1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) August 9, 1996
QUANEX CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 1-5725 38-1872178
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State or other jurisdiction of Commission File Number (I.R.S. Employer
incorporation or organization) Identification No.)
1900 West Loop South, Suite 1500, Houston, Texas 77027
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (713) 961-4600
No Change
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(Former name or former address, if changed since last report)
2
Item 2 - Acquisition or Disposition of Assets
On August 9, 1996, pursuant to an asset purchase agreement among the Company,
Piper Impact, Inc., a Delaware corporation, Piper Impact, Inc., a Tennessee
corporation ("Piper"), B. F. Sammons and M. W. Robbins, the Company closed on
the acquisition of substantially all the assets of Piper, a manufacturer of
custom-designed, impact-extruded aluminum and steel parts for the
transportation, electronics and defense markets. Piper's net sales for the
years ended December 31, 1995 and 1994, were $106.9 million and $95.3 million,
respectively. Piper has production facilities in New Albany, Mississippi and
Park City, Utah. The Company intends to continue to devote the assets purchased
to the manufacture of impact extrusions.
Piper's assets, net of various liabilities, were acquired for approximately $130
million in cash, cash equivalents, and notes. The purchase price will be
allocated to the assets and liabilities of Piper based on their estimated fair
values. The Company anticipates that the purchase price and associated
acquisition expenses will exceed the fair value of Piper's net assets, with the
excess to be recorded as goodwill.
To finance the acquisition, the Company entered into an unsecured revolving
credit/term loan facility with a group of five banks which provides for the
borrowing of up to $250 million. This agreement replaced the Company's $75
million revolving credit facility.
Item 7 - Financial Statements and Exhibits
a) It is impracticable to provide financial statements as of the date of
this report. The financial statements will be filed as soon as
practicable, but no later than October 25, 1996.
b) It is impracticable to provide pro-forma financial information as of the
date of this report. The pro-forma financial information will be filed
as soon as practicable, but no later than October 25, 1996.
c) Exhibits:
Exhibit 2.1 Asset Purchase Agreement dated July 31, 1996, among the
Company, Piper Impact, Inc., a Delaware corporation, Piper
Impact, Inc., a Tennessee corporation, B. F. Sammons and M.
W. Robbins.
Exhibit 4.1 $250,000,000 Revolving Credit and Term Loan Agreement dated
as of July 23, 1996, among the Company, Comerica Bank, as
Agent, and Harris Trust and Savings Bank and Wells Fargo
Bank (Texas), N.A. as Co-Agents.
Exhibit 99 Press release dated August 12, 1996, announcing the
completion of the acquisition of Piper Impact, Inc.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
QUANEX CORPORATION
------------------------------------------
Registrant
Date August 21, 1996 /s/ Wayne M. Rose
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Wayne M. Rose
Vice President and Chief Financial Officer
4
EXHIBIT INDEX
Exhibit 2.1 Asset Purchase Agreement dated July 31, 1996, among the
Company, Piper Impact, Inc., a Delaware corporation, Piper
Impact, Inc., a Tennessee corporation, B. F. Sammons and M.
W. Robbins.
Exhibit 4.1 $250,000,000 Revolving Credit and Term Loan Agreement dated
as of July 23, 1996, among the Company, Comerica Bank, as
Agent, and Harris Trust and Savings Bank and Wells Fargo
Bank (Texas), N.A. as Co-Agents.
Exhibit 99 Press release dated August 12, 1996, announcing the
completion of the acquisition of Piper Impact, Inc.
1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
Dated July 31, 1996,
And effective March 29, 1996,
Among
QUANEX CORPORATION,
a Delaware corporation,
PIPER IMPACT, INC.
(formerly named "Quanex Aluminum, Inc."),
a Delaware corporation,
PIPER IMPACT, INC.,
a Tennessee corporation,
B. F. SAMMONS
and
MARSHALL W. ROBBINS
2
TABLE OF CONTENTS
This Table of Contents is solely for convenience of reference and shall be
given no effect in the construction or interpretation of this Agreement.
PAGE
1. ASSETS TO BE PURCHASED, CONSIDERATION TO BE PAID AND LIABILITIES TO BE ASSUMED . . . . . . . . . . . . . . . . (1)
1.1 Assets to Be Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1)
(a) Mississippi Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1)
(b) Utah Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2)
(c) Mississippi Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2)
(d) Buildings and Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2)
(e) Other Tangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2)
(f) Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2)
(g) Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
(h) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
(i) Technology Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
(j) Piper Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
(k) Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
(l) Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
(m) Certain Warranty Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4)
(n) Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4)
(o) Tax Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4)
(p) Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4)
1.2 Assets Relating to Piper's Business Not to Be Purchased Pursuant to This Agreement . . . . . . . . . . . (4)
(a) Office Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4)
(b) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4)
(c) Rights to Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4)
(d) Certain Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4)
(e) Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5)
(f) Certain Warranty Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5)
1.3 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5)
(a) Cash Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5)
(b) Promissory Note Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5)
(c) Contingency Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5)
(d) Determination of Adjustment Amount Pursuant to the Purchase Price Promissory Note . . . . . . . . (5)
(e) Post-Closing Adjustments to Contingency Promissory Note . . . . . . . . . . . . . . . . . . . . . (6)
1.4 Liabilities and Obligations to Be Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)
(a) Mississippi Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)
(b) Equipment Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)
(c) Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)
(d) Sales Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)
(e) Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)
(i)
3
(f) Piper Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)
(g) Tax Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)
(h) Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8)
(i) Product Replacement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8)
(j) Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8)
(k) General Liabilities After the Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . (8)
(l) Section 401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8)
(m) Welfare Benefit Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8)
(n) Certain Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8)
1.5 Liabilities Not to Be Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10)
(a) Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10)
(b) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10)
(c) Certain Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10)
(d) Product Replacement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10)
(e) Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10)
(f) Section 401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10)
(g) Welfare Benefit Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10)
(h) General Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11)
(i) Specified Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11)
(j) Other Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11)
2. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11)
2.1 Time and Place of the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11)
2.2 Actions to Be Taken at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12)
(a) Documents Transferring Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12)
(b) Provision for Unassignable Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12)
(c) Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12)
(d) Promissory Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12)
(e) Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12)
(f) Certain Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12)
(g) Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13)
(h) Certain Updated Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13)
(i) Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13)
(j) Certificates of Incumbency and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13)
(k) Other Documents to Be Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13)
(l) Form of Documents Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13)
(m) Timing of Actions to Be Taken at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . (14)
2.3 Certain Actions to Be Taken After the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14)
(a) Purchasing Parties' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14)
(b) Piper's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14)
(c) Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15)
(d) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15)
(e) Transaction Taxes and Other Closing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15)
3. REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15)
3.1 Organization and Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15)
3.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16)
(ii)
4
3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16)
3.4 Interests in other Entities and Scope of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . (16)
3.5 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16)
3.6 No Consents or Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17)
3.7 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17)
3.8 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17)
3.9 Real Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17)
3.10 Equipment Used in Piper's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18)
3.11 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18)
3.12 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19)
3.13 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19)
3.14 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19)
3.15 Certain Transactional Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20)
3.16 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20)
(a) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20)
(b) Compliance and Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20)
3.17 Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21)
(a) Identification of Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21)
(b) Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22)
(c) Severance Pay, Vacation Pay and Medical Coverage . . . . . . . . . . . . . . . . . . . . . . . . . (22)
(d) Certain Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22)
(e) Multi-Employer Plans and Voluntary Beneficiary Associations . . . . . . . . . . . . . . . . . . . (23)
3.18 Regulatory Authority and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23)
3.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23)
3.20 Tax Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23)
3.21 Patents, Trademarks and Other Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24)
3.22 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24)
3.23 No Undisclosed Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24)
4. REPRESENTATIONS AND WARRANTIES OF QUANEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24)
4.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24)
4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25)
4.3 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25)
4.4 No Consents or Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25)
4.5 Brokerage Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25)
4.6 Financial Condition of Quanex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25)
5. CERTAIN COVENANTS OF THE SELLING PARTIES AND QUANEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26)
5.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26)
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26)
(b) Compensation and Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26)
(c) Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26)
(d) No New Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26)
(e) Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26)
5.2 Transactions After the Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27)
5.3 Supplying of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27)
(iii)
5
5.4 Filings, Authorizations and Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27)
5.5 Retention of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27)
5.6 Change of Name of Piper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28)
5.7 Inspection of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28)
5.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28)
5.9 Piper's Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28)
5.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29)
5.11 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29)
5.12 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29)
5.13 Limitation on Piper's Obligation With Respect to Returned Product . . . . . . . . . . . . . . . . . . . (29)
5.14 Assumed Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30)
5.15 Cost Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30)
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASING PARTIES TO CLOSE . . . . . . . . . . . . . . . . . . (30)
6.1 Selling Parties' Fulfillment of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31)
6.2 Selling Parties' Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31)
6.3 Authorizations; Consents; Legal Prohibition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31)
6.4 Selling Parties' Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31)
6.5 Purchasing Parties' Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31)
6.6 Title Commitments and Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31)
6.7 Agricultural Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32)
6.8 Mississippi Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32)
6.9 Documents Described in Article 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32)
7. CONDITIONS PRECEDENT TO THE SELLING PARTIES' OBLIGATIONS TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . (32)
7.1 Purchasing Parties' Fulfillment of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32)
7.2 Purchasing Parties' Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32)
7.3 Authorizations; Consents; Legal Prohibition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32)
7.4 Purchasing Parties' Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33)
7.5 Selling Parties' Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33)
7.6 Documents Described in Article 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33)
8. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33)
8.1 Manner of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33)
(a) By Quanex for Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33)
(b) By Piper for Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33)
(c) By Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34)
(d) By Either Party After Deadline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34)
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34)
9. INDEMNIFICATION AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34)
9.1 Indemnification by the Selling Parties of the Purchasing Parties . . . . . . . . . . . . . . . . . . . . (34)
(a) Breaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34)
(b) Certain Claims Before Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34)
(c) Bulk Sales Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34)
(iv)
6
(d) Non-Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34)
(e) WARN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35)
(f) Form 5500 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35)
(g) Compliance With Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35)
(h) Arms Export Control Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35)
(i) Certain Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35)
(j) Certain Environmental Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35)
9.2 Indemnification by the Purchasing Parties of the Selling Parties . . . . . . . . . . . . . . . . . . . . (37)
(a) Breaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37)
(b) Certain Claims After Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37)
(c) Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37)
(d) WARN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37)
(e) Certain Environmental Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37)
9.3 Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38)
9.4 Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . (38)
9.5 Limitation on Indemnifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38)
10. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (39)
10.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (39)
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (39)
10.3 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40)
10.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40)
10.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40)
10.6 Entire Agreement; Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40)
10.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40)
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41)
10.9 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41)
10.10 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41)
(v)
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INDEX OF DEFINITIONS
This Index of Definitions is solely for convenience of reference and shall be
given no effect in the construction or interpretation of this Agreement.
TERMS DEFINED IN THIS AGREEMENT WHERE DEFINED
Adjacent Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
Adjacent Parcel Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(c)
Adjustment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3(d)
Adjustment Sum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3(d)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Introduction]
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.4
Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2(e)
Cash Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3(a)
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.4(k)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
Closing Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(f)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3(d)
Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.11
Contiguous Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
Contingency Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3(b)
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.15
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Introduction]
Effective Time Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(o)
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.4(h)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.17(a)
Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9
Governmental Body . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.6
Gross-Up Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3(d)
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.5(h)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.6
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 9.3
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 9.3
Interim Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.4(g)
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.17(a)
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3
Leased Original Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(c)
Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.5
Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(c)
Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 9.1
Mississippi Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(c)
New Facility Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
NIMCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(c)
Office Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2(a)
Original Facility Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.4(k)
(vi)
8
INDEX OF DEFINITIONS (CONT'D)
TERMS DEFINED IN THIS AGREEMENT WHERE DEFINED
Owned Original Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
Owned Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8
Park City Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(b)
Parking Lot Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(c)
Parking Lot Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(c)
Piper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Introduction]
Piper Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(j)
Piper Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(c)
Piper's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(f)
Piper's Outside Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3(d)
Piper Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.3
Predecessors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 9.1(i)
Purchase Price Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3(b)
Purchasing Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Introduction]
Quanex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Introduction]
Quanex Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Introduction]
Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.4
Recapture Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3(d)
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.6
Robbins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Introduction]
Sammons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Introduction]
Selling Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Introduction]
Selling Parties' Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9
Shareholder Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2(d)
Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.6
Specified Compliance Problems . . . . . . . . . . . . . . . . . . . . . . . . Section 1.4(n)
Specified Contamination Problems . . . . . . . . . . . . . . . . . . . . . . . Section 1.4(n)
Technology Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(i)
Title Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.6
WARN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 9.1(e)
(vii)
9
INDEX OF EXHIBITS AND SCHEDULES
This Index of Exhibits and Schedules is solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
EXHIBITS: WHERE REFERRED TO
Exhibit A -- Form of Technology Transfer Agreement . . . . . .
Section 1.1(i)
Exhibit B -- Form of Purchase Price Promissory Note . . . . .
Section 1.3(b)
Exhibit C -- Form of Contingency Promissory Note . . . . . . . Section 1.3(c)
Exhibit D -- Form of Mississippi deed . . . . . . . . . . . . Section 2.2(a)
Exhibit E -- Form of Utah deed . . . . . . . . . . . . . . . . Section 2.2(a)
Exhibit F -- Form of bill of sale . . . . . . . . . . . . . . Section 2.2(a)
Exhibit G -- Form of Assumption Agreement . . . . . . . . . . Section 2.2(e)
Exhibit H -- Form of Non-Competition Agreement . . . . . . . . Section 2.2(f)
Exhibit I -- Form of 401(k) Assumption and Termination
Agreement . . . . . . . . . . . . . . . . . . . . Section 2.2(f)
Exhibit J -- Form of Welfare Benefit Plan Assumption and
Termination Agreement Section 2.2(f)
Exhibit K -- Description of legal opinion of Burch, Porter &
Johnson PLLC . . . . . . . . . . . . . . . . . . Section 2.2(g)
Exhibit L -- Description of legal opinion of Fulbright &
Jaworski L.L.P. . . . . . . . . . . . . . . . . . Section 2.2(g)
Exhibit M -- Form of Agricultural Lease . . . . . . . . . . . Section 6.7
SCHEDULES DELIVERED SEPARATELY AT SIGNING:
Schedule 1.1(a) -- Description of owned Mississippi property . . . . . .
Section 1.1(a)
Schedule 1.1(b) -- Description of Utah property . . . . . . . . . . . . . Section 1.1(b)
Schedule 1.1(c)(i) -- Mississippi Lease . . . . . . . . . . . . . . . . Section 1.1(c)
Schedule 1.1(c)(ii) -- Parking Lot Lease . . . . . . . . . . . . . . . . . . Section 1.1(c)
Schedule 1.1(c)(iii)-- Description of Adjacent Parcel Lease . . . . . . . . . Section 1.1(c),
Section 3.9
(viii)
10
INDEX OF EXHIBITS AND SCHEDULES (CONT'D): WHERE REFERRED TO
Schedule 1.1(e)(i) -- Description of furniture, fixtures, tools, dies,
machinery, equipment, vehicles and other tangible
assets . . . . . . . . . . . . . . . . . . . . . Section 1.1(e),
Section 3.10
Schedule 1.1(e)(ii) -- Equipment leases and other leases . . . . . . . . . . Section 1.1(e),
Section 1.4(b),
Section 3.10
Schedule 1.1(g) -- Description of accounts receivable . . . . . . . . . . Section 1.1(g)
Schedule 1.1(j) -- List of Piper Agreements . . . . . . . . . . . . . . . Section 1.1(j)
Schedule 1.1(k) -- Description of prepaid expenses . . . . . . . . . . . Section 1.1(k)
Schedule 1.1(l) -- Description of cash equivalents . . . . . . . . . . . Section 1.1(l)
Schedule 1.1(o) -- Effective Time Balance sheet . . . . . . . . . . . . . Section 1.1(o)
Schedule 1.2(d) -- Description of Shareholder Loans . . . . . . . . . . . Section 1.2(d)
Schedule 1.4(c) -- List of purchase orders . . . . . . . . . . . . . . . Section 1.4(c)
Schedule 1.4(d) -- List of sales commitments . . . . . . . . . . . . . . Section 1.4(d)
Schedule 1.4(e) -- Accounts payable . . . . . . . . . . . . . . . . . . . Section 1.4(e)
Schedule 1.4(h) -- Assumed claims . . . . . . . . . . . . . . . . . . . . Section 1.4(h)
Schedule 1.4(m) -- Welfare benefit plans being assumed . . . . . . . . . Section 1.4(m),
Section 1.5(g)
Schedule 1.4(n) -- Description of heavy metals contamination identified by
Eckenfelder, Inc. in sediment of a northern and western
ditches at the New Albany Plant; description of non-
hazardous waste burial area identified by Eckenfelder,
Inc. northeast of the plant buildings; list of
shareholders, officers and directors . . . . . . . . . Section 1.4(n)
Schedule 2.2(a) -- Acceptable encumbrances on title . . . . . . . . . . . Section 2.2(a),
Section 6.6
Schedule 2.2(b) -- Non-transferable contracts . . . . . . . . . . . . . . Section 2.2(b)
Schedule 2.3(c) -- Allocation of purchase price . . . . . . . . . . . . . Section 2.3(c)
Schedule 3 -- Persons who have or should have knowledge . . . . Section 3
Schedule 3.3 -- Exceptions to title to Piper Stock . . . . . . . . . . Section 3.3
Schedule 3.5 -- Exceptions to non-conflict with agreements . . . . . . Section 3.5
Schedule 3.6 -- Required governmental filings . . . . . . . . . . . . Section 3.6
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INDEX OF EXHIBITS AND SCHEDULES (CONT'D): WHERE REFERRED TO
Schedule 3.7 -- Description of material adverse changes in financial
condition since March 31, 1996 . . . . . . . . . . . . Section 3.7
Schedule 3.8 -- Exceptions to title to Assets . . . . . . . . . . . . Section 3.8
Schedule 3.9 -- List of violations with respect to real properties and
improvements thereon and environmental reports and
exceptions to hazardous material representation . . . Section 3.9
Schedule 3.10 -- Use of underground storage tanks . . . . . . . . . . . Section 3.10
Schedule 3.11 -- List of contracts and indication whether contract is
with affiliates . . . . . . . . . . . . . . . . . . . Section 3.11,
Section 7.5
Schedule 3.12 -- Exceptions to representation relating to hazardous
material . . . . . . . . . . . . . . . . . . . . . . . Section 3.12
Schedule 3.13 -- Litigation and other claims . . . . . . . . . . . . . Section 3.13
Schedule 3.16 -- Exceptions to employee matters representations . . . . Section 3.16
Schedule 3.17 -- List of employee benefit plans and arrangements and
certain exceptions . . . . . . . . . . . . . . . . . . Section 3.17
Schedule 3.18 -- List of licenses, permits, etc. and certain exceptions Section 3.18
Schedule 3.19 -- Description of insurance policies . . . . . . . . . . Section 3.19
Schedule 3.21 -- List of intellectual property and certain exceptions . Section 3.21
Schedule 5.1(d) -- New agreements relating to real property . . . . . . . Section 5.1(d)
SCHEDULES TO BE DELIVERED AT CLOSING:
Schedule 1.1(g)-A -- Update of accounts receivable schedule . . . . . . Section 1.1(g),
Section 2.2(h)
Schedule 1.1(j)-A -- Update of Piper Agreements schedule . . . . . . . Section 1.1(j),
Section 2.2(h)
Schedule 1.4(c)-A -- Update of purchase order schedule . . . . . . . . Section 1.4(c),
Section 2.2(h)
Schedule 1.4(d)-A -- Update of sales order schedule . . . . . . . . . Section 1.4(d),
Section 2.2(h)
Schedule 1.4(e)-A -- Update of payables schedule . . . . . . . . . . . Section 1.4(e),
Section 2.2(h)
(x)
12
ASSET PURCHASE AGREEMENT
THIS AGREEMENT (this "Agreement") dated July 31, 1996, and
effective at 11:59 p.m. mountain time on March 29, 1996 (the "Effective Time"),
is among Quanex Corporation, a Delaware corporation ("Quanex"), Piper Impact,
Inc. (formerly named "Quanex Aluminum, Inc."), a Delaware corporation ("Quanex
Subsidiary"), Piper Impact, Inc., a Tennessee corporation ("Piper"), B. F.
Sammons ("Sammons") and Marshall W. Robbins ("Robbins").
WHEREAS, Quanex Subsidiary wishes to acquire the assets of
Piper and Piper wishes to sell its assets to Quanex Subsidiary;
WHEREAS, Quanex owns all of the outstanding capital stock of
Quanex Subsidiary; and
WHEREAS, Sammons and Robbins own substantially all of the
outstanding capital stock of Piper;
NOW THEREFORE, in consideration of the mutual agreements and
covenants contained in this Agreement and for other good, fair and valuable
consideration, the receipt and sufficiency of which are acknowledged, Piper,
Sammons and Robbins (together, the "Selling Parties") and Quanex and Quanex
Subsidiary (together, the "Purchasing Parties") agree as follows:
1. ASSETS TO BE PURCHASED, CONSIDERATION TO BE PAID AND
LIABILITIES TO BE ASSUMED.
1.1 ASSETS TO BE PURCHASED. In reliance on the
representations and warranties contained in this Agreement, and on the terms
and subject to the conditions set forth in this Agreement, at the closing
described in Section 2 of this Agreement (the "Closing"), Quanex Subsidiary
shall purchase from Piper and Piper shall sell, transfer, convey and deliver to
Quanex Subsidiary the following assets:
(a) MISSISSIPPI LAND. The four parcels of an
aggregate of approximately 178 acres of land more specifically
described in Schedule 1.1(a) to this Agreement located in New Albany,
Mississippi, and consisting of (i) the parcel (the "Owned Original
Parcel") that is owned by Piper and constitutes a portion of Piper's
facility at 922 State Highway 15 North in New Albany, Mississippi,
(ii) the parcel (the "Contiguous Parcel") that is owned by Piper and
is contiguous to the Owned Original Parcel, (iii) the parcel (the
"Adjacent Parcel") that is owned by Piper and is located near the
Owned Original Parcel on the opposite side of State Highway 15 North
in New Albany, Mississippi, and (iv) the parcel (the "New Facility
Parcel") located on Union County Road 269 in New Albany, Mississippi;
13
(b) UTAH LAND. The parcel (the "Park City
Parcel") of approximately eight acres of land more specifically
described in SCHEDULE 1.1(b) to this Agreement, located in Park City,
Utah;
(c) MISSISSIPPI LEASES. The rights of Piper
under (i) that certain Industrial Enterprise Contract dated March 19,
1958, between the Board of Supervisors of Union County, Mississippi,
acting for and in behalf of Supervisor's District No. 3 of said county
("Lessor"), and National Impact Metal Corporation, a Mississippi
corporation ("NIMCO"), as lessee, as amended by that certain
Supplemental Industrial Enterprise Contract dated January 24, 1961,
between Lessor and NIMCO, and as assigned pursuant to an
Acknowledgment of Lease and Assignment dated March 31, 1986, among
Lessor, Piper Industries, Inc., a Tennessee corporation ("Piper
Industries") and Piper, which is SCHEDULE 1.1(c)(i) to this Agreement
(the "Mississippi Lease") relating to the parcel (the "Leased Original
Parcel") of approximately ten acres of land more specifically
described in the Mississippi Lease and that constitutes a portion of
Piper's facility at 922 State Highway 15 North in New Albany,
Mississippi; (ii) that certain Lease Agreement dated February 15,
1995, between Master-Bilt Products, as lessor, and Piper, as lessee,
which is SCHEDULE 1.1(c)(ii) to this Agreement (the "Parking Lot
Lease") relating to the parking lot (the "Parking Lot Parcel") more
specifically described in the Parking Lot Lease and that is located at
or near Piper's facility at 922 State Highway 15 North in New Albany,
Mississippi; and (iii) that certain oral lease agreement between
Piper, as lessor, and Lamar Frazier, as lessee, described in SCHEDULE
1.1(c)(iii) to this Agreement (the "Adjacent Parcel Lease") relating
to the Adjacent Parcel (which is to be amended and novated as
described in Section 6.7 of this Agreement);
(d) BUILDINGS AND IMPROVEMENTS. All buildings
and other improvements located on the Owned Original Parcel, the
Contiguous Parcel, the Adjacent Parcel, the New Facility Parcel and
the Park City Parcel and Piper's interest in any buildings and other
improvements owned by Piper located on the Leased Original Parcel and
the Parking Lot Parcel;
(e) OTHER TANGIBLE ASSETS. All furniture,
fixtures, tools, dies, machinery, equipment, vehicles and other
rolling stock owned by Piper, including without limitation those items
listed in SCHEDULE 1.1(e)(i) to this Agreement, and any rights and
interests of Piper under the equipment leases and other leases
described in SCHEDULE 1.1(e)(ii) to this Agreement;
(f) INVENTORY. All inventory relating to Piper's
impact extrusion production business ("Piper's Business") as of 11:59
p.m. mountain time on the day immediately preceding the date of the
Closing (the "Closing Time");
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(g) ACCOUNTS RECEIVABLE. All accounts receivable
described in SCHEDULE 1.1(g) to this Agreement, which reflects the
accounts receivable of Piper as of July 31, 1996, and all additional
accounts receivable of Piper as of the Closing Time, which additional
accounts receivable will be described on SCHEDULE 1.1(g)-A, to be
delivered by Piper to the Purchasing Parties at the Closing;
(h) INTELLECTUAL PROPERTY. The rights of Piper
to (i) the trade names or trademarks "Piper" and "Piper Impact",
including package design and the right to use all existing packages,
invoices, letterhead, envelopes and the like using those names or
marks, (ii) any other trade names or trademarks and similar rights
owned by Piper or used in Piper's Business, (iii) patents and patent
applications, copyrights and copyright applications applied for,
issued to or owned by Piper or used in Piper's Business and (iv)
processees, know-how, tool and die technology, other technology,
inventions, formulae, trade secrets and computer programs owned by
Piper or used in Piper's Business;
(i) TECHNOLOGY TRANSFER AGREEMENT. The rights to
be acquired by the Purchasing Parties under the Technology Transfer
Agreement in substantially the form attached to this Agreement as
EXHIBIT A (the "Technology Agreement") to be executed and delivered at
or before the Closing;
(j) Piper Agreements. The rights of Piper under
those agreements described in SCHEDULE 1.1(j) to this Agreement, which
describes those agreements to be transferred to Quanex Subsidiary at
the Closing known to the Selling Parties as of the date of this
Agreement, and all additional agreements to which Piper is a party,
which will be transferred to Quanex Subsidiary at the Closing and
which exist as of the Closing Time, which additional agreements will
be described in SCHEDULE 1.1(j)-A, to be delivered by Piper to the
Purchasing Parties at the Closing (the agreements described
in SCHEDULES 1.1(j) and SCHEDULE 1.1(j)-A being referred to as the
"Piper Agreements"); provided, however, that the rights to the Piper
Agreements transferred hereunder shall not include those rights
relating to the operation of Piper's Business before the Effective
Time, which rights shall be deemed to be excluded assets under Section
1.2 of this Agreement;
(k) PREPAID EXPENSES. The prepaid expenses and
deposits described in SCHEDULE 1.1(k) to this Agreement;
(l) CASH AND CASH EQUIVALENTS. All cash and cash
equivalents of Piper and any bank, money market, investment, brokerage
or other accounts of Piper, including, but not limited to, those
described in SCHEDULE 1.1(l) to this Agreement;
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(m) CERTAIN WARRANTY RIGHTS. Subject to the
provisions of subsection 1.2(f) of this Agreement, all rights of Piper
under express or implied warranties from Piper's suppliers;
(n) RECORDS. All books, records and
correspondence owned by Piper, including, but not limited to, customer
and supplier records, production records, employment records and any
confidential information that has been reduced to writing or stored
electronically;
(o) TAX ACCOUNTS. All tax accounts that are
reflected or accrued on the unaudited balance sheet of Piper as of
March 29, 1996, which balance sheet is Schedule 1.1(o) to this
Agreement (the "Effective Time Balance Sheet"); and
(p) OTHER ASSETS. Subject to the provisions of
Section 1.2 of this Agreement, all other assets used or useful to
Piper's Business and owned by Piper as of Closing Time, wherever
located, even if not named or described on a schedule to this
Agreement or in any financial statements of Piper, including, but not
limited to, goodwill, supplies, contract rights, other tangible assets
and all other assets used by or useful to Piper in Piper's Business
(to the extent Piper owns such assets or has any rights with respect
to such assets) or otherwise owned by Piper.
The term "Assets" as used in this Agreement shall mean the assets described in
subsections 1.1(a) through 1.1(p) above, excluding the assets described in
Section 1.2 of this Agreement.
1.2 ASSETS RELATING TO PIPER'S BUSINESS NOT TO BE
PURCHASED PURSUANT TO THIS AGREEMENT. Specifically excluded from any assets to
be purchased pursuant to this Agreement are:
(a) OFFICE LEASE. The rights of Piper under any
lease agreement relating to Piper's administrative offices in Memphis,
Tennessee (the "Office Lease");
(b) TAX MATTERS. All amounts representing any
rights to tax refunds or other tax payments that are not reflected or
accrued on the Effective Time Balance Sheet;
(c) RIGHTS TO CLAIMS. All rights of Piper
pursuant to any lawsuits or other claims involving Piper's Business
based on events occurring before the Effective Time other than those
rights included within the Assumed Liabilities described in
subsections 1.4(g), 1.4(h), 1.4(k) and 1.4(n) of this Agreement;
(d) CERTAIN RECEIVABLES. Amounts reflected on
Piper's books and records as of the Effective Time as receivables by
Piper pursuant to loans and advances made by Piper to Sammons, Robbins
and
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other shareholders of Piper and their family members described on
SCHEDULE 1.2(d) to this Agreement (the "Shareholder Loans"), which
receivables equal $0 in the aggregate;
(e) CORPORATE RECORDS. The minute book and stock
transfer records of Piper and such other corporate records that relate
directly and solely thereto; and
(f) CERTAIN WARRANTY RIGHTS. The rights of Piper
under express or implied warranties from Piper's suppliers to the
extent the exercise of those rights by Piper is necessary or useful in
connection with any product liability claims not assumed by the
Purchasing Parties pursuant to this Agreement.
1.3 CONSIDERATION.
(a) CASH PURCHASE PRICE. In reliance on the
representations and warranties of the Selling Parties contained in this
Agreement, and on the terms and subject to the conditions set forth in this
Agreement, at the Closing, Quanex or Quanex Subsidiary shall pay Piper, as
consideration for the transfer and delivery of the Assets by Piper, an
aggregate cash purchase price of $2,000,000 (the "Cash Purchase Price"). The
Cash Purchase Price shall be paid by wire transfer of immediately available
funds to the account designated by Piper in writing to Quanex at least two
business days before the Closing.
(b) PROMISSORY NOTE PURCHASE PRICE. In reliance on the
representations and warranties of the Selling Parties contained in this
Agreement, and on the terms and subject to the conditions set forth in this
Agreement, at the Closing, Quanex and Quanex Subsidiary shall, in addition to
paying the Cash Purchase Price, execute and deliver to Piper the promissory
note in substantially the form attached to this Agreement as EXHIBIT B (the
"Purchase Price Promissory Note").
(c) CONTINGENCY PROMISSORY NOTE. In reliance on the
representations and warranties of the Selling Parties contained in this
Agreement, and on the terms and subject to the conditions set forth in this
Agreement, at the Closing, Quanex and Quanex Subsidiary shall, in addition to
paying the Cash Purchase Price and delivering the Purchase Price Promissory
Note, execute and deliver to Piper the promissory note in substantially the
form attached to this Agreement as EXHIBIT C (the "Contingency Promissory
Note").
(d) DETERMINATION OF ADJUSTMENT AMOUNT PURSUANT TO THE
PURCHASE PRICE PROMISSORY NOTE. Within 90 days after the date of the Closing,
the accounting firm of Whitehorn, Tankersley & Co., CPA's ("Piper's Outside
Accountant") shall determine (i) the amount of federal income taxes and any
state taxes payable by Sammons, Robbins and the other shareholders of record of
Piper as a result of any gain to be recognized as ordinary income, rather than
capital gain, by Piper pursuant to Section 1245 and Section 1250 of the
Internal Revenue Code of 1986, as amended (the "Code"), as a result of Piper's
sale of the Assets to Quanex Subsidiary pursuant to this
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Agreement (the "Recapture Amount") and (ii) the amount of any additional
federal income taxes and any additional state taxes payable by Sammons, Robbins
and the other shareholders of record of Piper arising from their receipt of the
Recapture Amount (the "Gross-Up Amount"), but excluding any additional taxes
payable by Sammons, Robbins or any other record shareholder of Piper arising
from receipt of the Gross-Up Amount. The Recapture Amount shall be calculated
on the basis of a December 31, 1996, tax year. Within that 90-day period,
Piper's Outside Accountant shall provide a reasonably detailed written report
to the Selling Parties, the Purchasing Parties and Deloitte & Touche L.L.P.
setting forth its calculation of the Recapture Amount and the Gross-Up Amount.
The Purchasing Parties and Deloitte & Touche L.L.P. shall have ten days to
review the report and to notify Piper's Outside Accountant and the Selling
Parties in writing of any objections to the contents of the report. If that
notice has not been given within the ten-day period, the post-closing purchase
price adjustment described in this subsection 1.3(d) shall be based on Piper's
Outside Accountant's report. If, however, the Purchasing Parties or Deloitte &
Touche L.L.P. has given the notice of objection within the ten-day period and
Deloitte & Touche L.L.P., the Purchasing Parties, Piper's Outside Accountant
and the Selling Parties cannot agree on appropriate changes to be made to the
report within five days after the expiration of that ten-day period, then the
Selling Parties and Quanex shall submit the report, along with the written
objections of the Purchasing Parties or Deloitte & Touche L.L.P., to the
Houston, Texas, office of Ernst & Young L.L.P., who shall finally determine the
contents of the report, and the post-closing purchase price adjustment
described in this subsection 1.3(d) shall be based on the report as so adjusted
by Ernst & Young L.L.P. The Selling Parties shall instruct Piper's Outside
Accountant to make available to the Purchasing Parties and Deloitte & Touche
L.L.P. all of its work papers and any other papers related to Piper's Outside
Accountant's reports described in this subsection 1.3(d) and, if the Purchasing
Parties so request and Ernst & Young L.L.P. is requested to conduct the review
described in this subsection 1.3(d), the Selling Parties shall instruct Piper's
Outside Accountant to make available to Ernst & Young L.L.P. all of Piper's
Outside Accountant's work papers and any other papers related to Piper's
Outside Accountant's reports described in this subsection 1.3(d). If the sum
of the Recapture Amount and the Gross-Up Amount reflected in the final report
(the "Adjustment Sum") exceeds $4,720,000, the "Adjustment Amount" referred to
in the Purchase Price Promissory Note shall be an amount equal to the sum of
that excess and $1,720,000. If $4,720,000 exceeds the Adjustment Sum, the
"Adjustment Amount" referred to in the Purchase Price Promissory Note shall be
an amount equal to $1,720,000 less the amount of that excess. If Ernst & Young
L.L.P. is requested to review and adjust the report of Deloitte & Touche L.L.P.
pursuant to the provisions of this subsection 1.3(d), each of Quanex and Piper
shall pay one-half of the fees of the Ernst & Young L.L.P. and costs in
connection with its services. The Selling Parties and the Purchasing Parties
shall cooperate to determine the Adjustment Amount before December 1, 1996.
(e) POST-CLOSING ADJUSTMENTS TO CONTINGENCY PROMISSORY
NOTE. Adjustments to the principal amount of the Contingency Promissory Note
shall be made in accordance with the terms of the Contingency Promissory Note.
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1.4 LIABILITIES AND OBLIGATIONS TO BE ASSUMED. In
reliance on the representations and warranties of the Selling Parties contained
in this Agreement and on the terms and subject to the conditions set forth in
this Agreement, at the Closing, Quanex and Quanex Subsidiary shall jointly and
severally assume the following specified liabilities and obligations, subject
to the provisions of Section 1.5 of this Agreement (the "Assumed Liabilities"):
(a) MISSISSIPPI LEASE. All of Piper's obligations and
liabilities accrued after the Effective Time under the Mississippi
Lease, the Parking Lot Lease and the Adjacent Parcel Lease, except
with respect to obligations or liabilities, if any, relating to
environmental matters arising before the Closing Time;
(b) EQUIPMENT LEASES. All of Piper's liabilities and
obligations pursuant to the equipment leases and other leases
described in SCHEDULE 1.1(e)(ii) to this Agreement;
(c) PURCHASE ORDERS. All contracts or purchase orders to
acquire goods or services listed in SCHEDULE 1.4(c) to this Agreement
and such other contracts and purchase orders to acquire goods or
services that exist as of the Closing Time, which other contracts or
purchase orders will be listed on SCHEDULE 1.4(c)-A to be delivered by
Piper to the Purchasing Parties at the Closing;
(d) SALES COMMITMENTS. All sales orders and obligations
listed in SCHEDULE 1.4(d) to this Agreement providing for the
manufacture and delivery of impact extrusion products to Piper's
customers and such other sales orders and obligations providing for
the manufacture and delivery of impact extrusion products to Piper's
customers, which will be listed on SCHEDULE 1.4(d)-A to be delivered by
Piper to the Purchasing Parties at the Closing;
(e) PAYABLES. All of Piper's accounts payable and notes
payable set forth in SCHEDULE 1.4(e) to this Agreement, which reflects
the accounts payable and notes payable of Piper as of July 31, 1996,
and all additional accounts payable of Piper as of the Closing Time,
which additional accounts payable will be described on SCHEDULE
1.4(e)-A to be delivered by Piper to the Purchasing Parties at the
Closing;
(f) PIPER AGREEMENTS. All of Piper's obligations and
liabilities under the Piper Agreements relating to the operation of
Piper's Business after the Effective Time;
(g) TAX ACCOUNTS. All tax accounts that are reflected as
accrued on the Effective Time Balance Sheet;
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(h) CLAIMS. All of Piper's obligations and liabilities
pursuant to those suits, actions, proceedings, investigations and
claims described in SCHEDULE 1.4(h) to this Agreement;
(i) PRODUCT REPLACEMENT. All obligations to repurchase
or replace products produced by Piper in Piper's Business after the
Effective Time and returned by the purchasers thereof;
(j) PRODUCT LIABILITY. Any product liability (other than
obligations assumed pursuant to subsection 1.4(i) of this Agreement)
relating to products produced by Piper in Piper's Business (i) after
the Effective Time and before the Closing Time (the "Interim Period"),
but only to the extent that the liability exceeds Piper's insurance
coverage with respect to the liability, and (ii) after the Closing
Time, regardless of the amount of Piper's insurance coverage;
(k) GENERAL LIABILITIES AFTER THE EFFECTIVE TIME. All
obligations and liabilities relating to Piper's Business reflected or
accrued on the Effective Time Balance Sheet or accrued after the
Effective Time, other than product liability relating to products
produced by Piper in Piper's Business, which is governed by subsection
1.4(j) of this Agreement;
(l) SECTION 401(k) PLAN. Subject to the provisions of
Section 1.5 of this Agreement and as provided in the 401(k) Assumption
and Termination Agreement described in Section 2.2(f) of this
Agreement, all liabilities with respect to the Piper Impact, Inc.
401(k) Plan accruing after the Effective Time;
(m) WELFARE BENEFIT LIABILITIES. Subject to the
provisions of Section 1.5 of this Agreement and as provided in the
Welfare Benefit Plan Assumption and Termination Agreement described in
Section 2.2(f) of this Agreement, all liabilities with respect to the
welfare benefit plans identified in SCHEDULE 1.4(m) to this Agreement
accruing after the Effective Time; and
(n) CERTAIN ENVIRONMENTAL LIABILITIES. Any liability of
Piper (and any liability of Piper's shareholders, directors and
officers named in SCHEDULE 1.4(n) to this Agreement, in such
capacities):
(i) to investigate and remediate or correct, to
such extent, in such manner and according to such schedule as
may be required by any regulatory authority exercising its
jurisdiction pursuant to any Environmental Law (as defined
below) the tetrachloroethene contamination (including
impurities and degradation products of tetrachloroethene, as
well as toluene, chlorobenzene and dichlorobenzene) in soil and
groundwater (as identified by Eckenfelder, Inc. in its
pre-Closing investigation) at or migrating from Piper's
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facility located at the Owned Original Parcel, the Leased
Original Parcel, the Contiguous Parcel and the Adjacent Parcel
(the "Original Facility Plant") (including but not limited to,
and as required, groundwater remediation, any construction of
slurry walls, any measures to contain contaminated soil, any
soil excavation and treatment/disposal, any septic tank
cleanout, any relocation of manufacturing equipment necessary
for remediation, any demolition, removal/disassembling or
installation/reassembly of a facility, and any indirect costs
or costs of business interruption related to the investigation
or remediation) and the heavy metals contamination as
identified by Eckenfelder, Inc. in its pre-closing
investigation only as follows: in sediments of certain
northern and western ditches, in and under the wastewater
holding pond, and in and under the wastewater treatment
facility at the Original Facility Plant, as identified in
SCHEDULE 1.4(n) to this Agreement (the "Specified
Contamination Problems"); and
(ii) to implement the following measures to such
extent and in such manner as may be required by any
Environmental Laws to correct possible non-compliance with
Environmental Laws at the Original Facility Plant: (u) to
upgrade or replace the wastewater holding pond and treatment
system (including installing aboveground tanks or taking
alternative actions to correct such non-compliance), (v) to
upgrade the sanitary wastewater treatment system, (w) to
complete any steps necessary to obtain a stormwater discharge
permit, (x) to provide for closure of the non-hazardous waste
burial area identified in SCHEDULE 1.4(n) to this Agreement
(but only to the extent such area contains materials that are
non-hazardous), (y) up to a maximum cost of $100,000, to
complete any steps required by regulatory authorities to
obtain a Title V air operating permit, including supplementing
or amending the Title V permit application currently pending
before MDEQ and (z) to conduct certain administrative
compliance program updates consisting of preparing an oil
spill prevention control and countermeasures plan, conducting
an asbestos survey, preparing an asbestos operations and
maintenance plan, and correcting as necessary any toxic
release inventory reports (the "Specified Compliance
Problems").
For purposes of this Agreement, "Environmental Laws" shall mean all
federal, state and local laws now or hereafter in effect relating to pollution
or protection of the environment, including common law decisions, statutes and
any other laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment
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(including without limitation ambient air, surface water, ground water or land)
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, removal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
(and including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA"), the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901
et seq., as amended; the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq., as amended; the Clean Air Act, 42 U.S.C. Section 7401 et seq., as
amended; and state and federal environmental lien and cleanup requirements),
and all regulations promulgated or approved under those laws, and orders issued
or entered in connection with those laws, by a federal, state or local
environmental agency.
1.5 LIABILITIES NOT TO BE ASSUMED. Neither Quanex nor
Quanex Subsidiary shall assume:
(a) CERTAIN AGREEMENTS. Any obligations of Piper
pursuant to the Office Lease (including without limitation any
accounts payable pursuant to the Office Lease at the Effective Time);
(b) TAX MATTERS. Any amounts representing taxes
paid, accrued or payable that are not accrued on the Effective Time
Balance Sheet;
(c) CERTAIN PAYABLES. Amounts reflected on
Piper's books and records as of the Effective Time as payables by
Piper to Sammons, Robbins and other shareholders of Piper and their
family members, which payables equal $2,580,000;
(d) PRODUCT REPLACEMENT. Subject to the
provisions of Section 5.13 of this Agreement, any obligation to
repurchase or replace products produced by Piper in Piper's Business
before the Effective Time and returned by the purchasers thereof;
(e) PRODUCT LIABILITY. Any product liability
(other than obligations described in subsection 1.5(d) of this
Agreement) relating to products produced by Piper in Piper's Business
(i) during the Interim Period, but only to the extent the liability
does not exceed Piper's insurance coverage with respect to the
liability, and (ii) before the Effective Time, regardless of the
amount of Piper's insurance coverage;
(f) SECTION 401(k) PLAN. Any liabilities with
respect to the Piper Impact, Inc. 401(k) Plan arising from acts or
omissions that occur during the Interim Period and that constitute
breaches or violations of, or conflicts with, any Legal Requirements
or the terms of the Piper Impact, Inc. 401(k) Plan;
(g) Welfare Benefit Liabilities. Any liabilities
with respect to the welfare benefit plans identified in SCHEDULE 1.4(m)
to this
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Agreement arising from acts or omissions that occur during the Interim
Period and that constitute breaches or violations of, or conflicts
with, any Legal Requirements or the terms of such welfare benefit
plans;
(h) GENERAL OBLIGATIONS. Except as specified in
subsections 1.4(g), 1.4(h), 1.4(k) and 1.4(n) of this Agreement,
obligations and liabilities relating to Piper's Business accrued
before the Effective Time;
(i) SPECIFIED ENVIRONMENTAL MATTERS. Except as
specified in subsection 1.4(n) of this Agreement or as specified by
the penultimate sentence of the last paragraph of subsection 9.1(j) of
this Agreement, liabilities of any kind with respect to the Specified
Contamination Problems or the Specified Compliance Problems, including
without limitation any liabilities for governmental claims seeking
fines, penalties or natural resource damages, and any liabilities for
third party claims alleging property damage or personal injury; and
(j) OTHER ENVIRONMENTAL MATTERS. Except as
specified in subsection 1.4(n) of this Agreement, liabilities of any
kind relating to Environmental Laws or Hazardous Material (as defined
below) arising from ownership or use of the Assets before the Closing
Time or the conduct of Piper's Business before the Closing Time.
"Hazardous Material" means all those materials, wastes or substances that are
regulated by, or that may form the basis of liability under, any Environmental
Law, including all materials, wastes or substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste, hazardous
constituent, hazardous chemical, special waste, hazardous substance, hazardous
material, or toxic substance. Without limiting the generality of the
foregoing, the term "Hazardous Material" includes, but is not limited to, any
material, waste or substance that contains petroleum or any fraction thereof,
asbestos, or polychlorinated biphenyls, or that is flammable, explosive or
radioactive.
2. CLOSING.
2.1 TIME AND PLACE OF THE CLOSING. The closing of the
transactions described in this Agreement shall take place at the offices of
Fulbright & Jaworski L.L.P., 1301 McKinney, Suite 5100, Houston, Texas at 10:00
o'clock a.m. central time on August 9, 1996, or such other place, time, and
date as the parties may agree on in writing. Failure to consummate the
transactions described in this Agreement at or before such time shall not
result in a termination of this Agreement or relieve any party to this
Agreement of any obligation under this Agreement, except as otherwise provided
in Article 8 of this Agreement.
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2.2 ACTIONS TO BE TAKEN AT THE CLOSING.
(a) DOCUMENTS TRANSFERRING ASSETS. At the Closing, Piper
shall deliver to Quanex Subsidiary the general warranty deeds in substantially
the forms attached to this Agreement as EXHIBITS D and E, a bill of sale in
substantially the form attached to this Agreement as EXHIBIT F, such other
deeds, bills of sale, endorsements and assignments as are customary in the
jurisdiction in which the property being transferred is located and other good
and sufficient instruments of transfer, conveyance, sale and assignment duly
executed and sufficient to convey and transfer the Assets to Quanex Subsidiary
free and clear of all liens, judgments, charges and encumbrances except those
set forth in SCHEDULE 2.2(a).
(b) PROVISION FOR UNASSIGNABLE CONTRACTS. The Purchasing
Parties acknowledge that Piper's ability to assign its rights under the
contracts included within the Assets identified on SCHEDULE 2.2(b) to this
Agreement may be subject to receipt of written consent from other parties.
Piper shall use its best efforts to obtain those consents as soon as possible
after the date of this Agreement. To the extent that any consent is required,
this Agreement shall not constitute an agreement to assign a contract if an
attempted assignment would constitute a breach of the contract. If any
contract cannot, in the reasonable opinion of Piper's counsel, be transferred
effectively without the consent of a third party, and Piper is unable to obtain
that consent even after using its best efforts to do so, Piper shall only be
obligated to assure Quanex Subsidiary of the benefits of the contract at
Piper's cost and expense; provided, however, that Piper shall not have any
obligation to pay any transfer fees or similar costs imposed by any parties to
such contracts as a condition to obtaining such consents. At the Closing,
Piper shall execute and deliver to Quanex Subsidiary such documentation that,
in the reasonable opinion of Quanex's counsel, assures Quanex Subsidiary of
those benefits.
(c) PAYMENT OF PURCHASE PRICE. At the Closing, the
Purchasing Parties shall pay the Cash Purchase Price in the manner described in
subsection 1.3(c) of this Agreement.
(d) PROMISSORY NOTES. At the Closing, the Purchasing
Parties shall execute and deliver to Piper the Purchase Price Promissory Note
and the Contingency Promissory Note.
(e) ASSUMPTION AGREEMENT. At the Closing, the Purchasing
Parties shall deliver an assignment and assumption agreement in the form of
EXHIBIT G to this Agreement (the "Assumption Agreement") pursuant to which they
shall assume and agree to be liable for performance of the Assumed Liabilities.
(f) CERTAIN ADDITIONAL AGREEMENTS. At the Closing the
parties to this Agreement, as applicable, shall execute and deliver, or cause
to be executed and delivered, the Technology Transfer Agreement, the
Non-Competition Agreement in substantially the form attached to this Agreement
as EXHIBIT H, the 401(k) Assumption and Termination Agreement in substantially
the form attached to this Agreement as
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EXHIBIT I and the Welfare Benefit Plan Assumption and Termination Agreement in
substantially the form attached to this Agreement as EXHIBIT J.
(g) LEGAL OPINIONS. At the Closing, the Selling Parties
shall cause Burch, Porter & Johnson PLLC, counsel to Piper, to deliver a
written opinion to the Purchasing Parties, to the effect described on EXHIBIT K
to this Agreement, and the Purchasing Parties shall cause Fulbright & Jaworski
L.L.P., counsel to the Purchasing Parties to deliver its written opinion to
Piper, to the effect described on EXHIBIT L to this Agreement.
(h) CERTAIN UPDATED SCHEDULES. At the Closing, the
Selling Parties shall provide Quanex Subsidiary with SCHEDULE 1.1(g)-A, which
relates to receivables and is described in subsection 1.1(g) of this Agreement,
SCHEDULE 1.1(j)-A, which relates to Piper's Agreements and is described in
subsection 1.1(j) of this Agreement, SCHEDULE 1.4(c)-A, which relates to
purchase orders and is described in subsection 1.4(c) of this Agreement,
SCHEDULE 1.4(d)-A, which relates to sales orders and is described in subsection
1.4(d) of this Agreement, and SCHEDULE 1.4(e)-A, which relates to payables and
is described in subsection 1.4(e) of this Agreement.
(i) COMPLIANCE CERTIFICATES. At the Closing, (i) the
Selling Parties shall deliver to Quanex a certificate dated as of the date of
the Closing and executed by Sammons as the chief executive officer of Piper,
and Sammons and Robbins, as individuals, stating that the representations made
by the Selling Parties in this Agreement are accurate as of the date of the
Closing and that all covenants, agreements and conditions required by this
Agreement to be performed or fulfilled by the Selling Parties before the
Closing have been performed, and (ii) the Purchasing Parties shall deliver to
Piper a certificate dated the date of the Closing and executed by the president
or any vice president of each of Quanex and Quanex Subsidiary stating that the
representations made by the Purchasing Parties in this Agreement are accurate
as of the date of the Closing and that all covenants, agreements and conditions
required by this Agreement to be performed or fulfilled by the Purchasing
Parties before the Closing have been performed or fulfilled.
(j) CERTIFICATES OF INCUMBENCY AND AUTHORITY. At the
Closing, (i) Piper shall deliver to the Purchasing Parties a properly executed
certificate of corporate incumbency and resolutions authorizing Sammons to sign
this Agreement and all related documents on behalf of Piper and (ii) the
Purchasing Parties shall deliver to Piper a properly executed certificate of
corporate incumbency and resolutions authorizing the individuals signing this
Agreement and all related documents to do so on behalf of Quanex and Quanex
Subsidiary.
(k) OTHER DOCUMENTS TO BE DELIVERED. At the Closing, the
parties to this Agreement shall deliver or shall cause to be delivered such
other documents as a party may reasonably require to evidence compliance with
the covenants contained in this Agreement and the fulfillment of the conditions
contained in this Agreement.
(l) FORM OF DOCUMENTS DELIVERED. Each document delivered
at or before the Closing pursuant to this Section 2.2 shall be in form
reasonably satisfactory
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to counsel for each of the parties to this Agreement, shall be appropriately
executed and, if applicable, shall be in form suitable for filing. Except with
respect to any promissory notes, each party to this Agreement shall deliver
such number of executed agreements, certificates and opinions as the parties to
this Agreement may reasonably request.
(m) TIMING OF ACTIONS TO BE TAKEN AT THE CLOSING. All
actions to be taken at the Closing shall be deemed to occur concurrently. To
effect the concurrent payment of consideration, transfer of the Assets,
assumption of the Assumed Liabilities and recordation of title with respect to
the real property that constitutes a portion of the Assets, the Purchasing
Parties and the Selling Parties agree that they shall take the following steps
in the following order at the Closing: first, all documents to be executed or
delivered in connection with the Closing shall be so executed and delivered;
second, any deeds or other instruments that are required to be recorded with
respect to the real property that constitutes a portion of the Assets shall be
recorded; and third, the Purchasing Parties shall commence the wire transfer of
the Cash Purchase Price. Unless the parties otherwise agree, no escrow fund
will be required to be established in connection with the Closing.
2.3 CERTAIN ACTIONS TO BE TAKEN AFTER THE CLOSING.
(a) PURCHASING PARTIES' OBLIGATIONS. If, at any time
after the Closing, demand is made on a Selling Party for payment or performance
under any contract, agreement, commitment, plan, arrangement or obligation in
respect of any Assumed Liability, a Selling Party shall immediately notify
Quanex Subsidiary of the demand in writing and Quanex or Quanex Subsidiary
shall make the payment or provide the performance on behalf of the Selling
Parties in accordance with the requirements of the agreement or obligation or
any judgment rendered in respect of the Assumed Liability. Failing payment or
performance by Quanex or Quanex Subsidiary, unless (i) Quanex or Quanex
Subsidiary is contesting the Assumed Liability diligently by appropriate
proceedings instituted in good faith, (ii) Quanex or Quanex Subsidiary has
agreed to the satisfaction of the Selling Parties to indemnify the Selling
Parties on a current basis for any increased costs, including without
limitation defense costs and any increased liability, resulting from the
contest, and (iii) Quanex or Quanex Subsidiary is so indemnifying the Selling
Parties on a current basis, the Selling Parties may make the payment or provide
the performance and, if the Selling Parties do so, Quanex or Quanex Subsidiary
shall promptly, upon written demand of a Selling Party, reimburse a Selling
Party for the amount of a Selling Party's payment or pay a Selling Party's cost
of performance, as applicable.
(b) PIPER'S OBLIGATIONS. If, at any time after Closing,
demand is made on a Purchasing Party for payment or performance under any
contract, agreement, commitment, plan, arrangement or obligation relating to
the Assets or to Piper's Business with respect to any liability that is not an
Assumed Liability, a Purchasing Party shall immediately notify the Selling
Parties of the demand in writing and Piper, Sammons or Robbins shall make the
payment or provide the performance on behalf of the Purchasing Parties with
respect to the liability or obligation or any judgment rendered with respect to
the liability. Failing payment or performance by the Selling
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Parties, unless (i) the Selling Parties are contesting the liability diligently
by appropriate proceedings instituted in good faith, (ii) the Selling Parties
have agreed to the satisfaction of the Purchasing Parties to indemnify the
Purchasing Parties on a current basis for any increased costs, including
without limitation defense costs and any increased liability, resulting from
the contest, and (iii) the Selling Parties are so indemnifying the Purchasing
Parties on a current basis, the Purchasing Parties may make the payment or
provide the performance and, if the Purchasing Parties do so, Piper shall
promptly, upon written demand of a Purchasing Party, reimburse a Purchasing
Party for the amount of a Purchasing Party's payment or pay a Purchasing
Party's cost of performance, as applicable.
(c) ALLOCATION OF PURCHASE PRICE. The Purchase Price for
the Assets shall be allocated as set forth in SCHEDULE 2.3(c) to this
Agreement. This allocation shall be used by Piper, Quanex and Quanex
Subsidiary for all tax purposes. Each of Piper and Quanex shall file IRS Form
8594 with its applicable federal income tax return (or the federal income tax
return of its consolidated group) as required by law.
(d) FURTHER ASSURANCES. At the Closing and at any time
or from time to time after the date of the Closing, the Selling Parties shall,
at the request of a Purchasing Party, take such reasonable action necessary to
put Quanex Subsidiary in actual possession and operating control of the Assets
and shall execute, acknowledge and deliver such additional instruments of
conveyance, sale, transfer and assignment, and take such other action as a
Purchasing Party may reasonably request to more effectively convey, sell,
transfer and assign to Quanex Subsidiary any of the Assets and to assist Quanex
Subsidiary in exercising rights with respect to the Assets. The Purchasing
Parties shall bear the cost of any additional actions that a Purchasing Party
requests a Selling Party to take after the Closing pursuant to this subsection
2.3(d), unless and until the costs of all such actions exceed $10,000, after
which time any such cost will be borne by the party who would have been
required to take the action had it been taken at or before the Closing;
provided, however, that Piper shall not have any obligation to pay any transfer
fees or similar costs imposed by any third parties as a condition to a transfer
or assignment of any of the Assets.
(e) TRANSACTION TAXES AND OTHER CLOSING COSTS. Any
sales, use or other transfer taxes, and any transfer, recording or similar fees
and charges arising in connection with the transfer of the Assets from Piper to
Quanex Subsidiary shall be paid by Quanex or Quanex Subsidiary.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES. For
purposes of this Article 3, the "knowledge" of a Selling Party shall mean the
actual knowledge of any of the persons named on SCHEDULE 3 to this Agreement
and the knowledge that any such person should have had in light of such
person's position or relationship with Piper and with respect to Piper's
Business. The Selling Parties jointly and severally represent and warrant to
Quanex that:
3.1 ORGANIZATION AND EXISTENCE. Piper is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Tennessee and has the corporate power and authority to own, operate
and lease its properties and carry
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on its business in all material respects as now owned, operated, leased or
conducted. Piper is duly qualified to conduct its business and is in good
standing in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on Piper's Business. True and correct copies of
the charter and bylaws of Piper have been provided to Quanex.
3.2 AUTHORITY. Piper has all requisite corporate power
and authority to enter into, deliver and perform this Agreement and any other
agreement or document necessary to perform this Agreement and to consummate the
transactions described in this Agreement. This Agreement has been duly
executed and delivered by Piper pursuant to all necessary corporate action.
3.3 CAPITALIZATION. The authorized capital stock of
Piper consists of 100,000 shares of common stock, $1.00 par value (the "Piper
Stock"), 1,000 shares of which are issued and outstanding. Each issued and
outstanding share of Piper Stock is duly authorized, validly issued, fully paid
and nonassessable and has not been issued, and is not owned or held, in
violation of any preemptive right of shareholders. All issued and outstanding
shares of the Piper Stock are owned of record and beneficially by Sammons,
Robbins and trusts controlled by and for the benefit of members of Sammons'
family, free and clear of all claims, liens, security interests, pledges,
charges, encumbrances, stockholders' agreements and voting trusts (except as
set forth on SCHEDULE 3.3 to this Agreement, which claims, liens, security
interests, pledges, charges, encumbrances, stockholders' agreements and voting
trusts shall be released or terminated at or before the Closing), and there are
no other beneficial owners of that stock. Sammons and Robbins together own of
record and beneficially at least 90 percent of the outstanding shares of Piper
Stock.
3.4 INTERESTS IN OTHER ENTITIES AND SCOPE OF BUSINESS.
Piper does not own or control any securities or other ownership interest in any
corporation, association, joint venture, limited liability company, partnership
or other business entity. Piper is not a general partner and does not have
responsibility for the management of any joint venture, limited liability
company or partnership. Piper does not operate and has not operated any
facility other than the facilities located on the real property described in
subsections 1.1(a), 1.1(b) and 1.1(c) of this Agreement (the "Real Property").
Piper has not engaged in any activities and has not conducted any operations
other than those activities and operations that are incident to Piper's
Business.
3.5 NO CONFLICT. Neither the execution and delivery by
the Selling Parties of this Agreement, the consummation of the transactions
described in this Agreement by the Selling Parties nor compliance by the
Selling Parties with any of the provisions of this Agreement will violate,
conflict with, result in a breach of or constitute a default under (a) Piper's
charter or bylaws, (b) except as set forth in SCHEDULE 3.5 to this Agreement,
any contracts, commitments or agreements to which a Selling Party is a party or
by which a Selling Party's assets are bound or (c) except as set forth in
SCHEDULE 3.5 to this Agreement, any law, statute, code, act, ordinance, order,
judgment, decree, injunction, rule, regulation, permit, license, authorization,
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direction or requirement (collectively, "Legal Requirements") by which a
Selling Party is subject or bound.
3.6 NO CONSENTS OR GOVERNMENTAL APPROVALS. Except for
any filings required to be made pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") or as set forth in SCHEDULE 3.6 to
this Agreement, no Selling Party is required to submit any notice, report or
other filing with any federal, state, local, foreign or other governmental
agency, department, commission, board, bureau, instrumentality, authority,
court, administration or body ("Governmental Body") in connection with the
execution, delivery or performance of this Agreement by the Selling Parties and
the consummation of the transactions described in this Agreement.
3.7 FINANCIAL CONDITION. Piper has delivered to Quanex
true and correct copies of the audited balance sheets of Piper as of December
31, 1994, and December 31, 1995, the Effective Time Balance Sheet, the audited
income statements of Piper for the years ended December 31, 1994, and December
31, 1995, and the unaudited income statement of Piper for the quarter ended
March 29, 1996. Each of the balance sheets presents fairly the financial
condition, assets, liabilities and stockholders' equity of Piper as of its
date, subject, in the case of interim statements, to normal year-end
adjustments. Each of the statements of income presents fairly the results of
operations of Piper for the periods indicated, subject, in the case of interim
statements, to normal year-end adjustments. Each of the financial statements
referred to in this Section 3.7 has been prepared in accordance with U.S.
federal income tax accounting principles consistently applied throughout the
periods indicated, subject, in the case of interim statements, to normal
year-end adjustments, and is in accordance with the books and records of Piper.
Except as disclosed in SCHEDULE 3.7 to this Agreement, since March 29, 1996,
there has been no material adverse change in the financial condition, results
of operations, business, properties, assets or liabilities of Piper.
3.8 TITLE TO ASSETS. Except as set forth in SCHEDULE 3.8
to this Agreement, Piper has (a) good and marketable title to all of the Assets
(other than the Assets described in subsections 1.1(a) and 1.1(b) of this
Agreement (the "Owned Real Property")) free and clear of all liens, claims,
security interests and encumbrances and (b) good and transferable title to the
Owned Real Property, free and clear of all liens, claims, security interests
and encumbrances.
3.9 REAL PROPERTIES. The only real properties now or in
the past owned or leased by Piper, as lessee, are the Real Properties. There
are no persons in possession or occupancy of any part of the Real Properties or
the improvements or facilities located on the Real Property (the "Facilities")
or who have possessory rights with respect to any part of the Real Properties
or the Facilities, except the Lessor pursuant to the provisions of the
Mississippi Lease, the lessor under the provisions of the Parking Lot Lease and
the lessee under the terms of the Adjacent Parcel Lease. Except as set forth
on SCHEDULE 3.9 to this Agreement, Piper has not received any notice of any
alleged violations of any applicable Legal Requirements of any Governmental
Body having jurisdiction over any part of the Real Properties or the Facilities
or the operation of any part of the Real Properties or the Facilities. There
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is no existing, pending or, to the Selling Parties' knowledge, contemplated,
threatened or anticipated, condemnation or other taking of all or any part of
the Real Properties or the Facilities. Piper has delivered to Quanex true and
correct copies of the Mississippi Lease and the Parking Lot Lease, and the
description of the Adjacent Parcel Lease contained in SCHEDULE 1.1(c)(iii) of
this Agreement is true, correct and complete in all material respects. Except
as set forth in SCHEDULE 3.9, and except for the Mississippi Lease, the Parking
Lot Lease, the Adjacent Lease and the Office Lease, Piper is not a party to any
lease or rental agreement with respect to real property (whether as a landlord
or a tenant). As to each of the Mississippi Lease and the Parking Lot Lease,
to the Selling Parties' knowledge, all obligations of the landlord have been
satisfied, the lease is in full force and effect, no material rights or
interests of Piper have been waived or released, all of Piper's obligations
have been satisfied, no party to the lease is in default, and the lease
contains no right on the part of the landlord to terminate the lease before the
end of its term, except as set forth in SCHEDULE 3.9 to this Agreement. As to
the Adjacent Parcel Lease, to the Selling Parties' knowledge, all obligations
of the tenant and of Piper have been satisfied, the lease is in full force and
effect, no material rights of the tenant have been waived or released and no
party is in default. Except as set forth on SCHEDULE 3.9 to this Agreement, no
environmental studies, reports, assessments, sampling results or audits have
been conducted with respect to the Real Property or the Facilities during the
period of time that a Selling Party owned or managed the business conducted at
such place (the "Selling Parties' Watch") or, to the knowledge of the Selling
Parties, during any other time. There has been no disposal of any Hazardous
Material or solid waste on the Real Properties or at the Facilities during the
Selling Parties' Watch or, to the knowledge of the Selling Parties, during any
other time, except for the Specified Contamination Problems, the Specified
Compliance Problems and as set forth in SCHEDULE 3.9 to this Agreement.
3.10 EQUIPMENT USED IN PIPER'S BUSINESS. The furniture,
fixtures, tools, dies, machinery, equipment, vehicles and other rolling stock
listed in SCHEDULES 1.1(e)(i) AND 1.1(e)(ii) to this Agreement constitutes all
of the furniture, fixtures, tools, dies machinery, equipment, vehicles and
other rolling stock used in or considered part of Piper's Business as of the
date of this Agreement that has a per item book value in excess of $1,000. No
underground storage tanks have been used at any time at any of the Facilities
during the Selling Parties' Watch or, to the knowledge of the Selling Parties,
during any other time, except as set forth in SCHEDULE 3.10 to this Agreement.
3.11 CONTRACTS. SCHEDULE 3.11 to this Agreement contains
a list of each contract, commitment, agreement, instrument, lease, license and
arrangement (i) to which Piper is a party, by which Piper is or any of the
Assets are bound or relating to Piper's Business and (ii) which, after the
Effective Date, requires or could require, Piper to pay or give, or gives or
could give Piper the right to receive, cash or assets having a value of at
least $50,000. There has not been any violation or breach of, or default with
respect to complying with, any material provision of any contract, commitment,
agreement, instrument, lease, license or arrangement described in SCHEDULE 3.11
to this Agreement by Piper or, to the Selling Parties' knowledge, any other
party. Each contract, agreement, instrument, lease, license and arrangement
described in SCHEDULE 3.11 to this Agreement is in full force and effect; is
the legal,
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valid and binding obligation of Piper and, to the knowledge of Piper, the other
parties thereto; and, except as may be limited by principles of equity or
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
judicial decisions relating to or affecting the enforcement of creditors'
rights, is enforceable against the parties thereto in accordance with its
terms. Piper enjoys peaceful and undisturbed possession of the assets,
properties and rights possessed under the leases and licenses described in
SCHEDULE 3.11 to this Agreement. Except as set forth in SCHEDULE 3.11 to this
Agreement, Piper has no contract, commitment, agreement, lease license,
arrangement or understanding with any director, officer, employee or affiliate
of Piper. Piper has not waived any right under any contract, commitment,
agreement, instrument, lease, license or arrangement described in SCHEDULE 3.11
to this Agreement. Piper has not, by contract or otherwise, assumed
environmental liabilities or obligations of or on behalf of any person or
entity except as set forth in SCHEDULE 3.11 to this Agreement.
3.12 CONDITION OF ASSETS. The property, plant, furniture,
fixtures, tools, machinery and equipment included in the Assets are in as good
a condition as they were on June 15, 1996, ordinary wear and tear excepted.
During the Selling Parties' Watch and, to the Selling Parties' knowledge during
all other times, no events occurred and no conditions were created to cause the
Facilities or the Real Properties to have any Hazardous Material contamination
or any other hazard or condition that reasonably may be expected with the
passage of time to result in environmental contamination, injury or harm, or in
physical harm to any person, except for the Specified Contamination Problems,
the Specified Compliance Problems and as set forth in SCHEDULE 3.12 to this
Agreement.
3.13 CLAIMS. Except as described in SCHEDULE 3.13 to this
Agreement, there is no suit, action, proceeding, investigation or claim pending
or, to the Selling Parties' knowledge, threatened or contemplated against and
affecting Piper or Piper's Business in or by any Governmental Body or
arbitration panel. There is no outstanding order, writ, injunction, decree,
judgment or award by any Governmental Body or arbitration panel against Piper
or affecting Piper's Business, except as described in SCHEDULE 3.13 to this
Agreement.
3.14 NO ADVERSE CHANGE. Since the Effective Time, Piper
has not (a) except in the ordinary course of business sold, transferred, or
otherwise disposed of, or agreed to sell, transfer, or otherwise dispose of any
of the Assets; (b) except in the ordinary course of business (but not with any
person affiliated with or related to Piper), entered or agreed to enter into
any agreement or arrangement granting any preferential rights to purchase any
of the Assets, including without limitation inventories, or requiring the
consent of any party to the transfer or assignment of any of the Assets; (c)
except in the ordinary course of business, made or permitted any amendment or
termination of any material contract, agreement or license relating to the
Assets; (d) taken any action with respect to the payment of any dividends or
other distributions to its stockholders in cash or property (other than
salaries paid in the ordinary course of business and any payments made pursuant
to the Shareholder Loans); or (e) entered into any other transaction or taken
any other action other than in the ordinary course of business.
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3.15 CERTAIN TRANSACTIONAL FEES. Piper has not employed
any broker, finder or other agent in connection with the transaction described
in this Agreement.
3.16 EMPLOYEE MATTERS.
(a) DOCUMENTS. Piper has delivered to Quanex, or
provided Quanex with access to, complete and correct copies of Piper's
employment records; collective bargaining, union or other employee association
agreements to which Piper is a party or by which Piper is bound; employment,
managerial, advisory and consulting agreements to which Piper is a party or by
which Piper is bound; employee confidentiality or other agreements protecting
proprietary processes, formulas or information to which Piper is a party or by
which Piper is bound; any employee handbook(s) currently provided to Piper's
employees; any reports or plans prepared or adopted pursuant to the Equal
Opportunity Act of 1972, as amended and relating to Piper's employees.
(b) COMPLIANCE AND CERTAIN AGREEMENTS. Except as
disclosed in SCHEDULE 3.16 to this Agreement:
(i) Piper is in compliance in all material
respects with all applicable laws and collective bargaining
agreements relating to employment and employment practices,
terms and conditions of employment and wages and hours and
occupational safety and health, and is not engaged in any
unfair labor practice within the meaning of section 8 of the
National Labor Relations Act, and there is no action, suit or
legal, administrative, arbitration, grievance or other
proceeding pending or, to the Selling Parties' knowledge,
threatened, or, to the Selling Parties' knowledge, any
investigation pending, threatened or contemplated against
Piper relating to any of such matters, and, to the Selling
Parties' knowledge, no basis exists for any such action, suit
or legal, administrative, arbitration, grievance or other
proceeding or governmental investigation;
(ii) there is no labor strike, dispute, slowdown
or stoppage actually pending or, to the Selling Parties'
knowledge, threatened or contemplated against Piper;
(iii) none of the employees of Piper is a member of
or represented by any labor union in connection with Piper's
Business and, to the Selling Parties' knowledge, there are no
attempts of whatever kind and nature being made to organize
any employees of Piper;
(iv) without limiting the generality of paragraph
(iii) above, no certification or decertification is pending or
was filed within the past 12 months with respect
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to the employees of Piper and, to the Selling Parties'
knowledge, no certification or decertification petition is
being or was circulated among the employees of Piper within
the past 12 months;
(v) no agreement, arbitration or court decision,
decree or order or governmental order that is binding on Piper
in any way limits or restricts Piper from relocating or
closing any of its operations;
(vi) Piper has not experienced any organized work
stoppage in the last five years; and
(vii) there are no charges, administrative
proceedings or formal complaints of discrimination (including
without limitation discrimination based upon sex, age, marital
status, race, national origin, sexual preference, handicap or
veteran status) pending or, to the Selling Parties' knowledge,
threatened or contemplated or, to the Selling Parties'
knowledge, any investigation pending, threatened or
contemplated before the Equal Employment Opportunity
Commission or any federal, state or local agency or court,
and, to the Selling Parties' knowledge, no basis for any such
claim exists.
3.17 EMPLOYEE BENEFIT MATTERS.
(a) IDENTIFICATION OF PLANS. SCHEDULE 3.17 to this
Agreement includes a complete and accurate list of (1) all employee welfare
benefit and employee pension benefit plans as defined in sections 3(1) and 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including, but not limited to, plans that provide retirement income or result
in a deferral of income by employees for periods extending to termination of
employment or beyond, and plans that provide medical, surgical, or hospital
care benefits or benefits in the event of sickness, accident, disability, death
or unemployment, and (2) all other employee benefit agreements or arrangements,
including without limitation deferred compensation plans, incentive plans,
bonus plans or arrangements, stock option plans, stock purchase plans, stock
award plans, golden parachute agreements, severance pay plans, dependent care
plans, cafeteria plans, employee assistance programs, scholarship programs,
employment contracts, vacation policies, and other similar plans, agreements
and arrangements that are currently in effect or were maintained within three
years of the date of this Agreement, or have been approved before this date but
are not yet effective, for the benefit of directors, officers, employees or
former employees (or their beneficiaries) of Piper. As to each plan, agreement
or arrangement listed in SCHEDULE 3.17 to this Agreement, Piper has delivered
to Quanex, as applicable, a complete and accurate copy of (1) each plan,
agreement or arrangement, (2) the trust, group annuity contract or other
document which provides the funding for the plan, agreement or arrangement, (3)
the three most recent annual Form 5500, 990 and 1041 reports, (4) the most
recent
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actuarial report or valuation statement, (5) the most current summary plan
description, booklet, or other descriptive written materials, and each summary
of material modifications prepared after the last summary plan description, (6)
the most recent Internal Revenue Service ("IRS") determination letter and all
rulings or determinations requested from the IRS after the date of that
determination letter, and (7) all other correspondence from the IRS or the
Department of Labor received that relate to one or more of the plans,
agreements or arrangements with respect to any matter, audit or inquiry that is
still pending.
(b) COMPLIANCE. Except as otherwise disclosed in
SCHEDULE 3.17 to this Agreement, with respect to each employee welfare benefit
plan and employee pension benefit plan as defined in sections 3(1) and 3(2) of
ERISA that has been or is sponsored by, participated in by or contributed to by
Piper: (1) the plan is in compliance with ERISA in all material respects,
including but not limited to all reporting and disclosure requirements of Part
1 of Subtitle B of Title I of ERISA; (2) the appropriate Form 5500 has been
timely filed, for each year of its existence; (3) there has been no transaction
described in sections 406 or 407 of ERISA or section 4975 of the Code relating
to the plan unless exempt under section 408 of ERISA or section 4975 of the
Code, as applicable; and (4) the bonding requirements of section 412 of ERISA
have been satisfied. There is no litigation, action, proceeding, investigation
or claim asserted or, to the Selling Parties' knowledge, threatened or
contemplated, with respect to any arrangement or agreement listed on SCHEDULE
3.17 to this Agreement (other than the payment of benefits in the normal
course) nor any issue resolved adversely to Piper that may subject Piper to the
payment of a penalty, interest, tax or other amount and each arrangement or
agreement listed on SCHEDULE 3.17 to this Agreement can be unilaterally
terminated or amended by Piper on no more than 90 days notice. No notice has
been received by Piper of an increase or proposed increase in the cost of any
agreement or arrangement listed in SCHEDULE 3.17 to this Agreement.
(c) SEVERANCE PAY, VACATION PAY AND MEDICAL COVERAGE.
Subject to Quanex Subsidiary's compliance with its agreements contained in
Section 5.9 of this Agreement, no plan, arrangement or agreement with any one
or more employees will cause Piper to have liability for severance pay or
vacation pay as a result of the consummation of the transactions described in
this Agreement. Piper does not provide employee post-retirement medical
coverage or contribute to or maintain any plan or arrangement that provides for
medical coverage following termination of employment except as is required by
section 4980B(f) of the Code, nor has it made any representations, agreements,
covenants or commitments to provide that coverage. All group health plans
maintained by Piper have been operated in compliance with section 4980B(f) of
the Code in all material respects.
(d) CERTAIN PENSION PLANS. All pension plans listed in
SCHEDULE 3.17 to this Agreement that are intended to qualify under section
401(a) of the Code either (i) have been determined by the IRS to be qualified
under section 401(a) of the Code or (ii) have applicable remedial amendment
periods that will not have ended before the Closing, except, in either case, as
described in SCHEDULE 3.17. Except as set forth in SCHEDULE 3.17 to this
Agreement, no facts have occurred that if known by the IRS could cause
disqualification of those plans.
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(e) MULTI-EMPLOYER PLANS AND VOLUNTARY BENEFICIARY
ASSOCIATIONS. Neither Piper nor any entity (whether or not incorporated) that
was at any time during the six years before the date of this Agreement treated
as a single employer together with Piper under section 414 of the Code has ever
maintained, had any obligation to contribute to or incurred any liability with
respect to a pension plan that is or was subject to the provisions of Title IV
of ERISA. During the last six years Piper has not maintained, had an
obligation to contribute to or incurred any liability with respect to a
voluntary employees beneficiary association that is or was intended to satisfy
the requirements of section 501(c)(9) of the Code.
3.18 REGULATORY AUTHORITY AND COMPLIANCE. SCHEDULE 3.18
to this Agreement contains a list of all governmental franchise, licenses,
authorizations, permits, consents and approvals currently held by Piper.
Except as set forth in SCHEDULE 3.18 to this Agreement, each governmental
franchise, license, authorization, permit, consent and approval listed on
SCHEDULE 3.18 is valid and current. Except as set forth in SCHEDULE 3.18 to
this Agreement, during the Selling Parties' Watch and, to the Selling Parties'
knowledge, at all other times, there has been no violation of any of the
requirements pertaining to such franchises, licenses, authorizations, permits,
consents and approvals. Except as set forth in SCHEDULE 3.18 to this
Agreement, during the Selling Parties' Watch and, to the Selling Parties'
knowledge, at all other times, all governmental franchises, licenses,
authorizations, permits, consents and approvals required to carry on Piper's
Business have been acquired and have been in full force and effect except when
the failure to so acquire them and keep them in full force and effect would not
have a material adverse effect on Piper's Business. Except with respect to the
Specified Compliance Problems and the Specified Contamination Problems or as
set forth in SCHEDULE 3.18 to this Agreement, Piper's Business has been and is
conducted in compliance with all applicable Legal Requirements of all
Governmental Bodies, except when the failure to so comply would not have a
material adverse effect on Piper's Business. Based on due investigation by the
Selling Parties, ceasing to use tetrachloroethene in Piper's Business before
December 31, 1996, will have no adverse effect on quality control, production
of products in Piper's Business or the operations or financial condition of
Piper's Business as currently conducted, and the Selling Parties know of no
reason why such cessation cannot be implemented satisfactorily before December
31, 1996.
3.19 INSURANCE. SCHEDULE 3.19 to this Agreement lists all
current insurance policies maintained by Piper and covering Piper, any of
Piper's employees or other agents or any assets of Piper. All retroactive
premium adjustments under any workers' compensation policy of Piper has been
recorded in its financial statements in accordance with U.S. federal income tax
accounting principles.
3.20 TAX REPRESENTATIONS. Piper has timely filed (taking
into account all extensions of time for filing) with all appropriate
governmental agencies all tax or information returns and tax reports that are
required to be filed by Piper. All taxes of Piper and all interests,
penalties, assessments, deficiencies, charges, fees or other government
impositions or charges claimed to be due by any taxing authority with respect
to taxes have been fully paid or adequately reserved for, and Piper has
collected and paid all sales taxes with respect to the sale of any of its
assets required to be so
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collected and paid before the Closing Time. Piper has made adequate accruals
on its financial statements for the payment of all taxes, and those accruals
have been made on a basis consistent with past practices. Piper has no
liability for any taxes or other governmental charges in excess of the amounts
so paid or accruals so made and required to be accrued. Piper is not a party
to any pending audit, action or proceeding with respect to taxes or any other
governmental charges.
3.21 PATENTS, TRADEMARKS AND OTHER INTANGIBLES. SCHEDULE
3.21 contains a list and brief description of all patents, applications for
patents, trademarks and service marks for which Piper has a registration or
which are used in Piper's Business. Except as disclosed in SCHEDULE 3.21,
Piper owns (or possesses adequate or enforceable licenses or other rights to
use) all trade secrets, inventions, processes and other technical know-how and
proprietary rights used in the conduct of Piper's Business to the extent that
the absence of such ownership would have a material adverse effect on Piper's
business as currently conducted. No Selling Party has knowledge of or has
received any notice of conflict with the asserted rights of others with respect
to any trademarks, trade names, copyrights or patents or any material trade
secrets, inventions, processes or other technical know-how or proprietary
rights used in the conduct of its business.
3.22 OTHER INFORMATION. The information provided by the
Selling Parties in this Agreement and in the schedules to this Agreement or
described in this Agreement or the Schedules to this Agreement, to the Selling
Parties' knowledge, does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated necessary to make the
statements and facts contained in this Agreement and the schedules to this
Agreement, in light of the circumstances under which they are made, not false
or misleading. All documents that the Selling Parties have made available to
Quanex were complete and accurate in all material respects as of the time they
were made available.
3.23 NO UNDISCLOSED LIABILITY. Except to the extent
specifically reflected in Piper's financial statements described in Section 3.7
of this Agreement or described in this Agreement or the Schedules to this
Agreement, to the Selling Parties' knowledge, Piper has no liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
and whether due or to become due (including without limitation any liability
for taxes and interests, penalties and other charges payable with respect to
any such liability or obligation) relating to Piper's Business and which are of
the type to be assumed by Quanex or to Quanex Subsidiary pursuant to this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF QUANEX. Quanex and Quanex
Subsidiary jointly and severally represent and warrant to the Selling Parties
as follows:
4.1 ORGANIZATION AND GOOD STANDING. Each of Quanex and
Quanex Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power
and authority to own,
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operate and lease its properties and carry on its business in all material
respects as now owned, operated, leased or conducted.
4.2 AUTHORITY. Each of Quanex and Quanex Subsidiary has
all requisite corporate power and authority to enter into, deliver and perform
this Agreement and any other agreement or document necessary to perform this
Agreement and to consummate the transactions described in this Agreement. This
Agreement has been duly executed and delivered by Quanex and Quanex Subsidiary
pursuant to all necessary corporate action.
4.3 NO CONFLICT. Neither the execution and delivery by
the Purchasing Parties of this Agreement, the consummation of the transactions
described in this Agreement by the Purchasing Parties nor compliance by the
Purchasing Parties with any of the provisions of this Agreement will conflict
with, result in a breach of or constitute a default under (a) certificate of
incorporation or bylaws of Quanex or Quanex Subsidiary, (b) any contracts,
commitments or agreements to which Quanex or Quanex Subsidiary is a party or by
which the assets of Quanex or Quanex Subsidiary are bound, or (c) any law,
statute, ordinance, regulation or court or administrative order by which Quanex
or Quanex Subsidiary is subject or bound.
4.4 NO CONSENTS OR GOVERNMENTAL APPROVALS. Except for
filings required to be made pursuant to the HSR Act or the Securities Exchange
Act of 1934, neither Quanex or Quanex Subsidiary is required to submit any
notice, report or other filing with any governmental or regulatory authority or
instrumentality in connection with the execution, delivery or performance of
this Agreement by the Purchasing Parties and the consummation of the
transactions described in this Agreement.
4.5 BROKERAGE COMMISSION. Quanex has entered into a
finder's fee agreement with Harry Roman & Company relating to the transactions
described in this Agreement, and Quanex is responsible for the payment of any
fees and related costs under that agreement. Otherwise, neither Quanex nor
Quanex Subsidiary has employed any broker, agent or finder in connection with
any transaction described in this Agreement.
4.6 FINANCIAL CONDITION OF QUANEX. Quanex has provided
Piper with a copy of Quanex's Annual Report on Form 10-K for the fiscal year
ended October 31, 1995, its Proxy Statement relating to the annual meeting of
its stockholders held February 22, 1996, and its Quarterly Reports on Form 10-Q
for the fiscal quarters ended January 31, 1996, and April 30, 1996, each in the
form filed with the Securities and Exchange Commission (the "Reports"). Since
October 31, 1995, no other report or other document has been filed with the
Securities and Exchange Commission pursuant to Section 13(a), Section (c),
Section 14 or Section 15(d) of the Securities Exchange Act of 1934, as amended.
Each of the consolidated balance sheets included in the Reports presents fairly
the financial condition, assets, liabilities and stockholders' equity of Quanex
and its consolidated subsidiaries as of its date, subject, in the case of
interim statements, to normal year-end adjustments. Each of the consolidated
statements of income, consolidated statements of stockholders' equity and
statements of cash flow included in the Reports presents fairly the results of
operations of Quanex and its
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consolidated subsidiaries for the periods indicated, subject, in the case of
interim statements, to normal year-end adjustments. Each of the financial
statements referred to in this Section 4.6 has been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods indicated, subject, in the case of interim statements, to normal
year-end adjustments, and is in accordance with the books and records of
Quanex. Since October 31, 1995, there has been no material adverse change in
the financial condition, results of operations, business, properties, assets or
liabilities of Quanex and its consolidated subsidiaries, taken as a whole.
5. CERTAIN COVENANTS OF THE SELLING PARTIES AND QUANEX. The
Selling Parties jointly and severally and the Purchasing Parties jointly and
severally covenant with each other that:
5.1 CONDUCT OF BUSINESS. Except to the extent waived or
consented to in writing by Quanex, after the Effective Time:
(a) ORDINARY COURSE. Piper shall conduct Piper's
Business only in the ordinary course;
(b) COMPENSATION AND PRICING. No increase shall be made
in the compensation of any director, officer or any other employee or group of
employees of Piper; no new agreement or arrangement, written or oral, shall be
made with any employee or group of employees of Piper with respect to
employment for a term that extends after the date of the Closing; and no
decrease shall be made in present pricing practices for products sold by or on
behalf of Piper other than in the ordinary course of business;
(c) MAINTENANCE. Piper shall use such efforts as are
consistent with prior practices to keep Piper's Business intact, maintain,
preserve and protect the property used to conduct Piper's Business, keep in
faithful service the present key employees of its business, and preserve the
goodwill of suppliers and customers and others having business relations with
Piper;
(d) NO NEW AGREEMENT. Piper shall not enter into (i) any
new written lease agreements or other agreements relating to real property or
any extensions of any existing lease agreements or other agreements relating to
real property except as set forth in SCHEDULE 5.1(d) to this Agreement, (ii)
any agreements or other arrangements with any affiliates of Piper, (iii) any
arrangements or other agreements relating to the borrowing of money, the
guaranty of obligations of another party or the pledging or any other
encumbrance of assets, or (iv) any arrangement or agreement, or any group of
related arrangements or agreements, that would require the expenditure of more
than $5,000,000 by Piper; and
(e) CAPITAL EXPENDITURES. Piper shall not incur any
capital expenditures that individually or in the aggregate exceed $5,000,000.
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5.2 TRANSACTIONS AFTER THE EFFECTIVE TIME. Any and all
transactions after the Effective Time, concerning the Assets and the Assumed
Liabilities shall be for the account of the Purchasing Parties. Piper shall
remit to Quanex Subsidiary all amounts received by any Selling Party after the
Closing Time that were intended to be transferred to Quanex Subsidiary under
this Agreement. Quanex Subsidiary shall remit all amounts to Piper received by
it after the Closing Time that were for matters relating to Piper's Business
before the Effective Time or were not intended to be transferred to Quanex
Subsidiary pursuant to this Agreement. Any such amounts shall be sent within
five business days if by wire, or three business days if by mail, from the date
the person making the payment has knowledge of its receipt.
5.3 SUPPLYING OF INFORMATION. Before and after the
Closing, Piper shall furnish to the Purchasing Parties and their
representatives such information with respect to Piper's Business and the
Assets as they may reasonably request in cooperation with any review,
investigation or examination of the books and records, accounts, contracts,
properties, assets, operations and facilities of Piper or relating to the
Assets. Any information obtained by the Purchasing Parties from Piper before
the Closing shall be kept confidential in accordance with the terms of that
certain Confidentiality Agreement dated November 15, 1995, between Piper and
Quanex and the terms of this Agreement, and shall be returned to Piper if for
any reason the sale of the Assets to Quanex Subsidiary does not close.
5.4 FILINGS, AUTHORIZATIONS AND OTHER ACTIONS. Each of
the Selling Parties and the Purchasing Parties, as promptly as practicable, (a)
will make, or cause to be made, any filings and submissions required under
laws, rules and regulations applicable to it, or to its subsidiaries and
affiliates, as may be required for it to consummate the purchase and sale of
the Assets in accordance with the terms of this Agreement; (b) will use its
best efforts to obtain, or cause to be obtained, all authorizations, approvals,
consents and waivers from all persons and governmental authorities necessary to
be obtained by it, or its affiliates, to consummate the purchase and sale of
the Assets in accordance with the terms of this Agreement; and (c) will use its
best efforts to take or cause to be taken, all other actions necessary, proper
or advisable for it to fulfill its obligations under this Agreement and satisfy
the conditions to closing contained in this Agreement.
5.5 RETENTION OF RECORDS. In light of each party's
continuing obligations with respect to events before the Closing Time, Quanex
shall retain for a period of five years after the Closing Time the books and
records relating to Piper's Business and the Assets and, during regular
business hours, on no less than 48 hours prior written notice from Piper, which
notice shall include the specific purposes for such review, shall (a) give
Piper and its authorized representatives reasonable access to all of such books
and records that do not constitute lawfully recognized privileged information
(except information that is privileged solely because of any accountant-client
relationship) and the offices and facilities relating to Piper's Business, (b)
permit Piper to make such inspections (and copies of any documents at Piper's
expense) thereof as Piper may reasonably request and (c) furnish Piper with
such financial and operating data and other information for periods before the
date of Closing or otherwise relating to Piper's responsibilities, with respect
to Piper's Business and its
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operations and properties as Piper may from time to time reasonably request,
including data and information needed for financial and tax reporting and
statutory filings. All costs incurred relating to such inspection shall be
paid by Piper. Under no circumstances may any such inspection interfere in any
material respect with the conduct of Quanex's business.
5.6 CHANGE OF NAME OF PIPER. Before the Closing Time,
Piper shall (a) take all actions necessary, including without limitation the
filing with the Secretary of State of the State of Tennessee an amendment to
its charter to effect the change of Piper's name from "Piper Impact, Inc." to a
name that does not use the words "Piper" or "Piper Impact". As soon as
practicable after the Closing Time, but in any event within three business days
after the Closing Time, Piper shall take all actions necessary, including
without limitation making appropriate filings to effect such name change in
each state where Piper is qualified to conduct business or to withdraw such
qualification.
5.7 INSPECTION OF PROPERTIES. Before the Closing, the
Purchasing Parties and their employees, agents, contractors and subcontractors
may enter upon the properties during Piper's business hours and make surveys
and appraisals, take measurements and make tests, borings and other tests of
surface and subsurface conditions, soil tests and structural and engineering
studies of the improvements thereon, provided that prior to entry on any Real
Property, Quanex has given at least 48 hours notice of any intent to come onto
the Real Property. In addition, before the Closing, Quanex shall be permitted
to obtain or continue environmental audits of the Real Properties and the
Facilities in form and substance satisfactory to the Purchasing Parties, and
the Purchasing Parties shall furnish Piper with copies of the data and final
reports with respect to any such environmental audits.
5.8 EXPENSES. Quanex shall pay (a) all fees and related
costs under its finder's fee agreement with Harry Roman & Company relating to
the transactions described in this Agreement, in accordance with the terms of
that agreement and (b) the fees, premium and costs of obtaining title insurance
and surveys on the Real Property. Otherwise, each party to this Agreement
shall pay its or his own costs and expenses (including without limitation all
legal and accounting fees) relating to this Agreement, the negotiations leading
up to this Agreement and, except as otherwise provided in this Agreement, the
transactions described in this Agreement.
5.9 PIPER'S EMPLOYEES. As of the Closing Time, Quanex
Subsidiary shall hire all persons who are employees of Piper at the Closing
Time on substantially the same terms and conditions that each such employee was
employed by Piper immediately before the Closing Time and shall maintain such
employment through the date of the Closing. Quanex Subsidiary shall provide
such employees with the benefits of any accrued but unpaid vacation with
respect to such employees accruing before the Closing Time. To the extent that
Quanex Subsidiary may so request, Piper shall cooperate with the Purchasing
Parties in hiring such Piper employees. Piper shall take no action that would
impede Quanex Subsidiary's hiring activities in connection with Piper's
Business (whether with respect to existing employees of Piper or other
persons). After the date of the Closing, no Selling Party shall, directly or
indirectly, hire, retain,
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employ or otherwise provide compensation for or to any employee of Piper hired
by the Purchasing Parties (other than Sammons, Robbins, Steven P. Robbins and
Paul Anthony Robbins). Nothing contained in this Section 5.9 shall create or
be deemed to create any rights of any employees of Piper or of Quanex
Subsidiary, and Quanex Subsidiary shall have no obligation to continue the
employment of any employees of Piper hired by Quanex Subsidiary as of the
Closing Time or to maintain the terms and conditions thereof after the date of
the Closing.
5.10 PUBLICITY. Until the business day after the date of
Closing and except for any public disclosure that Quanex and Piper in good
faith believe is required by law, neither party shall issue any press release
or make any public statement regarding the transactions contemplated hereby,
without the prior written approval of the other party, which approval will not
be unreasonably withheld. Quanex and Piper shall issue mutually acceptable
press releases as soon as practicable after the execution of this Agreement and
after the Closing.
5.11 CONFIDENTIAL INFORMATION. The Selling Parties, on
the one hand, and the Purchasing Parties, on the other hand, shall treat in
confidence all documents, materials and other information (whether tangible,
oral or electronic) that is obtained from any unaffiliated party for the
unaffiliated party's employees, agent or affiliates (the "Confidential
Information"). If this Agreement is terminated, each party to this Agreement
shall return all Confidential Information to the party that has furnished it
and, at the request of the furnishing party, will destroy all copies of that
Confidential Information and any notes, studies or other written or electronic
information related to that Confidential Information. This Section 5.11 shall
not apply to any Confidential Information (a) that a party to this Agreement
possessed before its receipt from an unaffiliated party to this Agreement, (b)
that is available to the public and did not become available to the public
through any violation of a legal obligation (including, but not limited to, the
obligations of this Section 5.11) or (c) that is lawfully acquired from sources
other than the parties to this Agreement or their affiliates.
5.12 EXCLUSIVITY. Unless and until this Agreement has
been terminated in accordance with the provisions of Article 8 of this
Agreement, no Selling Party shall, or authorize or permit any officer, director
or employee of, or any investment banker, attorney, accountant or other
representative retained by, Piper or any affiliate of Piper to, solicit or
initiate any inquiries or the making of any proposal that may reasonably be
expected to lead to another party's acquisition of a substantial portion of the
assets of Piper, the acquisition or the controlling interest in Piper, a merger
or other consolidation with Piper or any other transaction that would impede
the Closing. Each Selling Party shall immediately advise Quanex of any such
inquiries or proposals.
5.13 LIMITATION ON PIPER'S OBLIGATION WITH RESPECT TO
RETURNED PRODUCT. Any obligations of Piper (excluding any obligation for
product liability claims) for returned products that are not assumed by Quanex
Subsidiary pursuant to this Agreement shall be limited to Piper's replacement
of or reimbursement for the cost of the product. Quanex Subsidiary will, upon
Piper's reasonable request, provide Piper with product at Quanex Subsidiary's
cost so that Piper can replace any returned products that are defective or are
not in compliance with specifications. For purposes
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of this Agreement, Quanex Subsidiary's "cost" shall mean 80 percent of the
current selling price of the product at the time that Quanex Subsidiary
provides Piper with the replacement product.
5.14 ASSUMED ENVIRONMENTAL LIABILITIES. After the
Closing, the Purchasing Parties shall act with reasonable diligence to pursue
the completion of the investigation and remediation or correction of the
environmental liabilities assumed by Quanex Subsidiary pursuant to and
consistent with Section 1.4(n) of this Agreement. It is acknowledged and
agreed that such investigation and remediation or correction may entail
negotiations with, and concurrence by, regulatory authorities, as well as
obtaining access to third-party property, and that the schedule for such
process is not entirely within the control of the Purchasing Parties. It is
further acknowledged and agreed that remediation of the tetrachloroethene
contamination may extend over a period of 30 years or more. It is further
acknowledged and agreed that Quanex Subsidiary shall take all reasonable
measures to cease use of tetrachloroethene at the Original Facility Plant by no
later than December 31, 1996.
5.15 COST RECOVERY. After the Closing and subject to the
limitations set forth herein, the Purchasing Parties shall cooperate as
reasonably requested by Piper for purposes of Piper's cost recovery efforts
against third parties. Such cooperation may include, among other things,
participating in cost recovery litigation initiated by Piper, taking measures
identified by Piper to assist Piper's efforts to demonstrate that response
actions are reasonably consistent with the National Contingency Plan of CERCLA,
informing and reviewing with Piper (and any advisory committee of potentially
responsible parties designated by Piper) the plans of Quanex Subsidiary to
conduct response actions concerning the Specified Contamination Problems, and
to make reasonable adjustments in such plans at the request of Piper for the
purpose of enhancing its cost recovery efforts. The Selling Parties shall
promptly reimburse the Purchasing Parties for any and all of the Purchasing
Parties' costs and liabilities arising out of or related to such cooperation
with Piper, including without limitation all attorneys' fees and expenses
incurred by the Purchasing Parties. Quanex hereby assigns to Piper, effective
as of the Closing Time, any rights (whether arising under CERCLA, common law or
otherwise) of Piper or the Purchasing Parties to recover from potentially
responsible third parties the initial $20,000,000 in eligible response costs
(rights of recovery for any response costs above $20,000,000 being subject to
negotiation between, and agreement of, the parties). The Purchasing Parties
shall cooperate with the Selling Parties to execute such documents as may be
necessary to effect such assignment. The Purchasing Parties make no
representation that the rights of recovery they have, if any, against third
parties for environmental response costs are valuable or assignable.
Notwithstanding any other provision of this Agreement to the contrary, the
Purchasing Parties shall have no responsibility for damages arising out of or
related to any failure by the Selling Parties to demonstrate consistency with
the National Contingency Plan or to prevail in any cost recovery litigation.
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASING
PARTIES TO CLOSE. The obligation of the Purchasing Parties to close shall, at
the option of Quanex, be subject to the following conditions:
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6.1 SELLING PARTIES' FULFILLMENT OF COVENANTS. Each of
the Selling Parties shall fulfill its or his covenants, obligations and
agreements as set forth in this Agreement insofar as they are required to be
fulfilled before the Closing.
6.2 SELLING PARTIES' REPRESENTATIONS. The
representations of the Selling Parties contained in this Agreement shall be
true and correct in all material respects on the date when made and on the date
of the Closing to the same extent as if made at the Closing.
6.3 AUTHORIZATIONS; CONSENTS; LEGAL PROHIBITION.
(a) The Selling Parties shall have obtained all
governmental or other authorizations, approvals, consents and waivers and shall
have made all filings, the lack of any of which before the Closing, under any
applicable law, rule or regulation (i) would render legally impermissible the
sale of the Assets by the Selling Parties pursuant to the terms of this
Agreement or (ii) would have a material adverse effect on the Assets or Piper's
Business.
(b) The Purchasing Parties shall have obtained all
governmental or other authorizations, approvals, consents and waivers and shall
have made all filings, the lack of any of which before the Closing, under any
applicable law, rule or regulation (i) would render legally impermissible the
purchase of the Assets by Quanex Subsidiary pursuant to the terms of this
Agreement or (ii) would have a material adverse effect on the Assets or Piper's
Business.
(c) On the date of the Closing, there shall not exist any
pending injunction or other order of a court of competent jurisdiction that
would make unlawful the consummation of the transactions described in this
Agreement.
6.4 SELLING PARTIES' CONSENTS. All consents, waivers,
approvals and authorizations (including without limitation a unanimous written
consent of Piper's shareholders approving the transactions described in this
Agreement) required to be obtained by the Selling Parties for the consummation
of the transactions described in this Agreement shall have been obtained by the
Selling Parties and copies thereof shall have been provided to the Purchasing
Parties.
6.5 PURCHASING PARTIES' CONSENTS. All consents, waivers,
approvals and authorizations required to be obtained by the Purchasing Parties
for the consummation of the transactions described in this Agreement shall have
been obtained by the Purchasing Parties.
6.6 TITLE COMMITMENTS AND SURVEYS. The Purchasing
Parties shall have obtained title insurance commitments and title policies for
each parcel of Real Property from an insurance company satisfactory to the
Purchasing Parties ("Title Commitments") and surveys of each parcel of Real
Property (showing boundary lines, location of improvements, encroachments,
easements, rights-of-way and other exceptions as set forth in the Title
Commitments) from a surveyor satisfactory to the Purchasing Parties (the
"Surveys"), and the Title Commitments and Surveys shall be
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reasonably satisfactory to the Purchasing Parties, regardless of any disclosure
regarding the Real Properties or the ownership thereof made in a schedule to
this Agreement; provided, however, that the Purchasing Parties shall be deemed
to have accepted the matters described in SCHEDULE 2.2(a) to this Agreement.
6.7 AGRICULTURAL LEASE. The tenant under the Adjacent
Parcel Lease shall have executed and delivered to Quanex Sub the Agricultural
Lease in substantially the form attached to this Agreement as EXHIBIT M.
6.8 MISSISSIPPI LEASE. All amounts payable by Piper to
the Lessor under the Mississippi Lease, including without limitation all
rentals due before the Closing Time, shall have been paid.
6.9 DOCUMENTS DESCRIBED IN ARTICLE 2. The Purchasing
Parties shall have received the documents of transfer described in Article 2 of
this Agreement; any documentation related to unassignable contracts, the
certificates, the legal opinion of Burch, Porter & Johnson PLLC, the schedules
described in subsection 2.2(h) of this Agreement and all other documents
described in Article 2 of this Agreement that are to be delivered to the
Purchasing Parties; and all such documents relating to the Real Properties that
are required to be filed or recorded shall have been filed or recorded. The
content of the schedules delivered pursuant to subsection 2.2(h) of this
Agreement shall be reasonably satisfactory to the Purchasing Parties.
7. CONDITIONS PRECEDENT TO THE SELLING PARTIES' OBLIGATIONS TO
CLOSE. The obligation of the Selling Parties to close shall, at the option of
the Selling Parties, be subject to the following conditions:
7.1 PURCHASING PARTIES' FULFILLMENT OF COVENANTS. Each
of the Purchasing Parties shall fulfill its covenants, obligations and
agreements as set forth in this Agreement insofar as they are required to be
fulfilled before the Closing.
7.2 PURCHASING PARTIES' REPRESENTATIONS. The
representations of the Purchasing Parties contained in this Agreement shall be
true and correct in all material respects on the date when made and on the date
of the Closing to the same extent as if made on the date of the Closing.
7.3 AUTHORIZATIONS; CONSENTS; LEGAL PROHIBITION.
(a) The Selling Parties shall have obtained all
governmental or other authorizations, approvals, consents and waivers and shall
have made all filings, the lack of any of which before the Closing, under any
applicable law, rule or regulation (i) would render legally impermissible the
sale of the Assets by the Selling Parties pursuant to the terms of this
Agreement or (ii) would have a material adverse effect on the Assets or Piper's
Business.
(b) The Purchasing Parties shall have obtained all
governmental or other authorizations, approvals, consents and waivers and shall
have made all filings, the lack of any of which before the Closing, under any
applicable law, rule or regulation
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(i) would render legally impermissible the purchase of the Assets by Quanex
Subsidiary pursuant to the terms of this Agreement or (ii) would have a
material adverse effect on the Assets or Piper's Business.
(c) On the date of the Closing, there shall not exist any
pending injunction or other order of a court of competent jurisdiction that
would make unlawful the consummation of the transactions contemplated by this
Agreement.
7.4 PURCHASING PARTIES' CONSENTS. All consents, waivers,
approvals and authorizations required to be obtained by the Purchasing Parties
for the consummation of the transactions described in this Agreement shall have
been obtained by the Purchasing Parties and copies thereof shall have been
provided to the Selling Parties.
7.5 SELLING PARTIES' CONSENTS. All consents, waivers,
approvals and authorizations required to be obtained by the Selling Parties for
the consummation of the transactions described in this Agreement shall have
been obtained by the Selling Parties (including without limitation approval by
Piper's board of directors, approval by Piper's shareholders and the approval
by current holders of those 12 promissory notes executed and delivered by Piper
on or about March 31, 1996, and identified on SCHEDULE 3.11 to this Agreement).
7.6 DOCUMENTS DESCRIBED IN ARTICLE 2. The Selling
Parties shall have received payment of the Cash Purchase Price, the Assumption
Agreement, the Contingency Promissory Note, the Purchase Price Promissory Note,
the opinion of Fulbright & Jaworski L.L.P., the certificates and all other
documents described in Article 2 of this Agreement that are to be delivered to
the Selling Parties.
8. TERMINATION.
8.1 MANNER OF TERMINATION. Subject to the provisions of
Section 8.2, this Agreement may, by written notice given at or prior to the
Closing in the manner provided, be terminated and abandoned:
(a) BY QUANEX FOR DEFAULT. By Quanex if a material
default or breach shall be made by any Selling Party with respect to the due
and timely performance of any of its or his covenants and agreements contained
in this Agreement, or with respect to the continuing accuracy of any of its or
his representations and warranties contained in this Agreement and such
default, breach or continuing accuracy cannot be cured in a timely fashion and
has not been waived;
(b) BY PIPER FOR DEFAULT. By Piper if a material default
or breach shall be made by any Purchasing Party with respect to the due and
timely performance of any of the covenants and agreements of the Purchasing
Parties contained in this Agreement, or with respect to the continuing accuracy
of any representations and warranties of the Purchasing Parties contained in
this Agreement, and such default, breach or continuing accuracy cannot be cured
in a timely fashion and has not been waived;
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(c) BY MUTUAL CONSENT. By mutual consent of Piper and
Quanex;
or
(d) BY EITHER PARTY AFTER DEADLINE. By either Quanex or
Piper if the Closing is not completed before the close of business on September
30, 1996.
8.2 EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to Section 8.1, all further obligations of the parties
hereunder shall terminate, except that the obligations set forth in Sections
5.8 and 5.11 shall survive; provided, however, that if this Agreement is so
terminated by one party pursuant to subsection 8.1(a) or subsection 8.1(b)
above any aggrieved party's right to pursue all legal remedies for breach of
contract or otherwise, including without limitation damages relating thereto,
shall also survive such termination unimpaired.
9. INDEMNIFICATION AND REMEDIES.
9.1 INDEMNIFICATION BY THE SELLING PARTIES OF THE
PURCHASING PARTIES. Each Selling Party shall jointly and severally defend,
indemnify and hold harmless each of the Purchasing Parties and any of their
officers, directors, employees, agents or affiliates against any claim, loss,
cost, damage or expense ("Loss") that any such person may suffer or incur,
including court costs and attorneys' fees, arising out of or in connection
with:
(a) BREACHES. Any breach of the representations,
warranties, covenants and agreements contained in this
Agreement or in any document signed by a Selling Party
referred to in Article 2 of this Agreement;
(b) CERTAIN CLAIMS BEFORE EFFECTIVE TIME. Any
claim with regard to the conduct of Piper's Business or the
ownership of Piper's assets based on events occurring before
the Effective Time, except to the extent expressly assumed by
Quanex and Quanex Subsidiary and except with respect to any
claims regarding the conduct of Piper's Business or the
ownership of Piper's assets relating to Environmental Laws or
Hazardous Materials, which is provided for in subsection
9.1(j) below;
(c) BULK SALES LAWS. Any failure of the parties
to comply with any applicable bulk sales or similar law in
connection with the transactions contemplated by this
Agreement;
(d) NON-ASSUMED LIABILITIES. Any debts,
liabilities, obligations or expenses of the Selling Parties
not expressly assumed by the Purchasing Parties pursuant to
this Agreement;
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(e) WARN. Any violation of the Worker Adjustment
and Retraining Notification Act, 29 U.S.C. Sections 2201 et
seq. ("WARN") based upon the termination of any of Piper's
employees that may occur before the Closing Time;
(f) FORM 5500 FILINGS. The failure to timely
file an appropriate Form 5500 pursuant to ERISA for any year
ended before the Closing Time;
(g) COMPLIANCE WITH LEASES. Any non-compliance
with the provisions of the Mississippi Lease, the Parking Lot
Lease or the Adjacent Parcel Lease before the Closing Time by
any party thereto other than Piper;
(h) ARMS EXPORT CONTROL ACT. Any non-compliance
by Piper with the Arms Export Control Act, 22 U.S.C. Sections
2778 et seq., as amended, and regulations promulgated
thereunder;
(i) CERTAIN UNDISCLOSED LIABILITIES. The
nondisclosure in Piper's financial statements described in
Section 3.7 of this Agreement, or in this Agreement or its
Schedules, of any liabilities or obligations of any nature,
whether absolute, accrued, contingent or otherwise, and
whether due or to become due (including without limitation any
liabilities for taxes and interests, penalties and other
charges payable with respect to any liability or obligation)
relating to Piper's Business and which are of the type to be
assumed by Quanex Subsidiary pursuant to this Agreement; and
(j) CERTAIN ENVIRONMENTAL CLAIMS. Any
environmental condition created, or action taken, with respect
to the conduct of Piper's business, or the ownership of any of
Piper's assets, before the Closing Time, except with respect
to the obligations that Quanex Subsidiary has agreed to assume
pursuant to Section 1.4(n) of this Agreement concerning the
Specified Contamination Problems and the Specified Compliance
Problems.
Without in any respect limiting the generality of subsection
9.1(j) of this Agreement, the obligations of the Selling Parties pursuant to
subsection 9.1(j) of this Agreement shall include all Losses arising out of or
in connection with any of the following: (i) any claims with respect to any act
or omission by Piper or any of its shareholders or by any predecessor of Piper
for whom Piper is claimed to be responsible as a successor (the "Predecessors")
before the Closing Time with respect to any Hazardous Material, including
without limitation the release, disposal, use,
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management or handling of any Hazardous Material; (ii) any alleged violation by
Piper or its shareholders or by any Predecessors of any requirement arising out
of any Environmental Law, including without limitation any governmental claims
seeking to impose fines or penalties; (iii) the absence of any permit required
by any Environmental Law for the conduct of Piper's Business, or the
non-compliance with any permit held by Piper, at any time up to the Closing
Time; (iv) the presence or alleged presence of any Hazardous Material at any of
Piper's facilities at or prior to the Closing Time, including without
limitation tetrachloroethene (including impurities and degradation products of
tetrachloroethene, as well as dichlorobenzene) and the heavy metals; (v)
underground storage tanks at any of Piper's facilities, without regard for when
any such tanks were used or by whom; (vi) the disposal or arrangement for
disposal by Piper or any of its shareholders or any Predecessors of any
Hazardous Material at any location before the Closing Time; (vii) claims by any
person, including without limitation Masterbilt, Inc. and Ertel Manufacturing,
Inc. and their respective employees, alleging property damage or personal
injury related to any Hazardous Material initially released by Piper or any of
its shareholders or any Predecessors before the Closing Time, without regard to
whether exposure or damage is alleged to have occurred or continued after the
Closing Time; (viii) any cooperation requested by Piper for its efforts to
recover from third parties costs related to the Specified Contamination
Problems or the Specified Compliance Problems, including without limitation any
Losses arising out of any counterclaims asserted against Purchasing Parties by
third parties, the costs of counsel selected with the concurrence of the
Purchasing Parties to defend against any such counterclaims and the costs of
any measures taken by Quanex or Quanex Subsidiary related to Piper's efforts to
demonstrate consistency with the National Contingency Plan; (ix) any breach by
a Selling Party of any representation or warranty set forth in this Agreement
concerning environmental matters; and (x) the expiration of NPDES wastewater
permit number MS0000931 applicable to the Original Facility Plant.
The obligations of the Selling Parties under subsection 9.1(j)
of this Agreement shall not be limited in any respect by (w) the knowledge or
lack of knowledge of any Selling Party or Purchasing Party with respect to any
environmental condition created, or action taken, before the Closing Time or
(x) the identity of the person or party responsible for causing any
environmental condition created, or action taken, before the Closing Time. It
is acknowledged and agreed that the Selling Parties shall be responsible for
any and all fines, penalties and third party claims for personal injury and
property damage related to or arising out of the Specified Contamination
Problems and the Specified Compliance Problems, and that such responsibility of
the Selling Parties shall not be limited by (y) the continued existence of such
conditions after the Closing Time (during which period the Purchasing Parties
may be conducting investigation and remediation or corrective action) or (z)
the reasonable exercise by the Purchasing Parties of discretion in deciding
whether and how to report conditions to any regulatory authorities.
Notwithstanding any provision of this Agreement to the contrary, the Selling
Parties shall have no responsibility hereunder for the portion of any
governmental fines or penalties incurred by the Purchasing Parties to the
extent that such portion of fines or penalties (i) is attributable to the
continuation of more than one year after the Closing Time of any noncompliance
with Environmental Laws related to the wastewater treatment system at the
Original Facility Plant, (ii) is
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attributable to the continuation after December 31, 1996, of noncompliance
constituting any other Specified Compliance Problems or (iii) is attributable
to the continuation after December 31, 1996, of use of tetrachloroethene at the
Original Facility Plant; it being understood that nothing in the preceding part
of this sentence shall relieve the Selling Parties of responsibility for any
portion of fines or penalties attributable to noncompliance before such cut-
off dates. The Purchasing Parties shall have the right to control any and all
response actions to be taken on the Real Property or at the Facilities after
the Closing Time; provided, however, that Sammons and Robbins shall have
primary responsibility for the supervision and control of terminating the use
of tetrachloroethene in Piper's Business before December 31, 1996.
9.2 INDEMNIFICATION BY THE PURCHASING PARTIES OF THE
SELLING PARTIES. Each Purchasing Party shall jointly and severally defend,
indemnify and hold harmless each of the Selling Parties and Piper's officers,
directors, employees, agents or affiliates against any Loss that any such
person may suffer or incur, including court costs and attorneys' fees, arising
out of or in connection with:
(a) BREACHES. Any breach of the representations,
warranties, covenants and agreements contained in this
Agreement or in any document signed by a Purchasing Party
referred to in Article 2 of this Agreement;
(b) CERTAIN CLAIMS AFTER EFFECTIVE TIME. Any
claim with regard to the conduct of Piper's Business or the
ownership of Piper's assets based on events occurring after
the Effective Time, except with respect to any claim regarding
the conduct of Piper's Business or the ownership of the Assets
relating to Environmental Laws or Hazardous Materials, which
is provided for in subsection 9.2(e) below;
(c) ASSUMED LIABILITIES. The Assumed Liabilities;
(d) WARN. Any violation of WARN based on the
termination of employment of persons who are employees of
Piper as of the Closing Time; and
(e) CERTAIN ENVIRONMENTAL CLAIMS. Any claim with
regard to the conduct of Piper's Business or the ownership of
the Assets relating to Environmental Laws or Hazardous
Materials based on conditions created or events occurring,
after the Closing Time; it is acknowledged and agreed that
Quanex and Quanex Subsidiary shall have no responsibility
pursuant to this subsection 9.2(e) with respect to the
continuation after the Closing Time of any conditions created,
or events occurring, prior to the Closing Time, unless and to
the extent that Quanex or Quanex Subsidiary are grossly
negligent or engage in willful misconduct and thereby
exacerbate such conditions or events, and in such
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event the responsibility of Quanex or Quanex Subsidiary shall be
limited to the extent of such exacerbation.
9.3 THIRD PARTY CLAIMS. If any claim covered by this
Article 9 is made by any third party, the party receiving such claim (the
"Indemnified Party") shall promptly notify the party to indemnify the
Indemnified Party (the "Indemnifying Party") and the Indemnifying Party shall
have an opportunity to defend or settle any such claim, with counsel reasonably
acceptable to the Indemnified Party. If the Indemnifying Party assumes the
defense of an Indemnified Party's claim and, under applicable standards of
professional conduct, a conflict of interest exists on any significant issue
between the positions of the Indemnified Party and the Indemnifying Party, such
that counsel chosen by the Indemnifying Party is ethically prohibited from
representing both the Indemnified Party and the Indemnifying Party, then the
Indemnified Party may retain counsel reasonably satisfactory to the
Indemnifying Party to represent the Indemnified Party with respect to the issue
as to which there is a conflict, and the Indemnifying Party shall pay all fees
and expenses of that counsel. If the Indemnifying Party fails to promptly
assume the defense of a claim covered by this Article 9 after notice or to
thereafter diligently defend against the claim or if any such claim is
determined valid by a court having proper jurisdiction, the Indemnified Party
shall have the right to pay or settle such claim and demand immediate payment
from the Indemnifying Party. All amounts paid under this Section 9.3 are
payable on demand or, in the case of a third party claim, upon settlement or
final judgment. The Indemnified Party shall also be entitled to recover any
costs or expenses, including reasonable attorneys' fees, incurred in enforcing
the rights to indemnity hereby granted.
9.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements set forth in this
Agreement shall survive the Closing Time for a period of three years, except as
follows: (a) the agreement by the Selling Parties to indemnify the Purchasing
Parties for the matters described in subsection 9.1(j) of this Agreement, which
shall survive the Closing Time for eight years; (b) the agreement by the
Purchasing Parties to indemnify the Selling Parties for those Assumed
Liabilities described in subsection 1.4(n) of this Agreement and the agreements
by the Purchasing Parties to indemnify the Selling Parties and by the Selling
Parties to indemnify the Purchasing Parties for breaches of the agreements
contained in Sections 5.14 and 5.15 of this Agreement, which shall survive the
Closing Time for an indefinite time; (c) the agreements contained in Section
5.5 of this Agreement, which shall survive the Closing Time for five years; and
(d) the agreements contained in Sections 5.2 and 5.4 of this Agreement, which
shall survive the Closing Time for an indefinite time.
9.5 LIMITATION ON INDEMNIFICATIONS. The total
indemnification to be paid by the Selling Parties under Section 9.1 of this
Agreement shall not exceed $90,000,000. The total indemnification to be paid
by the Purchasing Parties under Section 9.2 of this Agreement shall not exceed
$90,000,000. The Selling Parties shall not be required to indemnify the
Purchasing Parties pursuant to Section 9.1 of this Agreement unless and only to
the extent that the aggregate amount of all claims against the Selling Parties
for indemnification exceed $100,000. The Purchasing
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Parties shall not be required to indemnify the Selling Parties pursuant to
Section 9.2 of this Agreement unless and only to the extent that the aggregate
amount of all claims against the Purchasing Parties for indemnification exceed
$100,000.
10. GENERAL PROVISIONS.
10.1 AMENDMENTS. This Agreement may be amended only by a
written agreement signed by Quanex and each Selling Party.
10.2 NOTICES. All notices, requests, demands and other
communications made in connection with this Agreement shall be in writing and
shall be deemed to have been duly given on the date delivered, if delivered
personally or sent by facsimile to the persons identified below, or three days
after mailing in the United States mail if mailed by certified or registered
mail, postage prepaid, return receipt requested, addressed as follows:
(a) if to Piper, Sammons or Robbins,
to such person at the following address:
B. F. Sammons
2512 Thomas Place
Fort Worth, Texas 76107
and to
Marshall W. Robbins
Piper Impact, Inc.
P. O. Box 726
New Albany, Mississippi 38652
Fax No. (601) 538-6466
with a copy to:
Burch, Porter & Johnson
50 North Front Street, Suite 800
Memphis, Tennessee 38103
Attention: Mr. John A. Stemmler
Fax No. (901) 527-5026
(b) if to Quanex:
Quanex Corporation
1900 West Loop South, Suite 1500
Houston, Texas 77027
Attention: Mr. Wayne M. Rose
Fax No. (713) 877-5333
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with a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attention: Ms. Harva R. Dockery
Fax No. (713) 651-5246
The addresses and numbers may be changed by means of a notice given in the
manner provided in this Section 10.2.
10.3 WAIVER. Waiver of any term or condition of this
Agreement by any party shall only be effective if in writing and shall not be
construed as a waiver of any subsequent breach or failure of the same term or
condition, or a waiver of any other term or condition of this Agreement.
10.4 HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.5 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
10.6 ENTIRE AGREEMENT; SCHEDULES. This Agreement, the
Confidentiality Agreement described in Section 5.3 of this Agreement, the
Exhibits attached to this Agreement and the Schedules identified in and
delivered pursuant to this Agreement constitute the entire agreement and
supersede all other prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
The Schedules identified in this Agreement have been delivered to the
Purchasing Parties and the Selling Parties separate from this Agreement; such
Schedules, however, shall constitute a part of this Agreement and are
incorporated by reference into this Agreement.
10.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AS
TO ALL MATTERS BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS, EXCLUDING ANY OTHER LAWS THAT MIGHT APPLY PURSUANT TO ITS CONFLICT OF
LAWS RULES. THIS AGREEMENT IS PERFORMABLE IN HOUSTON, HARRIS COUNTY, TEXAS.
EXCLUSIVE VENUE FOR ANY DISPUTE ARISING WITH RESPECT TO THIS AGREEMENT SHALL BE
SAN ANTONIO, TEXAS. THE SELLING PARTIES ACCEPT THE EXCLUSIVE JURISDICTION OF
ANY COURT OF COMPETENT JURISDICTION IN
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SAN ANTONIO, TEXAS, AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION THAT THEY MAY HAVE OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THE TERMS OF THIS AGREEMENT
BROUGHT IN A COURT OF COMPETENT JURISDICTION IN SAN ANTONIO, TEXAS, AND WAIVE
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
10.8 COUNTERPARTS. This Agreement and all agreements
executed and delivered pursuant to this Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement.
10.9 NO THIRD-PARTY BENEFICIARIES. This Agreement does
not create, and shall not be construed as creating, any rights enforceable by
any person who is not a party to this Agreement.
10.10 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES THE RIGHT TO
TRIAL BY JURY WITH RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS IN WHICH ANY
SELLING PARTY OR PURCHASING PARTY IS A PARTY, WHETHER OR NOT SUCH ACTIONS OR
PROCEEDINGS ARISE OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENT EXECUTED IN
CONJUNCTION WITH THIS AGREEMENT OR ANY OF THE ASSUMED LIABILITIES. THE WAIVERS
CONTAINED IN THIS SECTION 10.10 HAVE BEEN VOLUNTARILY GIVEN, WITH FULL
KNOWLEDGE OF THE CONSEQUENCES THEREOF.
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IN WITNESS WHEREOF, Piper, Sammons, Robbins and Quanex have
caused this Agreement to be executed on the day and year first above written
acknowledging that this Agreement shall be effective at the Effective Time.
QUANEX CORPORATION
By________________________________________
Wayne M. Rose
Vice President and Chief Financial Officer
PIPER IMPACT, INC.
(formerly named "Quanex Aluminum, Inc."), a
Delaware corporation
By________________________________________
Wayne M. Rose
Vice President and Chief Financial Officer
PIPER IMPACT, INC.,
a Tennessee corporation
By_________________________________________
B. F. Sammons
President
___________________________________________
B. F. SAMMONS
___________________________________________
MARSHALL W. ROBBINS
(Schedules that are incorporated by reference into the Asset Purchase Agreement
have been omitted; a copy of the schedules will be provided to the Commission's
Staff upon request.)
54
Exhibit A
to Asset Purchase Agreement
TECHNOLOGY TRANSFER AGREEMENT
, 1996
- -------------------
Mr. B. F. Sammons
Piper Impact, Inc.
6280 Silver Creek
Park City, Utah 84068-1990
Dear Mr. Sammons:
On this date, Piper Impact, Inc. (formerly Quanex Aluminum, Inc.), a
Delaware corporation (the "Company"), has acquired or is acquiring the business
and substantially all of the assets (collectively, the "Business") of Piper
Impact, Inc., a Tennessee corporation ("Piper"), pursuant to an Asset Purchase
Agreement dated July __, 1996 with Piper, Quanex Corporation, a Delaware
corporation ("Quanex"), and you and Marshall W. Robbins. You and we recognize
that the value of Piper has been created largely by your knowledge and
contacts. The future growth and success of the Business, which is an element
of the matters considered when determining the purchase price for the Business,
depends on the transfer of Piper's technology to Quanex, including your unique
knowledge, innovation and personal contacts.
In view of the foregoing, you agree to assist in and provide
information to accomplish the transfer of technology to the Company or Quanex.
It is expected that the transfer of technology should be completed in (12)
twelve months from the date of this Agreement. During this time you will fully
transfer your technical and other knowledge regarding the Business and assist
in a transition with the contacts that you have developed. This will not
require you to serve in a long-term administrative role. However, you agree to
be available on a mutually agreeable basis to provide information for up to (5)
five years as needed.
The term of your assistance (the "Term"), which will not exceed five
years and would terminate earlier upon your death or permanent disability, will
be determined by a committee (the "Committee") comprised of three members: you,
Quanex's Chief Executive Officer (CEO) and Quanex's Chief Operating Officer
(COO). During the Term, you will work closely with Quanex's CEO and COO to
hire, train, develop and introduce other employees who can continue to provide
your level of capabilities after the end of the Term.
The Committee will meet at least every six months to review the
progress of the transfer of your knowledge regarding the Business, to take into
account your personal level of interest in continuing your Term and to
determine the nature of your continued assistance for the ensuing six-month
period. All decisions of the Committee will be determined by a majority vote
of the members of the Committee. It is expected that
A-1
55
your role will evolve from that of a full time CEO of the Business for the
first few months of the Term to a lesser level of involvement over time dealing
more directly with the transfer of technology and support of new product
development and growth strategy.
In addition to the consideration set forth in the Asset Purchase
Agreement, as additional compensation for your assistance during the Term, the
Committee may from time to time grant you a title, salary and bonus, taking
into account the amount of time spent on technology transfer and transition and
the amount of additional time spent helping to ensure the continued success of
the Business through supplying managerial assistance, new contacts or new
innovations. Such compensation will take into account your experience level
and comparable pay for comparable positions.
If this accurately sets forth our agreement, please so indicate by
signing below.
Very truly yours,
PIPER IMPACT, INC.
(formerly Quanex Aluminum, Inc.)
By
--------------------------------------
[name, title]
AGREED AND ACCEPTED, this day of , 1996.
----- ----------
- -----------------------------------
B.F. Sammons
A-2
56
Exhibit B
to Asset Purchase Agreement
PROMISSORY NOTE
Houston, Texas
August ___, 1996
Quanex Corporation, a Delaware corporation ("Quanex"), and its wholly
owned subsidiary, Piper Impact, Inc. (formerly named "Quanex Aluminum, Inc."),
a Delaware corporation ("Quanex Subsidiary"), jointly and severally promise to
pay to Piper Impact, Inc., a Tennessee corporation ("Payee"), at its principal
offices at __________________________________, in lawful money of the United
States of America, a principal amount equal to the sum of One Hundred Twenty
Million, One Hundred Twenty-Five Thousand and no/100s Dollars ($120,125,000)
and the Adjustment Amount described below, together with interest on the
principal balance of such sum from time to time remaining unpaid from the date
of this Note until maturity at the rate of six and 68.75/100s percent (6.6875%)
per annum.
This Note is that certain note given as part of the consideration paid
or payable to Payee in connection with Quanex Subsidiary's acquisition of
substantially all of the assets, and its assumption of certain liabilities, of
Payee pursuant to that certain Asset Purchase Agreement dated July 31, 1996,
and effective March 29, 1996, among Quanex, Quanex Subsidiary, Payee, B. F.
Sammons and Marshall W. Robbins (as it may be amended from time to time, the
"Asset Purchase Agreement"), being referred to therein as the "Purchase Price
Promissory Note".
Terms used in this Note that are defined in the Asset Purchase
Agreement shall have the same meanings in this Note as they have in the Asset
Purchase Agreement. In addition, for purposes of this Note the term "Makers"
shall mean Quanex and Quanex Subsidiary.
The principal on this Note shall be payable in three installments, the
first installment of principal being in the amount of $117,125,000 and being
due and payable on September ___, 1996, the second installment of principal
being the Adjustment Amount (as determined pursuant to the provisions of the
Asset Purchase Agreement) and being due and payable on December 15, 1996, and
the third and last installment of principal being in the amount of $3,000,000
and being due and payable on January 15, 1997. In addition to such
installments of principal, interest on the unpaid principal amount of this Note
shall be payable in installments as it accrues on the same dates as
installments of unpaid principal are due and payable. Upon failure by Makers
to pay any installment of principal or interest on this Note as provided by the
terms of this Note, a default shall be deemed to have occurred under this Note,
and the entire unpaid principal balance owed on this Note, together with all
interest then accrued, shall, at the option of Payee, at once become due and
payable. Upon such a default, makers agree to pay interest at a rate equal to
the lesser of (i) __________ percent (__%) per annum or (ii) the Maximum Rate
(as defined below), on all past due principal and interest on this Note from
the maturity thereof until paid. No installment of principal or interest on
this Note may be paid before its due date without the written consent of Payee.
B-1
57
Notwithstanding anything to the contrary contained in this Note, no
provision of this Note shall require the payment or permit the collection of
interest in excess of the maximum rate of interest permitted by applicable law
(the "Maximum Rate"). If any excessive interest in that respect shall be
adjudicated to be provided in this Note or otherwise in connection with the
transactions contemplated by this Note, the provisions of this paragraph shall
govern and prevail, and neither Makers nor any successors of Makers shall be
obligated to pay the excess amount of the interest, or any other excess sum
paid for the use, forbearance or detention of sums pursuant to this Note. If
for any reason interest in excess of the Maximum Rate shall be deemed by any
court of competent jurisdiction to be charged, paid, received, contracted for,
taken, reserved or otherwise required or permitted, the excess shall be applied
as an additional payment and reduction of the principal amount of this Note;
and, if the amount of this Note has been paid in full, any remaining excess
shall forthwith be paid to Makers.
The rights and remedies provided for in this Note and any other
documents executed in connection with this Note are cumulative and not
exclusive of any rights and remedies provided by law.
This Note is not transferrable, assignable or negotiable by Payee or
Makers; provided, however, that this Note may be transferred or assigned, in
whole or in part, to Sammons, Robbins, or any other person who is a shareholder
of record of Payee on the date of this Note (or their heirs or beneficiaries by
operation of law), or any one or more of them, and upon any such transfer or
assignment, the transferees or assignees shall also have and may exercise all
of the rights of Payee under this Note.
Makers waive demand, presentment for payment, notice of non-payment,
protest, notice of protest, notice of demand and all other notice, filing of
suit and diligence in collecting this Note; agree to the release by Payee of
any party primarily or secondarily liable with respect to this Note; agree that
it will not be necessary to enforce payment of this Note for Payee to first
institute suit or exhaust its remedies against Makers; and consent to any
extensions or postponements of time of payment of this Note or any other
indulgences with respect to this Note, without notice to either of them.
No failure to accelerate the indebtedness evidenced by this Note by
reason of default under this Note, acceptance of a past-due installment or
other indulgences granted from time to time shall be construed to be a novation
of this Note or a waiver of any right of acceleration or of the right of Payee
to insist on strict compliance with the terms of this Note or construed to
prevent the exercise of such right of acceleration or any other right granted
under the terms of this Note or by applicable laws. No extension of the time
for payment of the indebtedness evidenced by this Note or any installment due
under this Note made by agreement with any person now or hereafter liable for
payment of the indebtedness evidenced by this Note shall operate to release,
discharge, modify, change or affect the original liability of Makers under this
Note or that of any other person now or hereafter liable for payment of the
indebtedness evidenced by this Note, either in whole or in part, unless Payee
agrees otherwise in writing. This Note may not be changed orally, but only by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
B-2
58
No failure on the part of Payee to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Note shall operate as a waiver of this Note, nor shall any
single or partial exercise of any right, power or privilege under this Note
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
Any provision of this Note held by a court of competent jurisdiction
to be invalid or unenforceable shall not impair or invalidate the remainder of
this Note and the effect of the holding shall be confined to the provision held
to be invalid or illegal.
If, after the occurrence of a default under this Note, Payee expends
any effort in an attempt to enforce payment of any amount due and payable under
this Note, if this Note is placed in the hands of an attorney for collection or
if this Note is collected through any legal proceedings, Makers shall pay all
reasonable collection costs, expenses and fees incurred by Payee, including
without limitation reasonable attorneys' fees.
Any notice, consent or other communication to be given to Makers in
connection with this Note shall be deemed properly given if delivered in person
or mailed by registered or certified mail, return receipt requested, postage
prepaid, to Makers at 1900 West Loop South, Suite 1500, Houston, Texas 77027,
Attention: Mr. Wayne M. Rose. Any notice or other communication to be given to
Piper in connection with this Note must be in writing and delivered in person
or mailed by registered or certified mail, return receipt requested, postage
prepaid, to Piper at 6280 Silver Creek, Park City, Utah, 84068, Attention: Mr.
B. F. Sammons. A party may change its address by setting forth the change in a
notice given in compliance with this paragraph. All payments made pursuant to
this Note shall be deemed to be made in accordance with the terms of this Note
if paid at the address set forth in the first paragraph of this Note, unless
the holder of this Note has changed the place for payment in a notice to Makers
given in compliance with this paragraph.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS (EXCLUDING ANY OTHER LAWS THAT MIGHT APPLY PURSUANT
TO ITS CONFLICT OF LAWS RULES) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. THIS NOTE IS PERFORMABLE IN HARRIS COUNTY, TEXAS. EXCLUSIVE VENUE
FOR ANY DISPUTE ARISING WITH RESPECT TO THIS NOTE SHALL BE SAN ANTONIO, TEXAS.
PAYEE AND MAKERS ACCEPT THE EXCLUSIVE JURISDICTION OF ANY COURT OF COMPETENT
JURISDICTION IN SAN ANTONIO, TEXAS, AND IRREVOCABLY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THEY MAY HAVE OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THE TERMS
OF THIS NOTE BROUGHT IN A COURT OF COMPETENT JURISDICTION IN SAN ANTONIO,
TEXAS, AND WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF MAKERS AND PAYEE IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS IN WHICH ANY SUCH PARTY IS A
PARTY, WHETHER OR NOT SUCH ACTIONS OR PROCEEDINGS ARISE OUT OF THIS NOTE OR ANY
OTHER AGREEMENT EXECUTED IN CONJUNCTION WITH THE ASSET PURCHASE
B-3
59
AGREEMENT. THE WAIVERS CONTAINED IN THIS PARAGRAPH HAVE BEEN VOLUNTARILY
GIVEN, WITH FULL KNOWLEDGE OF THE CONSEQUENCES THEREOF.
PIPER IMPACT, INC. (formerly "Quanex
Aluminum, Inc."), a Delaware corporation
By
--------------------------------------
Wayne M. Rose
Vice President and
Chief Financial Officer
QUANEX CORPORATION
By
--------------------------------------
Wayne M. Rose
Vice President and
Chief Financial Officer
ACCEPTED AND AGREED:
PIPER IMPACT, INC.,
a Tennessee corporation
By
---------------------------------------
B. F. Sammons
President
- -----------------------------------------
B. F. SAMMONS
- -----------------------------------------
MARSHALL W. ROBBINS
B-4
60
Exhibit C
to Asset Purchase Agreement
PROMISSORY NOTE
$10,000,000 August ___, 1996
Quanex Corporation, a Delaware corporation ("Quanex"), and its wholly
owned subsidiary, Piper Impact, Inc. (formerly named "Quanex Aluminum, Inc."),
a Delaware corporation ("Quanex Subsidiary"), promise, jointly and severally,
to pay Piper Impact, Inc., a Tennessee corporation ("Payee"), in lawful money
of the United States of America, and as provided below, the amount of Ten
Million Dollars ($10,000,000), as such amount may be adjusted pursuant to the
terms of this Note, on or before August ___, 2004 [8th anniversary of closing
date] (the "Payment Date").
This Note is that certain note given as part of the consideration paid
or payable to Payee in connection with Quanex Subsidiary's acquisition of
substantially all of the assets, and its assumption of certain liabilities, of
Payee pursuant to that certain Asset Purchase Agreement dated July 31, 1996,
and effective March 29, 1996, among Quanex, Quanex Subsidiary, Payee, B. F.
Sammons and Marshall W. Robbins (as it may be amended from time to time, the
"Asset Purchase Agreement"), being referred to therein as the "Contingency
Promissory Note", and is given in consideration of Quanex Subsidiary's
assumption of certain specified obligations, subject to certain specified
deductions and offsets.
Terms used in this Note that are defined in the Asset Purchase
Agreement shall have the same meanings in this Note as they have in the Asset
Purchase Agreement. In addition, the following terms used in this Note shall
have the meanings set forth below:
The "Expenditures" shall mean the sum of (1) all costs and fees
(including without limitation attorneys' fees) incurred by Makers to remediate
the tetrachloroethene contamination (including impurities and degradation
products of tetrachloroethene, as well as toluene, chlorobenzene and
dichlorobenzene) in soil (but not including groundwater) at or migrating from
the Original Facility Plant (including as required any construction of slurry
walls, any measures to contain contaminated soil, any soil excavation and
treatment/disposal, any septic tank cleanout, any relocation of manufacturing
equipment necessary for remediation, any demolition, removal/disassembling or
installation/reassembly of a facility, and any indirect costs or costs of
business interruption related to the investigation or remediation) and (2) all
costs and fees (including without limitation attorneys' fees) incurred by
Makers to investigate and remediate the heavy metals contamination at the
Original Facility Plant described in Schedule 1.4(n)(i) to the Asset Purchase
Agreement.
The "Final Cost Adjustment Amount" shall mean the sum of (1) any
amount by which $650,000 exceeds the amount of all costs and fees (including
without limitation attorneys' fees) incurred by Makers to conduct the
investigation of the tetrachloroethene contamination (and related contamination
as set forth in the preceding paragraph) at or migrating from the Original
Facility Plant and (2) any
C-1
61
amount by which $2,960,000 exceeds the amount of all costs and fees (including
without limitation attorneys' fees) incurred by Makers to investigate and
correct, through the following measures, possible non-compliance with
Environmental Laws at the Original Facility Plant: (u) to upgrade or replace
the wastewater holding pond and treatment system (including installing
aboveground tanks or taking alternative actions to correct such
non-compliance), (v) to upgrade the sanitary wastewater treatment system, (w)
to complete any steps necessary to obtain a stormwater discharge permit, (x) to
provide for closure of the non-hazardous waste burial area identified in
Schedule 1.4(n) to the Asset Purchase Agreement (but only to the extent such
area contains materials that are non-hazardous), (y) up to a maximum cost of
$100,000, to complete any steps required by regulatory authorities to obtain a
Title V air operating permit, including supplementing or amending the Title V
permit application currently pending before MDEQ, and (z) to conduct certain
administrative compliance program updates consisting of preparing an oil spill
prevention control and countermeasures plan, conducting an asbestos survey,
preparing an asbestos operations and maintenance plan, and correcting as
necessary any toxic release inventory reports.
"Makers" shall mean Quanex and Quanex Subsidiary.
The amount of this Note shall be reduced by an amount equal to
one-half of the amount by which the Expenditures exceed the sum of $10,000,000
and the Final Cost Adjustment Amount. In addition, if any amount of this Note
is outstanding at the time that a Selling Party is to make any payment to or on
behalf of either Maker pursuant to any provision of the Asset Purchase
Agreement, Makers shall have the right, but not the obligation, to cause that
payment to be made by offsetting the amount of that payment (together with
interest thereon at a rate of eight and one-half percent (8 1/2%) per annum
from the date such payment became due to the date of such offset) against the
amount of this Note, to the extent of the outstanding amount of this Note. Any
adjustments made to the amount of this Note described in this paragraph are
intended to be consistent with applicable provisions of the Asset Purchase
Agreement.
If there is a reduction in the amount of this Note as provided for
pursuant to the terms of the foregoing paragraph, then (1) the original amount
of this Note due on or before the Payment Date shall be reduced accordingly,
(2) Makers shall be jointly and severally obligated to pay only the amount of
this Note as so adjusted, and (3) any references in this Note to the "amount of
this Note" shall be deemed to refer to such original amount of this Note as so
reduced. Any such reduction in the amount of this Note shall be described in a
written notice to be given by Makers to Payee, which notice shall include a
detailed description of the reason for and the method of calculation of the
reduction. Makers shall cooperate with Payee and shall make their
representatives available to discuss with Payee the subject matter of any such
notice.
Makers and Selling Parties shall, during the period of time commencing
with the date of this Note and ending three (3) years after the date of this
Note, discuss from time to time the remediation and compliance estimates used
by the parties to determine the amount of adjustments to the original amount of
this Note, and, pursuant to such discussions, may adjust the amounts used to
determine such adjustment amounts. If
C-2
62
they reach an agreement, they shall amend this Note pursuant to a written
agreement signed by the Selling Parties and Makers to reflect such agreement.
Makers shall not be required to pay any interest pursuant to this
Note. To the extent the amount of this Note may be deemed to include interest,
the amount of interest paid or payable pursuant to this Note shall be deemed to
be based on that interest rate designated by the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder, to be the
imputed rate of interest existing from time to time; provided, however, that no
such imputation of interest shall be construed to affect any other matters set
forth in this Note.
Makers shall have the right and privilege of prepaying all or any part
of this Note at any time after January 15, 1997, without notice or penalty. If
Makers pay all or any part of the amount of this Note before the Payment Date,
the total amount due as of such date of prepayment shall be the sum of the
amount, if any, not to be so prepaid as of the date of the prepayment and the
then-present value, as of the date of such prepayment, of that portion of the
original amount of this Note that is being prepaid, discounted at a rate of
eight and one-half percent (8 1/2%) per annum for the period of time between
the date of such prepayment to the Payment Date. Discounts shall be based on a
year consisting of 365 or 366 days, as applicable.
Notwithstanding anything to the contrary contained in this Note, no
provision of this Note shall require the payment or permit the collection of
interest in excess of the maximum rate of interest permitted by applicable law
(the "Maximum Rate"). If any excessive interest in that respect shall be
adjudicated to be provided in this Note or otherwise in connection with the
transactions contemplated by this Note, the provisions of this paragraph shall
govern and prevail, and neither Makers nor any successors of Makers shall be
obligated to pay the excess amount of the interest, or any other excess sum
paid for the use, forbearance or detention of sums pursuant to this Note. If
for any reason interest in excess of the Maximum Rate shall be deemed by any
court of competent jurisdiction to be charged, paid, received, contracted for,
taken, reserved or otherwise required or permitted, the excess shall be applied
as an additional payment and reduction of the principal amount of this Note;
and, if the amount of this Note has been paid in full, any remaining excess
shall forthwith be paid to Makers.
Upon failure by Makers to pay the outstanding amount of this Note on
the Payment Date as provided by the terms of this Note, a default shall be
deemed to have occurred under this Note; provided, however, that to the extent,
if any, that Payee is not in agreement as to the amount of any reduction in the
amount of this Note in accordance with its terms, then no default shall be
deemed to have occurred as to the amount of such reduction.
The rights and remedies provided for in this Note and any other
documents executed in connection with this Note are cumulative and not
exclusive of any rights and remedies provided by law.
This Note is not transferrable, assignable or negotiable by Payee or
Makers; provided, however, that this Note may be transferred or assigned, in
whole or in part,
C-3
63
to Sammons, Robbins, any other person who is a record shareholder of Payee as
of the date of this Note (or their heirs or beneficiaries by operation of law),
or any one or more of such parties and upon any such transfer or assignment,
the transferees or assignees shall also have and may exercise all of the rights
of Payee under this Note.
Makers waive demand, presentment for payment, notice of non-payment,
protest, notice of protest, notice of demand and all other notice, filing of
suit and diligence in collecting this Note; agree that it will not be necessary
to enforce payment of this Note for Payee to first institute or exhaust its
remedies against Makers; and consent to any extensions or postponements of time
of payment of this Note or any other indulgences with respect to this Note,
without notice to either of them.
No failure to accelerate the indebtedness evidenced by this Note by
reason of default under this Note, acceptance of a past-due installment or
other indulgences granted from time to time shall be construed to be a novation
of this Note or a waiver of any right of acceleration or of the right of Payee
to insist on strict compliance with the terms of this Note or construed to
prevent the exercise of such right of acceleration or any other right granted
under the terms of this Note or by applicable laws. No extension of the time
for payment of the indebtedness evidenced by this Note or any installment due
under this Note made by agreement with any person now or hereafter liable for
payment of the indebtedness evidenced by this Note shall operate to release,
discharge, modify, change or affect the original liability of Makers under this
Note or that of any other person now or hereafter liable for payment of the
indebtedness evidenced by this Note, either in whole or in part, unless Payee
agrees otherwise in writing. This Note may not be changed orally, but only by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
No failure on the part of Payee to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Note shall operate as a waiver of this Note, nor shall any
single or partial exercise of any right, power or privilege under this Note
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
Any provision of this Note held by a court of competent jurisdiction
to be invalid or unenforceable shall not impair or invalidate the remainder of
this Note and the effect of the holding shall be confined to the provision held
to be invalid or illegal.
If, after the occurrence of a default under this Note, Payee expends
any effort in an attempt to enforce payment of any amount due and payable under
this Note as to which the default has occurred, if this Note is placed in the
hands of an attorney for collection or if this Note is collected through any
legal proceedings, Makers shall pay all reasonable collection costs, expenses
and fees incurred by Payee, including without limitation reasonable attorneys'
fees.
Any notice, consent or other communication to be given to Makers in
connection with this Note shall be deemed properly given if delivered in person
or mailed by registered or certified mail, return receipt requested, postage
prepaid, to Makers at
C-4
64
1900 West Loop South, Suite 1500, Houston, Texas 77027, Attention: Mr. Wayne M.
Rose. Any notice or other communication to be given to Piper in connection
with this Note must be in writing and delivered in person or mailed by
registered or certified mail, return receipt requested, postage prepaid, to
Piper at 6280 Silver Creek, Park City, Utah, 84068, Attention: Mr. B. F.
Sammons. A party may change its address by setting forth the change in a notice
given in compliance with this paragraph. All payments made pursuant to this
Note shall be deemed to be made in accordance with the terms of this Note if
paid at the address set forth in the first paragraph of this Note, unless the
holder of this Note has changed the place for payment in a notice to Makers
given in compliance with this paragraph.
THIS NOTE SHALL BE GOVERNED AS TO ALL MATTERS BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY OTHER LAWS THAT
MIGHT APPLY PURSUANT TO ITS CONFLICT OF LAWS RULES. THIS NOTE IS PERFORMABLE
IN HOUSTON, HARRIS COUNTY, TEXAS. EXCLUSIVE VENUE FOR ANY DISPUTE ARISING WITH
RESPECT TO THIS NOTE SHALL BE SAN ANTONIO, TEXAS. PAYEE AND MAKERS ACCEPT THE
EXCLUSIVE JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION IN SAN ANTONIO,
TEXAS, AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION THAT THEY MAY HAVE OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUIT, ACTION OR PROCEEDING RELATING TO THE TERMS OF THIS NOTE BROUGHT IN A
COURT OF COMPETENT JURISDICTION IN SAN ANTONIO, TEXAS, AND WAIVE ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, PAYEE AND MAKERS IRREVOCABLY WAIVE
THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS
IN WHICH ANY OF THEM IS A PARTY, WHETHER OR NOT SUCH ACTIONS OR PROCEEDINGS
ARISE OUT OF THIS NOTE OR ANY OTHER AGREEMENT EXECUTED IN CONJUNCTION WITH THIS
NOTE. THE WAIVERS CONTAINED IN THE FOREGOING SENTENCE HAVE BEEN VOLUNTARILY
GIVEN, WITH FULL KNOWLEDGE OF THE CONSEQUENCES THEREOF.
PIPER IMPACT, INC. (formerly "Quanex
Aluminum, Inc."), a Delaware corporation
By
------------------------------------------
Wayne M. Rose
Vice President and Chief Financial Officer
QUANEX CORPORATION
By
------------------------------------------
Wayne M. Rose
Vice President and Chief Financial Officer
C-5
65
ACCEPTED AND AGREED:
PIPER IMPACT, INC.,
a Tennessee corporation
By
-----------------------------------------
B. F. Sammons
President
-----------------------------------------
B. F. SAMMONS
-----------------------------------------
MARSHALL W. ROBBINS
C-6
66
Exhibit D
to Asset Purchase Agreement
WARRANTY DEED
STATE OF MISSISSIPPI )
)
COUNTY OF UNION )
FOR AND IN CONSIDERATION of the sum of Ten Dollars ($10.00) cash in hand
paid, the receipt and sufficiency of which are acknowledged, PIPER IMPACT,
INC., a Tennessee corporation ("Grantor"), does hereby sell, convey and warrant
to PIPER IMPACT, INC., a Delaware corporation (formerly known as Quanex
Aluminum, Inc.) ("Grantee"), the lands located in Union County, Mississippi,
more particularly described on Exhibit A attached hereto and made a part hereof
for all purposes, together with all improvements situated thereon and
appurtenances thereto (collectively, the "Property").
Grantor's warranty is subject only to those matters shown on Exhibit B
attached hereto and made a part hereof for all purposes.
Grantor intends to convey, and does hereby convey and quitclaim to
Grantee, all of Grantor's right, title and interest to any other land or
interests in land owned by Grantor adjacent, contiguous or appurtenant to the
Property, including, but not limited to, any strips, gores, alleys and land
beneath public roads, and whether now owned or hereafter acquired. It is the
intention of Grantor and Grantee that all interests conveyed herein merge unto
Grantee.
[Grantor and Grantee have prorated the 1996 ad valorem taxes between
themselves. Grantee shall have the obligation to pay the 1996 ad valorem taxes
when due.]
IN WITNESS WHEREOF, Grantor, acting by and through its duly authorized
officer, has executed this instrument on the date below its signature, but
effective on the ____ day of ________________, 1996.
PIPER IMPACT, INC.,
a Tennessee corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date: , 1996
---------------------------
D-1
67
STATE OF [TEXAS] )
)
COUNTY OF [HARRIS] )
Personally appeared before me, the undersigned authority in and for
the said County and State, on this ___ day of _______________, 1996, within my
jurisdiction, the within named ______________________________________, who
acknowledged that he is the _____________________ of PIPER IMPACT, INC., a
Tennessee corporation, and that for and on behalf of said corporation, and as
its act and deed, he executed the above and foregoing instrument, after first
having been duly authorized by said corporation so to do.
----------------------------------------------
Notary Public in and for the State of Texas
My Commission Expires:
- -----------------------------
GRANTOR: GRANTEE:
- ------- -------
Piper Impact, Inc. Piper Impact, Inc. (formerly Quanex
P.O. Box 680126 Aluminum, Inc.)
Park City, Utah 84068 1900 West Loop South, Suite 1500
Telephone: Houston, Texas 77027
-------------------- Telephone: (713) 961-4600
D-2
68
INDEXING INSTRUCTIONS:
The land subject to this instrument is located in:
Section 21: SW-1/4, NE-1/4 and SE-1/4
Section 22: NW-1/4
Section 28: NW-1/4
Section 32: SW-1/4, NW-1/4, NE-1/4 and SE-1/4,
all in Township 6 South, Range 3 East, Union County, Mississippi
THIS INSTRUMENT WAS PREPARED BY, AND
AFTER RECORDING SHOULD BE RETURNED TO:
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
ATTENTION: HOLLY STICKLEY
POST OFFICE DRAWER 119
JACKSON, MISSISSIPPI 39205
(601) 948-3101
D-3
69
EXHIBIT A
[ATTACH LEGAL DESCRIPTION OF PROPERTY]
70
EXHIBIT B
1. Ad valorem taxes for 1996, which taxes are not due or payable until
1997.
2. [Exceptions listed in title commitments that are acceptable to
Quanex.]
71
Exhibit E
to Asset Purchase Agreement
WHEN RECORDED, MAIL TO:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attention: Mr. Terry L. Radney
WARRANTY DEED
STATE OF UTAH )
)
COUNTY OF SUMMIT )
PIPER IMPACT, INC., a Tennessee corporation ("Grantor"), hereby
CONVEYS and WARRANTS to PIPER IMPACT, INC., a Delaware corporation (formerly
known as Quanex Aluminum, Inc.) ("Grantee"), for the sum of TEN DOLLARS AND
NO/100 ($10.00), the real property in Summit County, State of Utah, more
particularly described as follows:
All of Lot 5, Plat "C" Amended, Silver Creek Commerce Center,
according to the official plat thereof on file and of record in the
Summit County Recorder's office,
together with all improvements and fixtures permanently affixed to and forming
a part of such real property.
Grantor's warranty is subject only to those matters set forth on
Exhibit A attached hereto and made a part hereof by this reference for all
purposes.
WITNESS this hand of Grantor this ___ day of ________________, 1996.
PIPER IMPACT, INC,
a Tennessee corporation
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
E-1
72
STATE OF [TEXAS] )
)
COUNTY OF [HARRIS] )
On the ___ day of __________, 1996, personally appeared before me
_____________________________, who being by me duly sworn did say that he is
the _____________________________________ of PIPER IMPACT, INC., a Tennessee
corporation, and that the within and foregoing instrument was signed in behalf
of said corporation by authority of its by-laws or a resolution of its board of
directors and said ____________________________________ duly acknowledged to me
that said corporation executed the same.
----------------------------------------------
Notary Public in and for the State of Texas
Residing at
-----------------------------------
My Commission Expires:
- -----------------------------
E-2
73
EXHIBIT A
1. General taxes for 1996.
2. [Exceptions listed in the title commitment that are acceptable to
Quanex.]
74
Exhibit F
to Asset Purchase Agreement
CONVEYANCE, BILL OF SALE AND ASSIGNMENT
This Conveyance, Bill of Sale and Assignment (this "Bill of Sale")
executed on __________, 1996, and effective at 11:59 p.m. mountain time on
March 29, 1996 (the "Effective Time"), is between PIPER IMPACT, INC., a
Tennessee corporation ("Assignor"), and PIPER IMPACT, INC., a Delaware
corporation (formerly known as Quanex Aluminum, Inc.) ("Assignee").
This Bill of Sale is given in connection with Assignee's acquisition
of substantially all of the assets, and its assumption of certain liabilities,
of Assignor pursuant to that certain Asset Purchase Agreement dated July ___,
1996, and effective March 29, 1996, among Quanex, Assignee, Assignor, B. F.
Sammons and Marshall W. Robbins (as it may be amended from time to time, the
"Asset Purchase Agreement").
Terms used in this Bill of Sale that are defined in the Asset Purchase
Agreement shall have the same meanings in this Bill of Sale as they have in the
Asset Purchase Agreement. In addition, for purposes of this Bill of Sale the
term the "Assigned Properties" shall mean all of the Assets described in
subsections 1.1(c) through (h) and (j) through (p) of the Asset Purchase
Agreement.
NOW, THEREFORE, in consideration of the receipt of Ten and No/100
Dollars ($10.00) and other good and valuable consideration paid by Assignee to
Assignor (including those matters described in the Asset Purchase Agreement),
the receipt and sufficiency of which are hereby acknowledged and confessed by
Assignor, Assignor does hereby ASSIGN, TRANSFER, CONVEY, SET OVER, and DELIVER
to Assignee, its successors and assigns, the Assigned Properties.
TO HAVE AND TO HOLD the Assigned Properties unto Assignee, its
successors and assigns, forever, and Assignor does hereby bind itself and its
successors to WARRANT AND FOREVER DEFEND, all and singular, title to the
Assigned Properties unto Assignee, its successors and assigns, against every
person whomsoever lawfully claiming or to claim the same, or any part thereof.
Nothing in this Bill of Sale shall impair or expand the rights of indemnity or
enforcement of Assignor or Assignee against each other pursuant to any
provision of the Asset Purchase Agreement. This Bill of Sale is entered into
pursuant to the Asset Purchase Agreement and is subject to the terms of the
Asset Purchase Agreement, including, without limitation, sections 10.7, 10.8
and 10.10 of the Asset Purchase Agreement.
F-1
75
EXECUTED on the date of the acknowledgement set forth above and to be
effective for all purposes as of the Effective Time.
ASSIGNOR:
--------
PIPER IMPACT, INC.,
a Tennessee corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ASSIGNEE:
--------
PIPER IMPACT, INC. (formerly Quanex
Aluminum, Inc.), a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
F-2
76
Exhibit G
to Asset Purchase Agreement
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement")
executed on ________________, 1996, and effective at 11:59 p.m. mountain time
on March 29, 1996 (the "Effective Time"), is among Quanex Corporation, a
Delaware corporation ("Quanex"), Piper Impact, Inc. (formerly Quanex Aluminum,
Inc.), a Delaware corporation ("Assignee"), and Piper Impact, Inc., a Tennessee
corporation ("Assignor").
This Agreement is given in connection with Assignee's acquisition
of substantially all of the assets, and its assumption of certain liabilities,
of Assignor pursuant to that certain Asset Purchase Agreement dated July ___,
1996, and effective March 29, 1996, among Quanex, Assignee, Assignor, B. F.
Sammons and Marshall W. Robbins (as it may be amended from time to time, the
"Asset Purchase Agreement").
NOW THEREFORE, in consideration of the mutual agreements and
covenants contained in this Agreement and for other good, fair and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:
1. Terms used in this Agreement that are defined in the Asset
Purchase Agreement shall have the same meanings in this Agreement as they have
in the Asset Purchase Agreement. However, for purposes of this Agreement the
term the "Assumed Liabilities" shall mean all of the liabilities described in
subsections 1.4(a) through (k) and subsection 1.4(n) of the Asset Purchase
Agreement.
2. As of the Effective Time, Assignor assigns to Assignee and
Quanex and Assignee, jointly and severally, assume and shall pay when due,
discharge and perform, the Assumed Liabilities.
3. Assignor shall use its best efforts to obtain any consents or
other documentation from third parties as soon as possible after the date of
this Agreement for the purpose of effecting the foregoing assignment. If
Assignee has not received any documentation requested by third parties to
evidence Assignor's objections under this Agreement, fully executed and
delivered by Assignor within 60 days of any request therefor by Assignee, then
Assignor appoints Assignee as its attorney-in-fact, for Assignor and in its
name and place, for the purpose of executing and delivering such documentation.
4. Nothing in this Agreement shall impair or expand the rights
of indemnity or enforcement of Assignor or Assignee against each other pursuant
to any provision of the Asset Purchase Agreement. This Agreement is entered
into pursuant to the Asset Purchase Agreement and is subject to the terms of
the Asset Purchase Agreement, including, without limitation, sections 10.7, 10.8
and 10.10 of the Asset Purchase Agreement.
5. This Agreement shall be binding on and shall inure to the
benefit of the successors and assigns of Assignor and Assignee.
G-1
77
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
QUANEX CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PIPER IMPACT, INC.(formerly Quanex Aluminum,
Inc.), a Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PIPER IMPACT, INC,
a Tennessee corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
G-2
78
Exhibit H
to Asset Purchase Agreement
NON-COMPETITION AGREEMENT
This Non-Competition Agreement dated July __, 1996, ("Agreement"), is
entered into among Quanex Corporation, a Delaware corporation ("Quanex"), Piper
Impact, Inc. (formerly Quanex Aluminum, Inc.), a Delaware corporation ("Quanex
Sub"), Piper Impact, Inc., a Tennessee corporation ("Seller"), and B.F. Sammons
and Marshall W. Robbins (collectively, the "Selling Shareholders").
WHEREAS, the Selling Shareholders served as officers [and directors] of
Seller, own substantially all of the shares of stock of Seller and have had
access to confidential and proprietary information regarding Seller;
WHEREAS, concurrently with the execution and delivery of this Agreement,
Quanex Sub is purchasing or has purchased substantially all of the assets (the
"Assets") of Seller pursuant to an Asset Purchase Agreement among the parties
hereto dated July __, 1996;
WHEREAS, Quanex and Quanex Sub (together, the "Purchasing Party") wish to
secure from the Seller and the Selling Shareholders (together, the "Selling
Party") their agreement not to compete with the Purchasing Party in accordance
with the terms set forth in this Agreement to enable the Purchasing Party to
successfully operate the business related to the Assets;
WHEREAS, the business related to the Assets extends throughout, or has
current expansion potential in, [North America, South America, Europe and
Asia]; and
WHEREAS, as an inducement to the Purchasing Party to acquire the Assets
and for other good and valuable consideration (including the consideration
being paid under the Asset Purchase Agreement), each Selling Party is willing
to refrain from competing with the Purchasing Party as provided in this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained in this Agreement, the parties hereto agree as follows:
1. Acknowledgements of Signatories. Each Selling Party
acknowledges that:
a. The Purchasing Party would not have purchased the
Assets pursuant to the provisions of the Asset Purchase Agreement
if each Selling Party had not executed and delivered this
Agreement;
b. The Selling Shareholders have had access to information
that is confidential to Seller and its business and that
constitutes a valuable, special and unique asset of Seller.
Accordingly, the Purchasing Party is entitled to the protections
afforded by this Agreement and to the remedies for enforcing this
Agreement provided by law and in equity (including, without
limitation, those remedies that may be within the discretion of the
court in which any action to enforce this Agreement is brought).
H-1
79
2. Non-Competition Covenants.
a. During the period beginning on the date of this
Agreement and continuing until the fifth anniversary of the date of
this Agreement (the "Covenant Period"), no Selling Party will
directly or indirectly, solicit or participate in the engineering
consulting, engineering design, hardware or software development,
production or manufacture of or with respect to the following
within the Designated Geographic Area (as defined below) other than
for or on behalf of the Purchasing Party or an Affiliate (as
defined below) of the Purchasing Party:
(1) any products manufactured utilizing the impact
extrusion process or technology,
(2) any products or type of products that have been
manufactured by Seller at any time from January 1, 1994 and
through the date hereof, regardless of the process or
technology utilized, or
(3) any additional products manufactured by Quanex
Sub after the date hereof and during the Term (as defined in
that certain technology transfer agreement dated the date
hereof between of B.F. Sammons and Quanex Sub); provided
that, with respect to products manufactured by Quanex Sub
after the date hereof and during the Term, the covenant
contained in this subsection 2(a)(3) shall not apply to Mr.
Robbins if he has no knowledge that such products are
manufactured by Quanex Sub.
b. All product and data rights developed in connection
with efforts for or on behalf of the Purchasing Party or an
Affiliate of the Purchasing Party during the Covenant Period shall
remain proprietary to the Purchasing Party.
c. Without limiting the generality of the foregoing
provisions of this Section 2, a Selling Party will be deemed to be
engaged in a particular business if he or it, whether alone or in
association with one or more other persons, is an owner,
proprietor, partner, stockholder, member, officer, employee,
independent contractor, director or joint venturer of, or a
consultant or lender to, or an investor in any manner in, any
person directly or indirectly engaged in that business.
Notwithstanding the foregoing provisions of this Section 2, a
Selling Party may own, solely as an investment, securities if the
Selling Party (1) is not an Affiliate of the issuer of the
securities, and (2) does not, directly or indirectly, beneficially
own more than 5% of the class of which the securities are a part.
H-2
80
d. For purposes of this Agreement, "Designated Geographic
Area" means those regions that lie anywhere within [the borders of
the continents of North America, South America, Asia and Europe].
e. For purposes of this Agreement, the term (1)
"Affiliate," means, with respect to any person, any other person
that, directly or indirectly controls or is controlled by or is
under common control with such person; (2) "person" means any
individual, corporation, limited liability company, partnership,
joint venture, association, joint stock company, trust or
unincorporated organization; and (3) "control" means (A) holding,
directly or indirectly, more than 50 percent of the outstanding
voting securities of a non- individual person, (B) having the
right, directly or indirectly, to more than 50 percent of the
profits of a non-individual person, (C) having the right, directly
or indirectly, to more than 50 percent of the assets of a
non-individual person if it is dissolved or (D) having the
contractual power to designate more than 50 percent of the
directors (or individuals exercising similar functions) of a
non-individual person.
f. During the Covenant Period, no Selling Party may,
whether for his own account or for the account of any other person
(other than the Purchasing Party or any Affiliate of the Purchasing
Party), directly or indirectly, either within or outside the
Designated Geographic Area, (1) solicit the employment or services
of, or cause or attempt to cause to leave the employment or service
of the Purchasing Party or any Affiliate of the Purchasing Party,
or otherwise interfere with the relationship of the Purchasing
Party or any of its Affiliates with, any person who is or was
employed by, or otherwise engaged to perform services for, the
Purchasing Party or any Affiliate of the Purchasing Party (whether
in the capacity of employee, consultant, independent contractor or
otherwise), or (2) solicit business from, or perform or attempt to
perform any service for (whether or not involving any solicitation
on the part of a Selling Party and whether or not a Selling Party
is compensated therefor), or otherwise interfere with the
relationship of the Purchasing Party or any Affiliate of the
Purchasing Party with, (x) any person for whom the Purchasing Party
is then providing any service, (y) any person for whom the
Purchasing Party provided any service at any time during the
Covenant Period or (z) any Affiliate of any person referred to
subclause (x) or subclause (y) of this clause (2).
3. Remedies. Each Selling Party acknowledges that if he or it
violates or threatens to violate any of the provisions of this Agreement,
the Purchasing Party may have no adequate remedy at law. In that event,
the Purchasing Party shall have the right, in addition to any other
rights that may be available to it, to obtain in any court of competent
jurisdiction injunctive relief to restrain any violation or threatened
violation by a Selling Party of any provision of this Agreement, without
necessity of posting bond, or to compel specific performance by the
Selling Party of one or more of the Selling Party's obligations under
this
H-3
81
Agreement. The seeking or obtaining by the Purchasing Party of
injunctive relief shall not foreclose or in any way limit the right of
the Purchasing Party or any Affiliate of the Purchasing Party to obtain a
money judgment against a Selling Party for any damage to the Purchasing
Party or Affiliate of the Purchasing Party that may result from the
Selling Party's breach of any provision of this Agreement. Further,
during any period in which a Selling Party is in breach of any covenant
in this Agreement, the Covenant Period with respect to that Selling Party
shall be extended for an amount of time equal to the duration of the
breach.
4. Reformation of Covenants. Each Selling Party acknowledges
that the duration, geographical area, scope of activities and all other
aspects of the covenants contained in Section 2 of this Agreement are
reasonable. If any court determines that any covenants in this
Agreement, or any part thereof, is unenforceable, then (a) the remainder
of the covenants contained in this Agreement shall not be affected by
such determination, and (b) a covenant that is determined to be
unenforceable because of its duration, geographical scope, scope of
activities or otherwise shall be reformed by the court to the extent
necessary to cause the covenant to be enforceable against each Selling
Party. Such reformation may limit the covenants of this Agreement as to
time, geographical area and scope of activities so as to impose a
restraint that is not greater than necessary to protect the goodwill and
other business interests of the Purchasing Party. If a court should
determine that any restriction in this Agreement is unenforceable, the
parties agree that this Agreement shall nevertheless be enforceable for
the maximum term, geographical area and scope of activities enforceable
under applicable law.
5. Miscellaneous.
a. This Agreement may be amended only by a written
agreement signed by each Purchasing Party and Selling Party.
b. Any notices, requests, demands and other communications
made in connection with this Agreement shall be in writing and
shall be deemed to have been duly given on the date delivered, if
delivered personally or sent by facsimile to the persons identified
below, or three days after mailing in the United States mail if
mailed by certified or registered mail, postage prepaid, return
receipt requested, addressed as follows:
(1) if to any of the Selling Parties
to such person at the following address:
Piper Impact, Inc.
P.O. Box 680126
Park City, Utah 84068
Attention: Mr. B.F. Sammons
Fax No.
---------------------
H-4
82
and:
Mr. Marshall W. Robbins
--------------------------------
--------------------
Fax No. ( ) -
--- --- -----
with a copy to:
Burch, Porter & Johnson
50 North Front Street, Suite 800
Memphis, Tennessee 38103
Attention: Mr. John A. Stemmler
Fax No. (901) 524-5026
(2) if to either of the Purchasing Parties:
Quanex Corporation
1900 West Loop South, Suite 1500
Houston, Texas 77027
Attention: Mr. Wayne M. Rose
Fax No. (713) 877-5333
with a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attention: Ms. Harva R. Dockery
Fax No. (713) 651-5246
The addresses and numbers may be changed by means of a notice given
in the manner provided in this Section 5(b).
c. No delay or omission by the Purchasing Party in
exercising any of its rights under this Agreement shall waive that
or any other right. Waiver of any term or condition of this
Agreement by any party shall only be effective if in writing and
shall not be construed as a waiver of any subsequent breach or
failure of the same term or condition, or a waiver of any other
term or condition of this Agreement.
d. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
e. Subject to Section 4 of this Agreement, if any term or
other provision of this Agreement is invalid, illegal or incapable
of being
H-5
83
enforced by any rule of law or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent
possible.
f. The rights and obligations under this Agreement of any
Selling Party may not be assigned. The Purchasing Party may, at
its option, assign one or more of its rights or obligations under
this Agreement.
g. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUDING ANY OTHER
LAWS THAT MIGHT APPLY PURSUANT TO ITS CONFLICT OF LAWS RULES).
THIS AGREEMENT IS PERFORMABLE IN HARRIS COUNTY, TEXAS. EXCLUSIVE
VENUE FOR ANY DISPUTE ARISING WITH RESPECT TO THIS AGREEMENT SHALL
BE SAN ANTONIO, TEXAS. SELLING PARTIES ACCEPT THE EXCLUSIVE
JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION IN SAN ANTONIO,
TEXAS, AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION THAT IT MAY HAVE OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THE
TERMS OF THIS AGREEMENT BROUGHT IN A COURT OF COMPETENT
JURISDICTION IN SAN ANTONIO, TEXAS, AND WAIVES ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT
FORM. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
PURCHASING PARTIES AND SELLING PARTIES IRREVOCABLY WAIVE THE RIGHT
TO TRIAL BY JURY WITH RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS
IN WHICH ANY SUCH PARTY IS A PARTY, WHETHER OR NOT SUCH ACTIONS OR
PROCEEDINGS ARISE OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENT
EXECUTED IN CONJUNCTION WITH THE ASSET PURCHASE AGREEMENT. THE
WAIVERS CONTAINED IN THIS PARAGRAPH HAVE BEEN VOLUNTARILY GIVEN,
WITH FULL KNOWLEDGE OF THE CONSEQUENCES THEREOF.
h. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original but all of which shall constitute one and the same
agreement.
H-6
84
IN WITNESS WHEREOF, the parties have executed this Agreement with the
intent that it be effective on the date first above written.
PIPER IMPACT, INC.,
a Tennessee corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
--------------------------------------
B.F. Sammons
--------------------------------------
Marshall W. Robbins
QUANEX CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PIPER IMPACT, INC. (formerly Quanex Aluminum,
Inc.), a Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
H-7
85
Exhibit I
to Asset Purchase Agreement
AGREEMENT FOR ASSUMPTION OF
THE PIPER IMPACT 401(k) PLAN
BY PIPER IMPACT, INC.
THIS AGREEMENT by and between Piper Impact, Inc. (formerly Quanex
Aluminum, Inc.), a Delaware corporation (the "Sponsor"), and Piper Impact,
Inc., a Tennessee corporation (the "Employer").
W I T N E S S E T H :
WHEREAS, effective January 1, 1995, the Employer established the Piper
Impact 401(k) Plan (the "Plan") for the benefit of its employees and its
employees' beneficiaries; and
WHEREAS, the Sponsor is desirous of assuming the liabilities of the Plan
and the responsibilities as sponsor and as plan administrator of the Plan ;
NOW, THEREFORE, the parties hereto agree as follows:
(1) Effective as of 11:59 p.m. mountain time on March 29, 1996 (the
"Effective Time"), the Sponsor hereby adopts the Plan and assumes all of the
responsibilities and liabilities of the Employer under the Plan, and hereby
agrees to be bound by all of the terms, provisions, limitations and conditions
of the Plan to the same extent as if it had been an original party thereto and
had executed an identical plan; provided that the Sponsor is not assuming any
responsibilities under the Plan for any liabilities arising from acts and
omissions that occur from the Effective Time through August __, 1996 which
liabilities shall remain the obligation of the Employer.
(2) The participation of the Employer as the sponsor, plan
administrator and as an adopting employer of the Plan shall terminate as of the
Effective Time after the Sponsor's adoption and assumption of sponsorship and
administration of the Plan have become effective so as to continue the Plan
uninterrupted without a gap or lapse in time or effect of the Plan.
(3) Effective as of the Effective Time, Sections 1.02 and 1.03(a)(3) of
the Plan are amended to provide as set forth in the attached Exhibit.
IN WITNESS WHEREOF, the Sponsor and the Employer have caused this
Agreement to be executed this ____ day of _____________, 1996.
PIPER IMPACT, INC. (formerly Quanex
Aluminum, Inc.), a Delaware corporation
By
-----------------------------------
I-1
86
PIPER IMPACT, INC., a Tennessee corporation
By
-----------------------------------
I-2
87
Exhibit J
to Asset Purchase Agreement
AGREEMENT FOR ASSUMPTION OF THE PIPER IMPACT, INC.
HEALTH BENEFITS PROGRAM, THE PIPER IMPACT, INC.
GROUP BENEFITS PROGRAM FOR UTAH EMPLOYEES AND
THE PIPER IMPACT, INC. SECTION 125 PLAN
BY PIPER IMPACT, INC.
THIS AGREEMENT by and between Piper Impact, Inc. (formerly Quanex
Aluminum, Inc.), a Delaware corporation (the "Sponsor"), and Piper Impact,
Inc., a Tennessee corporation (the "Employer").
W I T N E S S E T H :
WHEREAS, the Employer previously established the Piper Impact, Inc.
Health Benefits Program, the Piper Impact, Inc. Group Benefits Program for Utah
Employees and the Piper Impact, Inc. Section 125 Plan (the "Plans") for the
benefit of its employees and its employees' beneficiaries;
WHEREAS, the Piper Impact, Inc. Health Benefits Program includes those
certain constituent benefit programs and agreements known as the Piper Impact,
Inc. Dental Care Plan effective January 1, 1995, administered by Advanced
Insurance Services, Inc., the CONCERN: Employee Assistance Program effective
January 1, 1995, administered by Health Tech Affiliates, Inc., the Short Term
Disability Benefits Plan effective June 1, 1993, administered by Golden
Security Life Insurance Company, the Medical Group Benefit Plan dated June 1,
1988, administered by Advanced Insurance Services, Inc., the PCS Health
Systems, Inc. Managed Pharmaceutical Benefit Agreement effective January 1,
1995, the Preferred Provider Agreement with Baptist Health Services Group
effective August 1, 1996;
WHEREAS, the Piper Impact, Inc. Group Benefits Program For Utah Employees
includes those certain constituent benefit programs and agreements known as the
Piper Impact, Inc. Dental Plan effective January 1, 1995, the Employee
Assistance Program Services Plan dated February 11, 1995, administered by
Vocational Resources, Inc., the Master Group Contract For Medical and Hospital
Services With IHC Health Plans, Inc., SelectMed Plus effective January 1, 1996,
the Beneficial Life Insurance Company Master Policy No. 53916 providing for
short-term disability and life insurance benefits and the Beneficial Life
Insurance Company Supplemental Group Term Life Insurance Policy No. 53917; and
WHEREAS, the Sponsor is desirous of assuming the liabilities of the Plans
and the responsibilities as sponsor and plan administrator of the Plans;
NOW, THEREFORE, the parties hereto agree as follows:
(1) Effective as of 11:59 p.m. mountain time on March 29, 1996 (the
"Effective Time"), the Sponsor hereby adopts the Plans and assumes all of the
responsibilities and liabilities of the Employer under the Plans, and hereby
agrees to
J-1
88
be bound by all of the terms, provisions, limitations and conditions of the
Plans to the same extent as if it had been an original party thereto and had
executed identical Plans; provided that the Sponsor is not assuming any
responsibilities under the Plans for any liabilities arising from acts and
omissions that occur from the Effective Time through August __, 1996 which
liabilities shall remain the obligation of the Employer.
(2) The participation of the Employer as the sponsor, plan
administrator and as an adopting employer of the Plans will terminate
immediately as of the Effective Time after the Sponsor's adoption and
assumption of sponsorship of the Plans have become effective so as to continue
the Plans uninterrupted without a gap or lapse in time or effect of the Plans.
(3) Effective as of the Effective Time the Plans are amended by
deleting all references to Piper Impact, Inc., a Tennessee corporation, and
inserting references to Piper Impact, Inc., a Delaware corporation, in their
stead.
(4) Effective as of the Effective Time the Piper Impact, Inc. Health
Benefits Program is amended by adding the following new provision to the
eligibility provisions thereof:
Notwithstanding any other provision of the Plan, employees of Piper
Impact, Inc. other than those employees regularly scheduled to work for
Piper Impact, Inc. in Mississippi shall not be eligible to participate in
the Plan.
(5) Effective as of the Effective Time, the Piper Impact, Inc. Group
Benefits Program for Utah Employees is amended by adding the following new
provision to the eligibility provisions thereof:
Notwithstanding any other provision of the Plan, employees of Piper
Impact, Inc. other than those employees regularly scheduled to work for
Piper Impact, Inc. in Utah shall not be eligible to participate in the
Plan.
J-2
89
IN WITNESS WHEREOF, the Sponsor and the Employer have caused this
Agreement to be executed this day of , 1996.
-------- --------------------
PIPER IMPACT, INC. (formerly Quanex
Aluminum, Inc.), a Delaware corporation
By
-----------------------------------
PIPER IMPACT, INC., a Tennessee corporation
By
-----------------------------------
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90
Exhibit K
to Asset Purchase Agreement
OPINION OF BURCH, PORTER & JOHNSON PLLC
1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Tennessee and has the corporate
power and authority to own, operate and lease its properties and carry on its
business in all material respects as now owned, operated, leased or conducted.
The Company is duly qualified to conduct its business and is in good standing
in each jurisdiction in which the failure to be so qualified would have a
material adverse effect on the Company's Business.
2. The Company has all requisite corporate power and authority to
enter into, deliver and perform the Agreement and each agreement that is an
exhibit to the Agreement and to which Piper is a party and to consummate the
transactions described in the Agreement. The Agreement has been duly executed
and delivered by the Company pursuant to all necessary corporate action.
3. The authorized capital stock of the Company consists of 100,000
shares of common stock, $1.00 par value (the "Piper Stock"), 1,000 shares of
which are issued and outstanding. Each issued and outstanding share of Piper
Stock is duly authorized, validly issued, fully paid and nonassessable and has
not been issued, and to our knowledge, is not owned or held, in violation of
any preemptive right of shareholders. All issued and outstanding shares of the
Piper Stock are owned of record and, to our knowledge, beneficially by the
persons named on Exhibit A attached hereto, free and clear of all claims,
liens, security interests, pledges, charges, encumbrances, stockholders'
agreements and voting trusts except as set forth on Schedule 3.3 to the
Agreement, and to our knowledge, there are no other beneficial owners of that
stock.
4. To our knowledge, the Company does not own or control any
securities or other ownership interest in any corporation, association, joint
venture, limited liability company, partnership or other business entity.
5. Neither the execution and delivery by the Selling Parties of the
Agreement, the consummation of the transactions described in the Agreement by
the Selling Parties nor compliance by the Selling Parties with any other
provisions of the Agreement will conflict with, result in a breach of or
constitute a default under (a) the Company's Charter or By-Laws, (b) except as
set forth in Schedule 3.5 to the Agreement, any contracts, commitments or
agreements listed in Schedule 1.1(j) to the Agreement or (c) except as set
forth in Paragraph 6 below, any law, statue, ordinance, regulation or, to our
knowledge, court or administrative order by which a Selling Party is subject or
bound.
6. With respect to the permits and licenses set forth on Schedule
3.18, except for any filings required to be made pursuant to the HSR Act, and
except as set forth on Schedule 3.6 to the Agreement, no Selling Party is
required to submit any notice, report or other filing with any governmental or
regulatory authority or instrumentality in connection with the execution,
delivery or performance of the Agreement by the Selling Parties and the
consummation of the transactions described in the Agreement.
K-1
91
7. The Agreement and, to our knowledge, each contract, agreement,
instrument, lease, license and arrangement described in Schedule 3.11 to the
Agreement is the legal, valid and binding obligation of the Selling Party who
is a party thereto; and, except as may be limited by principles of equity or
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
judicial decision relating to or affecting the enforcement of creditors'
rights, is enforceable against such Selling Party in accordance with its terms.
8. To our knowledge and except as described in Schedule 3.13 to the
Agreement, (1) there is no suit, action, proceeding, investigation or claim
pending or threatened against and affecting the Company or the Company's
Business in any court or before any arbitration panel of any kind or before or
by any Governmental Body and (2) there is no outstanding order, writ,
injunction, decree, judgment or award by any court, arbitration panel or
Governmental Body against the Company or affecting the Company's Business.
K-2
92
Exhibit L
to Asset Purchase Agreement
OPINION OF FULBRIGHT & JAWORSKI L.L.P.
(a) Each of Quanex and Quanex Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Each of Quanex and Quanex Subsidiary has all requisite corporate
power and authority to enter into, deliver and perform the Agreement and each
agreement that is an exhibit to the Agreement and to which Quanex is a party
and to consummate the transactions described in the Agreement. The Agreement
has been duly executed and delivered by Quanex and Quanex Subsidiary pursuant
to all necessary corporate action.
(c) Neither the execution and delivery by the Purchasing Parties of the
Agreement, the consummation of the transactions described in the Agreement by
the Purchasing Parties nor compliance by the Purchasing Parties with any of the
provisions of the Agreement will conflict with, result in a breach of or
constitute a default under (a) the certificate of incorporation or bylaws of
Quanex or Quanex Subsidiary, (b) any contracts, commitments or agreements
listed as an exhibit to Quanex's Annual Report on Form 10-K for the year ended
October 31, 1995, to which Quanex or Quanex Subsidiary is a party or by which
the assets of Quanex or Quanex Subsidiary are bound, or (c) any law, statute,
ordinance, regulation or court or administrative order by which Quanex or
Quanex Subsidiary is subject or bound.
(d) Except for filings required to be made pursuant to the HSR Act or
the Securities Exchange Act of 1934, neither Quanex nor Quanex Subsidiary is
required to submit any notice, report or other filing with any governmental or
regulatory authority or instrumentality in connection with the execution,
delivery or performance of the Agreement by the Purchasing Parties and the
consummation of the transactions described in the Agreement.
(e) The Agreement is the legal, valid and binding obligation of Quanex
and Quanex Subsidiary, as applicable; and except as may be limited by
principles of equity or bankruptcy, insolvency, reorganization, moratorium or
other similar laws or judicial decisions relating to or affecting the
enforcement of creditors' rights, is enforceable against the Purchasing Parties
in accordance with its terms.
L-1
93
Exhibit M
to Asset Purchase Agreement
AGRICULTURAL LEASE
This Agricultural Lease (this "Lease") is made and entered into as of the
______ day of ___________________, 1996, by and between PIPER IMPACT, INC., a
Delaware corporation, formerly known as Quanex Aluminum, Inc. ("Landlord"), and
LAMAR FRAZIER ("Tenant");
W I T N E S S E T H:
Section 1. Premises. Landlord hereby leases and rents to Tenant, and
Tenant hereby leases and rents from Landlord, the surface only of that certain
tract or parcel of land situated in Union County, Mississippi, and being more
particularly described on Exhibit A attached hereto and made a part hereof for
all purposes (collectively the "Leased Property").
Section 2. Initial Term. The initial term of this Lease (the "Initial
Term") shall commence on January 1, 1996 (the "Initial Commencement Date"), and
terminate at 11:59 p.m., on December 31, 1996 (the "Initial Termination Date").
Section 3. Renewal Terms. Unless at least thirty (30) days prior to the
Initial Termination Date Landlord or Tenant gives written notice to the other
(a "Termination Notice") stating that such party has elected to terminate this
Lease as of the Initial Termination Date, this Lease shall automatically be
extended at the same rental rate and on the same terms and conditions for
successive twelve (12) month periods (collectively the "Renewal Terms"),
commencing on the Initial Termination Date or the last day of the then current
Renewal Term, as applicable, and terminating at 11:59 p.m., on the last day of
the then current Renewal Term. Either Landlord or Tenant may terminate this
Lease at the expiration of the then current Renewal Term by providing written
notice to such effect to the other party at least thirty (30) days prior to the
end of the then current Renewal Term; provided, however, in the event that
Landlord terminates this Lease after Tenant has applied lime treatment to the
Leased Property, then Landlord shall reimburse Tenant for the cost of such lime
treatment up to a maximum of Twenty and 00/100 Dollars ($20.00) per acre. Any
Termination Notice shall be given in the manner prescribed in Section 14
hereof. In the event either Landlord or Tenant gives to the other a
Termination Notice, this Lease and all rights of Tenant hereunder shall
terminate as of the Initial Termination Date, or as of the last day of the then
current Renewal Term, as applicable.
Nothing in this Section 3 shall alter or diminish the rights and options
reserved and/or available to Landlord under Sections 9 or 15 hereof.
The Initial Term and any applicable Renewal Terms are hereinafter
collectively referred to as the "Term".
94
Section 4. Rent. As rent for the Leased Property during the Term of
this Lease ("Rent"), Tenant shall pay to Landlord the sum of Thirty and 00/100
Dollars ($30.00) per acre per year, which sum shall be due and payable on or
before ______________________________ of each year, without offset or
counterclaim.
Section 5. Use. The Leased Property shall be used and occupied by
Tenant for farming purposes only, and for no other uses or purposes without
Landlord's prior written consent, which consent may be given or withheld in
Landlord's sole and absolute discretion. Tenant agrees to conduct all farming
operations on the Leased Property in full and complete accordance with good
farming and land conservation practices and in accordance with applicable law.
Without limiting the foregoing, Tenant agrees that no part of the Leased
Property shall be used for club purposes, that no public hunting shall be
permitted on the Leased Property, and that no motorcycles or recreational
vehicles shall be allowed on the Leased Property.
Section 6. Acceptance of Premises; Repairs, Maintenance and
Improvements. Tenant hereby accepts the Leased Property "AS IS", "WHERE IS"
and in its present condition, and having previously inspected the Leased
Property, Tenant stipulates and states that it is fully familiar with the
condition of same. Tenant acknowledges that Landlord has made no warranty or
representation, express or implied, about the Leased Property, its condition,
suitability, fitness for a particular purpose or fitness for any purpose.
Landlord shall not be required to make any repairs or improvements on or to the
Leased Property or any fences or other improvements located thereon at any time
during the Term of this Lease. Tenant shall keep and maintain the Leased
Property and all improvements thereon (including, without limitation, all
fences, gates and cattle-guards situated on or enclosing the Leased Property)
in good order and repair and in a safe condition and shall not commit or allow
any waste, or allow any nuisance to exist on the Leased Property. Any
maintenance, repairs or replacements that are required to keep all such
improvements or equipment (including, without limitation, all fences, gates and
cattle-guards situated on or enclosing the Leased Property) in good working
condition shall be promptly performed by Tenant at its expense. Tenant shall
comply with all applicable laws and rules and regulations of governmental
bodies and agencies having jurisdiction over the Leased Property and/or
Tenant's operations thereon.
Without limiting the foregoing, Tenant, as part of the consideration for
this Lease, agrees to keep and maintain in good repair at all times substantial
fences on the boundary lines enclosing the Leased Property and to prevent
trespass, encroachments or depredation of any kind on the Leased Property by
persons or animals. Tenant agrees not to cut or remove any growing timber from
the Leased Property, or to permit unauthorized persons so to do.
Tenant shall have the right to install or place equipment, machinery,
structures and other property on the Leased Property. All equipment,
machinery, structures and other property of any kind or description installed,
affixed, or placed
95
on the Leased Property by Tenant shall remain the property of Tenant, and
Tenant shall have the right, at any time during the Term of this Lease, to
remove any or all of such property, provided that Tenant, at Tenant's expense,
shall promptly repair any damage to the Leased Property occasioned by such
removal. Any property of Tenant not removed from the Leased Property within
thirty (30) days after the expiration or earlier termination of this Lease
shall be deemed to have been abandoned and shall belong to Landlord without the
payment of any consideration therefor.
Tenant shall have no right or power to create or permit any lien of any
kind or character to attach to the Leased Property, Landlord's interest therein
or Tenant's interest therein by reason of repair, construction or other work,
and Tenant agrees to indemnify, defend and hold harmless Landlord and the
Leased Property from and against any and all claims, liens and demands,
including, without limitation, mechanic's and materialman's liens, arising from
the use, occupancy, conduct, management of or from any work or thing whatsoever
done in or about the Leased Property by Tenant or any party acting by, through,
under or on behalf of Tenant. Tenant shall pay all ad valorem taxes assessed
against Tenant's property on the Leased Property.
This Lease is made by Landlord and the Leased Property is accepted by
Tenant subject to all valid and subsisting restrictions, covenants, conditions,
easements, rights-of-way, mineral leases, royalty reservations, mineral
reservations and other encumbrances affecting the Leased Property.
Section 7. Assignment; Subletting. Tenant shall not sublet the Leased
Property or any part thereof, or assign the Lease or any interest therein,
without the prior written consent of Landlord, which consent may be given or
withheld in Landlord's sole and absolute discretion. Landlord's consent in the
case of any sublease or assignment shall not abrogate the requirement for
Landlord's consent in the case of any subsequent or additional sublease or
assignment.
Section 8. Taxes. Landlord shall pay or cause to be paid before
delinquency all general and special taxes, assessments for local improvements
and other governmental charges lawfully assessed or imposed on the Leased
Property; provided, however, that Landlord may in good faith defer compliance
to contest the validity or amount of any such tax, assessment or governmental
charge, so long as Landlord's title to and Tenant's occupancy of the Leased
Property is not disturbed or threatened thereby. Tenant agrees not to
construct any improvement on the Leased Property or take any other action which
would cause the Leased Property or any part thereof not to be classified as
agricultural lands or open lands for ad valorem tax purposes.
Section 9. Landlord's Remedies. In the event Tenant defaults hereunder,
which default continues for a period of thirty (30) days after notice from
Landlord to Tenant specifying such default, then Landlord, at Landlord's
option, may, immediately or any time thereafter while such default remains in
effect, and without
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96
further demand or notice, exercise any remedy available to Landlord under
applicable law.
Section 10. Access. Landlord and Landlord's authorized representatives
shall have the right to enter upon the Leased Property at reasonable times for
the purpose of inspecting the same, and Tenant agrees to furnish Landlord a
duplicate key to any lock installed by Tenant on any gate on or about the
Leased Property.
Section 11. Indemnity; Insurance. Landlord shall not be liable for any
damage, loss or injury to the person or property or effects of the Tenant or
any other person, suffered in, on or about the Leased Property from any cause,
and particularly from any activity done thereon or from any negligence of
Tenant or Tenant's sublessees, agents, employees, or contractors. In this
regard, Tenant agrees to indemnify, defend and hold harmless Landlord from and
against any and all claims arising from any such damage, loss or injury or from
any loss, cost, expense or liability therefrom or in connection therewith,
including attorney's fees. Tenant agrees to furnish Landlord with evidence of
public liability insurance in the amount of $__________ for each occurrence and
property damage insurance in the amount of $____________ with insurers
acceptable to Landlord. Such insurance shall cover the Leased Property and the
operations of Tenant and its agents, employees, equipment and automobiles
thereon and on the roads, highways, and lands adjacent to the Leased Property.
Such insurance policy shall name Landlord as an additional insured and shall
not be cancelable without thirty (30) days prior written notice to Landlord.
Tenant assumes all risks of loss or damage from whatever cause to any of
Tenant's property or livestock on the Leased Property or to Landlord's property
thereon; Tenant, for itself and its insurer, waives any claim or cause of
action (whether in the nature of subrogation or otherwise) against Landlord or
its successors and assigns in connection with any loss or damage. Tenant's
indemnity obligations shall survive the expiration or earlier termination of
this Lease as to acts or omissions occurring prior to such expiration or
termination.
Section 12. Condemnation. In the event all the Leased Property is taken
for public purposes, this Lease shall cease and terminate without further
liability on either party hereto. If only part or parts of the Leased Property
are taken for public purposes, then this Lease shall continue in force and
effect as to the portion of the Leased Property not so taken; provided,
however, that if such partial taking materially interferes with Tenant's
continuing operations on the Leased Property, Tenant may terminate this Lease,
without further liability on either party hereto, by providing Landlord with
written notice delivered to Landlord within thirty (30) days after such taking.
Section 13. Quiet Enjoyment; Surrender of Premises. Subject to the
other terms and provisions of this Lease and so long as Tenant complies with
Tenant's obligations hereunder, Tenant shall lawfully, peaceably and quietly
have, hold and occupy the Leased Property during the Term of the Lease, without
hinderance or objection from anyone claiming by, through or under Landlord;
subject, however, to the matters set forth in Section 6 and Section 15 hereof.
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97
At the expiration or earlier termination of this Lease, Tenant shall quit
and surrender the Leased Property to Landlord in as good condition as at the
date hereof, reasonable wear and tear and natural deterioration excepted. Any
holding over after the expiration or earlier termination of this Lease shall
not renew or extend this Lease, but shall constitute Tenant a tenant at
sufferance at a rental rate equal to two hundred percent (200%) the rental rate
in effect immediately prior to such expiration or earlier termination.
Section 14. Notices. Whenever, by the terms of this Lease, notice shall
or may be given to Landlord or Tenant, such notice shall be in writing and
shall be delivered in hand or sent by registered or certified United States
mail, postage prepaid, as follows:
(a) If for Landlord, addressed to Landlord at 1900 West Loop
South, Houston, Texas 77027 or at such other address as may from time to
time hereafter be designated by Landlord by like notice;
(b) If for Tenant, addressed to Tenant at
_______________________________________________________, or at such other
address as may from time to time hereafter be designated by Tenant by
like notice.
Absent a postal strike or other stoppage of the mails, any notice
undertaken to be given by mail in accordance with this Section 14 shall be
deemed to have been received by the addressee on the third regular business day
following the day during which such notice is deposited with the United States
Postal Service. Any notice given by personal delivery shall be deemed given as
at the time of such delivery.
Section 15. Landlord's Retained Rights. As aforesaid, the rights of
Tenant hereunder are subordinate and subject to the rights of any and all
mineral lessees now or hereafter holding leases on all or any part of the
Leased Property. Further, Landlord reserves the right to make mineral leases
and mineral conveyances affecting the minerals under all or any part of the
Leased Property and hereby reserves all minerals in, on or under the Leased
Property with the right to operate and explore for same and the rights of
Landlord, its lessees and assigns, to operate and explore on all or any part of
the Leased Property for minerals shall be superior to the rights of Tenant
hereunder; provided, however, any mineral lease hereafter executed by Landlord
shall expressly bind the lessee therein to pay Tenant for the actual damages to
crops or other property of Tenant resulting directly from mineral exploration,
development or operations. The term "minerals" used herein shall refer to oil,
gas, sulphur and/or any other minerals (similar or dissimilar).
Landlord further reserves the right to negotiate for and to sell and
convey the Leased Property or any part thereof or any interest therein at any
time during any term of this Lease and in the event of any such sale and
conveyance to take possession or permit such purchaser to take possession of
the Leased Property or portion thereof sold. Landlord shall give Tenant not
less than thirty days notice of its intention to repossess the Leased Property
or
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98
portion thereof by reason of any such sale or conveyance, and Tenant agrees to
surrender the Leased Property or portion thereof to be repossessed on or before
the expiration of thirty days following such notice. Upon such surrender,
Tenant shall be paid the then value of its interest in any crops authorized to
be planted and growing or unharvested on the repossessed land and shall be
refunded the proportionate part of the unearned rental paid in advance thereon
and this Lease shall terminate as to the interest and/or acreage so sold.
Section 16. Provisions Binding. The laws of the State of Mississippi
shall govern the rights and liabilities to the parties hereto, and if any
provisions of this Lease are determined invalid by judicial decision, the
invalidity of such provisions shall not affect the validity of any other
provisions thereof. This Lease constitutes the entire agreement between the
parties concerning leasing of the Leased Property and shall not be amended,
except by written instrument signed by both parties. This Lease shall be
binding upon and shall inure to the benefit of Landlord and Tenant and their
respective heirs, successors, assigns, and legal representatives, but this
provision does not constitute a waiver of the requirement for consent by
Landlord to any assignment or subletting by Tenant.
Section 17. Counterparts. This Lease may be executed in one or more
counterparts by one or more party Landlord and Tenant, and shall be binding
upon any Landlord who may, together with Tenant, execute the same so long as
all parties constituting Landlord and Tenant shall have executed some (but not
necessarily the same) counterpart. Each such counterpart shall be deemed an
original, and all such counterparts shall constitute one and only one
agreement.
EXECUTED in multiple originals effective on the day and date first above
written.
PIPER IMPACT, INC.,
a Delaware corporation (formerly known as
Quanex Aluminum, Inc.)
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
"Landlord"
--------------------------------------
LAMAR FRAZIER
"Tenant"
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99
Exhibit A
[ATTACH PROPERTY DESCRIPTION]
-7-
1
EXHIBIT 4.1
EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
QUANEX CORPORATION
$250,000,000
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
DATED AS OF JULY 23, 1996
COMERICA BANK, AS AGENT
AND
HARRIS TRUST AND SAVINGS BANK
AND
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION
AS CO-AGENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
TABLE OF CONTENTS
Page
----
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. THE INDEBTEDNESS: REVOLVING CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.1 Revolving Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2 Type of Advance and Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.3 Requests for and Refundings and Conversion of
Revolving Credit Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.4 Disbursement of Revolving Credit Advances . . . . . . . . . . . . . . . . . . . . . . . . 25
2.5 Revolving Credit Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.6 Optional Reduction or Termination of
Revolving Credit Aggregate Commitment . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.7 Optional Cancellation of Revolving Credit
Committed Increase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.8 Mandatory Reduction of Revolving Credit
Aggregate Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.9 Extension of Revolving Credit Maturity Date . . . . . . . . . . . . . . . . . . . . . . . 28
3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.1 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.2 Conditions to Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.3 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4 Assignments of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.5 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.6 Issuance and Facing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.7 Draws Under Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.8 Funding of Letter of Credit Payment as
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.9 Obligations Irrevocable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.10 Risk Under Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.11 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.12 Liability of Agent or the Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.13 Right of Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.14 Existing Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3A. SWING LINE CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3A.1 Swing Line Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3A.2 Accrual of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3A.3 Requests for Swing Line Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3A.4 Disbursement of Swing Line Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3A.5 Refunding of or Participation Interest in
Swing Line Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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TABLE OF CONTENTS
(Continued)
Page
----
3B. TERM LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3B.1 Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3B.2 Repayment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3B.3 Initial Requests for Funding Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . 41
3B.4 Term Loan Rate Requests; Initial Term Loan,
Refundings and Conversions of Advances of Term
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3B.5 Term Loan Certifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3B.6 Failure to Refund or Convert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3B.7 Disbursement of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4. INTEREST, INTEREST PERIODS, PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.2 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.3 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5. SPECIAL PROVISIONS FOR LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.1 Reimbursement of Prepayment Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.2 Agent's Eurodollar Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.3 Circumstances Affecting Eurodollar-based
Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.4 Laws Affecting Eurodollar-based Advance
Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.5 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.6 Other Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.7 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.8 Substitution of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.1 Payment Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.2 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.3 Pro-rata Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.4 Deposits and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7. CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.1 Execution of Notes and This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.3 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.4 Termination of Prior Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.5 Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.6 Representations and Warranties -- All
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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7.7 Compliance with Certain Documents and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.8 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.9 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.10 Company's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.11 Payment of Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.12 Other Documents and Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.13 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.14 Continuing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.1 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.2 Due Authorization - Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.3 Due Authorization -- Restricted Subsidiaries
and Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.4 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.5 No Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.8 Enforceability of Agreement and Loan
Documents -- Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.9 Enforceability of Loan Documents --
Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.10 Non-contravention -- Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.11 Non-contravention -- Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.12 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.13 Consents, Approvals and Filings, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.15 Environmental and Safety Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.16 No Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.17 Agreements Affecting Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . 66
8.18 Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.19 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.1 Conduct of Business and Preservation of
Existence, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.2 Keeping of Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.3 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.4 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.5 Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.6 Computation of Financial Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.8 Governmental and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
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9.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.11 ERISA Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.12 Compliance with Contractual Obligations and
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.13 Hazardous Material Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.14 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.15 Debt Service Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.16 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.1 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.3 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.4 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.5 Merger and Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.6 Negative Pledges of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.7 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.8 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.9 Prepayment or Amendment of Subordinated
Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11. DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.2 Exercise of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.3 Rights Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.4 Waiver of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
12. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.1 Appointment of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.2 Deposit Account with Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.4 Successor Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.5 Loans by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.6 Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.7 Notices by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.8 Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.9 Nature of Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.10 Actions; Confirmation of Agent's Authority to
Act in Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.11 Authority of Agent to Enforce Notes and This
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
12.13 Knowledge of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
12.14 Agent's Authorization; Action by Banks . . . . . . . . . . . . . . . . . . . . . . . . . 88
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12.15 Enforcement Actions by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.16 Co-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.1 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.2 Law of Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.3 Waiver by Company of Certain Laws;
WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.4 Agent's Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
13.6 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
13.7 Successors and Assigns; Assignments and
Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
13.8 Indulgence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
13.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
13.10 Entire Agreement; Amendment or Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 95
13.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
13.12 Withholding Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
13.13 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
13.14 Effectiveness of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
13.15 Designation of Unrestricted and Restricted
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
13.16 Construction of Certain Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
13.17 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
13.18 Reliance on and Survival of Various
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
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TABLE OF CONTENTS
(Continued)
SCHEDULES:
- ---------
Schedule 1.1 Bank Percentages
Schedule 1.2 Pricing Matrix (Grids I and II)
Schedule 8.6 List of Subsidiaries
Schedule 8.12 Material Litigation
Schedule 8.14 Pension Plans
Schedule 8.16 Environmental Matters
Schedule 10.1 Liens Securing Funded Debt
Schedule 10.2 Permitted Indebtedness
Schedule 13.5 Addresses for Notices
EXHIBITS:
- --------
Exhibit A-1 Form of Request for Revolving Credit Advance
Exhibit A-2 Form of Request for Swing Line Advance
Exhibit B Form of Revolving Credit Note
Exhibit C Form of Swing Line Note
Exhibit D Form of Swing Line Participation Certificate
Exhibit E Form of Letter of Credit Agreement
Exhibit F Form of Term Note
Exhibit G Form of Term Loan Initial Request
Exhibit H Form of Term Loan Rate Request
Exhibit I Form of Letter of Credit Notice
Exhibit J Form of Subsidiary Guaranty
Exhibit K Form of Company Guaranty
Exhibit L Form of Assignment Agreement
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8
QUANEX CORPORATION
$250,000,000
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
THIS $250,000,000 REVOLVING CREDIT AND TERM LOAN AGREEMENT
("Agreement") is made as of the 23rd day of July, 1996, among the Banks
signatory hereto (individually "Bank" and collectively "Banks"), Comerica Bank,
as agent for the Banks (in such capacity, "Agent") and Quanex Corporation, a
Delaware corporation ("Company").
RECITALS:
A. The Company has requested that the Banks extend credit to it
consisting of a revolving credit facility in the aggregate principal amount of
Two Hundred Fifty Million Dollars ($250,000,000), and including therein a swing
line facility, letters of credit facility and a committed term loan facility.
B. The Banks are prepared to extend such credit as aforesaid, but
only upon the terms and conditions set forth in this Agreement.
NOW THEREFORE, COMPANY, AGENT AND THE BANKS AGREE AS FOLLOWS:
1. DEFINITIONS
For the purposes of this Agreement the following terms (when
capitalized) will have the following meanings:
"Account Party(ies)" shall mean the account party or parties named in
a Letter of Credit, which will be Company, individually, or jointly and
severally with a Restricted Subsidiary, as named in the application to the
Agent for the issuance of such Letter of Credit.
"Adjusted Leverage Calculation" is defined in Section 4.1(x)(d).
"Advance(s)" shall mean Revolving Credit Advance(s), Swing Line
Advance(s), and/or Advance(s) of a Term Loan, as the context may require.
"Affected Lender" is defined in Section 5.8.
"Affiliate" shall mean, with respect to any Person, any other Person
or group acting in concert in respect of the Person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under the common control with such Person. For purposes of this
definition, "control" (including,
9
with correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person or group of Persons, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agent" shall mean Comerica Bank or any successor appointed in
accordance with Section 12.4 hereof.
"Agent's Fees" shall mean those fees and expenses required to be paid
by Company to Agent under Section 12.8 hereof.
"Alternate Base Rate" shall mean for any day a rate per annum equal to
the Federal Funds Effective Rate in effect on such day plus one percent (1%).
"Annual Debt Service" shall mean, as of the last day of each Fiscal
Quarter, the sum of interest charges (including without limitation, capitalized
interest expense) incurred on indebtedness (including the interest component,
as determined in accordance with generally accepted accounting principles, of
all Rentals on Capitalized Leases) plus all amounts required for mandatory
repayment of principal of and premium on indebtedness (whether by operation of
sinking fund or otherwise), for the Company and its Restricted Subsidiaries, on
a Consolidated basis, during the period of twelve months ended on and
immediately preceding the date of such calculation.
"Applicable Interest Rate" shall mean the Eurodollar-based Rate, the
Quoted Rate or the Prime-based Rate, as selected by Company from time to time
or otherwise determined pursuant to the terms and conditions of this Agreement;
provided, however, that the Applicable Interest Rate for any Bank shall never
exceed the Highest Lawful Rate for such Bank.
"Applicable Letter of Credit Fee Percentage" shall mean, as of any
date of determination thereof, the applicable percentage used to calculate the
Letter of Credit Fees due and payable hereunder, determined by reference to the
appropriate columns in the applicable Pricing Matrix (Grid I or II) attached to
this Agreement as Schedule 1.2.
"Applicable Commitment Fee Percentage" shall mean as of any date of
determination thereof, the applicable percentage used to calculate the
Revolving Credit Commitment Fee due and payable hereunder, determined by
reference to the appropriate columns in the applicable Pricing Matrix (Grid I
or II) attached to this Agreement as Schedule 1.2.
"Banks" shall mean Comerica Bank and such other financial institutions
from time to time parties hereto as lenders and shall
2
10
include the Swing Line Bank and any assignee which becomes a Bank pursuant to
Section 13.7.
"Base Tangible Net Worth" shall mean (i) One Hundred Million Dollars
($100,000,000) plus (on a cumulative basis), for each Fiscal Year ending on or
after October 31, 1997, Five Million Dollars ($5,000,000), plus (ii) fifty
percent (50%) of the Net Income (if positive) of the Company and its Restricted
Subsidiaries, on a Consolidated basis, earned in each Fiscal Quarter commencing
subsequent to July 31, 1990, plus (iii) 100% of the amount of cash proceeds or
the value of any other assets received by Company of any New Equity, net of
reasonable and customary fees and expenses (including, without limitation,
filing fees, brokerage commissions, accounting fees and attorneys fees)
incurred in connection with the issuance thereof.
"Business Day" shall mean any day on which commercial banks are open
for domestic and international business (including dealings in dollar deposits
in the interbank market) in Detroit, London, New York and Houston.
"Capitalization" shall mean, as of the time of any determination
thereof, Funded Debt plus Tangible Net Worth of the Company and its Restricted
Subsidiaries, on a Consolidated basis.
"Capitalized Lease" shall mean any lease of property (real, personal
or mixed) the obligation for Rentals with respect to which is required to be
capitalized on a balance sheet of the lessee in accordance with generally
accepted accounting principles or for which the amount of the asset and
liability thereunder as so capitalized should be disclosed in a note to such
balance sheet.
"Co-Agent(s)" shall mean Harris Trust and Savings Bank and/or Wells
Fargo Bank (Texas), National Association, in their individual capacities as
co-agent hereunder, or both of them, as the context may require.
"Collateral Documents" shall mean the guaranty agreements executed and
delivered (or to be executed and delivered) to the Agent by Company's
Restricted Subsidiaries in accordance with the terms and conditions hereof
(substantially in the form attached as Exhibit J), including, but not limited
to the guaranty agreements from LaSalle, Michigan Seamless and Nichols (and
upon consummation of the Piper Acquisition, from Piper), of all of the
Indebtedness hereunder and of Letter of Credit Obligations of Account Parties,
and Company's guaranty of the Letter of Credit Obligations of the Account
Parties (substantially in the form attached hereto as Exhibit K).
"Company" shall mean Quanex Corporation, a Delaware corporation.
3
11
"Consolidated" or "Consolidating" shall, when used with reference to
any financial information (or when used as a part of any defined term or
statement pertaining to any financial condition) mean the accounts of Company
and its Subsidiaries (or, if the context indicates, Company and its Restricted
Subsidiaries) determined on a consolidated or consolidating basis, as the case
may be, all determined as to principles of consolidation and, except as
otherwise specifically required by the definition of such term or by such
statements, as to such accounts, in accordance with generally accepted
accounting principles applied on a consistent basis and consistent with the
financial statements, if any, as at and for the Fiscal Year ended October 31,
1995.
"Contractual Obligation" shall mean, as to any Person, any provision
of any security issued by such Person or of any material agreement, instrument
or written undertaking to which such Person is a party or by which it or any of
its property is bound.
"Conversion" shall mean the conversion of the Subordinated Debentures
into common shares of the Company in accordance with the terms of the
Indenture.
"Current Assets" shall mean as of the time any determination thereof
is to be made, the amount, without duplication, that would be classified on a
balance sheet for the Company and its Restricted Subsidiaries, on a
Consolidated basis, as the current assets at such time determined in accordance
with generally accepted accounting principles consistently applied.
"Debt Rating" shall mean a debt rating of Company's long term,
non-credit enhanced senior unsecured debt (regardless of whether any such debt
is outstanding) as in effect from time to time and published or otherwise
communicated by the applicable rating agency to Agent and the Banks.
"Debt Service Coverage Ratio" shall mean, for the period of any
determination thereof, a ratio, the numerator of which is Net Earnings
Available for Debt Service for such period and the denominator of which is
Annual Debt Service for such period.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, or any successor act or code.
"Effective Date" shall mean the date on which all the conditions
precedent set forth in Sections 7.1 through 7.13 have been satisfied; provided
however that such date shall not occur after August 31, 1996.
"Eurodollar Interest Period" shall mean an interest period of one (1),
two (2), three (3) or six (6) months as selected by Company or otherwise
determined in accordance with the provisions hereof.
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"Eurodollar Lending Office" shall mean, (a) with respect to the Agent,
Agent's office located at Grand Cayman, British West Indies or such other
branch of Agent, domestic or foreign, as it may hereafter designate as a
Eurodollar Lending Office by notice to Company and the Banks and (b) as to each
of the Banks, its office, branch or affiliate located at its address set forth
on the signature pages hereof (or identified thereon as a Eurodollar Lending
Office), or at such other office, branch or affiliate of such Bank as it may
hereafter designate as its Eurodollar Lending Office by notice to Company and
Agent.
"Eurodollar Rate" shall mean:
(a) the per annum interest rate at which deposits in eurodollars
are offered to Agent's Eurodollar Lending Office by other
prime banks in the eurodollar market in an amount comparable
to the relevant Eurodollar-based Advance and for a period
equal to the relevant Eurodollar-Interest Period at
approximately 11:00 A.M. Detroit time two (2) Business Days
prior to the first day of such Eurodollar Interest Period;
divided by,
(b) an amount equal to one minus the stated maximum rate
(expressed as a decimal) of all reserve requirements
(including, without limitation, any marginal, emergency,
supplemental, special or other reserves) that is specified on
the first day of such Eurocurrency-Interest Period by the
Board of Governors of the Federal Reserve System (or any
successor agency thereto) for determining the maximum reserve
requirement with respect to eurodollar funding (currently
referred to as "eurocurrency liabilities" in Regulation D of
such Board) maintained by a member bank of such System, all as
conclusively determined (absent manifest error) by the Agent,
such sum to be rounded upward, if necessary, to the nearest whole multiple of
1/16th of 1%.
"Eurodollar-based Advance" shall mean a Revolving Credit Advance or an
advance, readvance, refunding or conversion of all or a portion of a Term Loan
which bears interest at a rate based on the Eurodollar-based Rate.
"Eurodollar-based Rate" shall mean a per annum interest rate equal to
the Eurodollar Rate, plus the Margin.
"Event of Default" shall mean the Events of Default specified in
Section 11.1 hereof.
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"Existing Letter of Credit" shall mean a letter of credit issued under
the Prior Credit Agreement which is outstanding on the Effective Date.
"Facility Reduction Proceeds" is defined in Section 2.8.
"Federal Funds Effective Rate" shall mean, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, 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, 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 Agent from three Federal funds brokers of recognized standing
selected by it.
"Federal Reserve Bank" shall mean any one of twelve central banks, or
any one of their branches, which are part of the Federal Reserve System and
which constitute the so-called Federal Reserve Banks.
"Fiscal Quarter" shall mean a fiscal quarterly period of a Fiscal
Year.
"Fiscal Year" shall mean the Company's fiscal year consisting of any
period of twelve consecutive calendar months ending on October 31.
"Funded Debt" shall mean, with respect to Company and its Restricted
Subsidiaries on a Consolidated basis, without duplication, as of the date of
any determination thereof, (a) any obligations, contingent or otherwise, for
borrowed money, (b) any obligation owed for all or any part of the purchase
price of property or other assets or for the cost of property or other assets
constructed or of improvements thereto, other than accounts payable included in
current liabilities and incurred in respect of property purchased in the
ordinary course of business, (c) any obligation, contingent or otherwise,
secured by any lien in respect of property even though the person owning the
property has not assumed or become liable for the payment of such obligation,
(d) any Capitalized Lease obligation, (e) any note payable or draft accepted
representing an extension of credit, whether or not representing an obligation
for borrowed money, (f) any liability associated with letters of credit,
whether contingent or otherwise, (g) any obligation which is in economic effect
a guaranty, regardless of its characterization, with respect to indebtedness
(of the kind otherwise described in this definition) of another person, and (h)
liabilities for obligations of Company and/or its Restricted Subsidiaries which
may arise by operation of law (excluding taxes, but including by way of example
and without limitation, liabilities for ERISA funding, environmental hazards,
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hazardous and solid waste handling practices and/or clean-up liabilities
imposed under CERCLA, RCRA or similar state statutes).
Notwithstanding anything to the contrary in the foregoing paragraph,
the following shall not be included in the calculation of Funded Debt; (w)
indebtedness of Company described in subsection 10.2(e) hereof; (x) any
obligations pursuant to the $50,000 Community Economic Betterment Account
Forgivable Loan by the Department of Economic Development for the City of
Davenport to Company, unless and until such time the amount of such loan is
required to be paid to the City of Davenport; (y) any obligations pursuant to
the $1,100,000 advance by Iowa-Illinois Gas & Electric Company to Company
during such time as the discounted portion of Company's electric utility
payments are being applied to reduce such obligations; and (z) any obligations
(in a net amount not exceeding $6,000,000) pursuant to Section XIV of the
Economic Development Expansion Agreement between the City of Davenport,
Rejuvenate Davenport, Inc., and Company during such time as such obligations
are contingent obligations.
Furthermore, notwithstanding anything to the contrary in the foregoing
paragraphs, the aggregate principal amount of the Subordinated Debentures as of
the date of their issue by the Company shall not be included in the calculation
of Funded Debt.
"Governmental Authority" shall mean any federal, state, provincial,
local, foreign or other governmental authority or body (or any agency,
instrumentality or political subdivision thereof).
"Hazardous Material" shall mean and include any hazardous, toxic or
dangerous waste, substance or material defined as such in (or for purposes of)
the Hazardous Material Laws.
"Hazardous Material Law(s)" shall mean all laws, codes, ordinances,
rules, regulations, orders, decrees and directives issued by Governmental
Authority pertaining to any hazardous, toxic or dangerous waste, substance or
material on or about any facilities owned, leased or operated by Company or any
of its Affiliates, or any portion thereof including, without limitation, those
relating to soil, surface, subsurface ground water conditions and the condition
of the ambient air, or pertaining to the protection of the environment; any
so-called "superfund" or "superlien" law; and any other federal, state,
provincial, foreign or local statute, law, ordinance, code, rule, regulation,
order or decree regulating, relating to, or imposing liability or standards of
conduct concerning, any hazardous, toxic or dangerous waste, substance or
material, as now or at any time hereafter in effect.
"Hedging Obligations" shall mean obligations in respect of interest
rate protection agreements or foreign currency exchange agreements (including
foreign currency hedges and swaps), commodity options or commodity swaps
entered into between Company and/or a
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Restricted Subsidiary and a Bank, or any Affiliate of a Bank, to manage
existing or anticipated interest rate or foreign exchange rate risk and not for
speculative purposes.
"Hereof", "Hereto", "Hereunder" and similar terms shall refer to this
Agreement and not to any particular paragraph or provision of this Agreement.
"Highest Lawful Rate" shall mean, with respect to each Bank, the
maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on its Notes
or other Indebtedness under laws applicable to such Bank which are in effect as
of the date hereof or, to the extent allowed by law, under such laws applicable
to such Bank which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws allow as of the date hereof.
"Indebtedness" shall mean all indebtedness and liabilities, whether
direct or indirect, absolute or contingent, owing by Company or any Account
Party to the Banks or to the Agent, in any manner and at any time, under this
Agreement or the Loan Documents, whether evidenced by the Notes or otherwise,
due or hereafter to become due, now owing or that may hereafter be incurred by
the Company or any Account Party to, or acquired by, the Banks or by Agent, and
any judgments that may hereafter be rendered on such indebtedness or any part
thereof, with interest according to the rates and terms specified, or as
provided by law, and any and all consolidations, amendments, renewals or
extensions of any of the foregoing.
"Indenture" shall mean that certain Indenture (pursuant to which the
Subordinated Debentures were issued) dated as of June 30, 1995 between the
Company and Chemical Bank, as trustee, as such Indenture may be amended,
subject to the terms hereof, from time to time.
"Interest Period" shall mean (a) for any Eurodollar-based Advance, an
interest period of one, two, three or six months as selected by the Company
pursuant to Section 4.2 hereof or (b) for any Quoted Rate Advance, an interest
period of up to thirty days, as offered by the Swing Line Bank and accepted by
the Company pursuant to Section 3A.3 hereof.
"Investment Grade Rating" shall mean a Debt Rating from S&P of BBB-
(or higher) or from Moody's of Baa3 (or higher).
"Issuing Office" shall mean Agent's office located at One Detroit
Center, 500 Woodward Avenue, Detroit, Michigan 48226 or such other office as
Agent shall designate as its Issuing Office.
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"LaSalle" shall mean LaSalle Steel Company, a Delaware corporation and
a wholly-owned Subsidiary of Company.
"Letter of Credit Agreement" shall mean, in respect of each Letter of
Credit, the application of an Account Party(ies) requesting Agent to issue such
Letter of Credit (including the terms and conditions on the reverse side
thereof or otherwise provided therein), substantially in the form attached
hereto as Exhibit E.
"Letter of Credit Fees" shall mean the fees payable to Agent for the
accounts of the Banks in connection with Letters of Credit pursuant to Section
3.5 hereof.
"Letter of Credit Maximum Amount" shall mean as of any date of
determination the lesser of: (a) Twenty Five Million Dollars ($25,000,000); or
(b) the then applicable Revolving Credit Aggregate Commitment minus the sum of
(i) aggregate principal amount of Revolving Credit Advances plus Swing Line
Advances outstanding as of such date plus (ii) Letter of Credit Obligations as
of such date.
"Letter of Credit Obligations" shall mean at any date of
determination, the sum of (a) the aggregate undrawn amount of all Letters of
Credit then outstanding and (b) the aggregate amount of Reimbursement
Obligations which have not been reimbursed by the Company as of such date.
"Letter of Credit Payment" shall mean any amount paid or required to
be paid by the Agent in its capacity as issuer of a Letter of Credit as a
result of a draw against any Letter of Credit.
"Letter(s) of Credit" shall mean any standby and/or documentary
letters of credit issued by Agent, titled as such, at the request of or for the
account of an Account Party(ies) pursuant to Article 3 hereof, including
without limitation any Existing Letters of Credit.
"Leverage" shall mean, as of the last day of each Fiscal Quarter,
Funded Debt divided by Capitalization, expressed as a percentage.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract (except that, for
purposes of Section 10.1, the contractual or other right of any bank to set off
deposits, other account balances, or any investments permitted under Section
10.4(b) through Section 10.4(e) against debts owed to it shall not constitute a
Lien unless or until a bank shall assert such right of setoff), and including
but not limited to the security interest or
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lien arising from a mortgage, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes. The term
"Lien" shall include reservations, exceptions, encroachments, easements,
right-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances (including, with respect to stock, stockholder
agreements, voting trust agreements, buy-back agreements and all similar
arrangements) affecting Property. For the purposes of this Agreement, the
Company or a Restricted Subsidiary shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale
agreement, Capitalized Lease or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for security
purposes and such retention or vesting shall constitute a Lien.
"Loan Documents" shall mean collectively, this Agreement, any Notes,
the Collateral Documents, any Letter of Credit Agreements and any other
documents, instruments or agreements executed pursuant to or in connection with
any such document.
"Majority Banks" shall mean at any time the Banks holding 66 2/3% of
the aggregate principal amount of the Indebtedness then outstanding under the
Notes plus the Letter of Credit Obligations, or, if no Indebtedness or Letters
of Credit are then outstanding, of the Percentages.
"Manufacturing Property" shall mean the assets of the Company or any
Restricted Subsidiary which are material to the business of the Company and its
Restricted Subsidiaries, taken as a whole, including, without limitation, any
such asset which constitutes part of the manufacturing or fabricating business
of the Company or any Restricted Subsidiary.
"Margin" shall mean, as of any date of determination thereof, the
applicable margin determined by reference to the appropriate columns of the
applicable Pricing Matrix (Grid I or II) attached hereto as Schedule 1.2.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole, (b) the ability
of the Company to perform its obligations under this Agreement or the Notes or
any other Loan Document to which it is a party, or (c) the validity or
enforceability of this Agreement, any of the Notes or any of the Collateral
Documents or the rights or remedies of the Agent or the Banks hereunder or
thereunder.
"Material Unrestricted Subsidiaries" shall mean any Unrestricted
Subsidiary or any number of Unrestricted Subsidiaries which have, individually
or in aggregate, indebtedness, obligations
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and other liabilities exceeding Fifty Million Dollars ($50,000,000).
"Michigan Seamless" shall mean Michigan Seamless Tube Company, a Delaware
corporation.
"Moody's" shall mean Moody's Investors Service, Inc., or any successor
thereto acceptable to the Majority Banks in their sole discretion.
"Net Earnings Available for Debt Service" shall mean, for the four
Fiscal Quarters preceding any calculation thereof, the total operating and
non-operating revenues of the Company and its Subsidiaries on a Consolidated
basis, including interest and dividends upon securities held, less the sum of
all operating expenses, expenditures for ordinary repairs and maintenance,
taxes (other than income and excess profits, taxes or other taxes which are
imposed on income after the deduction of interest charges), and all
non-operating expenses and losses of Company and its Restricted Subsidiaries on
a Consolidated basis (provided that such expenses shall not include charges for
amortization, depreciation and depletion, interest charges, and all
amortization of debt discount and expense or premium), plus the SFAS
Adjustment, if any, with respect to the applicable period of calculation. No
profits or losses from the sale or abandonment of capital assets or change in
the value of securities or other investments shall be included in making such
computations.
"Net Income" shall mean, for the period of determination thereof, the
net income for such period taken as one accounting period, for Company and its
Restricted Subsidiaries, on a Consolidated basis, determined in accordance with
generally accepted accounting principles consistently applied, plus the SFAS
Adjustment, if any, for such period.
"New Equity" shall mean additional common or preferred stock of the
Company issued on or after the date hereof (excluding any stock issued pursuant
to a conversion of the Subordinated Debentures).
"New Senior Debt" shall mean any senior unsecured debt issued by the
Company after the date hereof.
"Nichols" shall mean Nichols-Homeshield, Inc., a Delaware corporation.
"Notes" shall mean the Revolving Credit Notes, the Swing Line Note
and/or the Term Notes, as the context indicates.
"Pension Plans" shall mean all pension plans or employee benefit plans
of Company or its Subsidiaries which are subject to ERISA.
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"Percentage" shall mean, with respect to any Bank, its percentage
share, as set forth on Schedule 1.1 hereto, of the Revolving Credit Aggregate
Commitment, Letters of Credit and/or Term Loans, as the context indicates, as
such Schedule may be revised from time to time by Agent in accordance with
provisions of Section 13.7.
"Permitted Acquisitions" shall mean (x) subject to satisfaction by the
Company of the Special Conditions on or before the Required Consummation Date,
the Piper Acquisition and (y) any acquisition by the Company or any of its
Subsidiaries of assets, businesses or business interests or shares of stock or
other ownership interests of or in any Person primarily engaged in those
businesses in which Company and its Subsidiaries are engaged on the date hereof
or other businesses directly related thereto, conducted in accordance with the
following requirements:
(a) not less than thirty (30) nor more than ninety (90)
days prior to the date each such proposed acquisition is scheduled to
be consummated, the Company provides written notice thereof to Agent
(with drafts of all material documents pertaining to such proposed
acquisition to be furnished to Agent not less than thirty (30) days
prior to such date), accompanied by the Pro Forma Projected Financial
Information delivered, if required, pursuant to Section 9.3 hereof,
whereupon Agent shall promptly notify each of the Banks of its receipt
thereof and, upon the written request of a Bank, shall distribute
copies of all notices and other materials received from Company under
this subparagraph (a) to each such requesting Bank;
(b) on the date of any such acquisition, all necessary or
appropriate governmental, quasi- governmental, agency, regulatory or
similar approvals of applicable jurisdictions (or the respective
agencies, instrumentalities or political subdivisions, as applicable,
of such jurisdictions) and all necessary or appropriate
non-governmental and other third-party approvals which, in each case,
are material to such acquisition have been obtained and are in effect,
and the Company and its Subsidiaries are in full compliance therewith,
and all necessary or appropriate declarations, registrations or other
filings with any court, governmental or regulatory authority,
securities exchange or any other person have been made;
(c) the total consideration paid or incurred, or to be
paid or incurred, with respect to each such acquisition, shall not
exceed 15% of Tangible Net Worth determined as of the date of such
acquisition;
(d) concurrently with such acquisition, the Company, its
Subsidiaries and any of the corporate entities involved in
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such acquisition shall execute or cause to be executed, and provide or
cause to be provided to Agent, for the Banks, any Loan Documents
required hereunder and such other documents and instruments (including
without limitation opinions of counsel, amendments, acknowledgments,
consents and evidence of approvals or filings) as reasonably requested
by Agent, if any, and otherwise comply with the terms and conditions
of this Agreement; and
(e) both immediately before and after such acquisition,
no Event of Default, or event, which with the giving of notice or the
lapse of time or both would become an Event of Default (whether or not
related to such acquisition), has occurred and is continuing.
"Permitted Redemptions" shall mean redemptions required under Section
11.5 of the Indenture or by virtue of a "Change of Control" as defined in the
Indenture, and redemptions of an aggregate amount not to exceed Ten Million
Dollars ($10,000,000) principal of the Subordinated Debentures, plus accrued
interest upon the principal amount so redeemed (determined in accordance with
the documents governing the Subordinated Debentures), effected from and after
the date hereof in connection with or necessary to effect the Conversion.
"Person" shall mean an individual, corporation, limited liability
company, partnership, limited liability partnership, trust, incorporated or
unincorporated organization, joint venture, joint stock company, or a
government or any agency or political subdivision thereof or other entity of
any kind.
"Piper" shall mean Piper Impact, Inc., formerly known as Quanex
Aluminum, Inc., a Delaware corporation.
"Piper Acquisition Letter of Intent" shall mean that certain letter of
intent entered into between the Target Company, B.F. Sammons and Marshall W.
Robbins, as sellers, and the Company and Piper, as purchasers, dated as of May
29, 1996.
"Piper Acquisition" shall mean the acquisition by the Company, subject
to the terms hereof, of substantially all of the assets, properties, rights and
business of the Target Company for the price and on substantially the terms and
conditions set forth in the Piper Acquisition Letter of Intent.
"Piper Acquisition Date" shall mean the date on which the Piper
Acquisition has been consummated in accordance with the terms and conditions
hereof.
"Preferred Stock" shall mean the Cumulative Convertible Exchangeable
Preferred Stock of the Company issued in 1992.
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"Prime Rate" shall mean the per annum interest rate established by
Agent as its prime rate for its borrowers as such rate may vary from time to
time, which rate is not necessarily the lowest rate on loans made by Agent at
any such time.
"Prime-based Advance" shall mean a Revolving Credit Advance or any
advance, readvance, refunding or conversion of all or any portion of a Term
Loan which bears interest at a rate based on the Prime-based Rate.
"Prime-based Rate" shall mean that rate of interest which is the
greater of (i) the Prime Rate or (ii) the Alternate Base Rate.
"Prior Credit Agreement" shall mean that certain Revolving Credit and
Letter of Credit Agreement dated as of December 4, 1990, as amended prior to
the date hereof.
"Priority Debt" shall mean, without duplication, (i) all indebtedness
of Restricted Subsidiaries, (ii) any indebtedness of the Company secured by
Liens permitted by Sections 10.1(f), (g), (j) or (k) hereof and (iii) all
indebtedness arising from Receivables Financing(s).
"Pro Forma Projected Financial Information" shall mean, as to any
proposed acquisition a statement (supported by reasonable detail) setting forth
the total consideration to be paid or incurred in connection with the proposed
acquisition and, pro forma combined projected financial information for the
Company and its Consolidated Subsidiaries and the acquisition target (if
applicable), consisting of projected balance sheets as of the proposed
effective date of the acquisition or the closing date and as of the end of at
least the next succeeding three (3) Fiscal Years of Company following the
acquisition and projected statements of income for each of those years,
including sufficient detail to permit calculation of the amounts and the ratio
described in Sections 9.14, 9.15 and 10.2 (as to Funded Debt and Priority Debt)
hereof, as projected as of the effective date of the acquisition and for those
Fiscal Years and accompanied by (i) a statement setting forth a calculation of
the ratios and amounts so described, (ii) a statement in reasonable detail
specifying all material assumptions underlying the projections and (iii) such
other information as the Majority Banks shall reasonably request.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Purchasing Lender" is defined in Section 5.8.
"Quoted Rate" shall mean the rate of interest per annum offered by the
Swing Line Bank in its sole discretion with respect to a Swing Line Advance.
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"Quoted Rate Advance" shall mean any Swing Line Advance which bears
interest at the Quoted Rate.
"Receivables Financing(s)" shall mean any accounts receivable
securitization program or other type of financing transaction involving
accounts entered into by the Company or any of its Restricted Subsidiaries, on
terms and conditions usual and customary for such transactions and otherwise in
compliance with this Agreement; provided that substantially all the
indebtedness incurred in connection therewith is obtained from the sale or
encumbrance of accounts, and not otherwise; and provided further that the
amount advanced by buyers or lenders in respect of any Receivables Financing(s)
shall not be less than eighty percent (80%) of the aggregate book value, of the
accounts sold or pledged, calculated for each account as of the time of the
sale or pledge thereof.
"Redemption Debt Instruments" is defined in Section 10.7.
"Refunded Swing Line Advance" is defined in Section 3A.5 hereof.
"Reimbursement Obligation" shall mean the obligation of an Account
Party(ies) under each Letter of Credit Agreement to reimburse the Agent for
each payment made by the Agent under the Letter of Credit issued pursuant to
such Letter of Credit Agreement, together with all other sums, fees, charges
and amounts which may be owing to the Agent under such Letter of Credit
Agreement, and shall include the obligation of Company to make such
reimbursement pursuant to its guaranty of such obligations of the Account
Parties other than Company.
"Rentals" shall mean and include all fixed rents (including as such
all payments which the lessee is obligated to make to the lessor on termination
of the lease or surrender of the property) payable by the Company or a
Restricted Subsidiary, as lessee or sublessee under a lease of real or personal
property, but shall be exclusive of any amounts required to be paid by the
Company or a Restricted Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
"Request for Revolving Credit Advance" shall mean a Request for
Revolving Credit Advance issued by Company under Section 2.3 of this Agreement
in the form annexed hereto as Exhibit A-1, as amended or otherwise modified.
"Request for Swing Line Advance" shall mean a Request for Swing Line
Advance issued by Company under Section 3A.3 of this
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Agreement in the form attached hereto as Exhibit A-2, as amended or otherwise
modified.
"Required Consummation Date" shall mean September 30, 1996, or such
later date as may be approved in writing by each of the Banks.
"Restricted Investment" shall mean the amount of any cash or other
assets invested, advanced or loaned by the Company or any Restricted Subsidiary
in or to an Unrestricted Subsidiary plus the amount of any obligation or
liability of any Unrestricted Subsidiary with respect to which the Company or
any Restricted Subsidiary is, directly or indirectly, liable whether such
liability arises by virtue of agreement or instrument entered with or for the
benefit of an Unrestricted Subsidiary (including by way of example and without
limitation, any obligation which is in economic effect a guaranty, regardless
of its characterization, or any liability with respect to letters of credit,
whether contingent or otherwise), or by operation of law (including by way of
example and without limitation, liability for ERISA funding, environmental
hazards, hazardous and solid waste handling practices and/or cleanup liability
imposed under CERCLA, RCRA or similar state statutes), or otherwise.
"Restricted Subsidiary" shall mean (a) LaSalle, Michigan Seamless,
Nichols, Piper and Quanex Bar, Inc., a Delaware corporation and (b) any
Subsidiary designated as such by resolution of the board of directors of the
Company and (i) that is organized under the laws of the United States or any
State thereof, (ii) that conducts substantially all of its business and has
substantially all of its assets within the United States, (iii) of which eighty
percent (80%) or more (by number of votes) of the voting stock is owned by the
Company and/or one or more Restricted Subsidiaries and (iv) that concurrently
with its designation as a Restricted Subsidiary shall execute and deliver to
the holders of the Notes a supplemental guaranty of the obligations of the
Company under the Notes pursuant to a guaranty substantially identical to the
form of guaranty attached hereto as Exhibit J, if the execution and delivery
thereof is required by Section 9.16 of this Agreement. For purposes of this
Agreement, the term "Restricted Subsidiary" shall not include (x) any
Subsidiary that was an "Unrestricted Subsidiary" pursuant to the terms of this
Agreement and (y) any Subsidiaries of an Unrestricted Subsidiary.
"Revolving Credit Advance" shall mean a borrowing requested by Company
and made by the Banks under Section 2.1 of this Agreement, including without
limitation any readvance, refunding or conversion of such borrowing pursuant to
Section 4.3 hereof and any advance in respect of a Letter of Credit under
Section 3.7 hereof.
"Revolving Credit Aggregate Commitment" shall mean One Hundred Fifty
Million Dollars ($150,000,000); provided, however, that, subject to reduction
or termination of the Revolving Credit
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Committed Increase under Section 2.6, 2.8, 3B.3, 4.3 or 11.2 hereof, said
amount shall increase to Two Hundred Fifty Million Dollars ($250,000,000)
concurrently with the Piper Acquisition Date, so long as no Default or Event of
Default has occurred and is continuing on such date.
"Revolving Credit Commitment Fee" shall mean the commitment fee
payable to Agent for distribution to the Banks pursuant to Section 2.5 hereof.
"Revolving Credit Committed Increase" shall mean, subject to reduction
or termination pursuant to Section 2.6, 2.7 or 11.2 hereof, (i) from the date
hereof to but not including the Piper Acquisition Date One Hundred Million
Dollars ($100,000,000) and (ii) from and after the Piper Acquisition Date, zero
(0).
"Revolving Credit Maturity Date" shall mean the earlier to occur of
(i) July 23, 2001 or such later date as is agreed to by the Company and the
Banks pursuant to the provisions of Section 2.9, and (ii) the date on which the
Revolving Credit Aggregate Commitment shall be terminated pursuant to Section
2.6 or 11.2 hereof.
"Revolving Credit Notes" shall mean the Notes described in Section
2.1, hereof, made or to be made by Company to each of the Banks in the form
annexed to this Agreement as Exhibit B, as such Notes may be amended, renewed,
replaced or extended from time to time.
"S&P" shall mean Standard & Poor's Ratings Group, or any successor
thereto, acceptable to the Majority Banks in their sole discretion.
"SFAS Adjustment" shall mean the amount of any adjustments required
pursuant to SFAS No. 106 "Employer's Accounting for Postretirement Benefits
Other Than Pension", including, without limitation any adjustments for prior
years booked in the first quarter of Company's 1992 Fiscal Year.
"Special Conditions" shall mean those special terms and conditions
required to be satisfied prior to or concurrently with the consummation of the
Piper Acquisition, as follows:
(a) there shall have been no material adverse change in the
condition, financial or otherwise, or prospects of the Target
Company, generally, or in the condition, financial or
otherwise, or prospects of the properties, business, results
or operations of the Target Company to be acquired by the
Company pursuant to the Piper Acquisition Letter of Intent
from that existing as of the date of this Agreement (as
determined in reference to the financial statements of the
Target Company covering its
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fiscal years 1993, 1994 and 1995, as previously delivered by
the Company to the Banks); nor shall any omission,
inconsistency, inaccuracy, or any change in presentation or
accounting standards which renders such financial statements
materially misleading have been determined by Agent or the
Majority Banks to exist;
(b) all governmental, quasi-governmental, agency, regulatory or
similar licenses, authorizations, exemptions, qualifications,
consents and approvals necessary or appropriate under any laws
applicable to Company or any of its Subsidiaries, or the
Target Company for or in connection with the Piper Acquisition
and all necessary or appropriate non-governmental and other
third-party approvals which, in each case, are material to
such acquisition shall have been obtained, and all necessary
or appropriate declarations, registrations or other filings
with any court, governmental or regulatory authority,
securities exchange or any other person have been made, and
evidence thereof satisfactory in form and substance to Agent
and the Majority Banks shall have been delivered, or caused to
have been delivered, by Company to Agent;
(c) There are no actions, suits or proceedings pending or, to the
knowledge of Company threatened against or affecting the
Target Company in any court or before or by any governmental
department, agency or instrumentality, an adverse decision in
which would materially adversely affect the financial
condition of the Target Company or the ability of the Target
Company to enter into or perform its obligations in connection
with the Piper Acquisition, nor are any actions, suits, or
proceedings pending, or to the knowledge of Company threatened
against Company or any of its Subsidiaries which would
materially adversely affect the ability of the Company or any
of its Subsidiaries to enter into or perform their respective
obligations in connection with the Piper Acquisition;
(d) the Company shall have designated Piper to be a Restricted
Subsidiary for all purposes of this Agreement, and shall have
complied with all requirements applicable to Restricted
Subsidiaries hereunder, including without limitation the
execution and delivery by Piper of a supplemental guaranty in
accordance with Section 9.16 hereof;
(e) the Company shall have delivered or caused to be delivered to
Agent and each of the Banks a certified copy (duly executed)
of that certain asset purchase agreement to be entered into
between the Target Company, B.F.
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Sammons and Marshall W. Robbins, as sellers, and the Company
and Piper, as purchasers, together with copies of the other
material acquisition documents to be executed and delivered
pursuant thereto, which agreement, and other acquisition
documents shall be on substantially the same terms as set forth
in the Piper Acquisition Letter of Intent; and
(f) the Company shall have delivered or caused to be delivered to
Agent (as evidenced by Agent's written confirmation thereof)
updated schedule(s) of the Permitted Liens, and the matters
shown on such updated schedule(s) do not differ materially
adversely from the matters disclosed by Company on Schedule
10.1, hereto (as evidenced by Agent's written confirmation
thereof), or have been approved by the Majority Banks, in
their sole discretion (upon which event Schedule 10.1 hereto
shall be deemed amended to include such additional matters).
"Subordinated Debentures" shall mean the 6.88% Convertible
Subordinated Debentures of the Company due June 30, 2007.
"Subsidiaries" shall mean any other corporation, association, joint
stock company, partnership, joint venture, limited liability company or
partnership, business trust or other entity of which more than fifty percent
(50%) of the outstanding voting stock or membership or other interests, as the
case may be, is owned either directly or indirectly by Company or one or more
of its Subsidiaries or by Company and one or more of its Subsidiaries.
"Swing Line Advance(s)" shall mean a borrowing made by Swing Line Bank
to Company pursuant to Section 3A.1 hereof, including without limitation, any
readvance, refunding or conversion of such borrowing pursuant to Section 3A.5
hereof.
"Swing Line Bank" shall mean Comerica Bank, in its capacity as lender
under Section 3A of this Agreement, and its successors and assigns.
"Swing Line Note" shall mean the swing line note described in Section
3A.1 hereof, made by Company to Swing Line Bank in the form annexed hereto as
Exhibit C, as such Note may be amended, renewed, replaced or extended from time
to time.
"Tangible Net Worth" shall mean the total common shareholder's equity
of Company and its Restricted Subsidiaries on a Consolidated basis, together
with the amounts, if any, of preferred stock which is classified as part of
shareholder's equity, as reflected on the most recent regularly prepared
quarterly balance sheet of Company and its Subsidiaries, which balance sheet
shall be prepared in accordance with generally accepted accounting principles
consistently applied plus, in the event any Preferred Stock shall
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be converted into or exchanged for Subordinated Debentures which are
outstanding at the time of determination of Tangible Net Worth, the amount of
net cash proceeds originally received by the Company from the sale of the
Preferred Stock so converted, plus, the SFAS Adjustment less (a) the amount of
all assets classified as intangible assets (including, without limitation,
goodwill, trade-marks, trade names, patents, copyrights, franchises and
unamortized debt discount and expenses) exclusive of deferred charges, (b) the
aggregate amount expended during the applicable quarter for all dividends,
distributions, purchases, redemptions, other acquisitions or retirements of
stock, and (c) the aggregate amount of Restricted Investments in excess of
Forty Million Dollars ($40,000,000).
"Target Company" shall mean Piper Impact, Inc., a Tennessee
corporation.
"Term Loan Aggregate Commitment" shall mean One Hundred Million
Dollars ($100,000,000) as reduced from time to time (i) pursuant to Section
3B.3 hereof by the amount of each Term Loan funded from time to time hereunder
as of the date of the funding of each such Term Loan or (ii) pursuant to
Section 2.6 or 4.3(c) hereof.
"Term Loan Funding Period" shall mean a period commencing on the Piper
Acquisition Date and ending on the first anniversary of the date of this
Agreement.
"Term Loan Maturity Date" shall mean a maturity date for a Term Loan
selected by the Company pursuant to Section 3B hereof; provided, however, that
such date shall not be more than seven years from the date of funding of each
such Term Loan and in any event, shall not be later than July 23, 2004.
"Term Loan Permitted Amortization Schedule" shall mean the
amortization schedule selected by Company for a specified Term Loan based on
equal quarterly installments of principal sufficient to pay and discharge in
full the initial amount of the applicable Term Loan over the stated term of
such loan, commencing on the last Business Day of the first calendar quarter
ending after the funding date of such loan and continuing on the last Business
Day of each calendar quarter thereafter to and including the applicable Term
Loan Maturity Date; provided however, in establishing the applicable
amortization schedule, that Company may elect to make payments of interest only
during the first four years of the term of any such loan (or any portion of
such initial four year period), in which event principal amortization will be
required in equal quarterly installments sufficient to pay and discharge in
full the initial amount of the applicable Term Loan over the remaining term of
such loan, commencing on the last Business Day of the first calendar quarter
ending after the expiration of the interest-only period selected by Company and
continuing on the last Business Day
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of each calendar quarter thereafter to and including the applicable Term Loan
Maturity Date; and provided further that, for each Term Loan with a Term Loan
Maturity Date of four years or less from the initial date of funding thereof,
no principal amortization will be required during the stated term of such loan
and the entire outstanding principal balance shall be due and payable on the
applicable Term Loan Maturity Date.
"Term Loan Initial Request" shall mean a request for the initial
funding of a Term Loan submitted by the Company to the Agent under Section 3B.3
of this Agreement in the form annexed hereto as Exhibit G.
"Term Loan Rate Request" shall mean a request for the refunding or
conversion of any Advance of a Term Loan submitted by Company under Section
3B.4 of this Agreement in the form annexed hereto as Exhibit H.
"Term Loan Reduction Proceeds" is defined in Section 4.3(c).
"Term Loan Request" shall mean a Term Loan Initial Request or a Term
Loan Rate Request, or both such requests, as the context may indicate.
"Term Loans" shall mean the term loans to be advanced by the Banks to
the Company pursuant to Section 3B.1 hereof, in an aggregate amount not to
exceed the Term Loan Aggregate Commitment, and "Term Loan" shall mean any
specified Term Loan funded pursuant thereto.
"Term Notes" shall mean the term notes described in Section 3B.1
hereof, made by Company to each of the Banks in the form annexed to this
Agreement as Exhibit F, as the case may be, as such notes may be amended,
renewed, replaced, extended or supplemented from time to time.
"type" shall mean, relative to any Advance (including an Advance of
Term Loan), the portion thereof, if any, being maintained as a Prime-based
Advance or an a Eurodollar-based Advance.
"Unrestricted Subsidiary" shall mean any Subsidiary that is not a
Restricted Subsidiary, including without any limitation any Subsidiary that was
at one time a Restricted Subsidiary but that has been designated an
Unrestricted Subsidiary pursuant to the terms of this Agreement.
2. THE INDEBTEDNESS: REVOLVING CREDIT
2.1 Revolving Commitment. Subject to the terms and conditions of
this Agreement (including without limitation Section 2.3 hereof), each Bank
severally agrees to make Revolving Credit
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Advances to Company at any time and from time to time from the Effective Date
until the Revolving Credit Maturity Date, and Company may borrow, sums not to
exceed each such Bank's Percentage of the Revolving Credit Aggregate
Commitment, as set forth on Schedule 1.1, attached hereto. All of the Revolving
Credit Advances under this Section 2.1 shall be evidenced by Revolving Credit
Notes under which advances, repayments and readvances may be made, subject to
the terms and conditions of this Agreement.
2.2 Type of Advance and Maturity. The Revolving Credit Notes, and
all principal and interest outstanding thereunder, shall mature and become due
and payable in full on the Revolving Credit Maturity Date, and each Revolving
Credit Advance from time to time outstanding hereunder shall be either a
Prime-based Advance or a Eurodollar-based Advance as the Company may elect
subject to the provisions hereof. The amount and date of each Revolving Credit
Advance, its Applicable Interest Rate, its Interest Period, if any, and the
amount and date of any repayment shall be noted on Agent's records, which
records will be presumed correct; provided, however, that any failure by the
Agent to record any such information shall not relieve the Company of its
obligation to repay the outstanding principal amount of such Advance, all
interest accrued thereon and any amount payable with respect thereto in
accordance with the terms of this Agreement and the other Loan Documents.
2.3 Requests for and Refundings and Conversion of Revolving Credit
Advances. Company may request a Revolving Credit Advance, refund any such
Advance in the same type of Advance or convert any such Advance to any other
type of such Advance only after delivery to Agent of a Request for Revolving
Credit Advance executed by an authorized officer of Company and subject to the
following:
(a) each such Request for Revolving Credit Advance shall set forth
the information required on the Request for Revolving Credit
Advance form annexed hereto as Exhibit A-1 including without
limitation:
(i) the proposed date of such Advance, which must
be a Business Day;
(ii) whether such Advance is a refunding or
conversion of an outstanding Advance; and
(iii) whether such Advance is to be a Prime-based
Advance or a Eurodollar-based Advance, and,
except in the case of a Prime-based Advance,
the first Interest Period applicable thereto;
(b) each such Request for Revolving Credit Advance shall be
delivered to Agent by 11:00 a.m. (Detroit time) three (3)
Business Days prior to the proposed date of Advance, except in
the case of a Prime-based Advance, for which
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the Request for Revolving Credit Advance must be delivered by
11:00 a.m. (Detroit time) on such proposed date of Advance;
(c) the principal amount of such Advance, plus the amount of any
outstanding Indebtedness having the same Applicable Interest
Rate and Interest Period, if any, shall be (i) in the case of
a Prime-based Advance, at least Three Million Dollars
($3,000,000), and (ii) in the case of a Eurodollar-based
Advance, at least Five Million Dollars ($5,000,000) or any
larger amount in an integral multiple of One Hundred Thousand
($100,000);
(d) a Request for Revolving Credit Advance, once delivered to
Agent, shall not be revocable by Company;
(e) the principal amount of such Revolving Credit Advance, plus
the outstanding principal amount of all other Revolving Credit
Advances plus the outstanding principal amount of all Swing
Line Advances hereunder plus the Letter of Credit Obligations,
in each case as of the date of the requested Advance, shall
not exceed the then applicable Revolving Credit Aggregate
Commitment; provided however, that, in the case of any
Revolving Credit Advance being applied to refund an
outstanding Swing Line Advance, the aggregate principal amount
of Swing Line Advances to be refunded shall not be included
for purposes of calculating the limitation under this Section
2.3(e);
(f) upon completion of the Revolving Credit Advance there shall be
no more than five (5) Interest Periods and five (5) Applicable
Interest Rates (including the Prime-based Rate) with respect
to all outstanding Revolving Credit Advances.
(g) each Request for Revolving Credit Advance shall constitute a
certification by the Company as of the date thereof that:
(i) both before and after the Revolving Credit
Advance, the obligations of the Company and
its Subsidiaries set forth in this Agreement
and any of the Loan Documents are the valid
and binding obligations of the Company and
each of its Subsidiaries, as the case may be,
enforceable in accordance with their
respective terms, except as the validity or
enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or
other similar laws affecting creditors'
rights generally or other equitable
principles
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(regardless of whether enforcement is
considered in proceedings in law or equity);
(ii) all conditions to the making of the Revolving
Credit Advance have been satisfied, and shall
remain satisfied to the date of such Advance
(both before and after giving effect to such
Advance);
(iii) there is no Event of Default, in existence,
and no event which, with the giving of notice
or the lapse of time, or both, would
constitute such an Event of Default, and none
will exist upon the making of the Revolving
Credit Advance (both before and after giving
effect to such Advance);
(iv) the representations and warranties contained
in this Agreement and the Loan Documents are
true and correct in all material respects and
shall be true and correct in all material
respects as of the making of the Revolving
Credit Advance (both before and after giving
effect to such Advance); and
(v) the execution of the Request for Revolving
Credit Advance will not violate the terms and
conditions of any material contract,
agreement or other borrowing of Company.
The Agent may advance funds under the Revolving Credit Notes upon
telephone request made by any one of those officers or agents of Company
authorized by resolution of Company's Board of Directors to make such requests.
Any such telephone request shall satisfy the time requirements set forth in
Section 2.3(b) above. Company hereby authorizes Agent and each Bank to disburse
Revolving Credit Advances pursuant to the instructions of any officer or agent
so identified. On the same day as such request for a Revolving Credit Advance
is made, the officer or agent requesting the advance shall mail to Agent a
Request for Revolving Credit Advance in form similar to that attached hereto as
Exhibit A-1, executed by an authorized officer or agent of Company and, until
such Request for Revolving Credit Advance is received by Agent, the telephone
request itself shall constitute the Company's certification of the matters set
forth in Section 2.3(f) above. Notwithstanding the foregoing, the Company
acknowledges that Company shall bear all risk of loss resulting from
disbursements made upon any telephone request until such time as Agent receives
the written confirmation of such request except to the extent any actions have
been taken prior thereto in reliance thereon.
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If, as to any outstanding Eurodollar-based Advance, Agent has not
received payment on the last day of the Interest Period applicable thereto, or
does not receive a timely Request for Revolving Credit Advance meeting the
requirements of this Section 2.3 with respect to the refunding or conversion of
such Advance, or, subject to Section 4.1 hereof, if on such day an Event of
Default, or event which, with the giving of notice or the lapse of time, would
become an Event of Default shall exist, the principal amount thereof which is
not then prepaid shall be converted automatically to a Prime-based Advance and
the Agent shall thereafter promptly notify Company of said action.
2.4 Disbursement of Revolving Credit Advances. (a) Upon receiving
any Request for Revolving Credit Advance (or telephone request) from Company
under Section 2.3 hereof, Agent shall promptly notify each Bank by wire, telex
or by telephone, including facsimile transmission (confirmed by wire or telex)
of the amount of such Revolving Credit Advance to be made and the date such
Revolving Credit Advance is to be made by said Bank pursuant to its Percentage
of the Revolving Credit Aggregate Commitment. Unless the conditions for
Revolving Credit Advance are not met by Company or such Bank's portion of the
Revolving Credit Aggregate Commitment shall have been suspended or terminated
in accordance with this Agreement, each Bank shall, not later than 2:00 p.m.
(Detroit time) on the date of such Revolving Credit Advance, make available the
amount of its Percentage of the Revolving Credit Advance in immediately
available funds to Agent, at the office of Agent located at One Detroit Center,
Detroit, Michigan 48226;
(b) Subject to submission of an executed Request for Revolving
Credit Advance by Company without exceptions noted in the compliance
certification therein, Agent shall make available to Company not later than
4:00 p.m. (Detroit time) on such date the aggregate of the amounts so received
by it in like funds by credit to an account of Company maintained with Agent or
to such other account or third party as Company may direct. Agent shall deliver
the documents and papers received by it for the account of each Bank to such
Bank or upon its order;
(c) Unless Agent shall have been notified by any Bank prior to the
date of any proposed Revolving Credit Advance that such Bank does not intend to
make available to Agent such Bank's Percentage of the Revolving Credit Advance,
Agent may assume that such Bank has made such amount available to Agent on such
date and may, in reliance upon such assumption, make available to Company a
corresponding amount. If such amount (having been made available to Company by
Agent) is not in fact made available to Agent by such Bank, Agent shall be
entitled to recover such amount on demand from such Bank. If such Bank does not
pay such amount forthwith upon Agent's demand therefor, the Agent shall
promptly notify Company and Company shall pay such amount to Agent. Agent shall
also be entitled to recover from such Bank or Company, as the case may be,
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interest on such amount in respect of each day from the date such amount was
made available by Agent to Company to the date such amount is recovered by
Agent, at a rate per annum equal to:
(i) in the case of such Bank, with respect to
Prime-based Advances, the Federal Funds
Effective Rate, and with respect to
Eurodollar-based Advances, Agent's aggregate
marginal cost (including the cost of
maintaining any required reserves or deposit
insurance and of any fees, penalties,
overdraft charges or other costs or expenses
incurred by Agent as a result of such failure
to deliver funds hereunder) of carrying such
amount;
(ii) in the case of Company, the rate of interest
then applicable to such Revolving Credit
Advance; and
(iii) in the case of such Bank or Company with
respect to Advances required to be made
pursuant to Sections 3.7 and 3.8 hereof, the
rate of interest set forth in subsection
3.7(a)(iii) hereof.
The obligation of any Bank to make any Revolving Credit Advance shall
not be affected by the failure of any other Bank to make any Revolving
Credit Advance and no Bank shall have any liability to Company, the
Agent, or any other Bank for another Bank's failure to make any
Revolving Credit Advance hereunder.
2.5 Revolving Credit Commitment Fee. From the Effective Date to
the Revolving Credit Maturity Date, the Company shall pay to the Agent on
behalf of Banks a Revolving Credit Commitment Fee quarterly in arrears
commencing November 1, 1996, and on the first day of each Fiscal Quarter
thereafter. The Revolving Credit Commitment Fee shall be the sum of:
(a) the Applicable Commitment Fee Percentage times the
daily average amount by which the Revolving Credit Aggregate
Commitment then applicable under Section 2.6 hereof exceeds the sum of
(i) the aggregate principal amount of Revolving Credit Advances
outstanding from time to time hereunder, (ii) the amount of Letter of
Credit Obligations during such period, and (iii) the aggregate
principal amount of Swing Line Advances outstanding from time to time
hereunder, in each case determined on a daily basis; and
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(b) the Applicable Commitment Fee Percentage times the
then applicable amount of the Revolving Credit Committed Increase (if
any), calculated on a daily basis.
The Revolving Credit Commitment Fee shall be computed on the basis of a year of
three hundred sixty (360) days and assessed for the actual number of days
elapsed. Whenever any payment of the Revolving Credit Commitment Fee shall be
due on a day which is not a Business Day, the date for payment thereof shall be
extended to the next Business Day. Upon receipt of such payment, Agent shall
make prompt payment to each Bank of its share of the Revolving Credit
Commitment Fee based upon its respective Percentage. It is expressly understood
that the commitment fees described in this Section are not refundable under any
circumstances.
2.6 Optional Reduction or Termination of Revolving Credit
Aggregate Commitment. Provided that the Revolving Credit Committed Increase
shall have first been permanently terminated or cancelled in accordance with
this Agreement in its entirety, upon at least five (5) Business Days' prior
written or telegraphic notice to the Agent, the Company may permanently reduce
the Revolving Credit Aggregate Commitment in whole at any time, or in part from
time to time, without premium or penalty, provided that: (i) each partial
reduction of the Revolving Credit Aggregate Commitment shall be in an aggregate
amount equal to Ten Million Dollars ($10,000,000) or any larger amount in an
integral multiple One Million Dollars ($1,000,000); (ii) each reduction or
termination shall be accompanied by the payment of the Revolving Credit
Commitment Fee, if any, accrued on the amount of the Revolving Credit Aggregate
Commitment so reduced through the date of such reduction or termination; (iii)
the Revolving Credit Aggregate Commitment, as so reduced, shall not be less
than the aggregate face amount of outstanding Letters of Credit; (iv) the
Company shall prepay the amount, if any, by which the sums of the then
outstanding aggregate unpaid principal amount of Swing Line Advances and
Revolving Credit Advances plus the Letter of Credit Obligations exceeds the
amount of the Revolving Credit Aggregate Commitment as so reduced, together
with interest thereon to the date of prepayment; and (v) if the termination or
reduction of the Revolving Credit Aggregate Commitment requires the prepayment
of a Eurodollar-based Advance or a Quoted Rate Advance, the termination or
reduction may be made only on the last Business Day of the then current
Interest Period applicable to such Advance. Reductions of the Revolving Credit
Aggregate Commitment and any accompanying payment of the Revolving Credit
Commitment Fee and prepayments of the Revolving Credit Notes shall be
distributed to each Bank in accordance with such Bank's Percentage thereof. Any
reductions of the Revolving Credit Aggregate Commitment hereunder shall
automatically reduce the Term Loan Aggregate Commitment then in effect.
2.7 Optional Cancellation of Revolving Credit Committed Increase.
Prior to the Piper Acquisition Date, the Company may at
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any time, upon at least twenty (20) Business Days' prior written notice to the
Agent (accompanied by the payment of that portion of the Revolving Credit
Commitment Fee, if any, accrued to the date of such cancellation applicable to
the Revolving Credit Committed Increase assessed under Section 2.5, above)
permanently cancel, in whole but not in part, the Revolving Credit Committed
Increase then in effect (if any), in which case the Revolving Credit Committed
Increase shall be zero (0) and the Banks shall have no further obligation for
any increases in the Revolving Credit Aggregate Commitment based on the
Revolving Credit Committed Increase.
2.8 Mandatory Reduction of Revolving Credit Aggregate Commitment.
In the event from time to time from and after the date of this Agreement of the
Company's entry into any Receivables Financing, the Company shall, to the
extent of 100% of the aggregate maximum financing proceeds available therefrom
(any and all such proceeds, the "Facility Reduction Proceeds"), concurrently
with each entry into each Receivables Financing, permanently reduce the
Revolving Credit Aggregate Commitment by complying with the terms and
conditions of Section 2.6 hereof (including any reductions of Indebtedness
outstanding under the Revolving Credit or the Swing Line required thereby),
except that, for purposes of the reduction of the Revolving Credit Aggregate
Commitment under this Section 2.8, the Company shall not be required to comply
with subparagraph (i) of Section 2.6 or the five day notice requirement
contained in the preamble thereto. To the extent that Indebtedness under the
Revolving Credit Notes which is subject to repayment as a result of the
reduction in the Revolving Credit Aggregate Commitment hereunder (and under
Section 2.6 hereof) is being carried at the Eurodollar- based Rate and no Event
of Default, or event which with the lapse of time or the giving of notice or
both would constitute such an Event of Default, has occurred and is continuing
hereunder, Company may deposit the aforesaid Facility Reduction Proceeds in a
cash collateral account to be held by Agent, for and on behalf of the Banks, on
such terms and conditions as reasonably acceptable to Agent and the Majority
Banks. Subject to the terms and conditions of the cash collateral account,
sums on deposit in said cash collateral account shall be applied (until
exhausted) to reduce the principal balance of the Revolving Credit Notes in
accordance with this subparagraph and in accordance with Section 2.6 hereof, on
the last day of each Interest Period attributable to such Eurodollar-based
Advances.
2.9 Extension of Revolving Credit Maturity Date. Provided that no
Event of Default, or event which with the lapse of time or the giving of notice
or both would become an Event of Default, has occurred and is continuing,
Company may, by written notice to Agent and each Bank (which notice shall be
irrevocable and which shall not be deemed effective unless actually received by
Agent and each Bank) prior to June 30, but not before June 16, of each year,
request that the Banks extend the then applicable Revolving Credit Maturity
Date to a date that is one year later than the Revolving
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Credit Maturity Date then in effect (each such request, a "Request"). Each
Bank shall, not later than thirty (30) Business Days following the date of its
receipt of a Request, give written notice to the Agent stating whether such
Bank is willing to extend the Revolving Credit Maturity Date as requested. If
Agent has received the aforesaid written approvals of such Request from each of
the Banks, then, effective fifteen (15) Business Days after the date of Agent's
receipt of all such written approvals from the Banks, as aforesaid, the
Revolving Credit Maturity Date shall be so extended for an additional one year
period, the term Revolving Credit Maturity Date shall mean such extended date
and Agent shall promptly notify the Company and the Banks that such extension
has occurred. If (i) any Bank gives the Agent written notice that it is
unwilling to extend the Revolving Credit Maturity Date as requested or (ii) any
Bank fails to provide written approval to Agent of such a Request within thirty
(30) Business Days of the date of Agent's receipt of the Request, then (x) the
Banks shall be deemed to have declined to extend the Revolving Credit Maturity
Date, (y) the then-current Revolving Credit Maturity Date shall remain in
effect (with no further right on the part of Company to request extensions
thereof under this Section 2.9) and (z) the commitments of the Banks to make
Advances of the Revolving Credit hereunder and of Swing Line Bank to make Swing
Line Advances shall terminate on the Revolving Credit Maturity Date then in
effect, and Agent shall promptly notify Company and the Banks thereof.
3. LETTERS OF CREDIT.
3.1 Letters of Credit. Subject to the terms and conditions of this
Agreement, Agent may through its Issuing Office, in its sole discretion, at any
time and from time to time from the Effective Date until the Revolving Credit
Maturity Date, upon the request of an Account Party, issue Letters of Credit
for the account of such Account Party, in an aggregate amount at any one time
outstanding not to exceed the Letter of Credit Maximum Amount. Each Letter of
Credit shall provide an initial expiration date not later than one (1) year
from its date of issuance (subject to renewals in Agent's sole discretion) and
that it is available by drafts drawn at sight and presentation of documents
(which shall be payable within three (3) Business Days of sight, provided that
the terms and conditions of the Letter of Credit are complied with); provided
that each Letter of Credit shall expire (notwithstanding any renewals thereof)
three (3) Business Days prior to the Revolving Credit Maturity Date. Provided
further, that all applications will be submitted and all Letters of Credit
issued hereunder shall be subject in all respects to applicable provisions of
U.S. law and regulations, including without limitation, the Trading With the
Enemy Act, Export Administration Act, International Emergency Economic Powers
Act, and the Regulations of the Office of Foreign Assets Control of the U.S.
Department of the Treasury. Upon the Effective Date, all letters of credit
issued pursuant to the Prior Credit Agreement shall be deemed to be Letters of
Credit issued
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under this Agreement and shall be subject to the terms of this Agreement.
3.2 Conditions to Issuance. No Account Party shall be issued any
Letter of Credit unless, as of the date the issuance of such Letter of Credit
is requested:
(a) the face amount of the Letter of Credit requested plus all
Letter of Credit Obligations, do not exceed the Letter of
Credit Maximum Amount;
(b) the face amount of the Letter of Credit requested, plus the
principal amount of all outstanding Revolving Credit Advances
and outstanding Swing line Advances plus all Letter of Credit
Obligations, do not exceed the then applicable Revolving
Credit Aggregate Commitment;
(c) the obligations of Company and its Subsidiaries set forth in
this Agreement and any of the Loan Documents are valid,
binding and enforceable obligations of Company and each of its
Subsidiaries, as the case may be, except as the validity or
enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting
creditors' rights generally or other equitable principles
(regardless of whether enforcement is considered in
proceedings in law or equity);
(d) no Event of Default exists and no event which, with the giving
of notice or lapse of time, or both, would constitute an Event
of Default exists;
(e) the representations and warranties contained in this Agreement
and the Loan Documents are true in all material respects;
(f) the execution of the Letter of Credit Agreement with respect
to the Letter of Credit requested will not violate the terms
and conditions of any contract, agreement or other borrowing
of Company or the Account Party;
(g) the Account Party requesting the Letter of Credit shall have
delivered to Agent and the Issuing Office, not less than five
(5) Business Days prior to the requested date for issuance,
the Letter of Credit Agreement related thereto, together with
such other documents and materials as may be required pursuant
to the terms thereof, and the terms of the proposed Letter of
Credit shall be satisfactory to Agent and its Issuing Office;
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(h) no order, judgment or decree of any court, arbitrator or
governmental authority shall purport by its terms to enjoin or
restrain Agent from issuing the Letter of Credit, or any Bank
from taking an assignment of its Percentage thereof pursuant
to 3.4 hereof, and no law, rule, regulation, request or
directive (whether or not having the force of law) shall
prohibit or request that Agent refrain from issuing, or any
Bank refrain from taking an assignment of its Percentage of,
the Letter of Credit requested or letters of credit generally;
and
(i) Agent shall have received the issuance fee required in
connection with the issuance of such Letter of Credit pursuant
to Section 3.6 hereof.
Each Letter of Credit Agreement submitted to Agent pursuant hereto shall
constitute the requesting party's certification of the matters set forth in
this Section 3.2 (a) through (i).
3.3 Notice. Agent shall give notice, substantially in the form
attached as Exhibit I, to each Bank of the issuance of each Letter of Credit,
promptly after issuance of each Letter of Credit, specifying the amount thereof
and the amount of such Bank's Percentage thereof.
3.4 Assignments of Letters of Credit. Immediately upon Agent's
issuance of any Letters of Credit in accordance with the terms hereof, each
Bank shall be deemed to have, without further action on the part of Agent or
such Bank, irrevocably and unconditionally purchased and received, without
recourse or warranty, a participation in and assignment of Agent's engagement
under such Letter of Credit in an amount equal to such Bank's Percentage of the
face amount of such Letter of Credit, and Banks hereby absolutely and
unconditionally assume, as primary obligors and not sureties, and
unconditionally agree to pay and discharge when due in accordance with the
terms hereof, their respective Percentages of the Letter of Credit Payments
under such Letters of Credit. Agent shall give notice, substantially in the
form attached as Exhibit I, to each Bank of the issuance of each Letter of
Credit, not later than three (3) Business Day after issuance of each Letter of
Credit, specifying the amount thereof and the amount of such Bank's Percentage
thereof.
3.5 Letter of Credit Fees. Company agrees to pay, or to cause the
applicable Account Party to pay, to Agent for distribution to the Banks in
accordance with the Percentages, Letter of Credit Fees with respect to the
undrawn face amount of such Letter of Credit issued pursuant hereto, at a per
annum rate equal to the Applicable Letter of Credit Fee Percentage. Such fees
shall be payable quarterly in advance on the first Business Day of each Fiscal
Quarter and shall be calculated on the basis of a 360 day year and assessed for
the actual number of days elapsed from the date of the
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issuance of each Letter of Credit until the earlier of (i) the date of
expiration set forth in such Letter of Credit, or (ii) the date of surrender of
such Letter of Credit.
3.6 Issuance and Facing Fees. In connection with the Letters of
Credit, and in addition to the Letter of Credit Fees the Company will pay or
cause the applicable Account Party to pay, for the sole account of the Agent,
facing fees, letter of credit issuance fees and standard administration,
payment and cancellation charges assessed by Agent or its Issuing Office, at
the times, in the amounts and on the terms set forth (or to be set forth from
time to time) in a letter agreement between Agent and Company.
3.7 Draws Under Letters of Credit.
(a) Upon receipt of any draw against a Letter of Credit,
Agent shall promptly notify Company and the Account Party (if other than
Company) of the amount of such draw and the date for payment of such draw. The
Company hereby agrees to deposit with Agent (whether or not Company is Account
Party with respect to such Letter of Credit), on the first Business Day
subsequent to such notice an amount equal to all Reimbursement Obligations with
respect to such draw. So long as all of the conditions for Advances under the
Notes are complied with, Company shall be entitled to fund such deposit with
proceeds of an Advance requested in accordance with Section 2.3 hereof. In the
event that sufficient funds are not deposited with Agent on or before the date
for payment of a draft, Agent shall so notify Banks and, immediately upon
Agent's payment under any Letter of Credit and for all purposes of this
Agreement and the Loan Documents, the amount paid as a result of such draft (i)
shall constitute an Advance whether or not the Company is then entitled to any
Advances under this Agreement or is in default hereunder or otherwise (and the
Company shall not be entitled to refuse any such Advance), (ii) shall be
evidenced by the Revolving Credit Notes issued by the Company hereunder, (iii)
shall bear interest at the Prime-based Rate, plus three percent (3%) until
repaid, and (iv) shall be due and payable on demand.
(b) Any amounts so paid by Agent pursuant to a draft
against any Letter of Credit (regardless of whether it is considered to be an
Advance), with interest thereon as aforesaid, shall be considered to be
Indebtedness of the Company for all purposes of this Agreement and the Loan
Documents, and shall be covered thereby to the full extent thereof.
(c) In the event that Company fails to deposit with Agent
funds sufficient to pay Reimbursement Obligations with respect to any draft,
from the date of Agent's payment on such draft until Company and/or the Account
Party shall have paid Reimbursement Obligations resulting from such draft,
Company shall not be entitled to request or receive any Advance hereunder and
the
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Account Parties shall not be entitled to request or receive issuance of Letters
of Credit hereunder.
3.8 Funding of Letter of Credit Payment as Advance.
By or before 11 a.m. (Detroit time) on the date for payment of any
draft under any Letter of Credit, Agent shall promptly notify each Bank by
wire, telex or by telephone (confirmed by wire, telecopy or telex) of the
amount of such draft (providing each Bank with a copy of the draft and
accompanying certificate), and, if applicable, the amount of resulting
Revolving Credit Advances to be made pursuant to Section 3.7(a) hereof. Each
Bank hereby irrevocably and unconditionally agrees to make available the amount
of its Percentage of such Advance in immediately available funds to Agent, at
the office of Agent located at One Detroit Center, Detroit, Michigan, 48226, no
later than 2:00 p.m. (Detroit time) on the date of the Letter of Credit
Payments to be made in connection with such draft. In the event such draft is
not considered to be or is subsequently determined not to constitute an Advance
hereunder, each Bank shall nevertheless be obligated to make available its
Percentage of the draft, as aforesaid. By virtue of its issuance of the Letter
of Credit, Agent is obligated to pay a draft under the Letter of Credit whether
or not it has received each Bank's respective Percentage of the Advances
resulting therefrom. However, if such amount is not in fact made available to
Agent by such Bank, as aforesaid, Agent shall be entitled to recover such
amount on demand from such Bank. If such Bank does not pay such amount
forthwith upon Agent's demand therefor, the Agent shall promptly notify Company
and Company shall immediately repay such amount to Agent. Agent shall also be
entitled to recover from such Bank or Company, as the case may be, interest on
such amount in respect of each day from the date such amount was paid by Agent
pursuant to the draft related thereto, at a rate per annum equal to the rate of
interest referred to in Section 3.7(a)(iii) hereof. The obligation of any Bank
to make any Advance hereunder shall not be affected by the failure of any other
Bank to make any Advance hereunder, or to fund its Percentage of any Letter of
Credit Payment, as the case may be, and no Bank shall have any liability to
Company, any Account Party, the Agent, or any other Bank for another Bank's
failure to make any such Advance hereunder, or to fund such other Bank's
Percentage of any Letter of Credit Payment, as the case may be.
3.9 Obligations Irrevocable. The obligations of Company, and
Account Parties to make payments to Agent with respect to Reimbursement
Obligations under Section 3.7 hereof, and the obligations of Banks to make
payments to Agent with respect to Letter of Credit Payments pursuant to Section
3.8 hereof, shall be irrevocable and (except for Reimbursement Obligations
arising and Letter of Credit Payments made solely as a result of Agent's gross
negligence or willful misconduct) not subject to any qualification or exception
whatsoever, including, without limitation:
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(a) invalidity or unenforceability of this Agreement or any other
Loan Documents or any portions hereof or thereof;
(b) the existence of any claim, set-off, defense or other right
which Company, any other Account Party, or any Bank may have
against a beneficiary named in a Letter of Credit, Agent, any
Bank or any other Person;
(c) any draft, certificate or any other document presented in
connection with a Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(d) the occurrence of any Event of Default or event which, with
the lapse of time or giving of notice, or both, would
constitute an Event of Default;
(e) payment by the Agent in good faith under any Letter of Credit
against presentation of a draft or accompanying certificate
which on its face appears to comply with the terms of the
Letter of Credit;
(f) any failure, omission, delay or lack on the part of Agent or
any party to this Agreement or any of the Loan Documents to
enforce, assert or exercise any right, power or remedy
conferred upon Agent or any such party under any such
documents; or
(g) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets of
the Company or any Account Party; the receivership,
insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition with
creditors or readjustment or other similar proceedings
affecting the Company or any Account Party, or any of their
respective assets, or any allegation or contest of the
validity of this Agreement or any of the Loan Documents, in
any such proceedings.
3.10 Risk Under Letters of Credit. (a) In assigning and the
handling of Letters of Credit and any security therefor, or any documents or
instruments given in connection therewith, Agent shall have the sole right to
take or refrain from taking any and all actions under or upon the Letters of
Credit; provided, however, that without the prior written concurrence of the
Banks, Agent shall not (i) amend, modify, terminate or release any of
Company's, or any Account Party's, obligations respecting Letters of Credit or
under any of said documents or instruments or any security interest, mortgage
or guaranty given with respect thereto; (ii) compromise any claim or waive any
right or privilege against Company or any Account Party; or (iii) settle any
litigation
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respecting any Letter of Credit or any of said documents and instruments.
(b) Subject to other terms and conditions of this Agreement, Agent
shall hold the Letters of Credit and the documents related thereto in its own
name and shall make all collections thereunder and otherwise administer the
Letters of Credit in accordance with Agent's regularly established practices
and procedures and, except pursuant to Section 12.3 hereof, Agent will have no
further obligation with respect thereto. In the administration of Letters of
Credit, Agent shall not be liable for any action taken or omitted on the advice
of counsel, accountants, appraisers and other experts selected by Agent and
Agent may rely upon any notice, communication, certificate or other statement
from Company, any Account Party, beneficiaries of Letters of Credit, or any
other Person which Agent believes to be authentic. Agent will, upon request,
furnish the Banks with copies of Letter of Credit Agreements, Letters of Credit
and documents related thereto.
(c) In connection with the issuance and administration of Letters
of Credit and the assignments hereunder, Agent makes no representation and
shall have no responsibility with respect to (i) the obligations of Company or
any of the Account Parties or, the validity, sufficiency or enforceability of
any document or instrument given in connection therewith, or the taking of any
action with respect to same, (ii) the financial condition of, any
representations made by, or any act or omission of Company, any of the Account
Parties or any other Person, or (iii) any failure or delay in exercising any
rights or powers possessed by Agent in its capacity as issuer of Letters of
Credit. Each of the Banks expressly acknowledge that they have made and will
continue to make their own evaluations of Company's and the Account Parties'
creditworthiness without reliance on any representation of Agent or Agent's
officers, agents and employees.
(d) If at any time Agent shall recover any part of any
unreimbursed amount for any draft under a Letter of Credit, or any interest
thereon, Agent shall receive same for the pro rata benefit of the Banks in
accordance with their respective Percentage interests therein and shall
promptly deliver to each Bank its share thereof, less Bank's pro rata share of
the costs of such recovery, including court costs and attorney's fees. If at
any time any Bank shall receive from any source whatsoever any payment on any
such unreimbursed amount or interest thereon in excess of such Bank's
Percentage share of such payment, such Bank will promptly pay over such excess
to Agent, for redistribution in accordance with this Agreement.
3.11 Indemnification. The Company hereby indemnifies and holds
Agent and each of the Banks harmless from and against any and all claims,
damages, losses, liabilities, costs or expenses whatsoever which any such party
may incur (or which may be claimed against any
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such party by any person) by reason of or in connection with the execution and
delivery or transfer of, or payment or failure to pay under, any Letter of
Credit; provided, however, that the Company shall not be required to indemnify
Agent or the Banks pursuant to this Section 3.11 for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent
caused by (a) the willful and wrongful failure or willful and wrongful
misconduct or gross negligence of the Agent or (b) the Agent's willful failure
to pay under the Letter of Credit after the presentation to the Agent by a
Letter of Credit beneficiary of a sight draft and certificate(s) strictly
complying with the terms and conditions of the Letter of Credit. Nothing in
this Section 3.11 is intended nor shall be deemed to limit, reduce or otherwise
affect in any manner whatsoever the reimbursement obligation of Company and the
Account Parties contained in Section 3.8, hereof.
3.12 Liability of Agent or the Banks. The Company assumes all risks
of the acts or omissions of beneficiaries of the Letters of Credit and agrees
that neither the Agent nor any of the Banks (nor any of their respective
officers or directors) shall be liable or responsible for: (a) the use which
may be made of Letters of Credit or for any acts or omissions of any
beneficiary in connection therewith; (b) the validity, sufficiency or
genuineness of documents, or of any endorsement(s) thereof, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (c) payment by the Agent in good faith made
against presentation of documents which on their face appear to comply with the
terms of any Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit. In furtherance
and not in limitation of the foregoing, the Agent may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
3.13 Right of Reimbursement. Each Bank agrees to reimburse the
Agent on demand, pro rata in accordance their Percentages, for (i) the
out-of-pocket costs and expenses of the Agent to be reimbursed by Company or
any Account Party pursuant to any Letter of Credit Agreement or any Letter of
Credit, to the extent not reimbursed by Company or Account Party and (ii) any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, fees, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against Agent (in
its capacity as issuer of Letter of Credit) in any way relating to or arising
out of this Agreement, any Letter of Credit, any Letter of Credit Agreement,
except to the extent that such liabilities, losses, costs or expenses were
incurred by Agent solely as a result of Agent's gross negligence or willful
misconduct.
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3.14 Existing Letters of Credit. Each Existing Letter of Credit
shall be deemed for all purposes of this Agreement to be a Letter of Credit
(except that Letter of Credit Fees paid under the Prior Credit Agreement shall
not be recalculated, redistributed or reallocated by Agent to the Banks), and
each application submitted in connection with each Existing Letter of Credit
shall be deemed for all purposes of this Agreement to be a Letter of Credit
Application. On the date of execution of this Agreement, the Agent shall be
deemed automatically to have sold and transferred, and each other Bank shall be
deemed automatically, irrevocably, and unconditionally to have purchased and
received from the Agent, without recourse or warranty, an undivided interest
and risk participation, to the extent of such other Bank's Percentage, in each
Existing Letter of Credit and the applicable Reimbursement Obligations with
respect thereto and any security therefor or guaranty pertaining thereto.
3A. SWING LINE CREDIT.
3A.1 Swing Line Advances. The Swing Line Bank shall, on the terms
and subject to the conditions hereinafter set forth (including Section 3A.3),
make one or more advances (each such advance being a "Swing Line Advance") to
Company from time to time on any Business Day during the period from the
Effective Date to (but excluding) the Revolving Credit Maturity Date, in an
aggregate amount not to exceed Ten Million Dollars ($10,000,000) at any time
outstanding. All Swing Line Advances shall be evidenced by the Swing Line
Note, under which advances, repayments and readvances may be made, subject to
the terms and conditions of this Agreement. Each Swing Line Advance shall
mature and the principal amount thereof shall be due and payable by Company on
the last day of the Interest Period applicable thereto. In no event whatsoever
shall any outstanding Swing Line Advance be deemed to reduce, modify or affect
any Bank's commitment to make Revolving Credit Advances based upon its
Percentage.
3A.2 Accrual of Interest. Each Swing Line Advance shall, from time
to time after the date of such Advance, bear interest at its Applicable
Interest Rate. The amount and date of each Swing Line Advance, its Applicable
Interest Rate, its Interest Period, and the amount and date of any repayment
shall be noted on Agent's records, which records will be conclusive evidence
thereof, absent manifest error; provided, however, that any failure by the
Agent to record any such information shall not relieve Company of its
obligation to repay the outstanding principal amount of such Advance, all
interest accrued therein and any amount payable with respect thereto in
accordance with the terms of this Agreement and the Loan Documents.
3A.3 Requests for Swing Line Advances. Company may request a Swing
Line Advance only after delivery to Swing Line Bank of a Request for Swing Line
Advance executed by a person authorized by
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the Company to make such requests on behalf of Company, subject to the
following and to the remaining provisions hereof:
(a) each such Request for Swing Line Advance shall set forth the
information required on the Request for Swing Line Advance
including without limitation:
(i) the proposed date of Swing Line Advance,
which must be a Business Day;
(ii) whether such Swing Line Advance is to be a
Prime-based Advance or Quoted Rate Advance;
and
(iii) the duration of the Interest Period
applicable thereto;
(b) each such Request for Swing Line Advance shall be delivered to
Swing Line Bank by 12:00 p.m. (Detroit time) on the proposed
date of the Swing Line Advance;
(c) the principal amount of such requested Swing Line Advance,
plus the principal amount of all other Swing Line Advances
then outstanding, shall not exceed Ten Million Dollars
($10,000,000);
(d) the principal amount of such requested Swing Line Advance,
plus the principal amount of all other Swing Line Advances and
Revolving Credit Advances then outstanding hereunder
(including any Revolving Credit Advances requested to be made
on such date), plus any Letter of Credit Obligations as of the
date of the requested Swing Line Advance, shall not exceed the
then applicable Revolving Credit Aggregate Commitment;
(e) the principal amount of such Swing Line Advance shall be at
least Two Hundred Fifty Thousand Dollars ($250,000) or any
larger amount in integral multiples of Fifty Thousand Dollars
($50,000);
(f) each Request for Swing Line Advance, once delivered to Swing
Line Bank, shall not be revocable by Company, and shall
constitute and include a certification by the Company as of
the date thereof that:
(i) both before and after the Swing Line Advance,
the obligations of the Company and its
Subsidiaries set forth in this Agreement and
the Loan Documents, as applicable, are valid,
binding and enforceable obligations of such
parties;
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(ii) to the best knowledge of Company all
conditions to Advances have been satisfied;
(iii) there is no Default or Event of Default in
existence, and none shall exist upon the
making of the Swing Line Advance; and
(iv) the representations and warranties contained
in this Agreement and the Loan Documents are
true and correct in all material respects and
shall be true and correct in all material
respects as of and immediately after the
making of the Swing Line Advance.
Swing Line Bank shall promptly deliver to Agent by telecopier a copy of any
Request for Swing Line Advance received.
3A.4 Disbursement of Swing Line Advances. Subject to submission of
an executed Request for Swing Line Advance by Company without exceptions noted
in the compliance certification therein and to the other terms and conditions
hereof, Swing Line Bank shall make available to Company the amount so
requested, in same day funds, not later than 4:00 p.m. (Detroit time) on the
date of such Swing Line Advance by credit to an account of Company maintained
with Swing Line Bank or to such other account or third party as Company may
reasonably direct. Swing Line Bank shall promptly notify Agent of any Swing
Line Advance by telephone, telex or telecopier.
3A.5 Refunding of or Participation Interest in Swing Line Advances.
(a) The Agent, at any time in its sole and absolute discretion,
may (or, upon the request of the Swing Line Bank, shall) on behalf of the
Company (which hereby irrevocably directs the Agent to act on its behalf)
request each Bank (including the Swing Line Bank in its capacity as a Bank) to
make a Prime-based Revolving Credit Advance in an amount equal to such
Revolving Credit Bank's Percentage of the principal amount of the Swing Line
Advances (the "Refunded Swing Line Advances") outstanding on the date such
notice is given; provided that (i) at any time as there shall be a Swing Line
Advance outstanding for more than thirty days, the Agent shall, on behalf of
the Company (which hereby irrevocably directs the Agent to act on its behalf),
promptly request each Bank (including the Swing Line Bank) to make a Revolving
Credit Advance in an amount equal to such Revolving Credit Bank's Percentage of
the principal amount of such outstanding Swing Line Advance, (ii) Swing Line
Advances may be prepaid by the Company in accordance with the provisions of
Section 4.3 hereof and (iii) Quoted Rate Advances which are converted to
Revolving Credit Advances at the request of the Agent at a time when no Default
or Event of Default has occurred and is continuing
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shall not be subject to Section 5.1. Unless any of the events described in
Section 11.1(i) shall have occurred (in which event the procedures of paragraph
(b) of this Section 3A.5 shall apply) and regardless of whether the conditions
precedent set forth in this Agreement to the making of a Revolving Credit
Advance are then satisfied, each Bank shall make the proceeds of its Revolving
Credit Advance available to the Agent for the ratable benefit of the Swing Line
Bank at the office of the Agent specified in Section 2.4(a) prior to 11:00 a.m.
Detroit time, in funds immediately available on the Business Day next
succeeding the date such notice is given. The proceeds of such Revolving Credit
Advances shall be immediately applied to repay the Refunded Swing Line
Advances.
(b) If, prior to the making of a Revolving Credit Advance pursuant
to paragraph (a) of this Section 3A.5, one of the events described in Section
11.1(i) shall have occurred, each Bank will, on the date such Revolving Credit
Advance was to have been made, purchase from the Swing Line Bank an undivided
participating interest in the Refunded Swing Line Advance in an amount equal to
its Percentage of such Refunded Swing Line Advance. Each Bank will immediately
transfer to the Agent, in immediately available funds, the amount of its
participation and upon receipt thereof the Agent will deliver to such Bank a
Swing Line Bank Participation Certificate in the form of Exhibit D dated the
date of receipt of such funds and in such amount.
(c) Each Bank's obligation to make Revolving Credit Advances and
to purchase participation interests in accordance with clauses (a) and (b)
above shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Bank may have against Swing Line
Bank, the Company or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of any Default or Event of Default; (iii) any adverse
change in the condition (financial or otherwise) of the Company or any other
Person; (iv) any breach of this Agreement by the Company or any other Person;
(v) any inability of the Company to satisfy the conditions precedent to
borrowing set forth in this Agreement on the date upon which such participating
interest is to be purchased; or (vi) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. If any Bank does
not make available to the Agent the amount required pursuant to clause (a) or
(b) above, as the case may be, the Agent shall be entitled to recover such
amount on demand from such Bank, together with interest thereon for each day
from the date of non-payment until such amount is paid in full at the Federal
Funds Effective Rate for the first two Business Days and at the Prime-based
Rate thereafter.
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3B. TERM LOANS
3B.1 Commitment. Subject to the terms and conditions of this
Agreement (including without limitation Section 3B.3 hereof), each Bank,
severally and for itself alone, agrees to advance to the Company during the
Term Loan Funding Period, in a single Advance for each such loan, sums not to
exceed in the aggregate for each such Bank an amount equal to such Bank's
respective Percentage of each Term Loan funded pursuant to Section 3B.3 hereof;
provided, however, that Company is permitted to elect no more than two Term
Loans under this Agreement; and provided further that the aggregate amount of
Term Loans funded under this Agreement, determined as set forth in Section 3B.3
hereof, shall not exceed the Term Loan Aggregate Commitment. Upon the
expiration of the Term Loan Funding Period, the Banks' respective commitments
to make additional Term Loans hereunder shall expire and be of no further force
and effect. Each of the Term Loans funded under this Section 3B.1 shall be
evidenced by Term Notes to be executed and delivered by Company to each of the
Banks, substantially in the form attached hereto as Exhibit F, with appropriate
insertions acceptable to the Agent and the Banks in form and substance, and in
the face amount of each Bank's Percentage of the applicable Term Loan to be
funded by the Banks hereunder.
3B.2 Repayment of Principal. Until the applicable Term Loan
Maturity Date (as selected by the Company hereunder), when the entire unpaid
principal balance of the applicable Term Loan and all accrued interest and
other sums outstanding thereon shall be paid in full (subject to the terms
hereof), the principal Indebtedness evidenced by each Term Loan shall be
repaid, in accordance with the Term Loan Permitted Amortization Schedule
selected by the Company for such Term Loan under Section 3B.3 hereof. The
applicable Term Loan Maturity Date and the Term Loan Permitted Amortization
Schedule selected for such Term Loan under Section 3B.3 hereof shall be set
forth in the Term Notes executed for such Term Loan. There shall be no
readvance or reborrowing of any principal reductions of the Term Loans, whether
pursuant to this Section 3B.2, resulting from the proceeds of New Senior Debt,
consisting of optional prepayments or otherwise.
3B.3 Initial Requests for Funding Term Loans. Company may request
the funding of a Term Loan only upon delivery to the Agent of a Term Loan
Initial Request executed by an authorized officer of Company not less than ten
(10) nor greater than thirty (30) Business Days prior to the proposed date of
funding, subject to the following conditions:
(a) Each such Term Loan Initial Request shall set forth the
information required on the form annexed hereto as Exhibit G,
including without limitation:
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(i) the proposed date that the applicable Term
Loan is to be funded, which must be a
Business Day;
(ii) the principal amount of the Term Loan
requested to be funded, which amount shall
not be less than Twenty Five Million Dollars
($25,000,000);
(iii) that the principal amount of the Term Loan
requested does not exceed the then applicable
Term Loan Aggregate Commitment; and
(iv) subject to the terms and conditions hereof,
the proposed Term Loan Maturity Date and the
Term Loan Permitted Amortization Schedule for
such Term Loan;
(b) The amount of the principal amount of the Term Loan requested
to be funded, determined as of the date of funding such loan,
shall not exceed the lesser of (i) the then remaining Term
Loan Aggregate Commitment, reduced by the original principal
amount of the Term Loan funded prior thereto, if any
(determined with respect to each Term Loan on the date of
funding thereof) and (ii) the then applicable Revolving Credit
Aggregate Commitment immediately preceding the funding thereof
minus the sum of the aggregate principal amount of all
outstanding Revolving Credit Advances and all Swing Line
Advances (including, in each case, any such Advances requested
to be made on such funding date), the aggregate undrawn amount
of all Letters of Credit which shall be outstanding as of such
funding date and the aggregate amount of all unpaid Letter of
Credit Obligations as of such funding date;
(c) Each such Term Loan Initial Request shall be accompanied by
the Company's concurrent request for a reduction in the
Revolving Credit Aggregate Commitment in the amount of the
Term Loan so requested, to be effective, subject to the terms
hereof, concurrently with the funding of such Term Loan, and
satisfying in every respect the terms and conditions of
Section 2.6 hereof (with respect to such reduction) as of the
funding of such Term Loan, including without limitation making
those reductions of Indebtedness required to be made under
said Section 2.6 hereof;
(d) Within three (3) Business Days of receipt from the Company of
a Term Loan Initial Request, Agent shall furnish, or cause to
be furnished, to the Company the proposed forms of Term Notes
which have been completed to
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evidence the applicable Term Loan, incorporating the
information supplied by the Company in its Term Loan Initial
Request with respect to such Term Loan, including without
limitation, the amount of such Term Loan, the applicable Term
Loan Maturity Date and Term Loan Permitted Amortization
Schedule selected by the Company, provided that neither the
Agent nor any of the Banks shall suffer any liability
whatsoever in the event such Term Notes are not delivered for
execution hereunder; and
(e) Not later than the close of business five (5) days prior to
the proposed date of funding of the Term Loan covered by the
applicable Term Loan Initial Request, Company shall deliver to
the Agent (which shall distribute such documents to the Banks
concurrently with the funding of such Term Loan) (i) the
aforesaid Term Notes, executed and delivered in compliance
with this Agreement (dated as of the proposed date of funding
of such Term Loan) accompanied by such other Loan Documents
(including without limitation Collateral Documents), corporate
authority documentation, opinions of counsel and the like as
required hereunder, upon which delivery the Term Loan Initial
Request shall no longer be revocable by the Company and (ii) a
Term Loan Rate Request for such Term Loan submitted in
accordance with Section 3B.4 hereof, except that the time
period for submission thereof shall be governed by this
Section 3B.3(e).
3B.4 Term Loan Rate Requests; Initial Term Loan, Refundings and
Conversions of Advances of Term Loans. Company may select the Applicable
Interest Rate(s) and Interest Periods for the initial Advance of a Term Loan
and may refund all or any portion of any Advance of a Term Loan as an Advance
with a like Interest Period or convert any Advance of a Term Loan to an Advance
with a different Interest Period, but only after delivery to Agent of a Term
Loan Rate Request executed by an authorized officer of Company and subject to
the terms hereof and to the following:
(a) each such Term Loan Rate Request shall set forth the
information required on the Term Loan Rate Request form
annexed hereto as Exhibit H with respect to such Term Loan,
including without limitation:
(i) the proposed date of the initial funding (as
set forth in the Term Loan Initial Request),
refunding or conversion of the Advance, which
must be a Business Day, as the case may be;
(ii) whether the Advance is a refunding or
conversion of an outstanding Advance; and
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(iii) whether such Advance (or any portion thereof)
is to be a Prime-based Advance or a
Eurodollar-based Advance, and, except in the
case of a Prime-based Advance, the Interest
Period(s) applicable thereto;
(b) each such Term Loan Rate Request shall be delivered to Agent
by 11:00 a.m. (Detroit time) three (3) Business Days prior to
the proposed date of Advance, except in the case of a
Prime-based Advance, for which the Term Loan Rate Request must
be delivered by 11 a.m. on the proposed date of Advance;
(c) the principal amount of such Advance of a Term Loan, plus the
amount of any other advance of such Term Loan to be then
combined therewith having the same Applicable Interest Rate
and Interest Period, if any, shall be (i) in the case of a
Prime-based Advance at least Three Million Dollars
($3,000,000), or the remaining principal balance outstanding
under such Term Loan, whichever is less and (ii) in the case
of a Eurodollar-based Advance at least Five Million Dollars
($5,000,000) or the remaining principal balance outstanding
under such Term Loan, whichever is less, or in each case a
larger integral multiple of One Hundred Thousand Dollars
($100,000);
(d) no Advance shall have an Interest Period ending after the Term
Loan Maturity Date applicable to such Term Loan, and,
notwithstanding any provision hereof to the contrary, Company
shall be required to select Interest Periods (or the
Prime-based Rate) for sufficient portions of a Term Loan such
that the Company may make its required principal payments
hereunder on a timely basis and otherwise in accordance with
Section 3B.2 above;
(e) upon completion of the Advance there shall be no more than two
(2) Interest Periods and two (2) Applicable Interest Rates
(including the Prime-based Rate) with respect to each Term
Loan; and
(f) a Term Loan Rate Request, once delivered to Agent, shall not
be revocable by Company.
Each selection of an Interest Period, and the amount and date of any repayment
shall be noted on Agent's records, which records will be rebuttably presumptive
evidence thereof, absent demonstrable error.
3B.5 Term Loan Certifications. Each Term Loan Request shall
constitute and include a certification by the Company as of the date thereof
that:
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(a) both before and after the Advance so requested, the
obligations of the Company and its Subsidiaries set forth in
this Agreement and the Loan Documents to which such Persons
are parties are valid, binding and enforceable obligations of
the Company, its Subsidiaries, as the case may be, except as
the validity or enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally or other equitable
principles (regardless of whether enforcement is considered in
proceedings in law or equity);
(b) all conditions to Advances of the applicable Term Loan or Term
Loans have been satisfied, and shall remain satisfied to the
date of Advance (both before and after giving effect to such
Advance);
(c) there is no Default or Event of Default in existence, and none
will exist upon the making of the applicable Advance (both
before and after giving effect to such Advance);
(d) the representations and warranties contained in this Agreement
and the Loan Documents are true and correct in all material
respects and shall be true and correct in all material
respects as of the making of the applicable Advance (both
before and after giving effect to such Advance); and
(e) the execution of the applicable Term Loan Request will not
violate the material terms and conditions of any material
contract, agreement or other borrowing of Company or any of
its Subsidiaries.
Each Term Loan Request shall be accompanied by such documents, instruments and
other materials required hereunder or otherwise necessary to evidence
satisfaction of all conditions to the applicable Advance or Advances of a
specified Term Loan or Term Loans.
3B.6 Failure to Refund or Convert. In the event the Company shall
fail with respect to any Advance of a Term Loan (other than a Prime-based
Advance) to timely exercise its option to refund or convert such Advance in
accordance with Section 3B.5 hereof (and such Advance has not been paid in full
on the last day of the Interest Period applicable thereto according to the
terms hereof), the principal amount of such Advance which has not been prepaid
shall be automatically converted to a Prime-based Advance.
3B.7 Disbursement of Advances.
(a) Upon receiving a Term Loan Request from Company in compliance
with Sections 3B.3 and/or 3B.4 hereof, as applicable,
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together with such other documents and instruments required thereunder, Agent
shall promptly notify each Bank by wire, telex or by telephone (confirmed by
wire, telecopy or telex) of the amount of such Advance to be made and the date
such Advance is to be made by said Bank pursuant to its Percentage of the
Advance. Unless such Bank's commitment to make Advances hereunder shall have
been suspended or terminated in accordance with this Agreement, each Bank shall
make available to Agent the amount of its Percentage of the Advance in
immediately available funds at the office of Agent located at One Detroit
Center, 500 Woodward Avenue, Detroit, Michigan 48226, not later than 2:00 p.m.
(Detroit time) on the date of such Advance.
(b) Subject to receipt of the Term Loan Requests, as applicable,
and such other documents and instruments referred to in subparagraph 3B.7(a)
hereof (without exceptions noted in the compliance certifications therein),
Agent shall make available to Company the aggregate of the amounts so received
by it from the Banks in like funds not later than 4:00 p.m. (Detroit time) on
the date of such Advance by deposit to an account of the Company maintained
with Agent, or to such other account or third party as Company may reasonably
direct.
(c) Agent shall deliver the documents and papers received by it
for the account of each Bank to such Bank or upon its order. Unless Agent shall
have been notified by any Bank prior to the date of any proposed Advance that
such Bank does not intend to make available to Agent such Bank's Percentage of
the Advance, Agent may assume that such Bank has made such amount available to
Agent on such date, as aforesaid and may, in reliance upon such assumption,
make available to Company a corresponding amount. If such amount is not in fact
made available to Agent by such Bank, as aforesaid, Agent shall be entitled to
recover such amount on demand from such Bank. If such Bank does not pay such
amount forthwith upon Agent's demand therefor, the Agent shall promptly notify
Company and Company shall pay such amount to Agent. Agent shall also be
entitled to recover from such Bank or Company, as the case may be, interest on
such amount in respect of each day from the date such amount was made available
by Agent to Company to the date such amount is recovered by Agent, at a rate
per annum equal to:
(i) in the case of such Bank, with respect to Prime-based
Advances, the Federal Funds Effective Rate, and with
respect to Eurodollar-based Advances, Agent's
aggregate marginal cost (including the cost of
maintaining any required reserves or deposit
insurance and of any fees, penalties, overdraft
charges or other costs or expenses incurred by Agent
as a result of such failure to deliver funds
hereunder) of carrying such amount; and
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(ii) in the case of Company, the rate of interest then
applicable to such Term Loan.
The obligation of any Bank to make any Advance hereunder shall not be affected
by the failure of any other Bank to make any Advance hereunder, and no Bank
shall have any liability to the Company or its Subsidiaries, the Agent, any
other Bank, or any other party for another Bank's failure to make any loan or
Advance hereunder.
4. INTEREST, INTEREST PERIODS, PREPAYMENTS.
4.1 Interest. Each Bank's Revolving Credit Notes, Swing Line Note
(if any), Term Notes and the Revolving Credit Advances, Swing Line Advances or
Term Loans evidenced thereby shall bear interest from the date thereof on the
unpaid principal balance thereof from time to time outstanding, at a rate per
annum equal to: (a) the Prime-based Rate, (b) the Eurodollar-based Rate or (c)
the Quoted Rate; as the Company may elect or as otherwise applicable pursuant
to the provisions of this Agreement; provided, however, that in no event shall
any Bank's Notes, Advances or other Indebtedness bear interest at a rate
greater than the Highest Lawful Rate applicable to such Bank. With respect to
Prime-based Advances, interest shall be payable quarterly on the first Business
Day of each Fiscal Quarter, commencing on the first Business Day of the Fiscal
Quarter immediately following the Fiscal Quarter during which such Advance is
made, and at maturity. With respect to Eurodollar-based Advances and Quoted
Rate Advances, interest shall be payable on the last day of each Interest
Period applicable thereto, provided however, that, in the case of a
Eurodollar-based Advance, if such Interest Period is longer than three months,
interest shall be payable three months following the first day of such Interest
Period and on the last day of such Interest Period. Notwithstanding the
foregoing in the event of an Event of Default, all principal payments due on
Advances shall bear interest, payable on demand, from the date of an Event of
Default at a rate per annum equal to: (i) in the case of a Prime-based Advance,
three percent (3%) above the rate which would otherwise be applicable under
subsection (a) of this Section 4.1; and (ii) in the case of a Eurodollar-based
Advance or Quoted Rate Advance, three percent (3%) above the rate which would
otherwise be applicable under subsection (b) or (c), of this Section 4.1 until
the end of the then current Interest Period, at which time such Eurodollar
Advances or Quoted Rate Advances, shall be automatically converted into
Prime-based Advances and bear interest at the rate provided for in clause (i)
of this sentence; provided, however, that in no event shall any Bank's Notes,
Advances or other Indebtedness bear interest at a rate greater than the Highest
Lawful Rate applicable to such Bank. Interest on all Advances shall be
calculated on the basis of a 360 day year for the actual number of days
elapsed. The interest rate with respect to any Prime-based Advance shall
change on the effective date of any change in the Prime-based Rate. The
interest rate with respect to all Eurodollar-
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based Advances shall change on the effective date of any adjustment of the
Margin, determined as follows:
(x) So long as the Company does not have an Investment
Grade Rating, adjustments in the Margin, the Applicable Commitment Fee
Percentage and the Applicable Letter of Credit Fee Percentage, based
upon Leverage, shall be implemented on a quarterly basis as follows:
(a) Such adjustments shall be given prospective
effect only, effective (i) as to all Prime-based Advances
outstanding hereunder, the Applicable Commitment Fee
Percentage and the Applicable Letter of Credit Fee Percentage,
upon the required date of delivery of the financial statements
under Section 9.3(c) hereunder, in each case establishing
applicability of the appropriate adjustment, and (ii) as to
each Eurodollar-based Advance outstanding hereunder, effective
upon the expiration of the applicable Interest Period(s), if
any, in effect on the date of the delivery of such financial
statements, in each case with no retroactivity or claw-back.
In the event Company fails timely to deliver the financial
statements required under Section 9.3(c), then from the date
delivery of such financial statements was required until such
financial statements are delivered, the applicable Margin and
fee percentages shall be those set forth under Level V of the
Pricing Matrix -- Grid I.
(b) With respect to Eurodollar-based Advances
outstanding hereunder, an adjustment hereunder, after becoming
effective, shall remain in effect only through the end of the
applicable Interest Period(s) for such Eurodollar-based
Advances if any; provided, however, that upon any change in
the Margin level then in effect, as aforesaid, or the
occurrence of any other event which under the terms hereof
causes such adjustment no longer to be applicable, then any
such subsequent adjustment or no adjustment, as the case may
be, shall be effective (and said pricing shall thereby be
adjusted up or down, as applicable) with the commencement of
each Interest Period following such change or event, all in
accordance with the preceding subparagraph.
(c) Such Margin adjustments under this Section
4.1(x) shall be made irrespective of, and in addition to, any
other interest rate adjustments hereunder.
(d) From the date hereof until the required date
of delivery under Section 9.3(c)of the financial statements
for the Company's Fiscal Quarter ending July 31, 1996, the
margins and fee percentages shall be those set forth under
Level IV of the Pricing Matrix -- Grid I; provided,
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however, that in the event the Piper Acquisition occurs after
July 31, 1996, then until the required date of delivery under
Section 9.3(c) of the financial statements for the Company's
Fiscal Year ending October 31, 1996, the applicable Margin and
fee percentages shall be those set forth under Level IV of the
Pricing Matrix - - Grid I; provided, further, that the Company
may deliver, together with the financial statements required
pursuant to Section 9.3(c) for the Fiscal Quarter ending July
31, 1996, an adjusted Leverage calculation as of the end of
said Fiscal Quarter, reflecting the Piper Acquisition and the
various changes in the financial components resulting
therefrom, supported by reasonable detail and otherwise in form
and substance satisfactory to the Majority Banks ("Adjusted
Leverage Calculation"). If submitted by the Company hereunder
(and acceptable to the Banks, as aforesaid), the Adjusted
Leverage Calculation shall be used to determine the applicable
Margin and fee percentages for the period from the required
delivery date of the financial statements for the Fiscal
Quarter ending July 31, 1996 until the required delivery date
of the financial statements for the Fiscal Year ending October
31, 1996; provided that, if established on the basis of the
Adjusted Leverage Calculation, the applicable Margin and fee
percentages for such period shall in no case be less than those
provided under Level III of the Pricing Matrix - Grid I.
(y) In the event the Company obtains and continues to maintain
at least one Investment Grade Rating, the Margin shall be determined
by reference to the appropriate columns in the Pricing Matrix - Grid
II attached to this Agreement as Schedule 1.2, and, in such case, the
Margin or any change in the Margin, as the case may be, shall be
determined upon the obtaining of and/or any change in the applicable
Debt Rating.
Upon receipt by the Agent of each interest payment made by the Company under
this Section 4.1, the Agent shall promptly remit to each Bank such Bank's
Percentage thereof.
4.2 Interest Periods. Each Interest Period for a Eurodollar-based
Advance shall commence on the date such Eurodollar-based Advance is made or is
converted from an Advance of another type pursuant to Section 4.3 hereof or on
the last day of the immediately preceding Interest Period for such
Eurodollar-based Advance and shall end on the date one, two, three or six
months thereafter, as the Company may elect as set forth below, subject to the
following:
(i) no Interest Period with respect to a Revolving Credit
Advance shall extend beyond the Revolving Credit
Maturity Date and no Interest Period with
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respect to an Advance of the Term Loan shall extend
beyond the Term Loan Maturity Date; and
(ii) with respect to a Eurodollar-based Advance, any
Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the
next succeeding Business Day unless the next
succeeding Business Day falls in another calendar
month, in which case, such Interest Period shall end
on the immediately preceding Business Day and when an
Interest Period begins on a day which has no
numerically corresponding day in the calendar month
during which such Interest Period is to end, it shall
end on the last Business Day of such calendar month.
The Company shall elect the initial Interest Period applicable to a
Eurodollar-based Advance by its Request for Revolving Credit given to the Agent
pursuant to Section 2.3, its Term Loan Initial Request pursuant to Section 3B.3
or by its notice of conversion given to the Agent pursuant to Section 4.3, as
the case may be.
4.3 Prepayments. (a) At its option and upon three (3) Business
Days' prior written or telephonic notice to the Agent, the Company may prepay
the Revolving Credit Advances in whole at any time or in part from time to
time, without premium or penalty but with accrued interest on the principal
being prepaid to the date of such prepayment, provided that: (i) in the case of
a Prime-based Advance each partial prepayment shall be in an amount not less
than One Million Dollars ($1,000,000) or an integral multiple thereof; (ii) in
the case of a Eurodollar-based Advance, each partial prepayment shall be in an
amount not less than Four Million Dollars ($4,000,000); and (iii) a
Eurodollar-based Advance may only be prepaid on the last Business Day of the
then current Interest Period with respect thereto.
(b) Company may prepay all or part of the outstanding balance of
any Prime-based Advance(s) of a Term Loan at any time (subject to not less than
one (1) Business Day's notice to Agent), provided that the amount of any
partial prepayment by such party shall be at least One Million Dollars
($1,000,000) and the aggregate balance of Prime-based Advance(s) remaining
outstanding on such Term Loan shall be at least Three Million Dollars
($3,000,000). Company may prepay all or part of any Eurodollar-based Advance
(subject to not less than three (3) Business Days' notice to Agent) only on the
last day of the Interest Period applicable thereto, provided that the amount of
any such partial prepayment by such party shall be at least One Million Dollars
($1,000,000), and the unpaid portion of such Advance which is refunded or
converted under Section 3B.4 hereof shall be at least Five Million Dollars
($5,000,000). Any prepayment made in accordance with this Section 4.3(b) shall
be applied against principal installments due hereunder in the inverse
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order of their maturities, and shall be without premium or penalty (subject to
Section 12 hereof), but there shall be no readvance or reborrowing of any
principal reductions of the applicable Term Loan (whether or not such principal
reductions constitute prepayments).
Each prepayment under clauses (a) and/or (b) above shall be made to the Agent,
and promptly upon receipt thereof, the Agent shall remit to each Bank its
Percentage thereof. In its notice of prepayment, the Company shall specify the
date of prepayment, the amount of the prepayment and the Revolving Credit
Advance and/or Term Loan to be prepaid.
(c) In the event from time to time from and after the date of this
Agreement of the Company's issuance of any New Senior Debt, the Company shall
be obligated, to the extent of the initial One Hundred Million Dollars
($100,000,000) in proceeds thereof (any and all such proceeds, the "Term Loan
Reduction Proceeds"), to prepay Indebtedness outstanding under the Term Notes,
applying such Term Loan Reduction Proceeds first against the Term Loan with the
longer final maturity date and to payments of principal under the applicable
Term Notes in the inverse order of their maturities. Company shall also be
obligated to pay accrued interest on the applicable Term Notes to the date of
each such prepayment. To the extent that Indebtedness under the Term Notes
which is subject to repayment hereunder is being carried at the
Eurodollar-based Rate and no Event of Default, or event which with the lapse of
time or the giving of notice or both would constitute such an Event of Default,
has occurred and is continuing hereunder, Company may deposit the aforesaid
Term Loan Reduction Proceeds in a cash collateral account to be held by Agent,
for and on behalf of the Banks, on such terms and conditions as reasonably
acceptable to Agent and the Majority Banks. Subject to the terms and
conditions of the cash collateral account, sums on deposit in said cash
collateral account shall be applied (until exhausted) to reduce the principal
balance of the Term Notes in accordance with this subparagraph as applicable,
on the last day of each Interest Period attributable to such Eurodollar-based
Advances. Any amounts repaid or prepaid hereunder shall permanently reduce the
Term Loan Aggregate Commitment; and no amount repaid or prepaid hereunder shall
be available for reborrowing.
Furthermore, to the extent the Term Loan Reduction Proceeds exceed the
Indebtedness then outstanding under the Term Notes, Company shall, concurrently
with the issuance of New Senior Debt, permanently reduce the Revolving Credit
Aggregate Commitment by complying with the terms and conditions of Section 2.6
hereof (including any reductions of Indebtedness outstanding under the
Revolving Credit or the Swing Line required thereby), except that, for purposes
of reduction of the Revolving Credit Aggregate Commitment under this Section
4.3(c) the Company shall not be required to comply with subparagraph (i) of
Section 2.6 or the five day notice requirement contained in the preamble
thereto, and
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except that, subject to the foregoing, Company may elect to establish a cash
collateral arrangement on substantially the terms set forth in the preceding
subparagraph with respect to the prepayment of Revolving Credit and Swing Line
Advances prior to the expiration of any Interest Periods applicable thereto.
5. SPECIAL PROVISIONS FOR LOANS.
5.1 Reimbursement of Prepayment Costs. If (a) Company makes any
payment of principal with respect to any Eurodollar-based Advance on any day
other than the last day of the Interest Period applicable thereto (whether
voluntarily, by acceleration, or otherwise), or (b) Company converts or refunds
(or attempts to convert or refund) any such Advance; or (c) Company fails to
borrow, refund or convert into any Eurodollar-based Advance after notice has
been given by Company to Agent in accordance with the terms hereof requesting
such Advance, or (d) Company fails to make any payment of principal or interest
in respect of a Eurodollar-based Advance when due, and any Bank incurs any
loss, cost or expense as a result thereof, then Company shall reimburse Agent
and Banks, as the case may be on demand for such resulting loss, cost or
expense incurred by Agent and Banks, as the case may be, including, without
limitation, any such loss, cost or expense incurred in obtaining, liquidating,
employing or redeploying deposits from third parties, whether or not Agent and
Banks, as the case may be shall have funded or committed to fund such Advance.
Such amount payable by Company to Agent and Banks, as the case may be may
include, without limitation, an amount equal to the excess, if any, of (a) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, refunded or converted, for the period from the date of such
prepayment or of such failure to borrow, refund or convert, through the last
day of the relevant Interest Period, at the applicable rate of interest for
said Advance(s) provided under this Agreement, over (b) the amount of interest
(as reasonably determined by Agent and Banks, as the case may be) which would
have accrued to Agent and Banks, as the case may be, on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurocurrency market. Calculation of any amounts payable to any Bank
under this paragraph shall be made as though such Bank shall have actually
funded or committed to fund the relevant Advance through the purchase of an
underlying deposit in an amount equal to the amount of such Advance and having
a maturity comparable to the relevant Interest Period; provided, however, that
any Bank may fund any Eurodollar-based Advance in any manner it deems fit and
the foregoing assumptions shall be utilized only for the purpose of the
calculation of amounts payable under this paragraph. Upon the written request
of Company, Agent and Banks shall deliver to Company a certificate setting
forth the basis for determining such losses, costs and expenses, which
certificate shall be conclusively presumed correct, absent manifest error.
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5.2 Agent's Eurodollar Lending Office. For any Interest Period for
which the Applicable Interest Rate is the Eurodollar-based Rate, if Agent shall
designate a Eurodollar Lending Office which maintains books separate from those
of the rest of Agent or if any Bank shall designate as its eurodollar lending
office an office which maintains books separate from those of the rest of such
Bank, Agent or such Bank shall have the option of maintaining and carrying the
relevant Advance on the books of such office.
5.3 Circumstances Affecting Eurodollar-based Availability. If with
respect to any Interest Period Agent determines that, by reason of
circumstances affecting the foreign exchange and interbank markets generally,
deposits in Eurodollars in the applicable amounts are not being offered to the
Agent for such Interest Period, then Agent shall forthwith give notice thereof
to the Company. Thereafter until Agent notifies Company that such circumstances
no longer exist, the obligation of Banks to make Eurodollar-based Advances for
such Interest Period, and the right of Company to convert an Advance to or
refund an Advance as a Eurodollar-based Advance for such Interest Period shall
be suspended, and the Company shall repay in full (or cause to be repaid in
full) the then outstanding principal amount of each such Eurodollar-based
Advance covered hereby together with accrued interest thereon, any amounts
payable (but not yet paid) under Section 5.1 hereof, and all other amounts
payable hereunder on the last day of the then current Interest Period
applicable to such Advance. Upon the date for repayment as aforesaid and unless
Company notifies Agent to the contrary within two (2) Business Days after
receiving a notice from Agent pursuant to this Section, such outstanding
principal amount shall be converted to a Prime-based Advance as of the last day
of such Interest Period.
5.4 Laws Affecting Eurodollar-based Advance Availability. If,
after the date hereof, the introduction of, or any change in, any applicable
law, rule or regulation or in the interpretation or administration thereof by
any governmental authority charged with the interpretation or administration
thereof, or compliance by any of the Banks (or any of their respective
Eurodollar Lending Offices) with any request or directive (whether or not
having the force of law) of any such authority, shall make it unlawful or
impossible for any of the Banks (or any of their respective Eurodollar Lending
Offices) to honor its obligations hereunder to make or maintain any Advance
with interest at the Eurodollar-based Rate, such Bank shall forthwith give
notice thereof to Company and to Agent. Thereafter (a) the obligations of Banks
to make Eurodollar-based Advances and the right of Company to convert an
Advance or refund an Advance as a Eurodollar-based Advance shall be suspended
and thereafter Company may select as the Applicable Interest Rates only the
Prime-based Rate, and (b) if any of the Banks may not lawfully continue to
maintain an Advance to the end of the then current Interest Period applicable
thereto, Company shall immediately prepay such Advance, together with interest
to
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the date of payment, and any amounts payable under Section 5.1 or 5.7 with
respect to such prepayment and the applicable Advance shall immediately be
converted to a Prime-based Advance and the Prime-based Rate shall be applicable
thereto.
5.5 Increased Costs. In the event that any applicable law, treaty
or governmental regulation, or any change therein or in the interpretation,
implementation or application thereof, or compliance by any Bank with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority:
(a) shall subject any of the Banks or Agent (or any of their
respective eurodollar lending offices) to any tax, duty or
other charge with respect to any Advance, or any Note or shall
change the basis of taxation of payments to any of the Banks
(or any of their respective eurodollar lending offices) of the
principal of or interest on any Advance or any Note or any
other amounts due under this Agreement in respect thereof
(except for changes in the rate of tax on the overall net
income or gross receipts of any of the Banks or Agent or any
of their respective eurodollar lending offices imposed by the
jurisdiction in which Agent's or such Bank's principal
executive office or eurodollar lending office is located); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System but excluding with
respect to any Eurodollar-based Advance any such requirement
included in the calculation of the Eurodollar-based Rate),
special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by any
of the Banks or Agent (or any of their respective eurodollar
lending offices) or shall impose on any of the Banks or Agent
(or any of their respective eurodollar lending offices) or the
foreign exchange and interbank markets any other condition
affecting any Advance or any of the Notes;
and the result of any of the foregoing is to increase the costs to any of the
Banks or Agent of making, renewing or maintaining any part of the Indebtedness
hereunder or to reduce the amount of any sum received or receivable by Agent or
any of the Banks under this Agreement, or under the Notes, or under any Letter
of Credit Agreement, then such Bank (if applicable) shall promptly notify
Agent, and Agent shall promptly notify Company and (if applicable) such Bank or
Banks of such fact and demand compensation therefor and, Company agrees to pay,
to the extent such payment would not violate or result in a violation of any
applicable law, to Agent or such Bank such additional amount or amounts as will
compensate such Agent or Bank or Banks for such increased cost, within thirty
(30)
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days of such notice. In the event that any such adoption or change is
subsequently reversed, Agent or such Bank, as the case may be, shall promptly
notify Company and, if applicable, Agent of such fact and Agent or such Bank or
Banks (as applicable) will within thirty (30) days of such notice, (i) reduce
or eliminate the additional compensation assessed hereunder, as aforesaid, by
an amount (as reasonably determined by Agent or such Bank or Banks, as
applicable) necessary to address such reversal and (ii) to the extent
necessary, reimburse Company for the amount of any overpayment resulting from
such reversal (and, if applicable, notify Agent of such payment).
5.6 Other Increased Costs. In the event that after the date hereof
the adoption of or any change in any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to any Bank or Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank or Agent
with any guideline, request or directive of any such authority (whether or not
having the force of law), including any risk based capital guidelines, affects
or would affect the amount of capital required or expected to be maintained by
such Bank or Agent (or any corporation controlling such Bank or Agent) and such
Bank or Agent, as the case may be, determines that the amount of such capital
is increased by or based upon the existence of such Bank's or Agent's
obligations or Advances hereunder and such increase has the effect of reducing
the rate of return on such Bank's or Agent's (or such controlling
corporation's) capital as a consequence of such obligations or Advances
hereunder to a level below that which such Bank or Agent (or such controlling
corporation) could have achieved but for such circumstances (taking into
consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank or Agent to be material, then the Company shall pay to such
Bank or Agent, as the case may be, from time to time, upon request by such Bank
or Agent, additional amounts sufficient to compensate such Bank or Agent (or
such controlling corporation) for any reduced rate of return which such Bank or
Agent reasonably determines to be allocable to the existence of such Bank's or
Agent's obligations or Advances hereunder. A statement as to the amount of
such compensation, prepared in good faith and in reasonable detail by such Bank
or Agent, as the case may be, shall be submitted by such Bank or by Agent to
the Company, reasonably promptly after becoming aware of any event described in
this Section 5.6 and shall be conclusive, absent manifest error in computation.
In the event that any such adoption or change is subsequently reversed, Agent
or such Bank, as the case may be, shall promptly notify Company and, if
applicable, Agent of such fact and Agent or such Bank or Banks (as applicable)
will within thirty (30) days of such notice, (i) reduce or eliminate the
additional compensation assessed hereunder, as aforesaid, by an amount (as
reasonably determined by Agent or such Bank or Banks, as applicable) necessary
to address such reversal
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and (ii) to the extent necessary, reimburse Company for the amount of any
overpayment resulting from such reversal (and, if applicable, notify Agent of
such payment).
5.7 Indemnity. The Company will indemnify Agent and each of the
Banks against any loss or expense which may arise or be attributable to the
Agent's and each Bank's obtaining, liquidating or employing deposits or other
funds acquired to effect, fund or maintain the Advances (a) as a consequence of
any failure by the Company to make any payment when due of any amount due
hereunder in connection with a Eurodollar-based Advance or Quoted Rate Advance,
(b) due to any failure of the Company to borrow, refund or convert on a date
specified therefor in a Request for Advance or Request for Swing Line Advance
or (c) due to any payment, prepayment or conversion of any Eurodollar-based
Advance on a date other than the last day of the Interest Period for such
Advance. Such loss or expense shall be calculated based upon the present value,
as applicable, of payments due from the Company with respect to a deposit
obtained by the Agent or any of the Banks in order to fund such Advance to the
Company or otherwise in accordance with this Agreement. The Agent's and each
Bank's, as applicable, calculations of any such loss or expense shall be
furnished to the Company and shall be conclusive, absent manifest error.
5.8 Substitution of Banks. If (i) the obligation of any Bank to
make Eurodollar-based Advances has been suspended pursuant to Section 5.3 or
Section 5.4 or (ii) any Bank has demanded compensation under Section 5.5, 5.6
or 6.1(d) (in each case, an "Affected Lender"), Company shall have the right,
with the assistance of the Agent, to seek a substitute lender or lenders (which
may be one or more of the Banks (the "Purchasing Lender" or "Purchasing
Lenders") to purchase the Revolving Credit Note and the Term Note and assume
the commitments (including without limitation its participations in Swing Line
Advances and Letters of Credit) under this Agreement of such Affected Lender.
The Affected Lender shall be obligated to sell its Revolving Credit Note and
Term Note and assign its commitments to such Purchasing Lender or Purchasing
Lenders within fifteen days after receiving notice from Company requiring it to
do so, at an aggregate price equal to the outstanding principal amount thereof,
plus unpaid interest accrued thereon up to but excluding the date of the sale.
In connection with any such sale, and as a condition thereof, Company shall pay
to the Affected Lender all fees accrued for its account hereunder to but
excluding the date of such sale, plus, if demanded by the Affected Lender
within ten Business Days after such sale, (i) the amount of any compensation
which would be due to the Affected Lender under Section 5.1 if Company has
prepaid the outstanding Eurodollar-based Advances of the Affected Lender on the
date of such sale and (ii) any additional compensation accrued for its account
under Section 5.5 or 5.6 to but excluding said date. Upon such sale, the
Purchasing Lender or Purchasing Lenders shall assume the Affected Lender's
commitment, and the Affected Lender shall be
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released from its obligations hereunder to a corresponding extent. If any
Purchasing Lender is not already one of the Banks, the Affected Lender, as
assignor, such Purchasing Lender, as assignee, Company and the Agent, with the
required consent of the Swing Line Bank shall enter into an Assignment
Agreement pursuant to Section 13.7 hereof, whereupon such Purchasing Lender
shall be a Bank party to this Agreement, shall be deemed to be an assignee
hereunder and shall have all the rights and obligations of a Bank with a
Percentage equal to its ratable share of the then applicable Revolving Credit
Aggregate Commitment, the then applicable Revolving Credit Committed Increase,
the then applicable Term Loan Aggregate Commitment and any Indebtedness
outstanding under the Term Loans of the Affected Lender. In connection with any
assignment pursuant to this Section 5.8, Company or the Purchasing Lender shall
pay to the Agent the administrative fee for processing such assignment referred
to in Section 13.7. Upon the consummation of any sale pursuant to this Section
5.8, the Affected Lender, the Agent and Company shall make appropriate
arrangements so that, if required, each Purchasing Lender receives a new
Revolving Credit Note and Term Note(s).
6. PAYMENTS.
6.1 Payment Procedure.
(a) All payments by Company of principal of, or interest on, the
Notes or of Revolving Credit Commitment Fees, Reimbursement Obligations or
Letter Credit Fees shall be made without setoff or counterclaim on the date
specified for payment under this Agreement not later than 11:00 a.m. (Detroit
time) in immediately available funds by Company to Agent, for the ratable
account of the Banks. Upon receipt of each such payment, the Agent shall make
prompt payment to each Bank in like funds of all amounts received by it for the
account of such Bank.
(b) Unless the Agent shall have been notified by Company prior to
the date on which any payment to be made by Company is due that Company does
not intend to remit such payment, the Agent may, in its discretion, assume that
Company has remitted such payment when so due and the Agent may, in reliance
upon such assumption, make available to each Bank on such payment date an
amount equal to such Bank's share of such assumed payment. If Company has not
in fact remitted such payment to the Agent, each Bank shall forthwith on demand
repay to the Agent the amount of such assumed payment made available to such
Bank, together with the interest thereon, in respect of each day from and
including the date such amount was made available by the Agent to such Bank to
the date such amount is repaid to the Agent at a rate per annum equal to (i)
for Revolving Credit Advances, the federal funds rate (daily average), as the
same may vary from time to time, and (ii) with respect to Eurodollar-based
Advances, Agent's aggregate marginal cost (including the cost of maintaining
any required reserves or deposit
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insurance and of any fees, penalties, overdraft charges or other costs or
expenses incurred by Agent) of carrying such amount.
(c) Whenever any payment to be made hereunder (other than payments
in respect of any Eurodollar-based Advance) shall otherwise be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in computing
interest, if any, in connection with such payment. Whenever any payment of
principal of, or interest on, a Eurodollar-based Advance shall be due on a day
which is not a Business Day the date of payment thereof shall be extended to
the next succeeding Business Day unless as a result thereof it would fall in
the next calendar month, in which case it shall be shortened to the next
preceding Business Day and, in the case of a payment of principal, interest
thereon shall be payable for such extended or shortened time, if any.
(d) All payments to be made by Company under this Agreement or any
of the Notes (including without limitation payments under the Swing Line Note)
shall be made without set-off or counterclaim, as aforesaid, and without
deduction for or on account of any present or future withholding or other taxes
of any nature imposed by any governmental authority or of any political
subdivision thereof or any federation or organization of which such
governmental authority may at the time of payment be a member, unless Company
is compelled by law to make payment subject to such tax. In such event, Company
shall:
(i) pay to the Agent for Agent's own account and/or, as
the case may be, for the account of the Banks (and,
in the case of any Swing Line Advances, pay to the
Swing Line Bank which funded such Advances) such
additional amounts as may be necessary to ensure that
the Agent and/or such Bank or Banks receive a net
amount equal to the full amount which would have been
receivable had payment not been made subject to such
tax; and
(ii) remit such tax to the relevant taxing authorities
according to applicable law, and send to the Agent or
the applicable Bank (including the Swing Line Bank)
or Banks, as the case may be, such certificates or
certified copy receipts as the Agent or such Bank or
Banks shall reasonably require as proof of the
payment by the Company or the Permitted Borrower of
any such taxes payable by the Company or the
Permitted Borrower.
As used herein, the terms "tax", "taxes" and "taxation" include all
existing taxes, levies, imposts, duties, charges, fees, deductions and
withholdings and any restrictions or conditions resulting in a charge together
with interest thereon and fines and
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penalties with respect thereto which may be imposed by reason of any violation
or default with respect to the law regarding such tax, assessed as a result of
or in connection with the transactions hereunder, or the payment and/or receipt
of funds hereunder, or the payment or delivery of funds into or out of any
jurisdiction other than the United States (whether assessed against Company,
Agent or any of the Banks). In the event that such tax is subsequently
reversed, Agent or such Bank, as the case may be, shall promptly notify Company
and, if applicable, Agent of such fact and Agent or such Bank or Banks (as
applicable) will within thirty (30) days of such notice, reimburse Company for
the amount of any overpayment resulting from such reversal (and, if applicable,
notify Agent of such payment).
6.2 Application of Proceeds. Notwithstanding anything to the
contrary in this Agreement, after an Event of Default, the proceeds of any
offsets, voluntary payments by Company or others and any other sums received or
collected in respect of the Indebtedness, shall be applied to the Indebtedness
in such order and manner as determined by the Majority Banks (subject, however,
to the applicable Percentages of the Loans held by each of the Banks) on a pro
rata basis, and then, if there is any excess, to Company. The application of
such proceeds and other sums to the Indebtedness shall be based on each Bank's
Percentage of the aggregate amount thereof.
6.3 Pro-rata Recovery. If any Bank shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of, or interest on, any of the Indebtedness
in excess of its pro rata share of payments then or thereafter obtained by all
Banks upon principal of and interest on all Indebtedness, such Bank shall
purchase from the other Banks such participations in the Notes and/or
Reimbursement Obligation held by them as shall be necessary to cause such
purchasing Bank to share the excess payment or other recovery ratably in
accordance with the Percentage 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 holder, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
The Company agrees that any Bank so purchasing a participation may exercise all
rights of offset, banker's lien, counterclaim or other sundry rights with
respect thereto as if the obligation under the Notes and/or Reimbursement
Obligations evidenced by the participation was owed directly to such Bank.
6.4 Deposits and Accounts. In addition to and not in limitation of
any rights of any Bank or other holder of any Note or assignee of Letter of
Credit Agreements and Reimbursement Obligations under applicable law, each Bank
and each other such holder shall, in the event of a default under the Notes or
any Letter of Credit Agreement or an Event of Default hereunder, and
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without notice or demand of any kind, have the right to liquidate and collect
all property or assets of Company (including deposits and other credits),
whether presently owned or hereafter acquired, in possession or control of (or
owing by) such Bank or other holder for any purpose, and to apply the proceeds
of any such liquidations and collections, and offset any amounts owing to
Company, against Company's obligations hereunder and under the Notes and Loan
Documents, provided, however, that any such amount so applied by any Bank or
other holder on any of the Notes owing to it shall be subject to the provisions
of Section 6.3.
7. CONDITIONS.
The obligations of Banks to make Advances pursuant to this Agreement
are subject to, and the Effective Date of this Agreement shall be the date of,
Company's satisfaction of the following conditions:
7.1 Execution of Notes and This Agreement. Company shall have
executed and delivered to Agent for the account of each Bank, the Notes and
this Agreement (including all schedules, exhibits, certificates, opinions,
financial statements and other documents to be delivered pursuant hereto) and
the Notes, the Loan Documents and this Agreement shall be in full force and
effect.
7.2 Corporate Authority. Agent shall have received, with a
counterpart thereof for each Bank: (i) certified copies of resolutions of the
Board of Directors of Company evidencing approval of the borrowing hereunder
and execution and delivery of the Loan Documents to which it is party, and each
of the Restricted Subsidiaries evidencing approval of its entering into the
Collateral Documents; (ii) certified copies of Company's and each of the
Restricted Subsidiaries' Certificate of Incorporation and Bylaws; (iii) a
certificate of good standing from the state of Company's incorporation, and
from the states of incorporation of the Restricted Subsidiaries and from every
state in which either the Company or any of the Restricted Subsidiaries is
qualified to do business; and (iv) incumbency certificates for Company and its
Restricted Subsidiaries.
7.3 Opinion of Counsel. Company shall furnish Agent, together with
signed copies for each Bank, an opinion of counsel to the Company and to the
Restricted Subsidiaries, dated the Effective Date and covering such matters as
required by and otherwise satisfactory in form and substance to the Agent and
each of the Banks.
7.4 Termination of Prior Credit Agreement. The Company and the
Agent (on behalf of the Banks) shall have terminated in writing the Prior
Credit Agreement and the Company shall have paid to the Banks all commitment
fees and other fees accrued under the Prior Credit Agreement to the termination
date.
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7.5 Collateral Documents. As security for all Indebtedness of
Company to Bank hereunder, Company agrees to furnish, execute and deliver to
Agent, or cause to be furnished, executed and delivered to Agent, prior to or
concurrently with the initial borrowing hereunder, in form to be satisfactory
to Agent and the Banks and supported by appropriate corporate resolutions in
certified form authorizing same, the Collateral Documents.
7.6 Representations and Warranties -- All Parties. The
representations and warranties made by Company and any other party to any of
the Loan Documents under this Agreement or any of the Loan Documents shall have
been true and correct when made and shall be true and correct in all material
respects on and as of the date of any of the Loans hereunder, and the
representations and warranties of any of the foregoing which are contained in
any certificate, document or financial or other statement furnished at any time
hereunder or thereunder or in connection herewith or therewith shall have been
true and correct when made.
7.7 Compliance with Certain Documents and Agreements. Company and
each of its Subsidiaries (and any of their respective Affiliates) shall have
each performed and complied with all agreements and conditions contained in
this Agreement, the Loan Documents and any agreement or other document executed
hereunder or thereunder and required to be performed or complied with by each
of them and none of such parties shall be in default in the performance or
compliance with any of the terms or provisions hereof or thereof.
7.8 No Default. No Event of Default or event which with the lapse
of time or giving of notice or both would constitute an Event of Default shall
have occurred and be continuing.
7.9 No Material Adverse Change. There shall have been no material
adverse change in the condition (financial or otherwise), properties, business,
prospects of, results or operations of Company or its Subsidiaries (taken as a
whole) from October 31, 1995.
7.10 Company's Certificate. The Agent shall have received, with a
signed counterpart for each Bank, a certificate of a responsible senior officer
of Company, dated the date of the making of initial Advances hereunder, stating
that the conditions of paragraphs 7.1 and 7.5 through 7.9 and 7.13 hereof have
been fully satisfied.
7.11 Payment of Agent's Fees. Company shall have paid to the Agent
the Agent's Fees and all costs and expenses required hereunder.
7.12 Other Documents and Instruments. The Agent shall have
received, with a photocopy for each Bank, such other instruments
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and documents as the Majority Banks may reasonably request in connection with
the making of the Loans hereunder, and all such instruments and documents shall
be satisfactory in form and substance to the Majority Banks.
7.13 Change in Control. No Person or group of Persons acting in
concert shall have acquired or be controlling, directly or indirectly, whether
by ownership, proxy, voting trust or otherwise, fifty percent (50%) or more of
the issued and outstanding common stock of Company.
7.14 Continuing Conditions. The obligations of the Banks to make
Advances under this Agreement, shall be subject to the continuing conditions
that all documents executed or submitted pursuant hereto shall be satisfactory
in form and substance to Agent and its counsel and to each of the Banks and
their respective counsel; Agent and its counsel and each of the Banks and their
respective counsel shall have received all information, and such counterpart
originals or such certified or other copies of such materials, as Agent or its
counsel and each of the Banks and their respective counsel may reasonably
request; and all legal matters incident to the transactions contemplated by
this Agreement (including, without limitation, matters arising from time to
time as a result of changes occurring with respect to any statutory, regulatory
or decisional law applicable hereto) shall be satisfactory to counsel to Agent
and counsel to each of the Banks.
8. REPRESENTATIONS AND WARRANTIES
Company represents and warrants and such representations and
warranties shall be deemed to be continuing representations and warranties
during the entire life of this Agreement:
8.1 Corporate Authority. Company is a corporation duly organized
and existing in good standing under the laws of the State of Delaware; LaSalle
is duly organized and existing in good standing under the laws of State of
Delaware; Michigan Seamless is duly organized and in good standing under the
laws of State of Delaware; Nichols is duly organized and existing in good
standing under the laws of the State of Delaware; each other Subsidiary of the
Company is duly organized and existing in good standing under the laws of the
state of its incorporation; and Company and each of Company's Subsidiaries is
duly qualified and authorized to do business as a foreign corporation in each
jurisdiction where the character of its assets or the nature of its activities
makes such qualification necessary and where failure to be so qualified would
have a material adverse effect on their respective businesses.
8.2 Due Authorization - Company. Execution, delivery and
performance of this Agreement, the Loan Documents to which it is party, and any
other documents and instruments required under this Agreement to which it is
party, and the issuance of the Notes by
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Company are within its corporate powers, have been duly authorized by Company,
are not in contravention of law or the terms of Company's Certificate of
Incorporation or Bylaws, and do not require the consent or approval, material
to the transactions contemplated by this Agreement, or the Loan Documents of
any governmental body, agency or authority; and this Agreement, the Loan
Documents and any other documents and instruments to which Company is party
required under this Agreement, when issued and delivered under this Agreement,
will all be valid and binding upon Company in accordance with their terms upon
and after the Effective Date.
8.3 Due Authorization -- Restricted Subsidiaries and Subsidiaries.
Execution, delivery and performance of the Collateral Documents and all other
documents and instruments executed and delivered by any of the Restricted
Subsidiaries of Company under or in connection with this Agreement or the Loan
Documents (or to be so executed and delivered), are within their respective
corporate powers, have all been duly authorized by such Restricted Subsidiaries
or Subsidiaries, are not in contravention of law or the terms of their
respective articles of incorporation or bylaws, and do not require the consent
or approval of any governmental body, agency or authority.
8.4 Encumbrances. There are no security interests in, liens,
mortgages, or other encumbrances on any of Company's or any Subsidiary's
property except for those not prohibited by the provisions of this Agreement.
8.5 No Negative Pledges. As of the date hereof, neither Company
nor any of its Restricted Subsidiaries are parties to, or subject to, any
agreement, document or instrument which would restrict or prevent them from
granting first priority liens upon, security interests in and pledges of assets
(in accordance with generally accepted accounting principles consistently
applied) to Agent on behalf of Banks, except (i) the agreements, documents or
instruments existing on the date hereof pursuant to which Liens not prohibited
by the terms of this Agreement have been created ("Existing Lien Agreements"),
and (ii) Article 12 of the Company's Certificate of Incorporation as in effect
on the date hereof.
8.6 Subsidiaries. As of the date hereof, there are no Subsidiaries
of Company except for the Subsidiaries listed on Schedule 8.6 hereto.
8.7 Taxes. Company and its Subsidiaries each have filed on or
before their respective due dates, all material federal, state and foreign tax
returns which are required to be filed or have obtained extensions for filing
such tax returns and are not delinquent in filing such returns in accordance
with such extensions and have paid all taxes which have become due pursuant to
those returns or pursuant to any assessments received by any such party, as the
case
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may be, to the extent such taxes have become due except to the extent such tax
payments are being actively contested in good faith and to the extent Company
and its Subsidiaries have created adequate reserves for such taxes in
accordance with generally accepted accounting principles consistently applied.
8.8 Enforceability of Agreement and Loan Documents -- Company.
This Agreement and each of the Loan Documents to which Company is a party and
all other certificates, agreements and documents executed and delivered by
Company under or in connection herewith have each been duly executed and
delivered by its duly authorized officers and constitute the valid and binding
obligations of Company, enforceable in accordance with their respective terms,
except as the validity or enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors' rights generally or other equitable principles (regardless of
whether enforcement is considered in proceedings in law or equity).
8.9 Enforceability of Loan Documents -- Restricted Subsidiaries.
The Loan Documents and all certificates, documents and agreements executed in
connection therewith by any of the Restricted Subsidiaries, including without
limitation the Collateral Documents, have each been duly executed and delivered
by the respective duly authorized officers of such parties and constitute the
valid and binding obligations of such parties, enforceable in accordance with
their respective terms, except as the validity or enforceability may be limited
by bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally or other equitable principles
(regardless of whether enforcement is considered in proceedings in law or
equity).
8.10 Non-contravention -- Company. The execution, delivery and
performance of this Agreement and the Loan Documents and any other documents
and instruments required under or in connection with this Agreement by Company
are not in contravention of the terms of any indenture, agreement or
undertaking to which Company is a party or by which it is bound.
8.11 Non-contravention -- Subsidiaries. The execution, delivery and
performance of those Loan Documents signed by any of the Restricted
Subsidiaries, and any other documents and instruments required under or in
connection with this Agreement by any of the Restricted Subsidiaries are not in
contravention of the terms of any indenture, agreement or undertaking to which
any of such parties is a party or by which it is bound.
8.12 No Material Litigation. There are no actions, suits or
proceedings pending or, to the knowledge of Company threatened against or
affecting Company or its Subsidiaries in any court or before or by any
governmental department, agency or
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instrumentality, an adverse decision in which would materially adversely affect
the financial condition of the Company and its Subsidiaries taken as a whole or
their respective abilities to perform their respective obligations under this
Agreement or any of the Loan Documents to which they are party, except as
listed on Schedule 8.12 hereto.
8.13 Consents, Approvals and Filings, Etc. No authorization,
consent, approval, license, qualification or formal exemption from, nor any
filing, declaration or registration with, any court, governmental agency or
regulatory authority or any securities exchange or any other person is required
in connection with the execution, delivery and performance: (i) by Company of
this Agreement, any of the Loan Documents to which it is a party or any other
documents or instruments to be executed and or delivered by Company in
connection therewith or herewith; or (ii) by each Restricted Subsidiary of the
Loan Documents to be executed by it under this Agreement.
8.14 ERISA. As of the Effective Date, neither Company, nor any of
its Subsidiaries, maintains or contributes to any employee pension benefit plan
subject to Title IV of ERISA except those set forth in Schedule 8.14 hereto. As
of the dates indicated on Schedule 8.14 hereto, the unfunded or over funded
"actuarial accrued liabilities" of the Pension Plans were as indicated thereon,
and there are no accumulated funding deficiencies within the meaning of ERISA,
or any existing liability with respect to the Pension Plans owed to the Pension
Benefit Guaranty Corporation or any successor thereto.
8.15 Environmental and Safety Matters. (a) As of the Effective
Date, the Company and each of its Subsidiaries is in material compliance with
all federal, state and local laws, ordinances and regulations relating to
safety and industrial hygiene and with all Hazardous Materials Laws, in effect
as of the date hereof, except for matters disclosed on Schedule 8.15 hereto,
and except for such matters as are not likely to have a Material Adverse
Effect.
(b) As of the Effective Date, no demand, claim, notice, suit, suit
in equity, action, administrative action, investigation or inquiry whether
brought by any governmental authority, private person or entity or otherwise,
arising under, relating to or in connection with any applicable Hazardous
Materials Laws is pending or, to the best knowledge of Company, after due
investigation, threatened against the Company or any of its Subsidiaries,
except as disclosed on Schedule 8.15 hereto, and except for such matters as are
not likely to have a Material Adverse Effect.
8.16 No Investment Company. Neither Company nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. Neither Company nor any of its Subsidiaries is
engaged principally, or as one of its
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important activities, directly or indirectly, in the business of extending
credit for the purpose of purchasing or carrying margin stock, and none of the
proceeds of any of the Loans will be used, directly or indirectly, for any
purpose which would violate the provisions of Regulation U or X of the Board of
Governors of the Federal Reserve System. Terms for which meanings are provided
in Regulation U of the Board of Governors of the Federal Reserve System or any
regulations substituted therefor, as from time to time in effect, are used in
this paragraph with such meanings.
8.17 Agreements Affecting Financial Condition. Neither Company nor
any of its Subsidiaries is party to any agreement or instrument or subject to
any charter or other corporate restriction which materially adversely affects
the financial condition, operations or prospects of any such party, as the case
may be, except as disclosed on the most recent Form 10-K or 10-Q for Company.
8.18 Accuracy of Information. The Consolidated financial statements
of Company dated as of October 31, 1995, previously furnished Agent and the
Banks by Company prior to the date of this Agreement, are complete and correct
in all material respects and fairly present the financial condition of Company
and its Consolidated Subsidiaries and the results of its operations as of the
date thereof; since such date there has been no material adverse change in the
financial condition of Company or its Consolidated Subsidiaries. To the
knowledge of Company's financial officers and except as previously disclosed in
writing by Company to Banks, neither Company, nor Subsidiaries have any
material contingent obligations (including any liability for taxes) not
disclosed by or reserved against said balance sheets, and at the present time
there are no material unrealized or anticipated losses from any present
commitment of Company, or its Subsidiaries.
8.19 Use of Proceeds. Advances made to the Company hereunder shall
be used by Company (i) for the payment of the costs and expenses of the
transactions contemplated by this Agreement; (ii) for the payment of any monies
due in connection with the termination of the Prior Credit Agreement; and (iii)
for its general business purposes, including without limitation working capital
and to finance Permitted Acquisitions.
9. AFFIRMATIVE COVENANTS
Company covenants and agrees that it will, and, as applicable, it will
cause each of its Restricted Subsidiaries to, so long as any of the Banks are
committed to make any Advances under this Agreement and thereafter so long as
any Indebtedness remains outstanding under this Agreement:
9.1 Conduct of Business and Preservation of Existence, Etc.
Continue to engage in businesses of the same general types as now conducted by
it and other businesses reasonably related thereto
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(including without limitation, upon consummation of the Piper Acquisition, the
Target Company's business); preserve and maintain its corporate existence
(subject to the provisions of Section 10.5) and such of its rights, licenses,
and privileges as are material to the business and operations conducted by it;
qualify and remain qualified to do business in each jurisdiction in which lack
of such qualification would have a material adverse effect on the respective
business, operations or ownership of the properties of Company or any of its
Restricted Subsidiaries; at all times maintain, preserve and protect all of its
property and keep the same in good repair, working order and condition and from
time to time make, or cause to be made, all necessary or appropriate repairs,
replacements, betterments and improvements thereto to the extent that, in each
case, the businesses carried on in connection therewith may be properly and
advantageously conducted at all times (subject to the provisions of Section
10.5 and subject to any sale of assets which are not otherwise prohibited by
the provisions of this Agreement); and maintain ownership of the issued and
outstanding capital stock of each Restricted Subsidiary at least equal to the
percentage ownership of such Restricted Subsidiary on the date it became a
Restricted Subsidiary (subject to the provisions of Section 10.5 and subject to
any sale of assets which are not otherwise prohibited by the provisions of this
Agreement).
9.2 Keeping of Books. Keep proper books of record and account in
which full and correct entries shall be made of all of its financial
transactions and its assets and businesses so as to permit the presentation of
financial statements prepared in accordance with generally accepted accounting
principles consistently applied; and permit each Bank or its representatives,
at reasonable times and intervals, to visit all of its offices, discuss its
financial matters with its officers and independent certified public
accountants (and by this provision Company authorizes such accountants to
discuss the finances and affairs of Company and its Subsidiaries) and examine
any of its or their books and other corporate records.
9.3 Reporting Requirements. Furnish Agent and each Bank:
(a) as soon as possible, and in any event within three (3)
Business Days after becoming aware of the occurrence of any
Event of Default or any event which, with the giving of notice
or lapse of time, or both, would constitute an Event of
Default, a written statement of the chief financial officer of
the Company (or in his absence, a responsible senior officer)
setting forth details of such Event of Default or event and
the action which the Company has taken or has caused to be
taken or proposes to take or cause to be taken with respect
thereto;
(b) as soon as available, and in any event within one hundred
twenty (120) days after and as of the end of each of
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Company's Fiscal Years, a detailed Consolidated audit report
of Company and its Consolidated Restricted Subsidiaries
certified to by nationally recognized independent certified
public accountants together with an unaudited Consolidating
report of Company and its Consolidated Restricted Subsidiaries
certified by an authorized officer of Company;
(c) as soon as available, and in any event within sixty (60) days
after and as of the end of each quarter other than the last
quarter of each Fiscal Year, and within one hundred twenty
(120) days after and as of the last quarter of each Fiscal
Year, Consolidated and Consolidating balance sheet for Company
and its Consolidated Restricted Subsidiaries and statement of
profit and loss and surplus reconciliation of Company and its
Restricted Subsidiaries certified by an authorized officer of
Company;
(d) as soon as possible, and in any event within three (3)
Business Days after becoming aware (i) of any material adverse
change in the financial condition of the Company, any of its
Restricted Subsidiaries or any Material Unrestricted
Subsidiary, a certificate of the chief financial officer of
Company (or in his absence, a responsible senior officer)
setting forth the details of such change, or (ii) of the
taking by the Internal Revenue Service of a tax position
(verbal or written) which would have a materially adverse
effect upon Company, any of its Restricted Subsidiaries or any
Material Unrestricted Subsidiary (or any tax position taken by
the Company, any of its Restricted Subsidiaries or any
Material Unrestricted Subsidiary), a certificate of the chief
financial officer of Company (or in his absence, a responsible
senior officer) setting forth the details of such position and
the financial impact thereof, or (iii) the taking of any
action or position (which would have a materially adverse
effect upon Company, any of its Restricted Subsidiaries or any
Material Unrestricted Subsidiary) by the Environmental
Protection Agency, or any other federal or state agency
monitoring or regulating environmental matters, with respect
to environmental hazards, wastes, or conditions which such
agency or agencies believe to exist upon the properties of, or
as a consequence of the operations of Company or any of its
Subsidiaries (or which such agency or agencies believe Company
or any of its Subsidiaries may otherwise be liable for), a
certificate of the chief financial officer of Company (or in
his absence, a responsible senior officer) setting forth the
details of such action or position and the financial impact
thereof; and
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(e) as soon as available, the Company's 10-Q and 10-K Reports
filed with the U.S. Securities and Exchange Commission, and in
any event, with respect to the 10-Q Report, within sixty (60)
days of the end of each of the Company's Fiscal Quarters, and
with respect to the 10-K Report, within one hundred five (105)
days after and as of the end of each of Company's Fiscal
Years, and, as soon as available, copies of all other
documents filed by the Company with the Securities and
Exchange Commission (other than any registration statement and
prospectus included therein relating to an employee benefit
plan and filed on Form S-8 or any successor form) and copies
of any orders in any proceedings to which the Company or any
Restricted Subsidiary is a party issued by any governmental
agency;
(f) promptly as issued, all press releases, notices to
shareholders and all other material written communications
transmitted to the general public or to the trade or industry
in which the Company is engaged;
(g) promptly as published or otherwise available to Company,
notice of the obtaining of or any change in any Debt Rating
obtained by the Company from S&P or Moody's;
(h) not less than thirty (30) nor more than ninety (90) days prior
to the proposed consummation of any acquisition (other than
the Piper Acquisition) the value of which could reasonably be
expected to exceed 5% of the Company's Tangible Net Worth as
of the date of such acquisition, the Pro Forma Projected
Financial Information; and
(i) promptly, and in form to be satisfactory to Agent and the
requesting Bank or Banks, such other information as Agent or
any of the Banks (acting through Agent) may reasonably request
from time to time.
9.4 Taxes. Pay and discharge all material taxes and other
governmental charges, and all contractual obligations calling for the payment
of money, before the same shall become delinquent, unless and to the extent
only that such payment is being contested in good faith and is reserved for on
its balance sheet in accordance with generally accepted accounting principles
consistently applied.
9.5 Inspections. Permit Agent, through its authorized attorneys,
accountants, representatives and auditors (including without limitation
environmental auditors) to examine Company's and each of its Subsidiaries'
books, accounts, records, ledgers and assets and properties of every kind and
description wherever
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located at all reasonable times during normal business hours, upon oral or
written request of Agent.
9.6 Computation of Financial Tests. Furnish to the Agent
concurrently with the delivery of each of the financial statements required by
Section 9.3 (b) and (c) hereof, a statement prepared and certified by the chief
financial officer of Company (or in his absence, a responsible senior officer
of Company) setting forth all computations necessary to show compliance by
Company with the covenants contained in Sections 9.14, 9.15 and 10.2 of this
Agreement, as of the date of such financial statements.
9.7 Indemnification. Indemnify and save Agent and Banks harmless
from all loss, damage, liability, or out- of-pocket costs or expenses,
including attorney fees, incurred by Agent or Banks by reason of an Event of
Default or following the occurrence and during the continuance of any Event of
Default, in exercising any of their respective rights, remedies or prerogatives
under or in connection with this Agreement or any of the Loan Documents,
excluding, however, any loss, cost, damage, liability or expense arising solely
as a result of the gross negligence or willful misconduct of the party seeking
to be indemnified under this Section 9.7.
9.8 Governmental and Other Approvals. Apply for, obtain and/or
maintain in effect, as applicable, all authorizations, consents, approvals,
licenses, qualifications, exemptions, filings, declarations and registrations
(whether with any court, governmental agency, regulatory authority, securities
exchange or otherwise) which are necessary in connection with the execution,
delivery and performance: (i) by Company, of this Agreement, the Loan Documents
or any other documents or instruments to be executed and/or delivered by
Company in connection therewith or herewith; and (ii) by each of its Restricted
Subsidiaries, of the Loan Documents to which they are party.
9.9 Insurance. Maintain insurance coverage on its physical assets
and against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature, and in the event
of acquisition of additional property, real or personal, or of incurrence of
additional risks of any nature, increase such insurance coverage in such manner
and to such extent as prudent business judgment and present practice would
dictate.
9.10 Compliance with ERISA. Comply in all material respects with
all requirements imposed by ERISA as presently in effect or hereafter
promulgated including, but not limited to, the minimum funding requirements of
any Pension Plan.
9.11 ERISA Notices. Promptly notify Banks upon the occurrence
thereof of any of the following events:
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(a) the termination of any Pension Plan pursuant to Subtitle C of
Title IV of ERISA or otherwise;
(b) the appointment of a trustee by a United States District Court
to administer any Pension Plan;
(c) the commencement by the Pension Benefit Guaranty Corporation,
or any successor thereto, of any proceeding to terminate any
Pension Plan;
(d) the failure of any Pension Plan to satisfy the minimum funding
requirements for any plan year as established in the Internal
Revenue Code of 1986, as amended;
(e) the withdrawal of the Company or any Subsidiary from any
Pension Plan; or
(f) a reportable event, within the meaning of Title IV of ERISA.
9.12 Compliance with Contractual Obligations and Laws. Comply in
all material respects with all Contractual Obligations and with all applicable
laws, rules, regulations and orders of any Governmental Authority, whether
federal, state, local or foreign (including without limitation, to the extent
set forth in Section 9.13, hereof, Hazardous Material Laws and including any
consumer protection, truth in lending, disclosure and other similar laws and
regulations governing the provision of financing to consumers), in effect from
time to time, except to the extent that failure to comply therewith could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect and could not reasonably be expected to materially adversely
affect the ability of any of the Company, or the Restricted Subsidiaries to
perform their respective obligations under any of the Loan Documents to which
they are a party.
9.13 Hazardous Material Laws.
(a) Comply and cause its Subsidiaries to comply in all material
respects with, and ensure compliance in all material respects by all tenants
and subtenants, if any, with, all Hazardous Material Laws and obtain and comply
with and maintain, and insure that all tenants and subtenants obtain and comply
in all material respects with and maintain, any and all licenses, approvals,
registrations or permits required by Hazardous Material Laws, except to the
extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and
(b) Defend, indemnify and hold harmless the Agent and the Banks,
and their respective employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, and out-of-pocket costs and
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expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of or noncompliance
with any Hazardous Material Laws applicable to the Company or any of its
Subsidiaries, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, attorney's and
consultant's fees, investigation and laboratory fees, court costs and
litigation expenses, except to the extent that any of the foregoing arise out
of the gross negligence or willful misconduct of the party seeking
indemnification therefor.
9.14 Tangible Net Worth. Maintain a Tangible Net Worth at the end
of each Fiscal Quarter of not less than the Base Tangible Net Worth.
9.15 Debt Service Coverage Ratio. Maintain a Debt Service Coverage
Ratio at the end of each Fiscal Quarter of not less than 1.50 to 1.0.
9.16 Guaranties. Except as provided below, Company shall cause each
Person which now is or hereafter becomes a Restricted Subsidiary to deliver to
the Agent, in accordance with this Section 9.16, a fully executed guaranty
agreement in the form attached as Exhibit J and such other instruments and
documents related to such guaranty (including an opinion of counsel) as the
Agent or any Bank shall reasonably request; provided, however, that such
guaranties shall not be required from Restricted Subsidiaries designated by
Company which do not have, in the aggregate, either:
(a) assets exceeding Ten Million Dollars ($10,000,000), or
(b) total outstanding loans, advances and/or capital contributions
and other investments from Company and/or any of the other
Restricted Subsidiaries exceeding Two Million Dollars
($2,000,000).
Company shall deliver to Agent a certificate setting forth the names
of the Restricted Subsidiaries which, pursuant to this Section 9.16, are not
executing and delivering guaranties and the Company's calculation of the
matters set forth in subparagraphs (a) and (b) hereof, (x) on even date
herewith, (y) within five (5) Business Days of the date that any Person becomes
a Restricted Subsidiary after the date hereof, and (z) within five (5) Business
Days after the Restricted Subsidiaries which have not theretofore executed
guaranties pursuant hereto exceed the limitations set forth in subparagraphs
(a) or (b) of this Section 9.16. Guaranties, if any, to be executed and
delivered pursuant to this Section 9.16 after the date hereof shall be
delivered to Agent on behalf of Banks within thirty (30) days after the date
such certificate is required.
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10. NEGATIVE COVENANTS
Company covenants and agrees that so long as any Indebtedness or the
commitment to lend under this Agreement remains outstanding, it will not, and
it will not allow its Restricted Subsidiaries, without the prior written
consent of the Majority Banks, to:
10.1 Limitation on Liens. Create or incur, or suffer to be incurred
or to exist, any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations
in priority to the payment of its or their general creditors, or acquire or
agree to acquire, or permit any Restricted Subsidiary to acquire, any property
or assets upon conditional sales agreements or other title retention devices,
except:
(a) Liens for property taxes and assessments or governmental
charges or levies and liens securing claims or demands of
mechanics and materialmen, provided that payment of the
obligations secured thereby is not at the time required by
Section 9.4 and liens for property taxes and assessments or
governmental charges, levies or claims with respect to
property that the Company or a Restricted Subsidiary has
determined to abandon if the sole recourse for such tax,
assessment, charge, levy or claim is to such property,
provided that adequate reserves with respect thereto are
maintained on the books of the Company in conformity with
generally accepted accounting principles;
(b) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have
expired, in respect of which the Company or a Restricted
Subsidiary shall at any time in good faith be prosecuting an
appeal or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for review
shall have been secured or if, within sixty (60) days after
the entry thereof, such judgment or award shall have been
discharged or execution thereof stayed pending appeal or shall
have been discharged within sixty (60) days after the
expiration of any such stay;
(c) Liens incidental to the conduct of business or the ownership
of properties and assets (including warehousemen's, carriers',
repairmen's, statutory landlords' and other liens of like
general nature) and deposits, pledges or liens to secure the
performance of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds, workers'
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compensation, unemployment insurance or other liens of like
general nature incurred in the ordinary course of business and
not in connection with the borrowing of money, provided in
each case, the obligation secured is not overdue for more than
ninety (90) days or, if so overdue is being contested in good
faith by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities
and other similar purposes, or zoning or other restrictions as
to the use of real properties, which do not materially
interfere with the business of the Company and its Restricted
Subsidiaries;
(e) Liens securing indebtedness of a Restricted Subsidiary to the
Company or to another Restricted Subsidiary;
(f) Liens (i) (including, without limitation, Capitalized Leases)
existing as of the date of this Agreement and reflected on
Schedule 10.1 hereto, securing Funded Debt of the Company or
any Restricted Subsidiary outstanding on such date or (ii)
securing the refundings, refinancings, restructurings or
replacements of indebtedness secured by Liens (including
without limitation Capitalized Leases) permitted by Section
10.1(f)(i), provided that (x) the instrument pursuant to which
the indebtedness secured by such Liens is issued does not
contain provisions which are more restrictive in any material
respect than the instrument pertaining to the indebtedness
being refunded, refinanced, restructured or replaced and (y)
such Lien is limited to the property covered by the Lien being
replaced;
(g) Liens (including without limitation Capitalized Leases)
incurred after the date hereof given to secure the payment of
the purchase price incurred in connection with the acquisition
of assets useful and intended to be used in carrying on the
business of the Company or a Restricted Subsidiary, including
Liens existing on such assets at the time of acquisition
thereof or at the time of acquisition by the Company or a
Restricted Subsidiary of any business entity then owning such
assets, whether or not such existing Liens were given to
secure the payment of the purchase price of the assets to
which they attach so long as they were not incurred, extended
or renewed in contemplation of such acquisition, provided that
the Lien shall attach solely to the Property acquired or
purchased;
(h) the interest of the lessee under any operating lease of
Property leased by the Company or any Restricted
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Subsidiary as lessor, provided that such operating lease does
not interfere in any material respect with the business of the
Company or any Restricted Subsidiary;
(i) Liens (i) consisting of customary initial deposits and margin
accounts or (ii) incurred in the ordinary course of business
and which are customary in the industry, in each case securing
Hedging Obligations;
(j) Liens securing tax-exempt private activity bonds issued
pursuant to Sections 103, 142 and 144 of the Internal Revenue
Code of 1986 (or any successor provision) for the benefit of
the Company and/or any Restricted Subsidiary;
(k) Liens incurred in connection with any sale/leaseback
arrangement of Property (other than Manufacturing Property)
entered into by the Company or any Restricted Subsidiary;
(l) Liens imposed by operation of law that do not materially
affect the ability of the Company or the Restricted
Subsidiaries to perform its or their respective obligations
under this Agreement;
(m) Liens arising from the filing of financing statements pursuant
to the provisions of the Uniform Commercial Code regarding
leases or consignments, which Liens (i) are incurred in the
ordinary course of business, (ii) are not incurred in
connection with the incurrence of any Indebtedness and (iii)
do not interfere in any material respect with the business of
the Company or any Restricted Subsidiary;
(n) Liens on cash or other Property of the Company held in escrow
for the benefit of the Company in connection with the sale of
assets by the Company to any third party;
(o) Liens on corporate owned life insurance policies held in trust
created to secure loans to Company from proceeds of borrowing
under such insurance policies;
(p) any Lien securing indebtedness assumed pursuant to a Permitted
Acquisition, provided that such Lien is limited to the
property so acquired, and was not entered into, extended or
renewed in contemplation of such acquisition; and
(q) Any Lien securing indebtedness arising out of a Receivables
Financing; provided that the aggregate book value of the
accounts and/or other assets transferred or pledged (and not
liquidated) in connection with such Receivables Financing does
not exceed one hundred twenty
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five percent (125%) of the original principal amount of the
indebtedness arising from such Receivables Financing;
provided, however, that any indebtedness secured by Liens permitted pursuant to
clauses (f), (g), (j), (k), (p) and (q) above shall be incurred within the
limitations of Section 10.2.
10.2 Indebtedness. Become or remain obligated for any indebtedness
for borrowed money or for any indebtedness incurred in connection with the
acquisition of any property, real or personal, tangible or intangible (or any
interest rate protection or foreign currency hedges or swaps in connection with
any such indebtedness), except:
(a) indebtedness to the Banks;
(b) unsecured indebtedness, including without limitation Hedging
Obligations and the New Senior Debt, provided that at the time
any such indebtedness is incurred no Event of Default or event
which, with the giving of notice or the lapse of time or both
would constitute an Event of Default, has occurred and is
continuing (both before and after giving effect to such
indebtedness);
(c) indebtedness set forth on Schedule 10.2 hereof;
(d) lease obligations and purchase money indebtedness incurred in
connection with leases or purchases of fixed assets in an
aggregate amount not to exceed the amount of all fixed asset
leases shown on the Consolidated financial statements of
Company and its Subsidiaries dated October 31, 1995 plus Ten
Million Dollars ($10,000,000);
(e) indebtedness to insurance companies secured by pledges and
security interests of Company's interests in life insurance
policies issued by the insurance companies, in amounts not to
exceed with respect to each such loan or extension of credit,
ninety percent (90%) of the cash surrender value of the
insurance policy pledged in connection with such loan or
extension of credit; and
(f) Priority Debt.
Provided that, notwithstanding anything to the contrary in this
Section 10.2, Company and its Restricted Subsidiaries shall not incur
obligations or indebtedness which would be included in Funded Debt which, after
giving effect to the incurring of such obligations or indebtedness, would cause
the ratio of Funded Debt to Capitalization to exceed sixty percent (60%) or
would result in an Event of Default or an event which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default
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hereunder. In the event that the ratio of Funded Debt to Capitalization exceeds
the percentage set forth above, notwithstanding the fact that such event may
have resulted from a reduction in Capitalization rather than an increase in
Funded Debt, until such excess is remedied, Company shall not be entitled to
request or receive any Advance hereunder (other than an Advance pursuant to
Sections 3.7 and 3.8 hereof) and Account Parties shall not be entitled to
request or have issued any Letter of Credit hereunder. Further, the Company
will not and will not permit any Restricted Subsidiary to create, assume, incur
or guarantee or in any manner become liable in respect of any Priority Debt if
at the time of incurrence thereof and after giving effect thereto and to the
application of the proceeds thereof Priority Debt would exceed ten percent
(10%) of Capitalization.
10.3 Transactions with Affiliates. Enter into any transaction with
any of their stockholders or officers or their Affiliates (other than
Restricted Subsidiaries), except in the ordinary course of business and on
terms not less favorable than would be usual and customary in similar
transactions between Persons dealing at arm's length; provided that
transactions between or among Company, the Restricted Subsidiaries and/or any
wholly-owned Subsidiaries of Company shall not be subject to this Section 10.3.
10.4 Investments. The Company will not, and will not permit any
Restricted Subsidiary to, make any investments in or loans, advances or
extensions of credit to, any Person, except:
(a) investments, loans and advances by the Company and its
Restricted Subsidiaries in and to Restricted Subsidiaries,
including any investment in a corporation which, after giving
effect to such investment, will become a Restricted
Subsidiary;
(b) investments from and after the date hereof in and loans or
advances to Unrestricted Subsidiaries, in an aggregate amount
at any time outstanding not to exceed $45,000,000, or any
greater amount approved in writing by Majority Banks (treating
any direct or indirect guaranty of the obligations of any
Unrestricted Subsidiary as an investment in such Unrestricted
Subsidiary);
(c) investments in commercial paper maturing in 270 days or less
from the date of issuance which, at the time of acquisition by
the Company or any Restricted Subsidiary, is rated at least
A-1 by S&P or at least P-1 by Moody's;
(d) investments in direct obligations of the United States of
America, or any agency thereof, maturing in twelve months or
less from the date of acquisition thereof and which are backed
by the full faith and credit of the United States of America;
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(e) investments in certificates of deposit maturing within one
year from the date of origin, issued by a bank or trust
company organized under the laws of the United States or any
state thereof, having capital, surplus and undivided profits
aggregating at least $250,000,000 and whose commercial paper
is rated at least A-1 by S&P or at least P-1 by Moody's
(except that Comerica Bank shall not be required to be so
rated or to have such amount of capital, surplus and undivided
profits);
(f) investments in certificates of deposit maturing within one
year from the date of origin, issued by a bank or trust
company organized under the laws of any jurisdiction other
than that of the United States or any state thereof and whose
short-term deposit rating is the highest such rating then
accorded by Moody's provided that the aggregate amount of such
investments under this clause (e) shall not exceed $5,000,000;
(g) investments in money market funds or mutual funds that invest
solely in investments described in clauses (c) through (f),
above and in cash and cash equivalents;
(h) investments in common stock of publicly traded companies, in
an aggregate amount not to exceed at any time $200,000;
(i) loans or advances in the usual and ordinary course of business
to officers, directors and employees for expenses (including
moving expenses related to a transfer) incidental to carrying
on the business of the Company or any Restricted Subsidiary
and under employee benefit plans in an aggregate amount not to
exceed $5,000,000;
(j) receivables arising from the sale of goods and services in the
ordinary course of business of the Company and its Restricted
Subsidiaries;
(k) investments, whether by acquisition of shares of capital
stock, Indebtedness or other obligations or Security of, any
Person (other than an Affiliate) which is a customer of the
Company or any Restricted Subsidiary, which investment was
made in exchange for amounts owed by such customer to the
Company or any Restricted Subsidiary; provided that all such
investments shall not exceed $1,000,000 in the aggregate
unless payment on the underlying obligation of such customer
is more than ninety (90) days past due and collection of which
defaulted obligations was determined, in the judgment of the
Board of Directors of the Company, to be commercially
doubtful;
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(l) investments in obligations of municipalities organized under
the laws of any state of the United States or any subdivision
of any such state which, at the time of acquisition by the
Company or any Restricted Subsidiary, are rated not lower than
"A" or "MIG-1" by Moody's or "A" by S&P and which mature
within twelve months or less from the date of acquisition
thereof, provided that the aggregate amount of such
investments under this clause shall not exceed an amount equal
to 50% of Tangible Net Worth and the aggregate amount of such
investments under this clause shall not, with respect to the
amount of obligations of any one issuer, exceed 1% of Tangible
Net Worth;
(m) Hedging Obligations, to the extent treated as investments
rather than indebtedness; and
(n) other investments (in addition to those permitted by the
foregoing provisions of this Section 10.4 made as Restricted
Payments) within the limitations of Section 10.7.
In valuing any investments, loans and advances for the purpose of
applying the limitations set forth in this Section 10.4 and Section 10.7
(except as otherwise expressly provided therein), such investments, loans and
advances shall be taken at the original amount or cost thereof, without
allowance for any subsequent write-offs or appreciation or depreciation
therein, but less any amount repaid or recovered on account of capital or
principal.
10.5 Merger and Consolidation. Enter into any merger or
consolidation or sell or transfer or dispose of all, substantially all or any
material part of its assets, except (a) sales of inventory in the ordinary
course of business, (b) the merger or consolidation of another corporation in
substantially the same line of business as the Company into the Company or a
Subsidiary, if the Company or the Subsidiary, as the case may be, is the
surviving corporation, and if immediately after the consummation of the
transaction, and after giving effect thereto, no Event of Default has occurred
or exists, (c) transfers of accounts pursuant to a Receivables Financing and
(d) the sale, transfer or disposition of all, substantially all or any material
part of the assets of (i) the Company or any Subsidiary to any Restricted
Subsidiary which has executed and delivered to the Banks a supplemental
guaranty substantially identical to the form of guaranty attached hereto as
Exhibit J or (ii) any Subsidiary to the Company, if, in any such event,
immediately after the consummation of the transaction and after giving effect
thereto, no Event of Default has occurred or exists.
10.6 Negative Pledges of Assets. Except for the Existing Lien
Agreements and any other agreements, documents or instruments
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pursuant to which Liens not prohibited by the terms of this Agreement are
created, enter into, or allow to exist, any agreement, document or instrument
which would restrict or prevent Company and its Restricted Subsidiaries from
granting Agent on behalf of Banks liens upon, security interests in and pledges
of their respective assets which are senior in priority to all Liens.
10.7 Dividends. Declare or pay any dividend or make any
distribution on its capital stock or to its stockholders, or purchase, redeem
or otherwise acquire or retire for value their capital stock (or debt
instruments issued upon redemption or conversion of capital stock, or which are
convertible into capital stock, which are referred to in this Section 10.7 as
"Redemption Debt Instruments"), or make any Restricted Investments except to
the extent that such dividends, purchases, redemptions, other acquisitions or
retirements and Restricted Investments (collectively, the "Restricted
Payments"), do not exceed, in aggregate amount, the sum of (i) Twenty-One
Million Dollars ($21,000,000), plus (ii) fifty percent (50%) of the Net Income
of the Company and its Restricted Subsidiaries subsequent to October 31, 1989,
plus (iii) the aggregate net cash proceeds received by the Company for the
sales, subsequent to October 31, 1989, of shares of its capital stock or
warrants, rights or options to purchase or acquire any shares of its capital
stock, plus (iv) principal amount of securities (other than capital stock) of
the Company issued after October 31, 1989 and converted after such date into
shares of capital stock of the Company, plus (v) the aggregate amount of net
proceeds received by the Company and its Restricted Subsidiaries in connection
with any sale or disposition of Restricted Investments made during such period,
provided that for the purposes of this Section 10.7 the amount of such net
proceeds received from the sale or disposition of any Restricted Investment may
not exceed the amount charged as a Restricted Investment when such Restricted
Investment was made (except that, if a Restricted Investment in an Unrestricted
Subsidiary is sold or otherwise disposed of, all of the net proceeds received
in connection with such sale or disposition may be included for this purpose),
plus (vi) any dividends on or other distributions in respect of shares of
capital stock of any Unrestricted Subsidiary, paid in cash, to the Company or
any Restricted Subsidiary, plus (vii) any property (other than cash)
distributed to the Company or any Restricted Subsidiary in respect of shares of
capital stock of any Unrestricted Subsidiary, for this purpose valued at the
lesser of the fair market value or book value. Any exchange of Preferred Stock
for Subordinated Debentures shall not be deemed to be a Restricted Payment for
purposes of this Section 10.7. Notwithstanding the provisions of this Section
10.7, the Company may take any of the following actions, provided that at the
time thereof, and after giving effect thereto, no Event of Default shall then
exist: (i) pay any dividend or make any distribution on its capital stock or to
its stockholders if on the date of declaration thereof such dividend or
distribution would comply with the terms
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of this Section 10.7 and such dividend or distribution is paid not more than
sixty (60) days after the date of declaration thereof; (ii) purchase, redeem or
otherwise acquire or retire for value Redemption Debt Instruments, with the
proceeds from a refinancing of such indebtedness, provided that the
Subordinated Debentures may be purchased, redeemed or otherwise acquired only
in compliance with Section 10.9 hereof; and (iii) purchase, redeem or otherwise
acquire or retire for value capital stock (or Redemption Debt Instruments)
with, or out of the proceeds of, the sale of additional shares of capital stock
of the Company other than shares of capital stock of the Company that are
subject to a sinking fund for redemption schedule (unless the sinking fund or
redemption provisions applicable to such shares of capital stock of the Company
prohibit the redemption thereof prior to the date on which the capital stock of
the Company to be acquired or retired was by its terms required to be
redeemed), provided that such proceeds are applied to such purchase,
redemption, acquisition or retirement within sixty (60) days after the date on
which the additional shares of capital stock of the Company are issued.
Any dividend by a Restricted Subsidiary to its parent corporation
shall not be deemed a Restricted Payment for purposes of this Section 10.7.
The Company will not declare any dividend which constitutes a
Restricted Payment payable more than sixty (60) days after the date of
declaration thereof.
10.8 Acquisitions. Other than any Permitted Acquisition and
investments permitted under Section 10.4 hereof, purchase or otherwise acquire
or become obligated for the purchase of all or substantially all or any
material portion of the assets or business interests of any Person, firm or
corporation (other than wholly-owned Subsidiaries of the Company), or any
shares of stock (or other ownership interests) of any corporation, trusteeship
or association, or any business or going concern, or in any other manner
effectuate or attempt to effectuate an expansion of present business by
acquisition.
10.9 Prepayment or Amendment of Subordinated Debentures. Prepay,
purchase, redeem or defease the Subordinated Debentures, other than Permitted
Redemptions; provided that Conversion shall not be restricted by this Section
10.9; or increase the principal amount of or interest rate applicable to, or
shorten the term or scheduled amortization (or increase the amount or
accelerate the timing of any sinking fund payments) or make any changes to the
subordination, default or remedial provisions contained in the Subordinated
Debentures, except in each case with the prior written approval of the Majority
Banks.
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11. DEFAULTS
11.1 Events of Default. Any of the following events is an "Event of
Default":
(a) non-payment of the principal or interest, when due, under any
of the Notes issued hereunder, or of any Reimbursement
Obligation to be paid hereunder or under any Letter of Credit
Agreement in accordance with the terms hereof and thereof;
(b) default in the payment of any money by Company or any Account
Party under this Agreement in accordance with the terms
hereof, other than as set forth in subsection (a), above
within three (3) Business Days of the date the same is due and
payable;
(c) default is made in the due observance or performance of any
term, covenant or agreement contained in Sections 9.2, 9.3,
9.5 through 9.8, 9.11 through 9.16, Sections 10.1 through 10.9
of this Agreement;
(d) default is made in the due observance or performance of any
other term, covenant or agreement contained in this Agreement
or any other Loan Document and such default continues
unremedied for a period of 30 days after written notice of
such default to Company by Agent;
(e) any representation or warranty made by Company herein or in
any instrument submitted pursuant hereto or by any other party
to the Loan Documents proves untrue in any material adverse
respect when made;
(f) default in the payment of any other obligation of Company or
its Restricted Subsidiaries for borrowed money aggregating in
excess of One Million Dollars ($1,000,000) or in the
observance or performance of any term, covenant or condition
in any agreement or instrument evidencing, securing or
relating to such indebtedness, and such default shall continue
for a period sufficient to permit acceleration of the
indebtedness prior to its expressed maturity, whether or not
such acceleration occurs;
(g) the rendering of any judgment for the payment of money in
excess of the sum of Two Million Dollars ($2,000,000) in the
aggregate against Company or any of its Restricted
Subsidiaries, and such judgments shall remain unpaid,
unvacated, unbonded or unstayed by appeal or otherwise for a
period of thirty (30) consecutive days, except as covered by
adequate insurance with a reputable carrier and an action is
pending in which an active defense is being made with respect
thereto;
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(h) the occurrence of any "reportable event", as defined in ERISA,
which is determined by the Pension Benefit Guaranty
Corporation in a written notice to Company to constitute
grounds for termination of any Pension Plan maintained by or
on behalf of the Company or any Restricted Subsidiary for the
benefit of any of its employees or for the appointment by the
appropriate United States District Court of a trustee to
administer such Pension Plan and such reportable event is not
corrected and such determination is not revoked within thirty
(30) days after notice thereof has been given to the plan
administrator or the Company or such Restricted Subsidiary; or
the institution of proceedings by the Pension Benefit Guaranty
Corporation to terminate any such Pension Plan or to appoint a
trustee to administer such Pension Plan; or the appointment of
a trustee by the appropriate United States District Court to
administer any such Pension Plan;
(i) if a creditors' committee shall have been appointed for the
business of Company, any of its Restricted Subsidiaries or its
Material Unrestricted Subsidiaries; or if Company, any of its
Restricted Subsidiaries, or its Material Unrestricted
Subsidiaries shall have made a general assignment for the
benefit of creditors or shall have been adjudicated bankrupt,
or shall have filed a voluntary petition in bankruptcy or for
reorganization or to effect a plan or arrangement with
creditors or shall fail to pay its debts generally as such
debts become due in the ordinary course of business (except as
contested in good faith and for which adequate reserves are
made in such party's financial statements); or shall file an
answer to a creditor's petition or other petition filed
against it, admitting the material allegations thereof for an
adjudication in bankruptcy or for reorganization; or shall
have a creditor's petition or other petition filed against it
and such petition is not dismissed within thirty (30) days of
such filing; or shall have applied for or permitted the
appointment of a receiver or trustee or custodian for any of
its property or assets; or such receiver, trustee or custodian
shall have been appointed for any of its property or assets
(otherwise than upon application or consent of Company, its
Restricted Subsidiaries or Material Unrestricted Subsidiaries)
or if an order shall be entered approving any petition for
reorganization of Company or any of its Subsidiaries; or
(j) any one Person or group of Persons acting in concert, acquires
or gains control, directly or indirectly, whether by
ownership, proxy, voting trust or otherwise,
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of fifty percent (50%) or more of the issued and outstanding
stock of Company.
11.2 Exercise of Remedies. If an Event of Default has occurred and
is continuing hereunder: (a) the Agent shall, if directed to do so by the
Majority Banks, declare any commitment of the Banks (including the Swing Line
Bank) to lend hereunder immediately terminated; (b) the Agent shall, if
directed to do so by the Majority Banks, declare the entire unpaid principal
Indebtedness, including the Notes, immediately due and payable, without
presentment, notice or demand, all of which are hereby expressly waived by
Company; (c) upon the occurrence of any Event of Default specified in
subsection 11.1(i), above, and notwithstanding the lack of any declaration by
Agent under preceding clause (b), the entire unpaid principal Indebtedness,
including the Notes, shall become automatically due and payable; (d) the Agent
shall, upon being directed to do so by the Majority Banks, demand immediate
delivery of cash collateral, and the Company and each Account Party agrees to
deliver such cash collateral upon demand, in an amount equal to the maximum
amount that may be available to be drawn at any time prior to the stated expiry
of all outstanding Letters of Credit, and (e) the Agent shall, if directed to
do so by the Majority Banks or the Banks, as applicable (subject to the terms
hereof), exercise any remedy permitted by this Agreement, the other Loan
Documents or law.
11.3 Rights Cumulative. No delay or failure of Agent and/or Banks
in exercising any right, power or privilege hereunder shall affect such right,
power or privilege, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof, or the exercise of any other power,
right or privilege. The rights of Banks under this Agreement are cumulative and
not exclusive of any right or remedies which Banks would otherwise have.
11.4 Waiver of Defaults. No Event of Default shall be waived by the
Banks except in a writing signed by an officer of the Agent in accordance with
Section 13.10 hereof. No single or partial exercise of any right, power or
privilege hereunder, nor any delay in the exercise thereof, shall preclude
other or further exercise of Agent's rights or of Banks' rights by Agent. No
waiver of any event of default shall extend to any other or further event of
default. No forbearance on the part of the Agent in enforcing Agent's or any
of Banks' rights shall constitute a waiver of any of their respective rights.
Company expressly agrees that this Section may not be waived or modified by
Banks or Agent by course of performance, estoppel or otherwise.
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12. AGENT
12.1 Appointment of Agent. Each Bank and the holder of each Note
appoints and authorizes Agent to act on behalf of such Bank or holder under the
Loan Documents and to exercise such powers hereunder and thereunder as are
specifically delegated to or required of Agent by the terms hereof and thereof,
together with such powers as may be reasonably incidental thereto. Each Bank
agrees (which agreement shall survive any termination of this Agreement) to
reimburse Agent for all reasonable out-of-pocket expenses (including house and
outside attorneys' fees) incurred by Agent hereunder or in connection herewith
or with an Event of Default or in enforcing the obligations of Company under
this Agreement or the other Loan Documents or any other instrument executed
pursuant hereto, and for which Agent is not reimbursed by Company, pro rata
according to such Bank's Percentage, but excluding any such expenses resulting
from Agent's gross negligence or willful misconduct. Agent shall not be
required to take any action under the Loan Documents, or to prosecute or defend
any suit in respect of the Loan Documents, unless indemnified to its
satisfaction by the Banks against loss, costs, liability and expense (excluding
liability resulting from its gross negligence or willful misconduct). If any
indemnity furnished to Agent shall become impaired, it may call for additional
indemnity and cease to do the acts indemnified against until such additional
indemnity is given.
12.2 Deposit Account with Agent. Company hereby authorizes Agent to
charge its general deposit account, if any, maintained with Agent for the
amount of any principal, interest, or other amounts or costs due under this
Agreement when the same becomes due and payable under the terms of this
Agreement or the Notes.
12.3 Exculpatory Provisions. Agent agrees to exercise its rights
and powers, and to perform its duties, as Agent hereunder and under the other
Loan Documents in accordance with its usual customs and practices in
bank-agency transactions, but only upon and subject to the express terms and
conditions of this Section 12 (and no implied covenants or other obligations
shall be read into this Agreement against the Agent); neither Agent nor any of
its directors, officers, employees or agents shall be liable to any Bank for
any action taken or omitted to be taken by it or them under this Agreement or
any document executed pursuant hereto, or in connection herewith or therewith,
except for its or their own willful misconduct or gross negligence, nor be
responsible for any recitals or warranties herein or therein, or for the
effectiveness, enforceability, validity or due execution of this Agreement or
any document executed pursuant hereto, or any security thereunder, or to make
any inquiry respecting the performance by Company or any of its Subsidiaries of
its obligations hereunder or thereunder. Agent shall not have, or be deemed to
have, a fiduciary relationship with any Bank by reason of this Agreement. Agent
shall be entitled to
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rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement or writing which it believes to be genuine and
to have been presented by a proper person.
12.4 Successor Agents. Agent may resign as such at any time upon at
least 30 days prior notice to Company and all Banks. If Agent at any time shall
resign or if the office of Agent shall become vacant for any other reason,
Majority Banks shall, by written instrument, appoint a successor Agent
(consisting of either Co-Agent or any other Bank or financial institution
satisfactory to such Majority Banks) which shall thereupon become Agent
hereunder and shall be entitled to receive from the prior Agent such documents
of transfer and assignment as such successor Agent may reasonably request. Such
successor Agent shall succeed to all of the rights and obligations of the
retiring Agent as if originally named. The retiring Agent shall duly assign,
transfer and deliver to such successor Agent all moneys at the time held by the
retiring Agent hereunder after deducting therefrom its expenses for which it is
entitled to be reimbursed. Upon such succession of any such successor Agent,
the retiring agent shall be discharged from its duties and obligations
hereunder, except for its gross negligence or willful misconduct arising prior
to its retirement hereunder, and the provisions of this Section 12 shall
continue in effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as Agent.
12.5 Loans by Agent. Agent shall have the same rights and powers
with respect to the credit extended by it and the Notes held by it as any Bank
and may exercise the same as if it were not Agent, and the term "Bank" and,
when appropriate, "holder" shall include Agent in its individual capacity.
12.6 Credit Decisions. Each Bank acknowledges that it has,
independently of Agent and each other Bank and based on the financial
statements of Company, and its Subsidiaries and such other documents,
information and investigations as it has deemed appropriate, made its own
credit decision to extend credit hereunder from time to time. Each Bank also
acknowledges that it will, independently of Agent and each other Bank 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 document executed pursuant hereto.
12.7 Notices by Agent. Agent shall give prompt notice to each Bank
of its receipt of each notice or request required or permitted to be given to
Agent by Company pursuant to the terms of this Agreement and shall promptly
distribute to the Banks any reports received from the Company or any of its
Subsidiaries under the terms hereof, or other material information or documents
received
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by Agent, in its capacity as Agent, from the Company, or its Subsidiaries.
12.8 Agent's Fees. Commencing on November 1, 1996 and on the first
day of each succeeding Fiscal Quarter until the Indebtedness has been repaid
and no commitment to fund any loan hereunder is outstanding, the Company, shall
pay to Agent a quarterly agency fee set forth (or to be set forth from time to
time) in a letter agreement between Company and Agent. The Agent's Fees
described in this Section 12.8 shall not be refundable under any circumstances.
12.9 Nature of Agency. The appointment of Agent as agent is for the
convenience of Banks, and the Company in making Advances of the Revolving
Credit, the Term Loans or any other Indebtedness of Company or issuing Letters
of Credit hereunder, and collecting fees and principal and interest on the
Indebtedness. No Bank is purchasing any Indebtedness from Agent and this
Agreement is not intended to be a purchase or participation agreement, except
to the extent, with respect to Swing Line Advances and Letters of Credit,
expressly provided herein.
12.10 Actions; Confirmation of Agent's Authority to Act in Event of
Default. Subject to the terms and conditions of this Agreement, Agent is hereby
expressly authorized to act in all litigation by or against Agent and in all
other respects as the representative of the Banks where Agent considers it to
be necessary or desirable in order to carry out the purposes of this Agreement
or the other Loan Documents. Without necessarily accepting service of process
or designating Agent to do so in its stead, each Bank hereby agrees with each
other Bank and with Agent, without intending to confer or conferring any rights
on any other party, (a) that it shall be bound by any litigation brought by or
against Agent by the Company, any Subsidiary, or any other party in connection
with the Indebtedness or any other rights, duties or obligations arising
hereunder or under this Agreement or the other Loan Documents and (b) that it
now irrevocably waives the defense of procedural impediment or failure to name
or join such Bank as an indispensable party. In conducting such litigation
hereunder on behalf of the Banks, Agent shall at all times be indemnified by
the Banks as provided in Sections 12.1 and 12.12 hereof. Agent shall undertake
to give each Bank prompt notice of any litigation commenced against Agent
and/or the Banks with respect to this Agreement or the other Loan Documents or
any matter referred to herein or therein.
12.11 Authority of Agent to Enforce Notes and This Agreement. Each
Bank, subject to the terms and conditions of this Agreement, authorizes the
Agent with full power and authority as attorney-in-fact to institute and
maintain actions, suits or proceedings for the collection and enforcement of
the Notes and to file such proofs of debt or other documents as may be
necessary to have the claims of the Banks allowed in any proceeding relative to
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the Company, any of its Subsidiaries, or its creditors or affecting its
properties, and to take such other actions which Agent considers to be
necessary or desirable for the protection, collection and enforcement of the
Notes, this Agreement or the other Loan Documents, but in each case only to the
extent of any required approval or direction of the Majority Banks or the
Banks, as applicable, obtained by or given to the Agent hereunder.
12.12 Indemnification. The Banks agree to indemnify the Agent in its
capacity as such, to the extent not reimbursed by the Company, pro rata
according to their respective Percentages, from and against any and all claims,
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Agreement or any of the other Loan Documents
or any action taken or omitted to be taken or suffered in good faith by the
Agent hereunder, provided that no Bank shall be liable for any portion of any
of the foregoing items resulting from the gross negligence or willful
misconduct of the Agent or any of its officers, employees, directors or agents.
12.13 Knowledge of Default. It is expressly understood and agreed
that the Agent shall be entitled to assume that no Default or Event of Default
has occurred and is continuing, unless the officers of the Agent immediately
responsible for matters concerning this Agreement shall have actual (rather
than constructive) knowledge of such occurrence or shall have been notified in
writing by a Bank that such Bank considers that a Default or an Event of
Default has occurred and is continuing, and specifying the nature thereof. Upon
obtaining actual knowledge of any Default or Event of Default as described
above, the Agent shall promptly, but in any event within three (3) Business
Days after obtaining knowledge thereof, notify each Bank of such Default or
Event of Default and the action, if any, the Agent proposes be taken with
respect thereto.
12.14 Agent's Authorization; Action by Banks. Except as otherwise
expressly provided herein, whenever the Agent is authorized and empowered
hereunder on behalf of the Banks to give any approval or consent, or to make
any request, or to take any other action, on behalf of the Banks (including
without limitation the exercise of any right or remedy hereunder or under the
other Loan Documents), the Agent shall be required to give such approval or
consent, or to make such request or to take such other action only when so
requested in writing by the Majority Banks or the Banks, as applicable
hereunder. Action that may be taken by Majority Banks or all of the Banks, as
the case may be (as provided for hereunder), may be taken (i) pursuant to a
vote at a meeting (which may be held by telephone conference call) as to which
all of the Banks have been given reasonable advance notice (subject to the
requirement that amendments, waivers or consents under Section
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13.10 hereof be made in writing by the Majority Banks or all the Banks, as
applicable), or (ii) pursuant to the written consent of the requisite
Percentages of the Banks as required hereunder, provided that all of the Banks
are given reasonable advance notice of the requests for such consent.
12.15 Enforcement Actions by the Agent. Except as otherwise
expressly provided under this Agreement or in any of the other Loan Documents
and subject to the terms hereof, Agent will take such action, assert such
rights and pursue such remedies under this Agreement and the other Loan
Documents as the Majority Banks or all of the Banks, as the case may be (as
provided for hereunder), shall direct. Except as otherwise expressly provided
in any of the Loan Documents, Agent will not (and will not be obligated to)
take any action, assert any rights or pursue any remedies under this Agreement
or any of the other Loan Documents in violation or contravention of any express
direction or instruction of the Majority Banks or all of the Banks, as the case
may be (as provided for hereunder). Agent may refuse (and will not be
obligated) to take any action, assert any rights or pursue any remedies under
this Agreement or any of the other Loan Documents in the absence of the express
written direction and instruction of the Majority Banks or all of the Banks, as
the case may be (as provided for hereunder). In the event Agent fails, within
a commercially reasonable time, to take such action, assert such rights, or
pursue such remedies as the Majority Banks or all of the Banks, as the case may
be (as provided for hereunder), shall direct in conformity with this Agreement,
the Majority Banks or all of the Banks, as the case may be (as provided for
hereunder), shall have the right to take such action, to assert such rights, or
pursue such remedies on behalf of all of the Banks unless the terms hereof
otherwise require the consent of all the Banks to the taking of such actions
(in which event all of the Banks must join in such action). Except as expressly
provided above or elsewhere in this Agreement or the other Loan Documents, no
Bank (other than the Agent, acting in its capacity as Agent) shall be entitled
to take any enforcement action of any kind under any of the Loan Documents.
12.16 Co-Agents. Each of Harris Trust and Savings Bank and Wells
Fargo Bank (Texas), National Association has been designated by the Company as
"Co-Agent" under this Agreement. Other than their respective rights and
remedies as a Bank hereunder, neither of the Co-Agents shall have any
administrative, collateral or other rights or responsibilities, provided,
however, that each Co-Agent shall be entitled to the benefits afforded to Agent
under Sections 12.5 and 12.6 hereof.
13. MISCELLANEOUS
13.1 Accounting Principles. Except as otherwise specified herein,
where the character or amount of any asset or liability or item of income or
expense is required to be determined or any
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consolidation or other accounting computation is required to be made for the
purposes of this Agreement, it shall be done in accordance with generally
accepted accounting principles consistently applied.
13.2 Law of Michigan. THIS AGREEMENT AND THE NOTES HAVE BEEN
DELIVERED AT DETROIT, MICHIGAN, AND SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN. Whenever
possible each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
13.3 Waiver by Company of Certain Laws; WAIVER OF JURY TRIAL. To
the extent permitted by applicable law, Company hereby agrees to waive, and
does hereby absolutely and irrevocably waive and relinquish the benefit and
advantage of any valuation, stay, appraisement, extension or redemption laws
now existing or which may hereafter exist, which, but for this provision, might
be applicable to any sale made under the judgment, order or decree of any
court, on any claim for interest on the Notes. EACH OF THE COMPANY, THE AGENT
AND THE BANKS HEREBY IRREVOCABLY AGREES TO WAIVE THE RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS IN WHICH AGENT OR THE BANKS
(OR ANY OF THEM), ON THE ONE HAND, AND THE COMPANY, ON THE OTHER HAND, ARE
PARTIES, WHETHER OR NOT SUCH ACTIONS OR PROCEEDINGS ARISE OUT OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS, OR OTHERWISE. These waivers have been voluntarily
given, with full knowledge of the consequences thereof.
13.4 Agent's Costs and Expenses. Company shall pay all reasonable
costs and expenses, including, by way of description and not limitation,
outside attorney fees and out of pocket expenses and lien search fees incurred
by Agent in connection with the commitment, consummation, and closing of the
loans contemplated hereby and in the exercise and enforcement of its rights and
prerogatives hereunder and under the Loan Documents. All of said amounts
required to be paid by Company as aforesaid may, at Agent's option, be charged
by Agent as an advance against the proceeds of the loans. All costs, including
attorney fees, incurred by Agent in revising, protecting, exercising or
enforcing any of its rights hereunder and under the Loan Documents, or
otherwise incurred by Agent in connection with an Event of Default or the
enforcement of the Loans, including by way of description and not limitation,
such charges in any court or bankruptcy proceedings or arising out of any claim
or action by any person against Agent or any Bank which would not have been
asserted were it not for Agent's or such Bank's relationship with Company
hereunder or otherwise, shall also be paid by Company.
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13.5 Notices. Except as otherwise provided herein, all notices,
requests and other communications shall be in writing and mailed (sent by
registered or certified mail, postage prepaid), faxed (provided that any matter
transmitted by the Company by facsimile shall be promptly confirmed by a
telephone call to the recipient at the number specified on Schedule 13.5 or
such other telephone number as shall be designated by such party in a written
notice to parties) or delivered, to the address or facsimile number specified
for notices on Schedule 13.5; or, as directed by the Company or the Agent, to
such other address or facsimile number as shall be designated by such party in
a written notice to the other parties, and as directed to any other party, at
such other address as shall be designated by such party in a written notice to
the Company and the Agent.
13.6 Further Action. Company, from time to time, upon written
request of Agent will make, execute, acknowledge and deliver or cause to be
made, executed, acknowledged and delivered, all such further and additional
instruments, and take all such further action as may be reasonably required to
carry out the intent and purpose of this Agreement and the Loan Documents, and
to provide for Advances under and payment of the Notes and Reimbursement
Obligations, according to the intent and purpose herein and therein expressed.
13.7 Successors and Assigns; Assignments and Participations.
(a) This Agreement shall be binding upon and shall inure to the
benefit of Company and the Banks and their respective successors and assigns.
(b) The foregoing shall not authorize any assignment by Company,
of its rights or duties hereunder, and no such assignment shall be made (or
effective) without the prior written approval of the Banks.
(c) The Company and Agent acknowledge that each of the Banks may
at any time and from time to time, subject to the terms and conditions hereof,
assign or grant participations in such Bank's rights and obligations hereunder
and under the other Loan Documents to any financial institution, the identity
of which institution is approved by Company and Agent, such approval not to be
unreasonably withheld or delayed; provided, however, that
(i) the approval of Company shall not be required
upon the occurrence and during the
continuance of a Default or Event of Default;
and
(ii) the approval of Company and Agent shall not
be required for any such sale, transfer,
assignment or participation to the Affiliate
91
99
of an assigning Bank, any other Bank or any
Federal Reserve Bank; and
(iii) the aggregate assignments and participation
interests sold by a Bank do not exceed fifty
percent (50%) of its original interest
therein unless (x) such Bank's interest is
sold, transferred or assigned in its entirety
or (y) subparagraph (i) or (ii) above shall
apply, in which event, compliance with said
50% hold level shall not be required.
The Company authorizes each Bank to disclose to any prospective assignee or
participant, once approved by Company and Agent (if such approval is required
hereunder), any and all financial information in such Bank's possession
concerning the Company which has been delivered to such Bank pursuant to this
Agreement; provided that each such prospective participant shall execute a
confidentiality agreement consistent with or otherwise agree to be bound by the
terms of Section 13.11 hereof.
(d) Each assignment by a Bank of any portion of its rights and
obligations hereunder and under the other Loan Documents shall be made pursuant
to an Assignment Agreement substantially (as determined by Agent) in the form
attached hereto as Exhibit L (with appropriate insertions acceptable to Agent)
and shall be subject to the terms and conditions hereof, and to the following
restrictions:
(i) each assignment shall cover all of the Notes
issued by Company hereunder to the assigning
Bank (and not any particular note or notes),
and shall be for a fixed and not varying
percentage thereof, with the same percentage
applicable to each such Note;
(ii) each assignment shall be in a minimum amount
of Ten Million Dollars ($10,000,000) (or, if
less, the entire remaining amount of an
assigning Bank's rights and obligations
hereunder);
(iii) no assignment shall violate any "blue sky" or
other securities law of any jurisdiction or
shall require the Company, or any other
Person to file a registration statement or
similar application with the United States
Securities and Exchange Commission (or
similar state regulatory body) or to qualify
under the "blue sky" or other securities laws
of any jurisdiction; and
92
100
(iv) no assignment shall be effective unless Agent
has received from the assignee (or from the
assigning Bank) an assignment fee of $3,500
for each such assignment.
In connection with any assignment, Company, and Agent shall be entitled to
continue to deal solely and directly with the assigning Bank in connection with
the interest so assigned until (x) the Agent shall have received a notice of
assignment duly executed by the assigning Bank and an Assignment Agreement
(with respect thereto) duly executed by the assigning Bank and each assignee;
and (y) the assigning Bank shall have delivered to the Agent the original of
each Note held by the assigning Bank under this Agreement. From and after the
date on which the Agent shall notify Company and the assigning Bank that the
foregoing conditions shall have been satisfied and all consents (if any)
required shall have been given, the assignee thereunder shall be deemed to be a
party to this Agreement. To the extent that rights and obligations hereunder
shall have been assigned to such assignee as provided in such notice of
assignment (and Assignment Agreement), such assignee shall have the rights and
obligations of a Bank under this Agreement and the other Loan Documents
(including without limitation the right to receive fees payable hereunder in
respect of the period following such assignment). In addition, the assigning
Bank, to the extent that rights and obligations hereunder shall have been
assigned by it as provided in such notice of assignment (and Assignment
Agreement), but not otherwise, shall relinquish its rights and be released from
its obligations under this Agreement and the other Loan Documents.
Within five (5) Business Days following Company's receipt of notice from the
Agent that Agent has accepted and executed a notice of assignment and the duly
executed Assignment Agreement, Company shall, to the extent applicable, execute
and deliver to the Agent in exchange for any surrendered Note, new Note(s)
payable to the order of the assignee in an amount equal to the amount assigned
to it pursuant to such notice of assignment (and Assignment Agreement), and
with respect to the portion of the Indebtedness retained by the assigning Bank,
to the extent applicable, new Note(s) payable to the order of the assigning
Bank in an amount equal to the amount retained by such Bank hereunder shall be
executed and delivered by the Company. Agent, the Banks and the Company
acknowledge and agree that any such new Note(s) shall be given in renewal and
replacement of the surrendered Notes and shall not effect or constitute a
novation or discharge of the Indebtedness evidenced by any surrendered Note,
and each such new Note may contain a provision confirming such agreement. In
addition, promptly following receipt of such Notes, Agent shall prepare and
distribute to Company, and each of the Banks a revised Schedule 1.1 to this
Agreement setting forth the applicable new Percentages of the Banks (including
the assignee Bank), taking into account such assignment.
93
101
(e) Each Bank agrees that any participation agreement permitted
hereunder shall comply with all applicable laws and shall be subject to the
following restrictions (which shall be set forth in the applicable
Participation Agreement):
(i) such Bank shall remain the holder of its
Notes hereunder, notwithstanding any such
participation;
(ii) except as expressly set forth in this Section
13.7(e) with respect to rights of setoff and
the benefits of Section 15 hereof, a
participant shall have no direct rights or
remedies hereunder;
(iii) a participant shall not reassign or transfer,
or grant any sub-participations in its
participation interest hereunder or any part
thereof; and
(iv) such Bank shall retain the sole right and
responsibility to enforce the obligations of
the Company relating to the Notes and the
other Loan Documents, including, without
limitation, the right to proceed against any
Guaranties, or cause Agent to do so (subject
to the terms and conditions hereof), and the
right to approve any amendment, modification
or waiver of any provision of this Agreement
without the consent of the participant,
except for those matters covered by Section
13.10(B)(a) through (e) and (h) hereof
(provided that a participant may exercise
approval rights over such matters only on an
indirect basis, acting through such Bank, and
Company, Agent and the other Banks may
continue to deal directly with such Bank in
connection with such Bank's rights and duties
hereunder).
Company agrees that each participant shall be deemed to have the right of
setoff under Section 6.4 hereof in respect of its participation interest in
amounts owing under this Agreement and the other Loan Documents to the same
extent as if the Indebtedness were owing directly to it as a Bank under this
Agreement, shall be subject to the pro rata recovery provisions of Section 6.3
hereof and shall be entitled to the benefits of Section 5 hereof. The amount,
terms and conditions of any participation shall be as set forth in the
participation agreement between the issuing Bank and the Person purchasing such
participation, and none of the Company, the Agent and the other Banks shall
have any responsibility or obligation with respect thereto, or to any Person to
whom any such
94
102
participation may be issued. No such participation shall relieve any issuing
Bank of any of its obligations under this Agreement or any of the other Loan
Documents, and all actions hereunder shall be conducted as if no such
participation had been granted.
(f) Nothing in this Agreement, the Notes or the other Loan
Documents, expressed or implied, is intended to or shall confer on any Person
other than the respective parties hereto and thereto and their successors and
assignees and participants permitted hereunder and thereunder any benefit or
any legal or equitable right, remedy or other claim under this Agreement, the
Notes or the other Loan Documents.
13.8 Indulgence. No delay or failure of Agent and Banks in
exercising any right, power or privilege hereunder shall affect such right,
power or privilege nor shall any single or partial exercise thereof preclude
any further exercise thereof, nor the exercise of any other right, power or
privilege. The rights of Agent and Banks hereunder are cumulative and are not
exclusive of any rights or remedies which Agent and Banks would otherwise have.
13.9 Counterparts. This Agreement may be executed in several
counterparts, and each executed copy shall constitute an original instrument,
but such counterparts shall together constitute but one and the same
instrument.
13.10 Entire Agreement; Amendment or Waiver. (A) This Agreement, the
Notes, any Requests for Revolving Credit Advances, Requests for Swing Line
Advances, the Letter of Credit Agreements and Letters of Credit, the other Loan
Documents, and any agreements certificates, or other documents given to secure
the Indebtedness, contain and will contain the entire agreement of the parties
hereto, and none of the parties shall be bound by anything not expressed in
writing.
(B) No amendment or waiver of any provision of this
Agreement or any Loan Document, nor consent to any departure by Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Majority Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all Banks, do any of the following: (a) subject Banks to
any additional obligations, increase the aggregate amount of principal
indebtedness which may be incurred under the Notes and in connection with
Letters of Credit, or change the Percentages, (b) reduce the principal of, or
interest on, the Notes or Reimbursement Obligations or any fees or other
amounts payable hereunder, (c) postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, (d) waive any Event of Default specified in Sections 11.1(a) or (b)
hereof, (e) release any of the guaranties included
95
103
in the Loan Documents, (f) take any action which requires the signing of all
Banks pursuant to the terms of this Agreement or any Loan Document, (g) change
the aggregate unpaid principal amount of Indebtedness which shall be required
for Banks or any of them to take any action under this Agreement or any Loan
Document, or (h) change this Section 13.10, and provided further, however, that
no amendment, waiver, or consent shall, unless in writing and signed by the
Agent in addition to all Banks, affect the rights or duties of the Agent under
this Agreement or any Loan Document.
13.11 Confidentiality. Each Bank agrees that all documentation and
other information made available by Company to such Bank under the terms of
this Agreement shall (except to the extent required by legal or governmental
process or otherwise by law, or if such documentation and other information is
publicly available or hereafter becomes publicly available other than by action
of such Bank, or was therefore known or hereafter becomes known to such Bank
independent of any disclosure thereto by Company) be held in the strictest
confidence by such Bank and used solely in administration and enforcement of
Loans from time to time outstanding from such Bank to Company and in the
prosecution or defense of legal proceedings arising in connection herewith;
provided that (i) such Bank may disclose such documentation and information to
the Agent, any Affiliate of such Bank (so long as such Affiliate, prior to such
disclosures, agrees for the benefit of Company to comply with the provisions of
this Section 13.11) and/or to any other Bank which is a party to this
Agreement; and (ii) such Bank may disclose such documentation and other
information to any other bank or other Person to which such Bank sells or
proposes to sell a participation in its Loans hereunder or assigns or proposes
to assign an interest in its Loans hereunder if such other bank or Person,
prior to such disclosure, agrees for the benefit of Company to comply with the
provisions of this Section 13.11.
13.12 Withholding Taxes. If any Bank is not incorporated under the
laws of the United States or a state thereof, such Bank shall promptly deliver
to the Agent two executed copies of (i) Internal Revenue Service Form 1001
specifying the applicable tax treaty between the United States and the
jurisdiction of such Bank's domicile which provides for the exemption from
withholding on interest payments to such Bank, (ii) Internal Revenue Service
Form 4224 evidencing that the income to be received by such Bank hereunder is
effectively connected with the conduct of a trade or business in the United
States or (iii) other evidence satisfactory to the Agent that such Bank is
exempt from United States income tax withholding with respect to such income.
Such Bank shall amend or supplement any such form or evidence as required to
insure that it is accurate, complete and non-misleading at all times. Promptly
upon notice from the Agent of any determination by the Internal Revenue Service
that any payments previously made to such Bank hereunder were subject to United
States income tax withholding when
96
104
made, such Bank shall pay to the Agent the excess of the aggregate amount
required to be withheld from such payments over the aggregate amount actually
withheld by the Agent. In addition, from time to time upon the reasonable
request and at the sole expense of the Company, each Bank and the Agent shall
(to the extent it is able to do so based upon applicable facts and
circumstances), complete and provide the Company with such forms, certificates
or other documents as may be reasonably necessary to allow the Company to make
any payment under this Agreement or the other Loan Documents without any
withholding for or on the account of any tax under Section 6.1(d) hereof (or
with such withholding at a reduced rate), provided that the execution and
delivery of such forms, certificates or other documents does not adversely
affect or otherwise restrict the right and benefits (including without
limitation economic benefits) available to such Bank or the Agent, as the case
may be, under this Agreement or any of the other Loan Documents, or under or in
connection with any transactions not related to the transactions contemplated
hereby.
13.13 Interest. It is the intention of the parties hereto that each
Bank and the Agent shall conform to usury laws applicable to them, if any.
Accordingly, if the transactions with any Bank or Agent contemplated hereby
would be usurious under such applicable laws, then, notwithstanding anything to
the contrary in the Notes or Loan Documents payable to such Bank, this
Agreement or any other agreement entered into in connection with or as security
for or guaranteeing this Agreement or the Indebtedness, it is agreed as
follows: (i) the aggregate of all consideration which constitutes interest
under applicable law that is contracted for, taken, reserved, charged or
received by such Bank under the Notes payable to such Bank, this Agreement, the
Loan Documents or under any other agreement entered into in connection with or
as security for or guaranteeing this Agreement or such Notes or Loan Documents
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be credited automatically, if theretofore
paid, on the principal amount of the Indebtedness owed to such Bank or, if no
Indebtedness to such Bank is outstanding, shall be refunded to Company by such
Bank, and (ii) in the event that the maturity of any such Note or other
Indebtedness is accelerated or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under law
applicable to such Bank may never include more than the maximum amount allowed
by such applicable law and excess interest, if any, to such Bank shall be
cancelled automatically as of the date of such acceleration or prepayment and,
if theretofore paid, shall be credited by such Bank on the principal amount of
the Indebtedness owed to such Bank by the Company or, if no Indebtedness to
such Bank is then outstanding, shall be refunded by such Bank to the Company.
Without limiting any provision of the Notes or Loan Documents, if for any
reason Texas law is applicable to this Agreement or any Note, it is expressly
agreed that Tex. Rev. Civ. Stat. Ann. art. 5069, Ch. 15 (which regulates
certain revolving
97
105
credit loan accounts and revolving triparty accounts) shall not apply to this
Agreement, such Note, such Loan Documents, the Loans or any transaction
contemplated hereby, and unless changed in accordance with law, the rate
ceiling applicable to any Indebtedness to which Texas law is applicable under
Texas law shall be the indicated (weekly) rate ceiling from time to time in
effect as provided in Tex. Rev. Civ. Stat. Ann. 5069-1.04, as amended.
13.14 Effectiveness of Agreement. This Agreement shall become
effective upon the later of the execution hereof by Banks, Agent and Company
and the Effective Date, and shall remain effective until the Indebtedness has
been repaid and discharged in full and no commitment to fund any Loan hereunder
remains outstanding.
13.15 Designation of Unrestricted and Restricted Subsidiaries. The
Company may designate any Unrestricted Subsidiary (which was not previously
designated a Restricted Subsidiary) to be a Restricted Subsidiary and any
Restricted Subsidiary (except LaSalle, Michigan Seamless, and, once so
designated hereunder, Piper and any Restricted Subsidiary which if designated
an Unrestricted Subsidiary would be a Material Unrestricted Subsidiary) to be
an Unrestricted Subsidiary by giving written notice to the Agent that the board
of directors of the Company has made such designation; provided, however, that
no Unrestricted Subsidiary may be designated a Restricted Subsidiary unless, at
the time of such action and after giving effect thereto, the Company would be
permitted to incur at least $1.00 of additional Priority Debt under the
provisions of the last sentence of Section 10.2 and no Event of Default shall
have occurred and be continuing, and no Restricted Subsidiary may be designated
an Unrestricted Subsidiary unless, at the time of such action and after giving
effect thereto, no Event of Default shall have occurred and be continuing.
13.16 Construction of Certain Provisions. If any provision of this
Agreement or any of the Loan Documents refers to any action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person,
whether or not expressly specified in such provision.
13.17 Independence of Covenants. Each covenant hereunder shall be
given independent effect (subject to any exceptions stated in such covenant) so
that if a particular action or condition is not permitted by any such covenant
(taking into account any such stated exception), the fact that it would be
permitted by an exception to, or would be otherwise within the limitations of,
another covenant shall not avoid the occurrence of an Event of Default, or
event which with the giving of notice or the lapse of time, or both, would
become an Event of Default.
98
106
13.18 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of Company or any party
to any of the Loan Documents made herein or in any of the Loan Documents or in
any certificate, report, financial statement or other document furnished by or
on behalf of Company or any Guarantor in connection with this Agreement or any
of the Loan Documents shall be deemed to have been relied upon by the Banks,
notwithstanding any investigation heretofore or hereafter made by any Bank or
on such Bank's behalf, and those covenants and agreements of Company set forth
in Section 5.7 hereof (together with any other indemnities of Company or any
Guarantor contained elsewhere in this Agreement or in any of the other Loan
Documents) and of Banks set forth in Section 12.12 hereof shall survive the
repayment in full of the Indebtedness and the termination of the Revolving
Credit Aggregate Commitment.
WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK, as Agent QUANEX CORPORATION
By: By:
------------------------------ ------------------------------
Its: Its:
----------------------------- -----------------------------
BANKS: COMERICA BANK
By:
------------------------------
Its:
-----------------------------
HARRIS TRUST AND SAVINGS BANK
By:
------------------------------
Its:
-----------------------------
99
107
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By:
------------------------------
Its:
-----------------------------
NATIONSBANK OF TEXAS, N.A.
By:
------------------------------
Its:
-----------------------------
ABN AMRO BANK N.V., Houston Agency
By: ABN AMRO North America, Inc.,
as agent
By:
------------------------------
Its:
-----------------------------
By:
------------------------------
Its:
-----------------------------
100
108
SCHEDULE 1.1
PERCENTAGES
=================================================================================================
BANK PERCENTAGE TOTAL COMMITMENT
-------------------------------------------------------------------------------------------------
Comerica Bank 38% $ 95,000,000
-------------------------------------------------------------------------------------------------
Harris Trust and Savings Bank 18% $ 45,000,000
-------------------------------------------------------------------------------------------------
Wells Fargo Bank (Texas), National Association 18% $ 45,000,000
NationsBank of Texas, N.A. 14% $ 35,000,000
-------------------------------------------------------------------------------------------------
ABN Amro Bank N.V., Houston Agency 12% $ 30,000,000
-------------------------------------------------------------------------------------------------
Total 100% $250,000,000
=================================================================================================
109
SCHEDULE 1.2
PRICING MATRIX - GRID I
=======================================================================================================================
BASIS FOR PRICING LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
Leverage < 30.00% > 30.00% But > 40.00% But > 50.00% But > 60.00%
- - - -
< 40.00% < 50.00% < 60.00%
- -----------------------------------------------------------------------------------------------------------------------
Commitment Fee .20% .25% .35% .45% .50%
- -----------------------------------------------------------------------------------------------------------------------
Eurodollar Margin .50% .625% .75% 1.125% 1.50%
- -----------------------------------------------------------------------------------------------------------------------
Letter of Credit Fees .50% .625% .75% 1.125% 1.50%
=======================================================================================================================
PRICING MATRIX - GRID II
==================================================================================================================================
BASIS FOR PRICING LEVEL I* LEVEL II* LEVEL III* LEVEL IV*
- ----------------------------------------------------------------------------------------------------------------------------------
Debt Rating S&P Moody's S&P Moody's S&P Moody's S&P Moody's
--- ------- --- ------- --- ------- --- -------
BBB+ or or Baal or BBB or Baa2 BBB- or Baa3 Lower than or Lower than
higher higher BBB- Baa3
- ----------------------------------------------------------------------------------------------------------------------------------
Commitment Fee .15% .20% .25%
- ----------------------------------------------------------------------------------------------------------------------------------
Eurodollar Margin* .40% .50% .625% Grid I shall apply
- ----------------------------------------------------------------------------------------------------------------------------------
Letter of Credit Fees .40% .50% .625%
==================================================================================================================================
* NOTE:
(1) If Company obtains only a single Debt Rating, that rating shall be
used for purposes of determining the applicable Rating Level.
(2) If, however, Company obtains a Debt Rating from S&P and Moody's, the
higher of the Debt Ratings (the "Governing Rating") shall be used for purposes
of determining the applicable Rating Level; provided that if the lower of the
Debt Ratings is more than one level lower than the Governing Rating, then a
premium of .125% shall be added to the Eurodollar Margin otherwise applicable
under Grid II.
(3) Capitalized terms used in this Schedule 1.2 shall be defined as in
the Agreement.
110
SCHEDULE 8.6
LIST OF SUBSIDIARIES OF THE COMPANY
AS OF APRIL 30, 1996
========================================================================================================================
PERCENTAGE OF
VOTING STOCK
OWNED BY COMPANY
JURISDICTION OF AND EACH OTHER
NAME OF SUBSIDIARY INCORPORATION SUBSIDIARY
========================================================================================================================
1. RESTRICTED SUBSIDIARIES:
- ------------------------------------------------------------------------------------------------------------------------
LaSalle Steel Company Delaware 100
Quanex Aluminum Inc. Delaware 100
Nichols-Homeshield, Inc. Delaware 100
Michigan Seamless Tube Company Delaware 100
Quanex Bar, Inc. Delaware 100
- ------------------------------------------------------------------------------------------------------------------------
2. SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES)
- ------------------------------------------------------------------------------------------------------------------------
Quanex Manufacturing, Inc. Delaware 100
Quanex Metals, Inc. Delaware 100
Quanex Steel, Inc. Delaware 100
Quanex Wire, Inc. Delaware 100
Quanex Foreign Sales Corporation U.S. Virgin Islands 100
========================================================================================================================
111
SCHEDULE 8.12
MATERIAL LITIGATION
None
112
SCHEDULE 8.14
PENSION PLANS
============================================================================================================
UNFUNDED (OVERFUNDED)
ACTUARIAL ACCRUED LIABILITY (A)
- ------------------------------------------------------------------------------------------------------------
Quanex Corporation
------------------
. Pension Plan for Salaried Employees of Quanex Corporation $1,486,107
. Gulf States Tube Division Hourly Rate Employees' Pension
Plan 1,315,988
. MacSteel Michigan Division Hourly Rate Employees' Pension
Plan 855,295
. MacSteel Arkansas Division Operations Personnel Pension
Plan
92,812
. Hourly Employees' Pension Plan
212,005
----------
Quanex Total $3,962,207
- ------------------------------------------------------------------------------------------------------------
LaSalle Steel Company
---------------------
. LaSalle Steel Company Pension Plan for Hourly Employees 2,072,786
- ------------------------------------------------------------------------------------------------------------
Michigan Seamless Tube Company
------------------------------
. Michigan Seamless Tube Division Hourly Rate Employees'
Pension Plan 1,221,456
----------
Combined Total $7,256,449
==========
============================================================================================================
(A) The Wyatt Company Actuarial Valuation as of November 1, 1995
113
SCHEDULE 8.16
ENVIRONMENTAL MATTERS
None
114
SCHEDULE 10.1
LIENS SECURING FUNDED DEBT
Liens securing Funded Debt and Capitalized Leases outstanding on April 30, 1996
were as follows:
(a) Notes, Bonds and other Securities:
None
(b) Capitalized Leases:
None
115
SCHEDULE 10.2
PERMITTED INDEBTEDNESS
Funded Debt of the Company and its Restricted Subsidiaries outstanding on July
19, 1996 was as follows:
(a) Notes, Bonds and other Securities.
(1) $50,000,000 borrowings were outstanding under the revolving
credit portion of the Quanex Corporation $75 Million Revolving
Credit and Letter of Credit Agreement dated as of December 4,
1990 among Comerica Bank, Wells Fargo Bank of Texas, N.A.,
Harris Trust and Savings Bank, NationsBank of Texas, N.A. and
Comerica Bank as agent (the "Banks").
(2) $1,610,000 pursuant to the City of Davenport,Iowa 8-3/8%
Pollution Control Revenue Refunding Bonds (Nichols-Homeshield,
Inc. Project) Series 1989.
(3) $1,665,000 pursuant to the City of Huntington, Indiana,
Economic Development Refunding Revenue Bonds, Series 1996
(Quanex Corporation Project).
(4) $84,920,000 pursuant to 6.88% Quanex Convertible Subordinated
Debentures due June 30, 2007.
(b) Guaranteed Obligations:
(1) Guarantees of Quanex Corporation, Nichols-Homeshield, Inc.,
Michigan Seamless Tube Company and LaSalle Steel Company to
the Banks regarding the obligation described in (a)(1) above.
(c) Capitalized Leases:
None
116
SCHEDULE 13.5
Addresses For Notices
===========================================================================================================
TELEPHONE FAX
OFFICE OFFICE
===========================================================================================================
Quanex Corporation Wayne M. Rose 713-961-4600 713-877-5333
1900 West Loop South Vice President & Chief
Suite 1500 Financial Officer
Houston, TX 77027
- -----------------------------------------------------------------------------------------------------------
Comerica Bank Kim A. Uhlemann 214-818-2545 214-818-2550
4100 Spring Valley Vice President
Suite 900
Dallas, TX 75244
cc: Comerica Bank William B. Murdock 313-222-5594 313-222-9434
Syndications Group Assistant Vice President
500 Woodward Avenue
Mail Code 3289
Detroit, MI 48275-3289
- -----------------------------------------------------------------------------------------------------------
Harris Trust and Savings Bank James H. Colley 312-461-6876 312-461-2591
111 W. Monroe - 2W Vice President
Chicago, IL 60690
- -----------------------------------------------------------------------------------------------------------
Wells Fargo Bank Valerie B. Carlson 713-250-4307 713-250-7029
1000 Louisiana Vice President
Third Floor
P.O. Box 3326
Houston, TX 77253-3326
- -----------------------------------------------------------------------------------------------------------
NationsBank of Texas, N.A. Forest Scott Singhoff 713-247-6961 713-247-6719
700 Louisiana Senior Vice President
Eighth Floor
P.O. Box 2518
Houston, TX 77252-2518
- -----------------------------------------------------------------------------------------------------------
ABN AMRO N.A., Inc. Timothy M. Schneider 713-964-3352 713-629-7533
Three Riverway Officer
Suite 1700
Houston, TX 77056
===========================================================================================================
117
EXHIBIT A-1
REQUEST FOR REVOLVING CREDIT ADVANCE
No. Dated:
-------------------- --------------------
To: Comerica Bank - Agent
Re: Revolving Credit and Term Loan Agreement by and among Comerica Bank
(individually and as Agent), the lenders from time to time parties
thereto (collectively, "Banks"), and Quanex Corporation ("Company")
dated as of July 23, 1996 (as amended from time to time, the
"Agreement").
Pursuant to the Agreement, the Company requests an Advance from Banks
as follows:
A. Date of Advance:
-------------------------
B. Amount of Advance:
$
---------------
[ ] Comerica Bank Account No.
--------------------
[ ] Other:
---------------------------------------
---------------------------------------
C. Type of Activity:
1. Advance [ ]
2. Refunding [ ]
of a Revolving Credit Advance [ ]
of a Swing Line Advance [ ]
3. Conversion [ ]
D. Interest Rate:
1. Prime-based Rate [ ]
2. Eurodollar-based Rate [ ]
E. Interest Period (for Eurodollar-based Advances only):
1. One (1) Month [ ]
2. Two (2) Months [ ]
3. Three (3) Months [ ]
4. Six (6) Months [ ]
118
The Company certifies to the matters specified in Section 2.3(g) of the
Agreement.
Capitalized terms used herein, except as defined to the contrary, have
the meanings given them in the Agreement.
QUANEX CORPORATION
By:
------------------------------
Its:
-----------------------------
Agent Approval:
------------------------------
2
119
EXHIBIT A-2
REQUEST FOR SWING LINE ADVANCE
No. Dated:
------------------------- -------------------------
To: Comerica Bank, Swing Line Bank
Re: Revolving Credit and Term Loan Agreement by and among Comerica Bank
(individually and as Agent), the lenders from time to time parties
thereto (collectively, "Banks"), and Quanex Corporation ("Company")
dated as of July 23, 1996 (as amended from time to time, the
"Agreement").
Pursuant to the Agreement, the Company requests a Swing Line Advance
from the Swing Line Bank as follows:
A. Date of Advance:
------------------------------
B. Amount of Advance:
$
--------------------
[ ] Comerica Bank Account No.
------------------
[ ] Other:
--------------------------------------
--------------------------------------
C. Interest Rate:
1. Prime-based Rate [ ]
2. Quoted Rate [ ]
D. Interest Period:
1. days(1)
-----------------
____________________
(1) Insert up to 30 days.
120
The Company certifies to the matters specified in Section 3A.3(f) of the
Agreement.
QUANEX CORPORATION
By:
------------------------------
Its:
-----------------------------
Swing Line Bank Approval:
--------------------
2
121
EXHIBIT B
REVOLVING CREDIT NOTE
$ , 1996
-------------------- -------------------
On the Revolving Credit Maturity Date, FOR VALUE RECEIVED, Quanex
Corporation, a Delaware corporation ("Company") promises to pay to the order of
[insert Bank] ("Bank") at Detroit, Michigan, in care of Agent, in lawful money
of the United States of America, the sum of [Insert Amount derived from
Percentages] Dollars ($____________), or so much of said sum as may from time
to time have been advanced and then be outstanding hereunder pursuant to the
Quanex Corporation Revolving Credit and Term Loan Agreement dated as of July
23, 1996, made by and among the Company, certain banks, including the Bank, and
Comerica Bank as Agent for such banks, as the same may be amended from time to
time (the "Agreement"), together with interest thereon as hereinafter set
forth.
Each of the Advances made hereunder shall bear interest at the
Applicable Interest Rate from time to time applicable thereto under the
Agreement or as otherwise determined thereunder, and interest shall be
computed, assessed and payable as set forth in the Agreement.
This Note is a note under which advances (including refundings and
conversions), repayments and readvances may be made from time to time, but only
in accordance with the terms and conditions of the Agreement. This Note
evidences borrowings under, is subject to, is secured in accordance with, and
may be accelerated or matured under, the terms of the Agreement, to which
reference is hereby made. Definitions and terms of the Agreement are hereby
incorporated by reference herein.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan (without regard to its conflict of laws principles).
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, release,
or forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note.
122
Nothing herein shall limit any right granted Bank by any other
instrument or by law.
QUANEX CORPORATION
By:
-----------------------------
Its:
----------------------------
2
123
EXHIBIT C
SWING LINE NOTE
$10,000,000 , 1996
--------------------
On the Revolving Credit Maturity Date, FOR VALUE RECEIVED, Quanex
Corporation, a Delaware corporation ("Company") promises to pay to the order of
Comerica Bank ("Bank") at 500 Woodward Avenue, Detroit, Michigan in lawful
money of the United States of America, the sum of Ten Million Dollars
($10,000,000), or so much of said sum as may from time to time have been
advanced and then be outstanding hereunder pursuant to Article 3A of the Quanex
Corporation Revolving Credit and Term Loan Agreement dated as of July 23, 1996,
executed by and among the Company, certain banks, including the Bank, and
Comerica Bank as Agent for such banks, as the same may be amended from time to
time (the "Agreement"), together with interest thereon as hereinafter set
forth.
The unpaid principal indebtedness from time to time outstanding under
this Note shall be due and payable on the last day of the Interest Period
applicable thereto or as otherwise set forth in the Agreement, provided that no
Swing Line Advance may mature or be payable on a day later than the Revolving
Credit Maturity Date.
Each of the Swing Line Advances made hereunder shall bear interest at
the Prime-based Rate or the Quoted Rate from time to time applicable thereto
under the Agreement or as otherwise determined thereunder, and interest shall
be computed, assessed and payable as set forth in the Agreement.
This Note is a note under which advances, repayments and readvances
may be made from time to time, but only in accordance with the terms and
conditions of the Agreement. This Note evidences borrowings under, is subject
to, is secured in accordance with, and may be accelerated or matured under, the
terms of the Agreement, to which reference is hereby made. Definitions and
terms of the Agreement are hereby incorporated by reference herein.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan (without regard to its conflict of laws provisions).
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, release,
or forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or
124
any present or subsequent owner of any property, real or personal, which is now
or hereafter security for this Note.
Nothing herein shall limit any right granted Bank by any other
instrument or by law.
QUANEX CORPORATION
By:
-----------------------------
Its:
----------------------------
2
125
EXHIBIT D
FORM OF
SWING LINE LOAN PARTICIPATION CERTIFICATE
,19
-------------------- --
[Name of Bank]
- ------------------------------
- ------------------------------
Ladies and Gentlemen:
Pursuant to subsection 3A.5 of the Revolving Credit and Term Loan
Agreement dated as of July 23, 1996, among Quanex Corporation, the Banks named
therein and Comerica Bank, as Agent, the undersigned hereby acknowledges
receipt from you of $___________________ as payment for a participating
interest in the following Swing Line Loan:
Date of Swing Line Loan:
----------------------------------------
Principal Amount of Swing Line Loan:
----------------------------
The participation evidenced by this certificate shall be subject to the terms
and conditions of the Revolving Credit and Term Loan Agreement including
without limitation Section 3A.5(b) thereof.
Very truly yours,
COMERICA BANK, as Agent
By:
------------------------------
Its:
-----------------------------
126
EXHIBIT E
FORM OF LETTER OF CREDIT AGREEMENT
[to be provided]
127
EXHIBIT F
FORM OF TERM NOTE
$
-------------------- --------------------
On or before [date selected by Company] (the "Term Loan Maturity
Date"), FOR VALUE RECEIVED, Quanex Corporation, a Delaware corporation
("Company") promises to pay to the order of [insert bank] ("Bank") at Detroit,
Michigan, care of Agent, in lawful money of the United States of America, the
sum of [insert amount derived from Percentages] Dollars ($__________) as may
have been advanced and then be outstanding hereunder pursuant to the Quanex
Corporation Revolving Credit and Term Loan Agreement dated as of July 23, 1996
(as amended, or otherwise modified from time to time, the "Agreement"), made by
and among the Company, certain banks, including the Bank, and Comerica Bank, a
Michigan banking corporation, as Agent for such banks, together with interest
thereon as hereinafter set forth.
Until the Term Loan Maturity Date, when the entire unpaid principal
balance of this Note and all accrued interest and other sums outstanding
thereon shall be paid in full, the principal Indebtedness evidenced by this
Note shall be repaid in accordance with the Term Loan Permitted Amortization
Schedule on the following dates and in the following amounts:
[to be inserted based on Term Loan Permitted Amortization
Schedule selected by Company]
There shall be no readvance or reborrowing of any principal reductions of this
Note.
Each of the Advances made hereunder shall bear interest at the
Eurodollar-based Rate or the Prime-based Rate as selected by Company or as
otherwise determined under the Agreement and interest shall be computed,
assessed and payable as set forth in the Agreement.
This Note is a note under which refundings and conversions may be made
from time to time, but only in accordance with the terms and conditions of the
Agreement. This Note evidences borrowings under, is subject to, is secured in
accordance with, and may be accelerated or matured under, the terms of the
Agreement, to which reference is hereby made, and was funded on the basis of
the Company's Term Loan Initial Request dated ____________________ with
128
respect to the applicable Term Loan. Definitions and terms of the Agreement are
hereby incorporated herein.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan.
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, release,
or forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note.
Nothing herein shall limit any right granted Bank by any other
instrument or by law.
QUANEX CORPORATION
By:
------------------------------
Its:
--------------------------
2
129
EXHIBIT G
TERM LOAN INITIAL REQUEST
No. Dated:
-------------------- --------------------
To: Comerica Bank - Agent
Re: Quanex Corporation Revolving Credit and Term Loan Agreement by and
among Comerica Bank (individually and as Agent), the lenders from time
to time parties thereto (collectively, "Banks"), and Quanex
Corporation ("Company") dated as of July 23, 1996 (as amended from
time to time, the "Agreement").
Pursuant to the Agreement, the Company requests a Term Loan from Banks
as follows:
A. Date of funding of Term Loan:
B. Amount of Term Loan:
$
--------------------
[ ] Comerica Bank Account No.
--------------------
[ ] Other:
-----------------------------------
-----------------------------------
C. The Term Loan Maturity Date for the requested Term Loan shall
be ________________.(1)
D. The proposed Term Loan Permitted Amortization Schedule is
attached hereto as Schedule 1.
The Company certifies to the matters specified in Section 3B.5.
QUANEX CORPORATION
By:
------------------------------
Its:
-----------------------------
Agent Approval:
-------------------------
- --------------------
(1) Insert a date not more than seven years from the date of proposed
funding of the Term Loan.
130
EXHIBIT H
FORM OF TERM LOAN RATE REQUEST
To: Comerica Bank ("Agent")
A. Request
The undersigned authorized officer of Quanex Corporation in accordance
with Section 3B.4 of the Quanex Corporation Revolving Credit and Term Loan
Agreement dated as of July 23, 1996 (as amended, or otherwise modified, the
"Agreement"), among Quanex Corporation ("Company"), certain Banks and Comerica
Bank, as Agent for the Banks, hereby requests the Agent under the Agreement to
fund an initial Term Loan, or refund or convert, as applicable, a (an)
_______________(1) Advance of the Term Loan to the undersigned on __________,
19__,(2) in the amount of $__________ under the Term Notes ("Notes") dated
_______________, 1996 to be made, or made by Company to said Banks.
If this Request involves a Eurodollar-based Advance, the first
Interest Period is ______________________________________________________.(3)
B. Certification
The undersigned hereby certifies to the matters specified in Section
3B.5 of the Agreement.
C. Defined Terms
Capitalized terms used herein, unless specifically defined to the
contrary herein, have the meanings given them in the Agreement.
Dated this ____ day of ________________, 1996.
QUANEX CORPORATION
By:
------------------------------
Its:
-----------------------------
- --------------------
(1) Insert, as applicable, "Eurodollar-based" or "Prime-based."
(2) Insert date at least three (3) Business Days after the date of
Request, if Request involves a Eurodollar-based Advance.
(3) Insert first Interest Period, if applicable.
131
EXHIBIT I
LETTER OF CREDIT NOTICE
TO: Members of the Bank Group
RE: Issuance of Letter of Credit pursuant to Article 3 of the Quanex
Corporation ("Company") Revolving Credit and Term Loan Agreement (as
amended or otherwise modified from time to time, "Agreement") dated
July 23, 1996 among Company, Agent and the Banks.
On ______________________, 19__,(1) Agent, in accordance with Article 3
of the Agreement, issued its Letter of Credit number ______________, in favor
of ____________________(2) for the account of Company [and _____________________
________________________ ______].(3) The face amount of such Letter of Credit is
$____________. The amount of each Bank's participation in the Letter of Credit
is as follows:(4)
Comerica Bank $
------------------
$
-------------------------- ------------------
$
-------------------------- ------------------
$
-------------------------- ------------------
$
-------------------------- ------------------
This notification is delivered this ___ day of ___________, 19___,
pursuant to Section 3.3 of the Agreement. Except as otherwise defined,
capitalized terms used herein have the meanings given them in the Agreement.
Signed:
COMERICA BANK
By:
------------------------------
Its:
-----------------------------
- --------------------
(1) Date of Issuance
(2) Beneficiary
(3) Other Account Party (i.e. Affiliate of Company), if any
(4) Amounts based on Percentages
132
EXHIBIT J
FORM OF RESTRICTED SUBSIDIARY GUARANTY
[NAME OF GUARANTOR] GUARANTY
[Name of Guarantor], a _________________ corporation ("Guarantor")
desires to see the success of Quanex Corporation, a Delaware corporation
("Company") and Account Parties (as defined below) and furthermore, Guarantor
shall receive direct and/or indirect benefits from loans and extensions of
credit to Company and Account Parties in connection with the transactions
contemplated under the Credit Agreement and the Loan Documents (as defined
below).
To induce each of the Banks (as defined below), to enter into and
perform its obligations under that certain $250,000,000 Revolving Credit and
Term Loan Agreement dated as of July 23, 1996 among Company, Comerica Bank, as
Agent, ("Agent") and the Banks, as the same may be amended from time to time
(the "Credit Agreement"), the Guarantor has executed and delivered this
guaranty ("Guaranty").
1. Definitions. Unless otherwise provided herein, all capitalized
terms in this Guaranty shall have the meanings specified in the Credit
Agreement. The term "Banks" as used herein shall include any successors or
assigns of the Banks, in accordance with the Credit Agreement.
2. Guaranty. The Guarantor hereby guarantees to the Banks the due
and punctual payment to the Banks when due, whether by acceleration or
otherwise, of all amounts due and owing under:
(a) the Credit Agreement;
(b) any and all Revolving Credit Notes, any and all Term
Loan Notes, and the Swing Line Note made or to be
made to the order of the Banks (or any of them,
including the Swing Line Bank); and
(c) any and all Reimbursement Obligations and other
amounts owing under or in connection with any and all
Letters of Credit issued for any Account Party from
time to time pursuant to the Credit Agreement;
all of the foregoing payable with interest thereon and otherwise in accordance
with the terms of such Notes and the Credit Agreement, as well as all
extensions, renewals, and amendments of or to the Credit Agreement, the Notes
or Letters of Credit or Letter of Credit Agreements or such other Indebtedness
(as defined in the
133
Credit Agreement, or any replacements or substitutions therefor), and hereby
agrees that if the Company, any Account Party, or any other Person who is or
becomes primarily liable therefor, shall fail to pay any of such amounts when
and as the same shall be due and payable, or shall fail to perform and
discharge any covenant, representation or warranty in accordance with the terms
of the Notes, the Credit Agreement, the Letters of Credit, the Letter of Credit
Agreements, or any of the other Loan Documents, the Guarantor will forthwith
pay to Agent on behalf of the Banks an amount equal to any such amount or cause
the Company and any other Person then primarily liable therefor to perform and
discharge any such covenant, representation or warranty, as the case may be,
and will pay any and all damages that may be incurred or suffered in
consequence thereof by Agent and all reasonable expenses, including reasonable
attorneys fees, that may be incurred by Agent in enforcing such covenant,
representation or warranty of the Company, and in enforcing the covenants and
agreements of this Guaranty.
3. Unconditional Character of Guaranty. The obligations of
Guarantor under this Guaranty shall be absolute and unconditional, and shall be
a guaranty of payment and not of collection, irrespective of the validity,
regularity or enforceability of the Notes, the Credit Agreement, the Letters of
Credit, the Letter of Credit Agreements, or any of the other Loan Documents, or
any provision thereof, the absence of any action to enforce the same, any
waiver or consent with respect to any provision thereof, the recovery of any
judgment against any person or action to enforce the same, any failure or delay
in the enforcement of the obligations of the Company under the Notes, the
Credit Agreement, or the obligations of Company or any other Account Party
under the Letters of Credit, the Letter of Credit Agreements, or of the
obligations of any Person under any of the other Loan Documents, or any setoff,
counterclaim, recoupment, limitation, defense or termination. Guarantor hereby
waives diligence, demand for payment, filing of claims with any court, any
proceeding to enforce any provision of the Notes, the Credit Agreement, the
Letters of Credit, the Letter of Credit Agreements, or any of the other Loan
Documents, any right to require a proceeding first against the Company, any
Account Party, or any other guarantor or surety, or to exhaust any security for
the performance of the obligations of the Company or any Account Party, any
protest, presentment, notice or demand whatsoever, and Guarantor hereby
covenants that this Guaranty shall not be terminated, discharged or released
except upon payment in full of all amounts due and to become due from the
Company and all Account Parties, as and to the extent described above, and only
to the extent of any such payment, performance and discharge or upon the
release of Guarantor pursuant to the terms of Section 5.6 hereof. Guarantor
further covenants that no security now or subsequently held by the Agent or the
Banks for the payment of the Indebtedness evidenced by the Notes, or incurred
under the Credit Agreement, the Letters of Credit, the Letter of Credit
Agreements, or otherwise evidenced or incurred, whether in the
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134
nature of a security interest, pledge, lien, assignment, setoff, suretyship,
guaranty, indemnity, insurance or otherwise, and no act, omission or other
conduct of Agent or the Banks in respect of such security, shall affect in any
manner whatsoever the unconditional obligation of this Guaranty, and that the
Agent and each of the Banks, in their respective sole discretion and without
notice to Guarantor, may release, exchange, enforce, apply the proceeds of and
otherwise deal with any such security without affecting in any manner the
unconditional obligation of this Guaranty. Notwithstanding anything to the
contrary contained in this Guaranty, Guarantor hereby irrevocably waives any
and all rights it may now or hereafter have under any agreement or at law or in
equity (including, without limitation, any law subrogating Guarantor to the
rights of Banks) to assert any claim against or seek contribution,
indemnification or any other form of reimbursement from the Company and the
Account Parties or any other party liable for payment of any or all of the
Indebtedness for any payment made by Guarantor under or in connection with this
Guaranty or otherwise.
Without limiting the generality of the foregoing, such obligations,
and the rights of the Agent on behalf of the Banks to enforce the same by
proceedings, whether by action at law, suit in equity or otherwise, shall not
be in any way affected by (i) any insolvency, bankruptcy, liquidation,
reorganization, readjustment, composition, dissolution, winding up or other
proceeding involving or affecting the Company, any Account Party, the Guarantor
or others or (ii) any change in the ownership of any of the capital stock of
the Company or any of the Company's Subsidiaries, or any of their respective
Affiliates.
The Guarantor hereby waives to the fullest extent possible under
applicable law:
(a) any defense based upon the doctrine of marshalling of
assets or upon an election of remedies by Agent or the Banks, including,
without limitation, an election to proceed by non-judicial rather than judicial
foreclosure, which destroys or otherwise impairs the subrogation rights of the
Guarantor or the right of the Guarantor to proceed against the Company or any
Account Party for reimbursement, or both;
(b) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal;
(c) any duty on the part of Agent or any of the Banks to
disclose to the Guarantor any facts Agent or the Banks may now or hereafter
know about the Company or any Account Party, regardless of whether Agent or any
Bank has reason to believe that any such facts materially increase the risk
beyond that which the Guarantor
3
135
intends to assume or has reason to believe that such facts are unknown to the
Guarantor or has a reasonable opportunity to communicate such facts to the
Guarantor, since the Guarantor acknowledges that it is fully responsible for
being and keeping informed of the financial condition of Company and Account
Parties and of all circumstances bearing on the risk of non-payment of any
Indebtedness hereby guaranteed;
(d) any defense arising because of Agent's or the Banks'
election, in any proceeding instituted under the Federal Bankruptcy Code, of
the application of Section 1111(b)(2) of the Federal Bankruptcy Code;
(e) any claim for reimbursement, contribution,
exoneration, indemnity or subrogation, or any other similar claim, which the
Guarantor may have or obtain against the Company, by reason of the existence of
this Guaranty, or by reason of the payment by the Guarantor of any Indebtedness
or the performance of this Guaranty or of any other Loan Documents, until the
Indebtedness has been repaid and discharged in full and no commitment to extend
any credit under the Credit Agreement or any of the Loan Documents (whether
optional or obligatory), or any Letter of Credit, remains outstanding, and any
amounts paid to the Guarantor on account of any such claim at any time when the
obligations of the Guarantor under this Guaranty shall not have been fully and
finally paid shall be held by the Guarantor in trust for Agent and the Banks,
segregated from other funds of the Guarantor, and forthwith upon receipt by the
Guarantor shall be turned over to Agent in the exact form received by the
Guarantor (duly endorsed to Agent by the Guarantor, if required), to be applied
to the Guarantor's obligations under this Guaranty, whether matured or
unmatured, in such order and manner as Agent may determine; and
(f) any other event or action (excluding Guarantor's
compliance with the provisions hereof) that would result in the discharge by
operation of law or otherwise of the Guarantor from the performance or
observance of any obligation, covenant or agreement contained in this Guaranty.
The Agent and each of the Banks may deal with the Company and Account
Parties and any security held by them, for the obligations of the Company or
any Account Party (as aforesaid) in the same manner and as freely as if this
Guaranty did not exist and the Agent on behalf of the Banks shall be entitled
without notice to Guarantor, among other things, to grant to the Company and
Account Parties such extension or extensions of time to perform any act or acts
as may seem advisable to the Agent on behalf of the Banks at any time and from
time to time, and to permit the Company or any Account Party to incur
additional indebtedness to Agent, the Banks, or either or any of them, without
terminating, affecting or
4
136
impairing the validity or enforceability of this Guaranty or the obligations of
Guarantor hereunder.
The Agent may proceed, either in its own name (on behalf of the Banks)
or in the name of the Guarantor, or otherwise, to protect and enforce any or
all of its rights under this Guaranty by suit in equity, action at law or by
other appropriate proceedings, or to take any action authorized or permitted
under applicable law, and shall be entitled to require and enforce the
performance of all acts and things required to be performed hereunder by the
Guarantor. Each and every remedy of the Agent on behalf of the Banks shall, to
the extent permitted by law, be cumulative and shall be in addition to any
other remedy given hereunder or now or hereafter existing at law or in equity.
No waiver or release shall be deemed to have been made by the Agent or
the Banks of any of its rights hereunder unless the same shall be in writing
and signed by or on behalf of the Banks, and any such waiver shall be a waiver
or release only with respect to the specific matter involved and shall in no
way impair the rights of the Agent or the Banks or the obligations of Guarantor
under this Guaranty in any other respect at any other time.
At the option of the Agent, Guarantor may be joined in any action or
proceeding commenced by the Agent against the Company, and/or any Account Party
or Account Parties, or any other Person in connection with or based upon the
Notes, the Credit Agreement, the Letters of Credit, the Letter of Credit
Agreements, or any of the other Loan Documents or other Indebtedness, or any
provision thereof, and recovery may be had against Guarantor in such action or
proceeding or in any independent action or proceeding against Guarantor,
without any requirement that the Agent or the Banks first assert, prosecute or
exhaust any remedy or claim against the Company, any Account Party, or any
other Person.
4. Representations and Warranties. Guarantor represents, warrants
and agrees, and such representations and warranties shall be deemed to be
continuing representations and warranties during the entire life of this
Guaranty, that:
(a) Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation and
has all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted. To the best of its
knowledge, Guarantor is duly qualified or licensed to do business as a foreign
corporation, and is in good standing in each jurisdiction where the nature of
the business conducted by it or the properties owned or leased by it makes such
qualification or licensing necessary and where failure to be so qualified would
have a material adverse effect on its business.
5
137
(b) Execution, delivery and performance of this Guaranty,
all of the other Loan Documents to which Guarantor is a party, and all other
documents and instruments executed and delivered under or in connection with
this Guaranty or the other Loan Documents by Guarantor (or to be so executed
and delivered) are within its corporate powers, have been duly authorized, are
not in contravention of law or the terms of Guarantor's articles of
incorporation or bylaws, and do not require the consent or approval, material
to the transactions contemplated by the Loan Documents, of any court,
governmental body, agency or authority not previously obtained and delivered to
Agent under the Credit Agreement.
(c) This Guaranty and each of the Loan Documents to which
Guarantor is a party and all other certificates, agreements, documents and
instruments executed and delivered by Guarantor under or in connection
therewith have each been duly executed and delivered by its duly authorized
officers and constitute the valid and binding obligations of Guarantor,
enforceable in accordance with their respective terms, except as the validity
or enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights generally or
other equitable principles (regardless of whether enforcement is considered in
proceedings in law or equity).
(d) The execution, delivery and performance of the
Guaranty and each of the Loan Documents to which Guarantor is a party and any
other documents and instruments required under or in connection with this
Guaranty by Guarantor are not in contravention of the terms of any indenture,
agreement or undertaking to which Guarantor is a party or by which it is bound,
except to the extent such terms have been waived or are not material to the
transactions contemplated by the Loan Documents.
(e) There is no suit, action, proceeding, including,
without limitation, any bankruptcy proceeding, or governmental investigation
pending against or affecting Guarantor or its Subsidiaries (other than any
suit, action or proceeding in which Guarantor or its Subsidiaries is the
plaintiff and in which no counterclaim or cross-claim against Guarantor or its
Subsidiaries has been filed) nor has Guarantor or its Subsidiaries or any of
their respective officers or directors been subject to any suit, action,
proceeding or governmental investigation as a result of which any such officer
or director is or may be entitled to indemnification by Guarantor or its
Subsidiaries, except as otherwise disclosed in the appropriate exhibit to the
Credit Agreement and except for miscellaneous suits, actions and proceedings
(other than suits, actions or proceedings commenced by any government or
governmental authority or seeking specific performance or other equitable or
injunctive relief) involving less than $100,000 which suits would not in the
aggregate, if resolved
6
138
adversely to Guarantor, have a material adverse effect on Guarantor. Except as
so disclosed, there is not outstanding against Guarantor or its Subsidiaries
any judgment, decree, injunction, rule, or order of any court, government,
department, commission, agency, instrumentality or arbitrator nor is Guarantor
or its Subsidiaries in violation of any applicable law, regulation, ordinance,
order, injunction, decree or requirement of any governmental body or court
where such violation would have a material adverse affect on Guarantor.
(f) There are no security interests in, liens, mortgages,
or other encumbrances on any of the assets or properties of the Guarantor, that
are prohibited by the provisions of the Credit Agreement.
(g) Guarantor's financial statements dated ___________,
1996 delivered to the Agent prior to the date of this Guaranty, are complete
and correct, prepared in accordance with generally accepted accounting
principles, consistently applied, and fairly present the financial condition of
Guarantor as of each date thereof. To the best knowledge of the Guarantor,
Guarantor has no contingent obligation (including any liability for taxes)
which was not disclosed by or reserved against in the financial statements; and
at the present time there are no material unrealized or anticipated losses from
any present commitment or obligation of Guarantor.
(h) All factual information heretofore or
contemporaneously furnished in writing by or on behalf of Guarantor to Agent or
any Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all other such factual information
hereafter furnished by or on behalf of Guarantor to Agent or any Bank will be,
true and accurate in every material respect on the date as of which such
information is dated or certified and, to the best of its knowledge, is not
incomplete by omitting to state any material fact necessary to make such
information not misleading.
5. Miscellaneous.
5.1 Governing Law. THIS GUARANTY SHALL BE DEEMED
DELIVERED IN MICHIGAN AND SHALL BE INTERPRETED AND THE RIGHTS OF THE PARTIES
HEREUNDER SHALL BE DETERMINED UNDER THE LAWS OF, AND BE ENFORCEABLE IN, THE
STATE OF MICHIGAN, GUARANTOR HEREBY CONSENTING TO THE JURISDICTION OF SUCH
STATE AND ALL FEDERAL COURTS SITTING IN SUCH STATE.
5.2 Severability. If any term or provision of this
Guaranty or the application thereof to any circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Guaranty, or the application
of such term or provision to circumstances other than those as to which it is
held invalid or
7
139
unenforceable, shall not be affected thereby, and each term and provision of
this Guaranty shall be valid and enforceable to the fullest extent permitted by
law.
5.3 Notice. All notices and other communications to be
made or given pursuant to this Guaranty shall be sufficient if made or given in
conformity with Section 13.5 of the Credit Agreement.
5.4 Right of Offset. Guarantor acknowledges the rights of
the Agent and of each of the Banks to offset against the indebtedness of
Guarantor to the Banks under this Guaranty, any amount owing by the Agent or
the Banks, or either or any of them to the Guarantor, whether represented by
any deposit of Guarantor with the Agent or any of the Banks or otherwise.
5.5 Amendments. The terms of this Guaranty may not be
waived, altered, modified, amended, supplemented or terminated in any manner
whatsoever except as provided herein and in accordance with the Credit
Agreement.
5.6 Release. Upon (a) the termination of the commitment
of the Banks to make Loans or Advances to Company and the satisfaction by
Guarantor of its obligations hereunder, or (b) the time at which Guarantor is
no longer subject to any obligation hereunder or the time at which the
Guarantor is designated an Unrestricted Subsidiary pursuant to and in
accordance with the terms of the Credit Agreement, whichever first occurs, the
Guarantor shall be deemed released from this Guaranty and, the Agent shall
deliver to Guarantor, upon written request therefor, a written release of this
Guaranty; provided that, the effectiveness of this Guaranty shall continue or
be reinstated, as the case may be, in the event that any payment received or
credit given by the Agent or the Banks is returned, disgorged or rescinded as
an avoidable preference, impermissible setoff, fraudulent conveyance or
otherwise under any applicable state or federal law, including laws pertaining
to bankruptcy or insolvency, and this Guaranty shall thereafter be enforceable
against Guarantor as if such returned, disgorged or rescinded payment or credit
had not been received or given by the Agent or the Banks, and whether or not
the Agent or any Bank relied upon such payment or credit or changed its
position as a consequence thereof.
5.7 Consent to Jurisdiction. The Guarantor and each of
the Agent and the Banks (by accepting the benefits hereof) hereby irrevocably
submit to the non-exclusive jurisdiction of any United States Federal or
Michigan state court sitting in Detroit in any action or proceeding arising out
of or relating to this Guaranty and the Guarantor and the Agent and the Banks
hereby irrevocably agree that claims in respect of such action or proceeding
may be heard and determined in any such United States Federal or Michigan state
court. The Guarantor irrevocably consents to the service of any and all process
in any such action or proceeding brought in any
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140
court in or of the State of Michigan by the delivery of copies of such process
to the Guarantor at its address specified on the signature page hereto or by
certified mail directed to such address or such other address as may be
designated by the Guarantor in a notice to the other parties that complies as
to delivery with the terms of Section 5.3. Nothing in this Section shall affect
the right of the Banks and the Agent to serve process in any other manner
permitted by law or limit the right of the Banks or the Agent (or any of them)
to bring any such action or proceeding against the Guarantor or any of its
property in the courts of any other jurisdiction. The Guarantor hereby
irrevocably waives any objection to the laying of venue of any such suit or
proceeding in the above described courts.
5.8 WAIVER OF JURY TRIAL. THE BANKS (BY ACCEPTING THE BENEFITS
HEREOF), THE AGENT (BY ACCEPTING THE BENEFITS HEREOF) AND THE GUARANTOR AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL
BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS GUARANTY OR ANY OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT,
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTION OF ANY OF THEM. NEITHER
THE BANKS, THE AGENT, NOR THE GUARANTOR SHALL SEEK TO CONSOLIDATE, BY
COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN
WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY
RESPECT OR RELINQUISHED BY THE BANKS AND THE AGENT OR THE GUARANTOR EXCEPT BY A
WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
5.9 Limitation under Applicable Insolvency Laws. Notwithstanding
anything to the contrary contained herein, it is the intention of the
Guarantor, Agent and the Banks that the amount of the Guarantor's obligations
hereunder shall be in, but not in excess of, the maximum amount thereof not
subject to avoidance or recovery by operation of applicable law governing
bankruptcy, reorganization, arrangement, adjustment of debts, relief of
debtors, dissolution, insolvency, fraudulent transfers or conveyances or other
similar laws (collectively, "Applicable Insolvency Laws"). To that end, but
only in the event and to the extent that the Guarantor's obligations hereunder
or any payment made pursuant thereto would, but for the operation of the
foregoing proviso, be subject to avoidance or recovery under Applicable
Insolvency Laws, the amount of the Guarantor's obligations hereunder shall be
limited to the largest amount which, after effect thereto, would not, under
Applicable Insolvency Laws, render the Guarantor's respective obligations
hereunder unenforceable or avoidable or subject to recovery under Applicable
Insolvency Laws. To the extent any payment actually made hereunder exceeds the
limitation contained in this Section 5.9, then the amount of such excess shall,
from and after the time of payment by the Guarantor (or any of them), be
reimbursed by the Banks upon demand by the
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Guarantor. The foregoing proviso is intended solely to preserve the rights of
the Agent and the Banks hereunder against the Guarantor to the maximum extent
permitted by Applicable Insolvency Laws and neither Company nor the Guarantor
nor any other Person shall have any right or claim under this Section 5.9 that
would not otherwise be available under Applicable Insolvency Laws.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this
Guaranty as of ________________, 1996.
[NAME OF GUARANTOR]
By:
------------------------------
Its:
-----------------------------
ACCEPTED BY:
COMERICA BANK, as Agent,
on behalf of the Banks
By:
------------------------------
Its:
------------------------------
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EXHIBIT K
FORM OF COMPANY GUARANTY
GUARANTY
Quanex Corporation, a Delaware corporation ("Guarantor") desires to
see the success of the Account Parties (as defined below) and furthermore,
Guarantor, as the parent corporation of the Account Parties, shall receive
direct and/or indirect benefits from extensions of credit to Account Parties in
connection with the transactions contemplated under the Credit Agreement and
the Loan Documents (as defined below).
To induce each of the Banks (as defined below), to enter into and
perform its obligations under that certain $250,000,000 Revolving Credit and
Term Loan Agreement dated as of July 23, 1996 among Guarantor, Comerica Bank,
as Agent, ("Agent") and the Banks, as the same may be amended from time to time
(the "Credit Agreement"), the Guarantor has executed and delivered this
guaranty ("Guaranty").
1. Definitions. Unless otherwise provided herein, all capitalized
terms in this Guaranty shall have the meanings specified in the Credit
Agreement. The term "Banks" as used herein shall include any successors or
assigns of the Banks, in accordance with the Credit Agreement.
2. Guaranty. The Guarantor hereby guarantees to the Banks the due
and punctual payment to the Banks when due, whether by acceleration or
otherwise, of all Reimbursement Obligations of the Account Parties and other
amounts owing by the Account Parties, or any of them under or in connection
with Letters of Credit issued for from time to time pursuant to the Credit
Agreement, payable with interest thereon and otherwise in accordance with the
terms of the Credit Agreement and the Letter of Credit Agreements related to
such Letters of Credit, as well as all extensions, renewals, and amendments of
Letters of Credit or Letter of Credit Agreements or such other Indebtedness (as
defined in the Credit Agreement, or any replacements or substitutions
therefor), and hereby agrees that if any Account Party, or any other Person who
is or becomes primarily liable therefor, shall fail to pay any of such amounts
when and as the same shall be due and payable, or shall fail to perform and
discharge any covenant, representation or warranty in accordance with the terms
of the Credit Agreement, the Letters of Credit, the Letter of Credit
Agreements, or any of the other Loan Documents, the Guarantor will forthwith
pay to Agent on behalf of the Banks an amount equal to any such amount or cause
the applicable Account Party or other Person then primarily liable therefor to
perform and discharge any such covenant, representation or warranty, as the
143
case may be, and will pay any and all damages that may be incurred or suffered
in consequence thereof by Agent and all reasonable expenses, including
reasonable attorneys fees, that may be incurred by Agent in enforcing such
covenant, representation or warranty, and in enforcing the covenants and
agreements of this Guaranty.
3. Unconditional Character of Guaranty. The obligations of
Guarantor under this Guaranty shall be absolute and unconditional, and shall be
a guaranty of payment and not of collection, irrespective of the validity,
regularity or enforceability of the Notes, the Credit Agreement, the Letters of
Credit, the Letter of Credit Agreements, or any of the other Loan Documents, or
any provision thereof, the absence of any action to enforce the same, any
waiver or consent with respect to any provision thereof, the recovery of any
judgment against any person or action to enforce the same, any failure or delay
in the enforcement of the obligations of any other Account Party under the
Letters of Credit, the Letter of Credit Agreements, or of the obligations of
any Person under or any of the other Loan Documents, or any setoff,
counterclaim, recoupment, limitation, defense or termination. Guarantor hereby
waives diligence, demand for payment, filing of claims with any court, any
proceeding to enforce any provision of the Letters of Credit, the Letter of
Credit Agreements, or any of the other Loan Documents, any right to require a
proceeding first against any Account Party, or any other guarantor or surety,
or to exhaust any security for the performance of the obligations of any
Account Party, any protest, presentment, notice or demand whatsoever, and
Guarantor hereby covenants that this Guaranty shall not be terminated,
discharged or released except upon payment in full of all amounts due and to
become due from all Account Parties, as and to the extent described above, and
only to the extent of any such payment, performance and discharge. Guarantor
further covenants that no security now or subsequently held by the Agent or the
Banks for the payment of the Indebtedness evidenced by the Notes or incurred
under the Credit Agreement, the Letters of Credit, the Letter of Credit
Agreements, or otherwise evidenced or incurred, whether in the nature of a
security interest, pledge, lien, assignment, setoff, suretyship, guaranty,
indemnity, insurance or otherwise, and no act, omission or other conduct of
Agent or the Banks in respect of such security, shall affect in any manner
whatsoever the unconditional obligation of this Guaranty, and that the Agent
and each of the Banks, in their respective sole discretion and without notice
to Guarantor, may release, exchange, enforce, apply the proceeds of and
otherwise deal with any such security without affecting in any manner the
unconditional obligation of this Guaranty. Notwithstanding anything to the
contrary contained in this Guaranty, Guarantor hereby irrevocably waives any
and all rights it may now or hereafter have under any agreement or at law or in
equity (including, without limitation, any law subrogating Guarantor to the
rights of Banks) to assert any claim against or seek contribution,
indemnification or any other form of reimbursement from the Account Parties or
any other party
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144
liable for payment of any or all of the Indebtedness for any payment made by
Guarantor under or in connection with this Guaranty or otherwise.
Without limiting the generality of the foregoing, such obligations,
and the rights of the Agent on behalf of the Banks to enforce the same by
proceedings, whether by action at law, suit in equity or otherwise, shall not
be in any way affected by (i) any insolvency, bankruptcy, liquidation,
reorganization, readjustment, composition, dissolution, winding up or other
proceeding involving or affecting any Account Party, the Guarantor or others or
(ii) any change in the ownership of any of the capital stock of the Guarantor
or any of the Guarantor's Subsidiaries, or any of their respective Affiliates.
The Guarantor hereby waives to the fullest extent possible under
applicable law:
(a) any defense based upon the doctrine of marshalling of
assets or upon an election of remedies by Agent or the Banks, including,
without limitation, an election to proceed by non-judicial rather than judicial
foreclosure, which destroys or otherwise impairs the subrogation rights of the
Guarantor or the right of the Guarantor to proceed against the Company or any
Account Party for reimbursement, or both;
(b) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal;
(c) any duty on the part of Agent or any of the Banks to
disclose to the Guarantor any facts Agent or the Banks may now or hereafter
know about any Account Party, regardless of whether Agent or any Bank has
reason to believe that any such facts materially increase the risk beyond that
which the Guarantor intends to assume or has reason to believe that such facts
are unknown to the Guarantor or has a reasonable opportunity to communicate
such facts to the Guarantor, since the Guarantor acknowledges that it is fully
responsible for being and keeping informed of the financial condition of the
Account Parties and of all circumstances bearing on the risk of non-payment of
any Indebtedness hereby guaranteed;
(d) any defense arising because of Agent's or the Banks'
election, in any proceeding instituted under the Federal Bankruptcy Code, of
the application of Section 1111(b)(2) of the Federal Bankruptcy Code;
(e) any claim for reimbursement, contribution,
exoneration, indemnity or subrogation, or any other similar claim, which the
Guarantor may have or obtain against any Account Party, by reason of the
existence of this Guaranty, or by reason of the
3
145
payment by the Guarantor of any Indebtedness or the performance of this
Guaranty or of any other Loan Documents, until the Indebtedness has been repaid
and discharged in full and no commitment to extend any credit under the Credit
Agreement or any of the Loan Documents (whether optional or obligatory), or any
Letter of Credit, remains outstanding, and any amounts paid to the Guarantor on
account of any such claim at any time when the obligations of the Guarantor
under this Guaranty shall not have been fully and finally paid shall be held by
the Guarantor in trust for Agent and the Banks, segregated from other funds of
the Guarantor, and forthwith upon receipt by the Guarantor shall be turned over
to Agent in the exact form received by the Guarantor (duly endorsed to Agent by
the Guarantor, if required), to be applied to the Guarantor's obligations under
this Guaranty, whether matured or unmatured, in such order and manner as Agent
may determine; and
(f) any other event or action (excluding Guarantor's
compliance with the provisions hereof) that would result in the discharge by
operation of law or otherwise of the Guarantor from the performance or
observance of any obligation, covenant or agreement contained in this Guaranty.
The Agent and each of the Banks may deal with the Account Parties and
any security held by them, for the obligations of or any Account Party (as
aforesaid) in the same manner and as freely as if this Guaranty did not exist
and the Agent on behalf of the Banks shall be entitled without notice to
Guarantor, among other things, to grant to the Account Parties such extension
or extensions of time to perform any act or acts as may seem advisable to the
Agent on behalf of the Banks at any time and from time to time, and to permit
any Account Party to incur additional indebtedness to Agent, the Banks, or
either or any of them, without terminating, affecting or impairing the validity
or enforceability of this Guaranty or the obligations of Guarantor hereunder.
The Agent may proceed, either in its own name (on behalf of the Banks)
or in the name of the Guarantor, or otherwise, to protect and enforce any or
all of its rights under this Guaranty by suit in equity, action at law or by
other appropriate proceedings, or to take any action authorized or permitted
under applicable law, and shall be entitled to require and enforce the
performance of all acts and things required to be performed hereunder by the
Guarantor. Each and every remedy of the Agent on behalf of the Banks shall, to
the extent permitted by law, be cumulative and shall be in addition to any
other remedy given hereunder or now or hereafter existing at law or in equity.
No waiver or release shall be deemed to have been made by the Agent or
the Banks of any of its rights hereunder unless the same shall be in writing
and signed by or on behalf of the Banks, and any such waiver shall be a waiver
or release only with respect to
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146
the specific matter involved and shall in no way impair the rights of the Agent
or the Banks or the obligations of Guarantor under this Guaranty in any other
respect at any other time.
At the option of the Agent, Guarantor may be joined in any action or
proceeding commenced by the Agent against any Account Party or Account Parties,
any other Person in connection with or based upon the Credit Agreement, the
Letters of Credit, the Letter of Credit Agreements, or any of the other Loan
Documents or other Indebtedness, or any provision thereof, and recovery may be
had against Guarantor in such action or proceeding or in any independent action
or proceeding against Guarantor, without any requirement that the Agent or the
Banks first assert, prosecute or exhaust any remedy or claim against any
Account Party, or any other Person.
4. Miscellaneous.
4.1 Governing Law. THIS GUARANTY SHALL BE DEEMED
DELIVERED IN MICHIGAN AND SHALL BE INTERPRETED AND THE RIGHTS OF THE PARTIES
HEREUNDER SHALL BE DETERMINED UNDER THE LAWS OF, AND BE ENFORCEABLE IN, THE
STATE OF MICHIGAN, GUARANTOR HEREBY CONSENTING TO THE JURISDICTION OF SUCH
STATE AND ALL FEDERAL COURTS SITTING IN SUCH STATE.
4.2 Severability. If any term or provision of this
Guaranty or the application thereof to any circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Guaranty, or the application
of such term or provision to circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Guaranty shall be valid and enforceable to the fullest extent
permitted by law.
4.3 Notice. All notices and other communications to be
made or given pursuant to this Guaranty shall be sufficient if made or in
accordance with Section 13.5 of the Credit Agreement.
4.4 Right of Offset. Guarantor acknowledges the rights of
the Agent and of each of the Banks to offset against the indebtedness of
Guarantor to the Banks under this Guaranty, any amount owing by the Agent or
the Banks, or either or any of them to the Guarantor, whether represented by
any deposit of Guarantor with the Agent or any of the Banks or otherwise.
4.5 Amendments. The terms of this Guaranty may not be
waived, altered, modified, amended, supplemented or terminated in any manner
whatsoever except as provided herein and in accordance with the Credit
Agreement.
4.6 Release. Upon the termination of the commitment of
the Banks to make Loans or Advances to Company and the satisfaction
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147
by Guarantor of its obligations hereunder, or when Guarantor is no longer
subject to any obligation hereunder, the Agent shall deliver to Guarantor, upon
written request therefor, a written release of this Guaranty; provided that,
the effectiveness of this Guaranty shall continue or be reinstated, as the case
may be, in the event that any payment received or credit given by the Agent or
the Banks is returned, disgorged or rescinded as an avoidable preference,
impermissible setoff, fraudulent conveyance or otherwise under any applicable
state or federal law, including laws pertaining to bankruptcy or insolvency,
and this Guaranty shall thereafter be enforceable against Guarantor as if such
returned, disgorged or rescinded payment or credit had not been received or
given by the Agent or the Banks, and whether or not the Agent or any Bank
relied upon such payment or credit or changed its position as a consequence
thereof.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this
Guaranty as of July 23, 1996.
QUANEX CORPORATION
By:
----------------------------
Its:
---------------------------
ACCEPTED BY:
COMERICA BANK, as Agent,
on behalf of the Banks
By:
----------------------------
Its:
---------------------------
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148
EXHIBIT L
FORM OF
ASSIGNMENT AGREEMENT
Date:
--------------------
To: QUANEX CORPORATION
and
COMERICA BANK, AS AGENT ("Agent")
Re: QUANEX CORPORATION $250,000,000 Revolving Credit and Term Loan
Agreement dated as of July 23, 1996 (as amended or otherwise modified
from time to time, the "Agreement"), among Quanex Corporation,
("Company"), Agent and certain Banks
Gentlemen and Ladies:
Reference is made to Section 13.7(c), (d) and (e) of the Agreement.
Unless otherwise defined herein or the context otherwise requires, all
initially capitalized terms used herein without definition shall have the
meanings specified in the Agreement.
This Agreement constitutes notice to each of you of the proposed
assignment and delegation by [insert assignor Bank] (the "Assignor") to
[insert proposed assignee] (the "Assignee") of a _____% undivided interest in
Assignor's Revolving Credit Note and Term Loan Note under the Agreement
(together, the "Note"), such that after giving effect to the assignment and
assumption hereafter provided the Assignee's interest in the Note shall equal
$_____________(1) and its Percentage shall equal ___% under the Loan Documents.
Assignor does hereby sell, assign and transfer to Assignee effective
on the "Effective Date" (as hereafter defined) _______% of Assignor's right,
title and interest in, to and under the Assignor's Note, the Agreement and the
other Loan Documents. It is acknowledged that Assignor, immediately after this
Assignment, shall hold ______ percentage (____%) interest in Assignor's Note.
The Assignor hereby instructs the Agent to make all payments from and
including the Effective Date hereof in respect of the interest assigned hereby,
directly to the Assignee. The Assignor and the Assignee agree that all interest
and fees accrued up to, but not including, the Effective Date of the assignment
and
- --------------------
(1) Such amount shall not be less than a minimum amount of $10,000,000.
149
delegation being made hereby are the property of the Assignor, and not the
Assignee. The Assignee agrees that, upon receipt of any such interest or fees
accrued up to the Effective Date, the Assignee will promptly remit the same to
the Assignor.
The Assignee hereby confirms that it has received a copy of the
Agreement and the exhibits and schedules referred to therein, and all other
Loan Documents which it considers necessary, together with copies of the other
documents which were required to be delivered under the Agreement as a
condition to the making of the loans thereunder. The Assignee acknowledges and
agrees that it: (a) has made and will continue to make such inquiries and has
taken and will take such care on its own behalf as would have been the case had
its Percentage been granted and its loans been made directly by such Assignee
to the Company without the intervention of the Agent, the Assignor or any other
bank; and (b) has made and will continue to make, independently and without
reliance upon the Agent, the Assignor or any other bank, and based on such
documents and information as it has deemed appropriate, its own credit analysis
and decisions relating to the Agreement. The Assignee further acknowledges and
agrees that neither the Agent, nor the Assignor has made any representations or
warranties about the creditworthiness of the Company, or any other party to the
Agreement or any other of the Loan Documents, or with respect to the legality,
validity, sufficiency or enforceability of the Agreement, or any other of the
Loan Documents. This assignment shall be made without recourse to or warranty
by the Assignor, except as set forth herein.
Assignee represents and warrants that it is a Person to which
assignments are permitted pursuant to Section 13.7(c) of the Agreement.
Assignor and Assignee represent and warrant that this assignment shall not
violate any "blue sky" or other securities law of any jurisdiction or require
the Company or any other Person to file a registration statement with the
United States Securities and Exchange Commission or apply to qualify any loans
or any interest in any thereof, under the "blue sky" or other securities laws
of any jurisdiction.
Except as otherwise provided in the Agreement, effective as of the
Effective Date:
(a) the Assignee: (i) shall be deemed automatically to have become
a party to the Agreement, to have assumed all of the
Assignor's obligations thereunder to the extent of the
Assignee's percentage referred to in the second paragraph of
this Assignment Agreement, and to have all the rights and
obligations of a party to the Agreement, as if it were an
original signatory thereto to the extent specified in the
second paragraph hereof; and (ii) agrees to be bound by the
terms and conditions set forth in the
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150
Agreement as if it were an original signatory thereto; and
(b) the Assignor's obligations under the Agreement shall be
reduced by the percentage referred to in the second paragraph
of this Assignment Agreement.
As used herein, the term "Effective Date" means the date on which all
of the following have occurred or have been completed, as reasonably determined
by the Agent:
(1) the delivery to the Agent of an original of this Assignment
Agreement executed by the Assignor and the Assignee;
(2) the payment to the Agent, of all accrued fees, expenses and
other items for which reimbursement is then owing under the
Agreement;
(3) the payment to the Agent of the $3,500 processing fee referred
to in Section 13.7(d) (iv) of the Agreement; and
(4) all other restrictions and items noted in Sections 13.7(c),
(d) and (e) of the Agreement have been satisfied.
The Agent shall notify the Assignor and the Assignee of the Effective Date.
The Assignee hereby advises each of you of the following
administrative details with respect to the assigned loans:
(A) Address for Notices:
Institution Name:
Address:
Attention:
Telephone:
Facsimile:
(B) Payment Instructions:
(C) Proposed effective date of assignment.
The Assignee has delivered to the Agent (or is delivering to the Agent
concurrently herewith) the tax forms referred to in Section 13.12 of the
Agreement, other forms reasonably requested by
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151
the Agent, and the original of each Note held by the Assignor under the
Agreement.
Please evidence your consent to and acceptance of the proposed
assignment and delegation set forth herein by signing and returning
counterparts hereof to the Assignor and the Assignee.
[ASSIGNOR]
By:
------------------------------
Its:
-----------------------------
[ASSIGNEE]
By:
------------------------------
Its:
-----------------------------
ACCEPTED AND CONSENTED TO
this day of , 199
--- -------- -
COMERICA BANK, Agent
By:
------------------------------
Its:
-----------------------------
QUANEX CORPORATION
By:
------------------------------
Its:
-----------------------------
4
1
EXHIBIT 99
Contact: Jeffrey Awalt (713) 877-5389
Jeff Galow (713) 877-5327
FOR IMMEDIATE RELEASE
---------------------
QUANEX CORPORATION COMPLETES ACQUISITION OF PIPER IMPACT
Houston, Texas, August 12, 1996 - Quanex Corporation (NYSE: NX) today
announced that it has completed its previously announced acquisition of Piper
Impact, Inc. Quanex said the transaction is being financed using a portion of
funds from its recently expanded $250 million bank revolver and term loan
facility.
Piper Impact, based in New Albany, Miss., is a manufacturer of
custom-designed, impact-extruded aluminum and steel parts for the
transportation, electronics and defense markets. Piper Impact operates plants
in New Albany, Miss., and Park City, Utah, and it currently is constructing a
third plant to support continuing growth as a supplier of air bag inflator
canisters to the automotive industry.
Quanex Corporation is a technological leader in the manufacture of steel
and aluminum specialized metals products for the transportation, capital
equipment, residential and commercial construction, and energy processing
markets.
- end -
