Subsidiaries (other than
KAAC, AJI, KFC and KJC, and except as otherwise provided inclauses (b)
and (c) of Section 9.1.10 and clause (b)(i) of Section 9.2.2), or
which would directly require any such Subsidiary, to guarantee or
otherwise become liable in respect of any Subordinated Debt or Senior
Debt, or (ii) the Company or any Subsidiary of the Company to provide
collateral security in respect of any Subordinated Debt or Senior
Debt;
(d) make any offer to prepay, redeem, defease or
repurchase any Subordinated Debt or Senior Debt;
(e) fail to deliver any certificate and opinion permitted
to be given to the trustee under clauses (a) and (b) of Section 16.14
of the Subordinated Indenture with respect to any "Subsidiary
Guarantor" (under and as defined in the Subordinated Indenture) or to
deliver any certificate and opinion permitted to be given to the
trustee under clauses (a) and (b) of Section 15.05 of the Senior
Indenture with respect to any "Subsidiary Guarantor" (under and as
defined in the Senior Indenture); and
(f) consent to any amendment, supplement or other
modification of any of the terms or provisions contained in, or
applicable to, any document or instrument evidencing or governing the
Parent Guarantor Preferred Stock (or depositary
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shares in respect thereof) if such amendment, supplement or other
modification would have a Materially Adverse Effect.
SECTION 9.2.14. Transactions with Affiliates. The Company will not,
and will not permit any of its Subsidiaries to, enter into, or cause, suffer,
or permit to exist any transaction, arrangement, or contract with any Affiliate
of the Company (other than the Company, its Subsidiaries which are not
Restricted Subsidiaries, Joint Venture Affiliates, and any Subsidiary of a
Joint Venture Affiliate in which neither the Parent Guarantor, MAXXAM nor any
Affiliate of either thereof (other than the Company, its Subsidiaries which are
not Restricted Subsidiaries, or any Joint Venture Affiliate) has any equity
interest other than through a direct or indirect ownership interest in the
Company) requiring, constituting or involving any payments or other transfers
of Property to be made by the Company or any Subsidiary to or for the benefit
of, or pursuant to which the Company or any of its Subsidiaries incurs a
Contingent Liability in respect of any obligation of, or incurs a contractual
obligation for the benefit of, any Affiliate of the Company (other than Persons
described in the previous parenthetical of this sentence).
Notwithstanding the foregoing provisions of this Section 9.2.14, (a)
directors, officers, and employees of the Company and its Subsidiaries may
render services to the Company and its Subsidiaries which are not Restricted
Subsidiaries for compensation and other benefits comparable to those generally
paid by corporations engaged in the same or similar businesses for the same or
similar services; (b) the transactions provided for in, and the loan evidenced
by, the KT Note shall be permitted; (c) the performance of the Tax Allocation
Agreement, the Deconsolidation Tax Allocation Agreement and the Transfer
Agreement shall be permitted, except that the Company shall not be permitted to
make any cash payments to MAXXAM or any other Affiliate pursuant to the Tax
Allocation Agreement but MAXXAM may offset amounts owing to it under the Tax
Allocation Agreement against amounts owed by MAXXAM under the Tax Allocation
Agreement; (d) the Company may make payments to MAXXAM for any Fiscal year in
respect of (i) services actually rendered to the Company during such Fiscal
Year by employees of MAXXAM, and (ii) the Company's allocable share of MAXXAM's
overhead expenses during such Fiscal Year which are attributable to employees
of the Company who are located at MAXXAM's corporate headquarters, provided
that the charges for such services are fully documented and that the aggregate
amount of such payments made by the Company to MAXXAM for any Fiscal Year does
not exceed the aggregate amount of payments made to the Company by MAXXAM for
similar purposes for any Fiscal Year by more than $1,500,000; (e) subject to
Section 9.2.10, a merger or other combination between the Company and the
Parent Guarantor shall be permitted; (f) Distributions permitted by Section
9.2.6 shall be permitted; (g) transactions between ALPART or VALCO and Persons
who own an equity interest in ALPART or VALCO shall be permitted; (h)
continuation of performance under agreements entered into with Persons who were
not then Affiliates shall be permitted (but
125
excluding, however, any renegotiation, extension, or modification of such
agreements after such Person has become, or is anticipated to become, an
Affiliate), provided that such agreement was not entered into in connection
with or in anticipation of such Person becoming an Affiliate of the Company;
(i) payments of legal fees and expenses to a law firm of which an Affiliate of
the Company is a member shall be permitted; (j) the Company may provide
services and facilities to the Parent Guarantor in connection with activities
of the Parent Guarantor that are permitted by the first sentence of Section
9.2.1 in exchange for payment of its actual costs (allocated in good faith
where appropriate) of providing such services and facilities; (k) any amendment
to the KT Note that extends the maturity thereof or reduces the interest rate
thereon shall be permitted; (l) performance of the PIK Note and any Equity
Proceeds Note in accordance with the provisions of Section 9.2.6; and (m) the
issuance of any Equity Proceeds Note shall be permitted.
For purposes of thisSection 9.2.14, the term "Affiliate" shall not be
deemed to include employee benefit plans, and trusts in connection therewith,
for the benefit of employees of the Company and its Subsidiaries.
SECTION 9.2.15. Negative Pledges, etc. The Parent Guarantor and the
Company will not, and will not permit any of their Subsidiaries (other than
ALPART and VALCO) to, enter into any agreement (excluding this Agreement, any
other Loan Document, and any agreement governing any Indebtedness permitted
either by clause (a)(iii) of Section 9.2.2 as in effect on the Effective Date,
or by clause (b)(xv) of Section 9.2.2 as to the assets financed with the
proceeds of such Indebtedness) (a) prohibiting the creation or assumption of
any Lien securing the Obligations of the Company and its Subsidiaries upon its
Properties, revenues, or assets which constitute Collateral, or over any
properties, revenues, or assets which, if acquired after the Effective Date
would be required to be subjected to a Lien in favor of the Agent pursuant to
Section 9.1.10 or 9.1.11 or over any other real property owned in fee by the
Company or any such Subsidiary on the Effective Date, or (b) specifically
prohibiting the Parent Guarantor, the Company, or any other Obligor from
amending or otherwise modifying this Agreement or any other Loan Document to
which it is a party; provided, however, that the execution and delivery of the
Senior Indenture shall not be deemed to breach clause (a) of this Section
9.2.15.
SECTION 9.2.16. Sale-Leaseback Transactions. The Company will not,
and will not permit any of its Subsidiaries to, directly or indirectly, become
liable as lessee or guarantor or other surety with respect to any lease
(whether an operating or capital lease) of any Property, whether now owned or
hereafter acquired, (a) which the Company or any of its Subsidiaries has sold
or transferred or is to sell or transfer to any other Person or (b) which the
Company or any of its Subsidiaries intends to use for substantially the same
purpose as any other Property which has been or is to be sold or transferred by
the Company or such Subsidiary to any Person in
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connection with such lease, except (i) any Capitalized Lease Liabilities
permitted under Section 9.2.2 or (ii) any consolidated lease expense resulting
therefrom that would be permitted under Section 9.2.8.
SECTION 9.2.17. Change of Location or Name. Each of the Parent
Guarantor and the Company will not, nor will either permit any of its
Subsidiaries listed on Schedule IV hereto to, change
(a) the location of its principal place of business, chief
executive office, major executive office, chief place of business, or
its records concerning its business and financial affairs; or
(b) its name or the name under or by which it conducts its
business,
in each case without first giving the Agent at least 30 days, or such shorter
period as shall be acceptable to the Agent, prior written notice thereof and
taking any and all actions which the Agent may request to maintain and preserve
all Liens in favor of the Agent granted pursuant to the Collateral Documents;
provided, however, that notwithstanding the foregoing, each of the Parent
Guarantor and the Company will not, and will not permit any such Subsidiary to,
change the location of its principal place of business, chief executive office,
chief place of business, or its records concerning its business and financial
affairs
(i) to Louisiana or Tennessee, or
(ii) from the contiguous continental United States to any
place outside the contiguous continental United States.
SECTION 9.2.18. Intercompany Transfers of Property. The Parent
Guarantor and the Company will not, and will not permit any Obligor to,
transfer or cause to be transferred, in one or a series of related transactions
any Property of the Parent Guarantor, the Company or any such Subsidiary to any
Subsidiary of the Company or to any Joint Venture Affiliate, except:
(i) any Obligor may transfer goods, services, working
capital and technology (other than Accounts) to Subsidiaries of the
Company and Joint Venture Affiliates in the ordinary course of
business and may license technology or know-how to Subsidiaries of the
Company and Joint Venture Affiliates in the ordinary course of
business;provided, in each case, that after giving effect to such
transfer the Revolving Credit Outstandings immediately following such
transfer will not exceed the Borrowing Base;
(ii) any Obligor may transfer Property (other than cash and
Accounts) to Subsidiaries and Joint Venture Affiliates, provided that
such transfer is made in exchange for cash in an amount equal to the
fair market value of such Property;
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(iii) any Obligor may transfer Property (other than
Accounts) to any other Obligor;
(iv) other transfers of Property (other than Accounts);
provided that the aggregate amount thereof (if other than cash, such
amount shall be the fair market value of such asset at the time of
such transfer), less the aggregate amount of such Property returned to
the Company or any Obligor (if returned other than in cash, the amount
of such Property shall be the fair market value thereof at the time so
returned), does not exceed, in the aggregate, the greater of (A)
$25,000,000 or (B) 5% of the Company's Net Worth, calculated after
giving effect to such transfers and returns;
(v) the use of the proceeds of Indebtedness incurred by
the Company, KJC, AJI and KAAC by ALPART, QAL and VALCO pursuant to
Section 9.2.2(b)(iii);
(vi) transfers of capital stock or other equity interests
to the issuer of such capital stock or other equity interests such
that immediately after giving effect to such transfer and related
transfers, the proportional beneficial ownership by the transferor of
the class of capital stock or equity interests so transferred is not
reduced;
(vii) Investments permitted by Sections 9.2.5(f) and
9.2.5(o);
(viii) the Company may contribute to any wholly-owned
Subsidiary of the Company intercompany receivables owing by such
wholly- owned Subsidiary to the Company; and
(ix) the Company or any wholly-owned Subsidiary of the
Company may assume intercompany payables owing by any wholly-owned
Subsidiary of the Company to the Company or any wholly-owned
Subsidiary of the Company.
SECTION 9.2.19. Inconsistent Agreements. The Parent Guarantor and
the Company will not, and will not permit any of its Subsidiaries to, enter
into any material agreement (other than the Senior Debt Instruments) containing
any provision which would be violated or breached by any Credit Extension or by
the performance by the Parent Guarantor or the Company or any other Obligor of
its obligations hereunder or under any Loan Document.
ARTICLE X
EVENTS OF DEFAULT
SECTION 10.1. Listing of Events of Default. Each of the following
events or occurrences described in this Section 10.1 shall constitute an "Event
of Default".
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SECTION 10.1.1. Non-Payment of Obligations. The Company shall
default in the payment or prepayment when due of any principal of or interest
on any Loan or Reimbursement Obligation; or the Company shall default (and such
default shall continue unremedied for a period of five days) in the payment
when due of any commitment or letter of credit fee payable hereunder.
SECTION 10.1.2. Breach of Warranty. Any representation, warranty, or
certification of the Parent Guarantor, the Company, or any other Obligor made
or deemed to be made hereunder or in any other Loan Document to which it is or
is to become a party or any other writing or certificate furnished by or on
behalf of the Parent Guarantor, the Company, or any other Obligor to the Agent
or any Lender for the purposes of or in connection with this Agreement or any
such other Loan Document (including any certificates delivered pursuant to
Article VII) is or shall be incorrect when made in any material respect.
SECTION 10.1.3. Non-Performance of Certain Covenants and Obligations.
The Parent Guarantor, the Company, or any Obligor shall default in the due
performance and observance of any of its respective obligations under Sections
3.3.2, 3.3.3, 9.2.4, 9.2.6 or 9.2.7 of this Agreement or Section _____ of the
Concentration Bank Agreement.
SECTION 10.1.4. Non-Performance of Certain Covenants and Obligations.
The Parent Guarantor, the Company, or any other Obligor shall default in the
due performance and observance of any of its respective obligations under
(a) Sections of this Agreement,
(b) Section 1.2, 1.4, 1.5, 1.7, 1.10, 1.11, 1.15, 1.17,
1.19, 1.20.1, or 1.21 of any Company Mortgage or Company Deed of
Trust,
(c) Section 5(d), 6(g), 6(h), 6(j), 6(o), or 9 of the
Company Security Agreement,
(d) Section 6(g), 6(h), 6(i), or 9 of the Parent Security
Agreement,
(e) Section 6(h), 6(i), 6(j), or 9 of the Subsidiary
Security Agreement,
(f) Section 4.1 or 4.2 of the Company Pledge Agreement,
the Parent Pledge Agreement, or the Subsidiary Pledge Agreement, or
(g) Section 4.1 of the Intercompany Note Pledge Agreement,
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and such default shall continue unremedied for a period of five days after
written notice thereof shall have been given by the Company to the Agent or by
the Agent to the Company.
SECTION 10.1.5. Non-Performance of Other Covenants and Obligations.
Any Obligor shall default in the due performance and observance of any other
agreement contained herein, or in any other Loan Document to which it is or is
to become a party, and such default shall continue unremedied for a period of
30 days after written notice thereof shall have been given by the Company to
the Agent or to the Company by the Agent.
SECTION 10.1.6. Default on Other Indebtedness. A default shall occur
in the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 10.1.1) of the Parent Guarantor, the Company, any of their
Subsidiaries, or any Joint Venture Affiliate having an aggregate principal
amount in excess of $20,000,000 or, in the case of Indebtedness of Joint
Venture Affiliates, having an aggregate principal amount for which the Parent
Guarantor, the Company, or any of their Subsidiaries is contingently liable in
excess of $20,000,000; or a default shall occur in the performance or
observance of any obligation or condition with respect to any such Indebtedness
if the effect of such default is to accelerate the maturity of any such
Indebtedness or to permit the holder or holders thereof, or any trustee or
agent for such holders, to cause such Indebtedness to become due and payable
prior to its expressed maturity.
SECTION 10.1.7. Judgments. A final judgment which, together with
other outstanding final judgments against the Company and its Significant
Subsidiaries, exceeds an aggregate of $20,000,000 (to the extent such judgments
are not covered by valid and collectible insurance from solvent unaffiliated
insurers) shall be entered against the Company and/or any of its Significant
Subsidiaries and (a) within 30 days after entry thereof, judgments exceeding
such amount shall not have been discharged, settled, bonded or execution
thereof stayed pending appeal or, within 30 days after the expiration of any
such stay, such judgments exceeding such amount shall not have been discharged,
settled, bonded or execution thereof stayed or (b) an enforcement proceeding
shall have been commenced (and not discharged, settled, bonded or execution
thereof stayed) by any creditor upon judgments exceeding such amount.
SECTION 10.1.8. Pension Plans. Any of the following events shall
occur with respect to any Pension Plan
(a) the taking of any action by the Parent
Guarantor, the Company, any member of their Controlled Groups, or any
other Person (with the requisite authority to act) to terminate a
Pension Plan if, as a result of such termination, the Parent
Guarantor, the Company, or any such member could reasonably expect to,
or in the case of liability arising
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under section 4063 or section 4069 of ERISA, there is a reasonable
likelihood that it could be required to, make a contribution to such
Pension Plan, or could reasonably expect to incur a liability or
obligation to such Pension Plan, in excess of $10,000,000; or
(b) a contribution failure occurs with respect to
any Pension Plan sufficient to give rise to a Lien against assets of
any Controlled Group member under Section 302(f) of ERISA in an amount
in excess of $1,000,000, which failure has not been completely cured
within 30 days of the applicable due date.
SECTION 10.1.9. Change in Control. Any Change in Control shall occur.
SECTION 10.1.10. Bankruptcy, Insolvency, etc. The Parent Guarantor,
the Company, any Significant Subsidiary, any other Obligor, or any Joint
Venture Affiliate (other than KJBC) shall
(a) become insolvent or generally fail to pay, or admit
in writing its inability or unwillingness to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator, or other custodian
for the Parent Guarantor, the Company, any Significant Subsidiary, any
other Obligor, or any such Joint Venture Affiliate or any Property of
any thereof, or make a general assignment for the benefit of
creditors;
(c) in the absence of such application, consent, or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator, or other custodian for the Parent Guarantor,
the Company, any Significant Subsidiary, any other Obligor, or any
such Joint Venture Affiliate or for a substantial part of the Property
of any thereof, and, in the case of any such Person other than the
Company, such trustee, receiver, sequestrator, or other custodian
shall not be discharged within 60 days;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up, or liquidation proceeding, in respect of the Parent
Guarantor or of the Company;
(e) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up, or liquidation proceeding, in respect of any Significant
Subsidiary, any other Obligor (other than the Parent Guarantor or the
Company), or any such Joint
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Venture Affiliate, and, if such case or proceeding is not commenced by
such Person, such case or proceeding shall be consented to or
acquiesced in by such Person or shall result in the entry of an order
for relief or shall remain for 60 days undismissed; or
(f) take any corporate action authorizing, or in
furtherance of, any of the foregoing.
SECTION 10.1.11. Subordinated Debt and Senior Debt. The
Company shall be required, pursuant to the terms of any Subordinated Debt
Instrument or any Senior Debt Instrument, or shall offer, to redeem,
repurchase, prepay, or defease any Subordinated Debt or any Senior Debt.
SECTION 10.1.12. Impairment of Certain Documents. Except as
otherwise expressly permitted in any Loan Document, any of the Fundamental Loan
Documents shall terminate or cease in whole or in part to be the legally valid,
binding, and enforceable obligation of the relevant Obligor, or such Obligor or
any Person acting for or on behalf of such Obligor contests such validity,
binding effect, or enforceability, or purports to revoke any Fundamental Loan
Document, or any asset or item of Property purported to be secured by any
Collateral Document ceases to be so secured and continues not to be secured for
ten Business Days after written notice thereof has been given to such Obligor
by the Agent.
SECTION 10.2. Action if Bankruptcy. If any Event of Default
described in clauses (a) through (e) of Section 10.1.10 shall occur with
respect to the Company, the outstanding principal amount of all outstanding
Loans and all other Obligations shall automatically be and become immediately
due and payable, without notice, demand or presentment and the Company shall
pay to the Agent in Dollars and immediately available funds an amount equal to
the then aggregate Letter of Credit Outstandings in accordance with Section
5.7.
SECTION 10.3. Action if Other Event of Default. If any Event of
Default (other than any Event of Default described in clauses (a) through (e)
of Section 10.1.10 with respect to the Company) shall occur for any reason,
whether voluntary or involuntary, and be continuing,
(a) the Agent shall, upon the direction of the Required Lenders,
(i) by written notice to the Company declare the Commitments
terminated, whereupon the Commitments of each Lender will thereupon
terminate immediately and any fees payable hereunder shall become due
and payable without notice of any kind;
(ii) by written notice to the Company declare all or any
portion of the outstanding principal amount of the Loans and
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other Obligations to be due and payable, whereupon the full unpaid
amount of such Loans and other Obligations which shall be so declared
due and payable shall be and become immediately due and payable,
without further notice, demand, or presentment and the Company shall
pay to the Agent in Dollars and immediately available funds an amount
equal to the then aggregate Letter of Credit Outstandings in
accordance with Section 5.7; or
(iii) terminate any Letter of Credit which may be
terminated in accordance with its terms; and
(b) the Agent shall, upon the direction of the Required Lenders,
and may, in its sole and absolute discretion,
(i) reduce the Revolving Commitment Availability or one or
more of the elements thereof; or
(ii) decline to permit the issuance of additional Letters
of Credit or the extension of the Stated Expiry Date of any
outstanding Letter of Credit.
Each and every right, power, and remedy provided herein or in any other Loan
Document shall be cumulative and shall be in addition to every other right,
power, and remedy provided herein or in any other Loan Document or provided
under applicable law.
ARTICLE XI
THE ADMINISTRATIVE AGENT
SECTION 11.1. Appointment; Actions.
(a) Each Lender hereby appoints Business Credit as its Agent
under and for purposes of this Agreement, each of the other Loan
Documents and the Collateral Documents. Each Lender irrevocably
authorizes, and each assignee of any Lender shall be deemed to
authorize, the Agent to act on behalf of such Lender under this
Agreement, each of the other Loan Documents and the Collateral
Documents and, in the absence of other written instructions from the
Required Lenders received from time to time by the Agent (with respect
to which the Agent agrees that it will comply, except as otherwise
provided in thisSection 11.1 or as otherwise advised by counsel), each
Lender irrevocably authorizes the Agent to take such actions on its
behalf and to exercise such powers hereunder and thereunder as are in
each case specifically delegated to or required of the Agent by the
terms hereof or thereof, together with such powers as may be
reasonably incidental thereto. In addition, each Lender irrevocably
authorizes, and each assignee of a Lender shall be deemed to
authorize, the Agent to delegate from time to time all or any of its
duties hereunder to Bank of America. In the event of any such
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delegation, Bank of America shall be entitled to all of the rights of
the Agent hereunder. Each Lender agrees that no Lender shall have any
right individually to seek to realize upon the security granted by or
any guaranty provided by any Collateral Document, it being understood
and agreed that such rights and remedies may be exercised solely by
the Agent for the benefit of the Lenders in accordance with the terms
of this Agreement and the Collateral Documents.
(b) The Agent shall not have by reason of this Agreement or
any other Loan Document a fiduciary relationship in respect of any
Lender; and nothing in this Agreement or any other Loan Document,
expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement or
any other Loan Document except as expressly set forth herein or
therein. Notwithstanding the foregoing, the Lenders acknowledge that
the Agent is authorized to exercise its discretion in taking certain
actions and exercising certain powers under this Agreement, including
determining which Accounts and Inventory constitute Eligible Accounts
and Eligible Inventory, determining the Revolving Commitment
Availability pursuant toSection 10.3, and following the occurrence of
an Event of Cash Dominion, continuing to make Credit Extensions
pursuant to Section 7.2 . Each Lender hereby irrevocably indemnifies
and agrees to indemnify (which indemnity shall survive any termination
of this Agreement) the Agent, and each of its officers, directors,
employees and agents (collectively, the Indemnified Persons"), pro
rata according to such Lender's Percentage, from and against any and
all liabilities, demands, judgments, obligations, losses, damages,
claims, costs, or expenses of any kind or nature whatsoever (including
those relating to the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether
through negotiations, legal proceedings, or otherwise) of this
Agreement, and the other Loan Documents) which may at any time be
imposed on, incurred by, or asserted against, any of the Indemnified
Persons in any way relating to or arising out of this Agreement, or
any other Loan Document, including reasonable attorneys' fees and
allocated costs of in-house counsel, and as to which the Agent is not
reimbursed by the Company;provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities,
obligations, losses, damages, claims, costs, or expenses of any
Indemnified Person which have resulted from such Indemnified Person's
bad faith or willful misconduct. The Agent shall not be required to
take any action, make any inquiry, or request any document hereunder,
or under any other Loan Document, or to prosecute or defend any suit
in respect of this Agreement, or any other Loan Document, unless (i)
if it has requested instructions from the Lenders as to such action,
it shall have received such instructions from the Required Lenders
(or, if required by this Agreement, all the Lenders) and (ii) it is
indemnified hereunder to its
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satisfaction. If any indemnity in favor of the Agent shall be or
become inadequate, in the determination of the Agent, the Agent may
call for additional indemnification from the Lenders and cease to do
the acts indemnified against hereunder until such additional indemnity
is given. The agreements in this clause (c) shall survive the
termination of the Commitments and the Letters of Credit and the
repayment of the Loans and other Obligations.
(c) The Company hereby requests the Agent to, and each Lender
hereby instructs the Agent to, and the Agent agrees to, deliver to the
Company on the Initial Borrowing Date, for delivery by the Company to
R.T.Z. Aluminum Holdings Limited, a letter in the form of Exhibit R
attached hereto.
(d) The Company hereby requests the Agent to, and each Lender
hereby instructs the Agent to, and the Agent agrees to, deliver to the
Company on the Initial Borrowing Date, a letter regarding the flood
plain status of the properties covered by the Company Mortgages and
the Company Deeds of Trust, in the form ofExhibit S attached hereto.
SECTION 11.2. Funding Reliance, etc.
(a) Unless the Agent shall have been notified by telephone
and such notice shall have been confirmed in writing by any Lender by
5:00 p.m., San Francisco time, on the Business Day prior to a
Borrowing that such Lender will not make available the amount which
would constitute its Percentage of such Borrowing on the date
specified therefor, the Agent may assume that such Lender has made
such amount available to the Agent and, in reliance upon such
assumption, make available to the Company a corresponding amount. If
and to the extent that such Lender shall not have made such amount
available to the Agent, such Lender and the Company severally agree to
repay the Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date the Agent made such
amount available to the Company to the date such amount is repaid to
the Agent, at the interest rate(s) applicable at the time to Loans
comprising such Borrowing.
(b) Unless the Agent shall have been notified by telephone
and such notice shall have been confirmed in writing by the Company by
5:00 p.m., San Francisco time, on the day prior to the due date of any
Obligation, that any Obligor will not make the full amount of all
payments scheduled to be made by it on such due date, the Agent may
assume that such Obligor has made such amount available to the Agent
and, in reliance upon such assumption, make available to the Lenders
their respectivepro rata shares of such amount. If the Agent makes
any such amount available to any Lender, but such amount was not in
fact made available by or on behalf of such Obligor to the Agent on
such due date, such Lender shall pay to the Agent
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on demand the amount previously made available to such Lender,
together with interest on such amount at the daily average Federal
Funds Rate for the number of days from and including the date on which
such Lender received such amount to the date on which such amount
becomes immediately available to the Agent, and together with such
other compensatory amounts as may be required to be paid by such
Lender to the Agent pursuant to the Rules for Interbank Compensation
of the Council on International Banking or the Clearinghouse
Compensation Committee, as the case may be, as in effect from time to
time. A statement of the Agent submitted to any Lender with respect
to any amounts owing under this paragraph shall be conclusive, in the
absence of manifest error. If such amount is not in fact made
available to the Agent by such Lender within two Business Days after
the date on which such Lender is (i) informed by the Agent that such
amount was not made available to the Agent by or on behalf of such
Obligor, and (ii) requested by the Agent to refund such amount to the
Agent, then the Agent shall be entitled to recover on demand an amount
calculated in the manner specified in the second preceding sentence of
this clause (b) after substituting the term "Reference Rate" for the
term "Federal Funds Rate".
SECTION 11.3. Exculpation.
(a) No Indemnified Person shall be liable to any Lender
for any action taken or omitted to be taken by such Indemnified Person
under this Agreement or any other Loan Document or in connection
herewith or therewith (except for such Indemnified Person's own
willful misconduct or bad faith), nor responsible for any recitals,
statements, representations or warranties herein or therein, nor for
the effectiveness, genuineness, enforceability, validity, or due
execution of this Agreement or any other Loan Document, nor for the
creation, perfection, or priority of any Liens purported to be created
by any of the Loan Documents, or the validity, genuineness,
enforceability, existence, condition, value, or sufficiency of any
collateral security, nor to make any inquiry respecting the
performance by any Obligor of its obligations hereunder or under any
other Loan Document. Each Indemnified Person shall be entitled to
rely upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement, or writing which such
Indemnified Person believes to be genuine and to have been presented
by a proper Person, and shall not be liable to any Lender or any
Obligor for the consequences of such reliance.
(b) The Agent shall be deemed not to have knowledge of
the occurrence of a Default or an Event of Default (other than, in the
case of the Agent, an Event of Default arising underSection 10.1.1),
or any breach of any of the Loan Documents unless, in each case, it
shall have received written notice thereof from a Lender or from the
Company. No Indemnified Person shall be responsible or liable for any
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shortage, discrepancy, damage, loss, or destruction of any part of the
Collateral, wherever the same may be located and regardless of the
cause thereof, unless the same shall happen through its own bad faith
or willful misconduct. No Indemnified Person shall, under any
circumstances or any event whatsoever, have any liability for any
error or omission or delivery of any kind made in the settlement,
collection, or payment of any of the Collateral or of any instrument
received in payment therefor or for any damage resulting therefrom
other than as a result of its own bad faith or willful misconduct.
SECTION 11.4. Successors. The Agent may resign as such at any time
upon at least 30 days' prior written notice to the Company and all Lenders. If
the Agent at any time shall resign, the Required Lenders may appoint another
Lender or a commercial banking institution organized under the laws of the
United States (or any state thereof) or a United States branch or agency of a
foreign commercial banking institution, and having a combined capital and
surplus of at least $500,000,000 as a successor Agent which shall thereupon
become the Agent hereunder. If no successor Agent shall have been so appointed
by the Required Lenders, and shall have accepted such appointment, within 30
days after the retiring Agent's giving notice of resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent which shall be
one of the Lenders or one of such commercial banking institutions. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall be entitled to receive from the retiring Agent such
documents of transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with all rights,
powers, privileges, and duties of the retiring Agent and the retiring Agent
shall be discharged from any further duties and obligations under or in
connection with this Agreement and any Loan Document. In addition, in the
event that Business Credit resigns as the Agent, Bank of America shall be
discharged from any duties and obligations under or in connection with this
Agreement and any Loan Documents that were delegated to Bank of America by
Business Credit in its capacity as Agent. After the resignation hereunder of a
retiring Agent, the provisions of
(a) this Article XI shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent
under this Agreement; and
(b) Sections 12.3 and 12.4 shall continue to inure to its
benefit.
SECTION 11.5. Credit Extensions by the Agent. Business Credit and
its successor as Agent shall have the same rights and powers with respect to
(a) the Loans made by it or any of its Affiliates and (b) Letters of Credit
issued (or participated in) by it or any of its Affiliates as any other Lender
and may exercise
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the same as if it were not the Agent. The terms "Lender" and "Lenders" as used
herein shall include the Agent in its individual capacity.
SECTION 11.6. Credit Decisions. Each Lender acknowledges that it
has, independently of the Agent, and each other Lender, and based on such
Lender's review of the financial information of the Company and such other
documents, information, and investigations as such Lender has deemed
appropriate, made its own credit decision to extend its Commitments. Each
Lender also acknowledges that it will, independently of the Agent, and each
other Lender, and based on such other documents, information, and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any other Loan
Document.
SECTION 11.7. Copies, etc. The Agent shall give prompt written
notice to each Lender of each notice or request required or permitted to be
given to the Agent by any Obligor pursuant to the terms of this Agreement or
any other Loan Document (unless concurrently delivered to the Lenders by or on
behalf of such Obligor pursuant to the terms hereof). The Agent will
distribute to each Lender each document or instrument received for its account
and copies of all other communications received by the Agent from the Company
for distribution to the Lenders by the Agent in accordance with the terms of
this Agreement and the other Loan Documents.
SECTION 11.8. Designation of Additional Agents. Whenever the Agent
shall deem it necessary or prudent in order either to conform to any law of any
jurisdiction in which all or any part of the Collateral shall be situated or to
make any claim or bring any suit with respect to the Collateral or the
Collateral Documents, or in the event that the Agent shall have been requested
to do so by the Required Lenders, the Agent and to the extent necessary, the
Parent Guarantor and the Company, shall (and the Company shall cause each other
Obligor to) execute and deliver a supplemental agreement and all other
instruments and agreements necessary or proper to constitute another bank or
trust company, or one or more Persons approved by the Agent, either to act as
Agent or agents with respect to all or any part of the Collateral, in any such
case with such powers of the Agent as may be provided in such supplemental
agreement, and to vest in such bank, trust company or Person as such Agent or
separate trustee, as the case may be, any Property, title, right, or power of
the Agent deemed necessary or advisable by the Agent.
SECTION 11.9. Certain Releases.
(a) To the extent that the Agent becomes concerned that the
exercise of any remedies or any action taken or omitted to be taken by
it in connection with any Collateral shall subject it to the
possibility of any liability, cost, or expense which
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it deems to be significant, arising under any law, rules, or
regulations relating to hazardous or toxic wastes or materials, the
Agent may, without liability to any Lender or other party to this
Agreement or any other Loan Document, or any other Person, decline to
accept, abandon, forfeit, or release such Collateral regardless of any
effect such declination, abandonment, forfeiture, or release may have
upon the Lenders, or otherwise, if either (i) the Agent is requested
to decline to accept, abandon, forfeit, or release such Collateral by
the Required Lenders or (ii) the Agent is not, within 30 days after
making a specific proposal therefor, specifically indemnified to its
satisfaction by the Required Lenders or insured to its satisfaction by
a third party or parties for any liability, costs, and expenses which
might result therefrom.
(b) In addition, if the Agent becomes concerned that the
inclusion of certain Property in the Collateral is not in the best
interests of the Agent or the Lenders, either because of potential
adverse legal implications (including the potential effects of
California's "one form of action", "anti-deficiency" and related rules
of law which may apply in connection with real property located in
California) or potential liabilities, costs, or expenses which the
Agent deems to be significant that may be imposed upon a Person
secured by such Collateral, the Agent may, without liability to any
Lender or other party to this Agreement or any other Loan Document, or
any other Person, decline to accept, abandon, forfeit, or release such
Collateral regardless of any effect such declination, abandonment,
forfeiture, or release may have upon the Lenders or otherwise unless
(i) the Agent is requested to do otherwise by the Required Lenders and
(ii) the Agent is, within 30 days after making a specific proposal
therefor, specifically indemnified to its satisfaction by the Required
Lenders or insured to its satisfaction by a third party or parties for
any liability, costs, and expenses which might result therefrom.
SECTION 11.10. Approval of Loan Documents. Each of the Lenders
hereby approves the forms of the Loan Documents attached as Exhibits to this
Agreement and hereby authorizes the Agent on its behalf to accept from the
Company and the other Obligors, as the case may be, and, authorizes the Agent
to execute and deliver as Agent, the Collateral Documents in substantially the
form of such Exhibits, with such changes, additions, or deletions as the Agent,
in its sole and absolute discretion, may approve as necessary or appropriate to
accomplish the purposes of such Loan Documents. Each of the Lenders also
authorizes the Agent to accept, or execute and deliver, such additional
documents, in form and substance satisfactory to the Agent in its sole and
absolute discretion, in connection with the initial Borrowing or any subsequent
Borrowing as the Agent, in its sole and absolute discretion, may approve as
necessary or appropriate to accomplish the purposes of the Loan Documents.
Each of the Lenders further authorizes the Agent, in
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its sole and absolute discretion, to approve the form and content of all
certificates, opinions, collateral, financing statements, and other documents
delivered to it at or in connection with the initial Borrowing or any
subsequent Borrowing as the Agent, in its sole and absolute discretion, may
deem necessary or appropriate. Whenever the Agent is permitted to consent to
any matter hereunder, the Agent shall have the right, in its sole discretion,
to consult with any or all of the other Lenders prior to providing or
refraining from providing any such consent.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. Waivers, Amendments, etc.
(a) The provisions of this Agreement and of each
other Loan Document may from time to time be amended or
modified, if such amendment or modification is in writing and
consented to by the Company or the Obligor(s) party thereto
(as the case may be) and the Required Lenders; and the
provisions of this Agreement may be waived by the Required
Lenders or by the Agent acting with the consent of the
Required Lenders; provided, however, that no such amendment,
modification, or waiver which would:
(i) modify this Section 12.1, change the
definition of "Required Lenders", or modify any
requirement hereunder that any particular action be
taken by all the Lenders or by the Required Lenders
shall be effective unless consented to by each
Lender;
(ii) increase any Revolving Commitment Amount
or the Percentage of any Lender, reduce any fees
described in Article III payable to any Lender, or
extend any Lender's Commitment Termination Date shall
be made without the consent of such Lender;
(iii) extend the due date for, or reduce the
amount of, any scheduled repayment of principal of or
interest on any Loan or any Reimbursement Obligation,
or reduce the principal amount of or rate of interest
on any Loan or reduce the amount of any Reimbursement
Obligation, shall be made without the consent of the
Lender which made such Loan or participated in such
Letter of Credit, or each Lender which issued or is
participating in the Letter of Credit with respect to
which such Reimbursement Obligation is owed, as the
case may be;
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(iv) release all, substantially all, or any
material portion of the Collateral (except for
releases in connection with dispositions of assets
which are permitted hereunder or under any Loan
Document, and releases which are required by the
Collateral Documents) without the consent of Lenders
holding at least 100% of the then aggregate
outstanding principal amount of the Revolving Credit
Outstandings or, if no such principal amount is then
outstanding, Lenders having at least 100% of the
Revolving Commitments;
(v) affect adversely the interests, rights,
or obligations of the Agent qua Agent, shall be made
without the consent of the Agent; or
(vi) modify any Letter of Credit or any
Revolving L/C Request without the consent of the
relevant Issuer Bank.
(b) Notwithstanding the foregoing, in the event that the
Revolving Commitment Availability shall at any time be less than
$40,000,000 or shall be less than $50,000,000 for three consecutive
Business Days and the Agent shall have given notice of its election
under the Concentration Bank Agreement to have funds in the
Concentration Account applied to Revolving Credit Outstandings, the
Agent may at any time thereafter, in its sole and absolute discretion,
waive any of the conditions precedent set forth in Section 7.2.
(c) No failure or delay on the part of the Agent, any
Lender, any Issuer Bank, or the holder of any of the Obligations in
exercising any power, right, or remedy under this Agreement or any
other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right, or remedy
preclude any other or further exercise thereof or the exercise of any
other power, right, or remedy. No notice to or demand on the Company
or any Obligor in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the Agent,
any Lender, any Issuer Bank, or the holder of any of the Obligations
under this Agreement or any other Loan Document shall, except as may
be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be
granted hereunder.
(d) Each of the Parent Guarantor and the Company hereby
waives demand, presentment for payment, protest, notice of protest,
notice of acceleration (except as otherwise provided herein), or of
intention to accelerate the maturity of any of the Loans, diligence in
collecting, the bringing of any suit against any party and any notice
of or defense on account of
141
any extensions, renewals, partial payments, or any changes in any of
the terms, provisions, and covenants of this Agreement, or any other
Loan Document, or any releases or substitutions of any security, or
any delay, indulgence, or other act of any trustee or any other Person
under or in connection with this Agreement, or any other Loan Document
whether before or after maturity.
SECTION 12.2. Notices. Except as otherwise provided herein or in
any other Loan Document, all notices and other communications provided to any
party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile (followed promptly thereby by mailing of
such notice or communication) and addressed, delivered, or transmitted to such
party at its address, telex, or facsimile number set forth below its signature
hereto, or set forth in the Assignee Agreement to be Bound pursuant to which
such party became a party hereto, or at such other address, telex, or facsimile
number as may be designated by such party in a notice to the other parties.
Any notice, if delivered by hand or if sent by mail or by overnight courier
properly addressed with postage prepaid, shall be deemed given when received;
any notice, if transmitted by telex or facsimile, shall be deemed given when
transmitted (answerback confirmed in the case of telexes).
SECTION 12.3. Payment of Costs and Expenses. The Parent Guarantor
and the Company, jointly and severally, agree to pay on demand all expenses of
the Agent (including the reasonable fees and out-of-pocket expenses of counsel
to the Agent and of local counsel, if any, who may be retained by counsel to
the Agent and the allocated costs of in-house counsel) in connection with
(a) the negotiation, preparation, execution, and delivery
of this Agreement and of each other Loan Document, including schedules
and exhibits, and any amendments, waivers, consents, supplements, or
other modifications to this Agreement or any other Loan Document as
may from time to time hereafter be required, whether or not the
transactions contemplated hereby are consummated,
(b) the filing, recording, refiling, and rerecording of
the Collateral Documents (including financing statements or similar
documentation) and all amendments, supplements, and modifications to
any thereof and any and all other documents or instruments of further
assurance required to be filed, recorded, refiled, or rerecorded by
the terms hereof or of the Collateral Documents, and
(c) the preparation and review of the form of any
document or instrument relevant to this Agreement or any other Loan
Document.
The Parent Guarantor and the Company, jointly and severally, further agree to
pay, and to save the Agent and the Lenders
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harmless from all liability for, any stamp, recording, or similar taxes which
may be payable in connection with the execution or delivery of this Agreement,
the Credit Extensions hereunder, the issuance of the Letters of Credit, or the
execution and delivery of any other Loan Documents. The Parent Guarantor and
the Company, jointly and severally, also agree to reimburse the Agent and each
Lender upon demand for all reasonable out-of-pocket expenses (including
attorneys' fees and legal expenses) incurred by the Agent or such Lender in
connection with the enforcement of any Obligations and to reimburse the Agent
upon demand for all reasonable out-of-pocket expenses (including attorneys'
fees and legal expenses) incurred by the Agent in connection with the
negotiation of any restructuring or "work-out," whether or not consummated, of
any Obligations.
SECTION 12.4. Indemnification. In consideration of the execution
and delivery of this Agreement by the Agent and each Lender, and the extension
of the Commitments, the Company hereby indemnifies, exonerates, and holds the
Agent and each Lender and each of their respective officers, directors,
employees, and agents (collectively, the "Indemnified Parties") free and
harmless from and against any and all actions, causes of action, suits, losses,
costs, liabilities, and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action
for which indemnification hereunder is sought), including reasonable attorneys'
fees and disbursements (collectively, the "Indemnified Liabilities" and,
individually, an "Indemnified Liability"), incurred by the Indemnified Parties
or any of them as result of, arising out of, or relating to
(a) any transaction or goods financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of any
Credit Extension;
(b) the entering into, issuance, acceptance, or
performance of or participation in this Agreement and any other Loan
Document by any of the Indemnified Parties (including any unsuccessful
action brought by or on behalf of the Company or any other Obligor as
the result of any determination by the Required Lenders pursuant to
Article VII not to make any Credit Extension);
(c) any investigation, litigation, or proceeding related
to any acquisition or proposed acquisition by the Parent Guarantor,
the Company, or any of their Subsidiaries or Joint Venture Affiliates
of all or any portion of the stock or assets of any Person, whether or
not such Indemnified Party is party thereto;
(d) any investigation, litigation, or proceeding related
to any environmental cleanup, audit, compliance, or other matter
relating to the protection of the environment or the Release by the
Parent Guarantor, the Company or any of their
143
Subsidiaries or Joint Venture Affiliates of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging, or releases from,
any real property owned or operated by the Parent Guarantor, the
Company, or any of their Subsidiaries or Joint Venture Affiliates of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses, or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the
control of, the Company or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or willful misconduct, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Company hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. Each
Indemnified Party, as soon as reasonably practicable, shall notify the Agent of
the commencement of any legal proceeding by any third Person under which any
Indemnified Liability might arise. The Agent shall notify the Company of any
such commencement promptly after the Agent receives its notice. The Company
shall have the option to participate in the defense of all claims under which
any Indemnified Liability might arise, but the Company shall not have the
option to compel any Indemnified Party to employ counsel of the Company's
choosing.
SECTION 12.5. Survival. The obligations of the Company under
Sections 4.3, 4.4, 4.5, 4.6, 4.7, 12.3, and 12.4, and the obligations of the
Lenders under Sections 4.8, 11.1 and 11.2, shall in each case survive any
termination of this Agreement. The representations and warranties made by each
Obligor in this Agreement and in each other Loan Document shall survive the
execution and delivery of this Agreement and each such other Loan Document
notwithstanding any investigation.
SECTION 12.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 12.7. Headings. The various headings of this Agreement and
of each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
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SECTION 12.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts and by
the different parties on separate counterparts, each of which shall be deemed
to be an original and all of which shall constitute together but one and the
same agreement. This Agreement shall become effective on the date (the
"Effective Date") when counterparts hereof executed on behalf of the Parent
Guarantor, the Company, the Agent, and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent and notice
thereof shall have been given by the Agent to the Parent Guarantor, the
Company, and each Lender.
SECTION 12.9. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT (EXCEPT
TO THE EXTENT THAT SUCH OTHER LOAN DOCUMENT CONTAINS A CONTRARY
EXPRESS CHOICE OF LAWS PROVISION) SHALL EACH BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO SUCH LAWS RELATING TO CONFLICTS OF
LAWS.
(b) THE PARENT GUARANTOR AND THE COMPANY HEREBY SUBMIT TO
THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL AND STATE
OF NEW YORK COURTS LOCATED IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK, NEW YORK FOR ALL PURPOSES OF OR IN CONNECTION WITH THIS
AGREEMENT, AND ALL OTHER LOAN DOCUMENTS, PROVIDED, HOWEVER, THAT
NOTHING IN THIS SECTION 12.9 SHALL AFFECT EITHER THE AGENT'S OR ANY
LENDER'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE PARENT
GUARANTOR, THE COMPANY, OR THEIR RESPECTIVE PROPERTY IN THE COURTS OF
ANY OTHER JURISDICTIONS.
(c) UNTIL SUCH TIME AS THE AGENT AND THE LENDERS SHALL
HAVE RECEIVED FINAL PAYMENT OF THE FULL AMOUNT OF ALL OBLIGATIONS AND
PERFORMANCE OF ALL OBLIGATIONS, AND ALL LETTERS OF CREDIT SHALL HAVE
EXPIRED, THE PARENT GUARANTOR AND THE COMPANY HEREBY IRREVOCABLY
DESIGNATE AND APPOINT KRAMER, LEVIN, NAFTALIS, NESSEN, KAMIN &
FRANKEL, CURRENTLY LOCATED AT 919 THIRD AVENUE, NEW YORK, NEW YORK
10022 (ATTENTION: EZRA LEVIN), AS THEIR AGENT TO ACCEPT AND
ACKNOWLEDGE ON THEIR BEHALF ANY AND ALL PROCESS WHICH MAY BE SERVED IN
CONNECTION WITH ANY SUIT, ACTION, OR PROCEEDING OF THE NATURE REFERRED
TO IN THE PRECEDING PARAGRAPH. THE PARENT GUARANTOR AND THE COMPANY
EACH HEREBY ACKNOWLEDGE THAT, TO THE FULLEST EXTENT PERMITTED BY LAW,
SUCH SERVICE SHALL BE EFFECTIVE AND BINDING SERVICE ON IT IN EVERY
RESPECT REGARDLESS OF WHETHER IT SHALL BE DOING OR SHALL HAVE AT ANY
TIME DONE BUSINESS IN THE STATE OF NEW YORK.
(d) THE PARENT GUARANTOR AND THE COMPANY HEREBY AGREE TO
TAKE ANY AND ALL ACTION THAT MAY BE NECESSARY TO ENSURE THAT AT ALL
TIMES DURING THE TERM OF THIS AGREEMENT THERE SHALL BE AN AGENT IN NEW
YORK DESIGNATED AND APPOINTED BY THEM FOR THE PURPOSE DESCRIBED ABOVE,
TO MAINTAIN SUCH DESIGNATION AND
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APPOINTMENT OF SUCH AGENT IN FULL FORCE AND EFFECT FOR THE TERM OF
THIS AGREEMENT, AND TO DELIVER PROMPTLY TO THE AGENT AT SUCH TIMES AS
THE AGENT MAY REQUEST EVIDENCE IN WRITING OF SUCH AGENT'S ACCEPTANCE
OF SUCH APPOINTMENT.
(e) THE PARENT GUARANTOR AND THE COMPANY HEREBY CONSENT
TO PROCESS BEING SERVED IN ANY SUIT, ACTION, OR PROCEEDING OF THE
NATURE REFERRED TO ABOVE EITHER (I) BY THE MAILING OF A COPY THEREOF
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT
REQUESTED, TO ITS RESPECTIVE ADDRESS SHOWN BELOW ITS SIGNATURE HERETO
OR (II) BY SERVING A COPY THEREOF UPON THE PERSON SPECIFIED ABOVE AS
THE AUTHORIZED AGENT FOR SERVICE OF PROCESS FOR THE PARENT GUARANTOR
AND THE COMPANY (TO THE EXTENT PERMITTED BY APPLICABLE LAW, REGARDLESS
OF WHETHER THE APPOINTMENT OF SUCH AGENT FOR SERVICE OF PROCESS FOR
ANY REASON SHALL PROVE TO BE INEFFECTIVE OR SUCH AGENT FOR SERVICE OF
PROCESS SHALL ACCEPT OR ACKNOWLEDGE SUCH SERVICE); PROVIDED, HOWEVER,
THAT, TO THE EXTENT LAWFUL AND PRACTICABLE, WRITTEN NOTICE OF SAID
SERVICE UPON SAID AGENT SHALL BE MAILED BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO THE PARENT
GUARANTOR OR THE COMPANY, AS APPLICABLE, AT ITS RESPECTIVE ADDRESS
SHOWN BELOW ITS SIGNATURE HERETO. THE PARENT GUARANTOR AND THE
COMPANY AGREE THAT SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY
LAW, (I) SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON IT IN ANY SUCH SUIT, ACTION, OR PROCEEDING AND (II) SHALL BE
TAKEN AND HELD TO BE VALID PERSONAL SERVICE UPON AND PERSONAL DELIVERY
TO IT. NOTHING HEREIN SHALL AFFECT EITHER THE AGENT'S OR ANY BANK'S
RIGHT TO SERVE PROCESS IN OR TO BRING PROCEEDINGS AGAINST THE PARENT
GUARANTOR OR THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 12.10. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that:
(a) neither the Parent Guarantor nor the Company may
assign or transfer their rights or obligations hereunder without the
prior written consent of the Agent and all Lenders; and
(b) the rights of sale, assignment, and transfer of the
Lenders are subject to Section 12.11.
SECTION 12.11. Sale and Transfer of Credit Extensions and
Commitments; Participations in Credit Extensions and Commitments. Each Lender
may assign, or sell participations in, its Credit Extensions and Commitments to
one or more other Persons in accordance with this Section 12.11.
SECTION 12.11.1. Assignments. Any Lender,
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(a) with the written consents of the Company and the
Agent (which consents shall not be unreasonably delayed or withheld
and which consent, in the case of the Company, shall be deemed to have
been given in the absence of a written notice delivered by the Company
to the Agent on or before the fifth Business Day after receipt by the
Company of such Lender's request for consent, stating, in reasonable
detail, the reasons why the Company proposes to withhold such consent)
may at any time assign and delegate to one or more Affiliates of such
Lender (if such Lender is not to remain liable for the performance of
its Affiliate's obligations hereunder or under any other applicable
Loan Document),
(b) with the written consents of the Company (which
consent shall not be unreasonably delayed or withheld) and the Agent
(which consent may be withheld for any reason) may at any time assign
and delegate to one or more other banks, savings and loan
associations, commercial finance companies and other similar financial
institutions, and
(c) with written notice to the Company and the Agent, but
without the consent of the Company or the Agent, may assign and
delegate to any other Lender or to one or more Affiliates of such
Lender (if such Lender remains liable for the performance of its
Affiliate's obligations hereunder and under any other applicable Loan
Document)
(each Person described in either of the foregoing clauses as being the Person
to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), all or any fraction of such Lender's
total Credit Extensions and Revolving Commitment (which assignment and
delegation shall be of a constant, and not a varying, percentage of all the
assigning Lender's Credit Extensions and Commitments); provided, however, that
the aggregate principal amount of the portion of the Revolving Commitment so
assigned to any Assignee Lender shall be not less than $20,000,000, unless such
assignment covers all of such Lender's interests and obligations hereunder and
under the Loan Documents; and provided, further, that any such Assignee Lender
will comply, if applicable, with the provisions contained in clause (b) of
Section 4.6; and provided, further, that the Parent Guarantor, the Company,
each other Obligor and the Agent shall be entitled to continue to deal solely
and directly with such assigning Lender in connection with the interests so
assigned and delegated to an Assignee Lender until
(i) written notice of such assignment and
delegation, together with payment instructions, addresses, and
related information with respect to such Assignee Lender,
shall have been given to the Company and the Agent by such
Lender and such Assignee Lender,
(ii) such Assignee Lender shall have executed and
delivered to the Company and the Agent an Assignee Agreement
to be Bound, accepted by the Agent, and
147
(iii) the processing fees described below shall have
been paid.
From and after the date that the Agent accepts such Assignee Agreement to be
Bound (subject to clauses (a) and (b) above), (A) the Assignee Lender
thereunder shall be deemed automatically to have become a party hereto and to
the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee Lender pursuant to such Assignee Agreement to be
Bound, shall have the rights and obligations of a Lender hereunder and under
the other Loan Documents, and (B) the assigning Lender, to the extent that
rights and obligations hereunder have been assigned and delegated by it
pursuant to such Assignee Agreement to be Bound, shall be released from its
obligations which are not then due and payable hereunder and under the other
Loan Documents. Accrued interest, and accrued fees, in respect of the rights
and obligations that have been assigned, shall be paid as provided in the
Assignee Agreement to be Bound. Accrued interest and accrued fees shall be
paid at the same time or times provided in this Agreement. Such assigning
Lender or such Assignee Lender must also pay a processing fee to the Agent upon
delivery of any Assignee Agreement to be Bound in the amount of $3500. Any
attempted assignment and delegation not made in accordance with this Section
12.11.1 shall be null and void.
SECTION 12.11.2. Participations. Any Lender may at any time
sell to one or more financial institutions (each of such financial institutions
being herein called a "Participant") participating interests in any of the
Credit Extensions, Commitments, or other interests or obligations of such
Lender hereunder; provided, however, that
(a) no participation contemplated in this Section 12.11.2
shall relieve such Lender from its Commitments or its other
obligations hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations,
(c) the Parent Guarantor, the Company, each other
Obligor, and the Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations
under this Agreement and each of the other Loan Documents, and
(d) no Participant, unless such Participant is an
Affiliate of such Lender, or is itself a Lender, shall be entitled to
require such Lender to take or refrain from taking any action
hereunder or under any other Loan Document.
SECTION 12.12. Other Transactions. Nothing contained herein shall
preclude the Agent or any Lender from engaging in any debt or equity
transaction, in addition to those contemplated by this
148
Agreement or any other Loan Document, with the Company or any of its Affiliates
in which the Company or such Affiliate is not restricted hereby from engaging
with any other Person.
SECTION 12.13. WAIVER OF JURY TRIAL.
TO THE EXTENT ANY SUCH LITIGATION IS NOT DETERMINED BY ARBITRATION OR
BY A REFERENCE, THE AGENT, THE LENDERS, THE PARENT GUARANTOR, AND THE COMPANY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR OTHER ACTIONS OF THE AGENT, THE LENDERS, THE PARENT GUARANTOR, OR
THE COMPANY IN CONNECTION WITH OR RELATED TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT. THE PARENT GUARANTOR AND THE COMPANY EACH ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS
ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTATION, OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
SECTION 12.14. Arbitration; Reference Proceeding.
(a) Any controversy or claim between or among the
parties, including but not limited to those arising out of or relating to this
Agreement or any agreements or instruments relating hereto or delivered in
connection herewith and any claim based on or arising from an alleged tort,
shall at the request of any party be determined by arbitration. The
arbitration shall be conducted in accordance with the United States Arbitration
Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this
Agreement, and under the Commercial Rules of the American Arbitration
Association ("AAA"). The arbitration shall be conducted within the City of New
York. The arbitrator(s) shall give effect to statutes of limitation in
determining any claim. Any controversy concerning whether an issue is
arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
(b) Notwithstanding the provisions of clause (a), no
controversy or claim shall be submitted to arbitration without the
149
consent of all parties if, at the time of the proposed submission, such
controversy or claim arises from or relates to an obligation to the Lenders
which is secured by real property collateral located in California. If all
parties do not consent to submission of such a controversy or claim to
arbitration, the controversy or claim shall be determined as provided in clause
(c).
(c) A controversy or claim which is not submitted to
arbitration as provided and limited in clauses (a) and (b) shall, at the
request of any party, be determined by a reference in accordance with INSERT
APPROPRIATE CODE SECTIONS. If such an election is made, the parties shall
designate to the court a referee or referees selected under the auspices of the
AAA in the same manner as arbitrators are selected in AAA-sponsored
proceedings. The presiding referee of the panel, or the referee if there is a
single referee, shall be an active attorney or retired judge. Judgment upon
the award rendered by such referee or referees shall be entered in the court in
which such proceeding was commenced in accordance with INSERT APPROPRIATE CODE
SECTIONS,
(d) No provision of this paragraph shall limit the right
of any party to this Agreement to exercise self-help remedies such as setoff,
to foreclose against or sell any real or personal property collateral or
security, or to obtain provisional or ancillary remedies from a court of
competent jurisdiction before, after, or during the pendency of any arbitration
or other proceeding. The exercise of a remedy does not waive the right of
either party to resort to arbitration or reference. At the Required Lenders'
option, foreclosure under a deed of trust or mortgage may be accomplished
either by exercise of power of sale under the deed of trust or mortgage or by
judicial foreclosure.
SECTION 12.15. Final Agreement, etc. This written loan agreement,
together with the other Loan Documents, represents the final agreement between
the parties with respect to the subject matter hereof and may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties with respect to the subject matter hereof. The inclusion in this
Agreement or any Loan Document of provisions not included in, or the deletion
of provisions previously included in, prior drafts of this Agreement or such
other Loan Document shall not be considered in interpreting the final executed
version of this Agreement or such other Loan Document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
KAISER ALUMINUM & CHEMICAL
CORPORATION
By________________________________
150
Name Printed:
Title:
Address:
Telephone No.:
Facsimile No.:
Telex No.:
Attention:
151
KAISER ALUMINUM CORPORATION
By_______________________________
Name Printed:
Title:
Address:
Telephone No.:
Facsimile No.:
Telex No.:
Attention:
152
PERCENTAGE LENDERS
- ---------- -------
BANKAMERICA BUSINESS CREDIT, INC.
By ________________________________
Name Printed:
Title:
Domestic
Office:
Telephone No.:
Facsimile No.:
Telex No.:
Attention:
LIBOR
Office:
Address for
payments:
Attention:
Ref:
153
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By___________________________________
Name Printed:
Title: Vice President
Domestic
Office: 555 California Street
41st Floor
San Francisco Corporate
Office #5133
San Francisco, California 94104
Telephone No.: (415) 622-5896
Facsimile No.: (415) 622-4585
Telex No.: 67652
(Answerback BANKAMER SFO)
Attention:
LIBOR
Office: (Same as Domestic)
Address for
payments: Bank of America N.T. & S.A.
(ABA 121-000-358-S.F.)
1850 Gateway Boulevard
Concord, California 94520
Attention: Global Agency (#5596)
For Credit to account
No.: Bancontrol-1233-5-15200
Ref: Kaiser Aluminum
154
AGENT
-----
BANKAMERICA BUSINESS CREDIT, INC.
By ________________________________
Name Printed:
Title:
Office:
Telephone No.:
Facsimile No.:
Telex No.:
Attention:
155