-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LBBUv6Kld4HCUI90nflafkjz4wQClRrm3mSGy7SI76RmBOVAqnXWIbAgZZ63BJds nROh4ftLgOt9N2oc+9jOWA== 0001047469-99-020635.txt : 19990517 0001047469-99-020635.hdr.sgml : 19990517 ACCESSION NUMBER: 0001047469-99-020635 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACCURIDE CORP CENTRAL INDEX KEY: 0000817979 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 611109077 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-15435 FILM NUMBER: 99623963 BUSINESS ADDRESS: STREET 1: 2315 ADAMS LN STREET 2: BOX 40 CITY: HENDERSON STATE: KY ZIP: 42420 BUSINESS PHONE: 5028265000 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended March 31, 1999. OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period From_____________to_____________. Commission file number 333-50239 ACCURIDE CORPORATION -------------------- (Exact name of registrant as specified in its charter) Delaware 61-1109077 - -------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 2315 Adams Lane Henderson, KY 42420 - --------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: (502) 826-5000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- There were 24,728 common shares outstanding as of March 31, 1999. ACCURIDE CORPORATION TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Balance Sheets as of March 31, 1999 (unaudited) and December 31, 1998 3 Consolidated Statements of Income for Three Months Ended March 31, 1999 and 1998 (Unaudited) 4 Consolidated Statement of Stockholders' Equity (Deficiency) for the Three Months Ended March 31, 1999 (Unaudited) 5 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999 and 1998 (Unaudited) 6 Notes to Unaudited Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures about Market Risk 16 PART II. OTHER INFORMATION Item 1. Legal Proceedings 17 Item 2. Changes in Securities 17 Item 3. Defaults Upon Senior Securities 17 Item 4. Submission of Matters to a Vote of Security Holders 17 Item 5. Other Information 18 Item 6. Exhibits and Reports on Form 8-K 18 Signatures 18
2 ITEM I. FINANCIAL STATEMENTS ACCURIDE CORPORATION CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31 DECEMBER 31, ASSETS 1999 1998 (UNAUDITED) ----------- ------------ CURRENT ASSETS: Cash and cash equivalents $ 38,454 $ 3,471 Customer receivables, net of allowance for doubtful accounts of $757 and $1,008 59,858 52,287 Other receivables 15,193 8,372 Inventories, net 36,258 36,980 Supplies 7,283 7,187 Prepaid expenses 759 139 Income taxes receivable - 458 Deferred income taxes 881 611 ----------- ----------- Total current assets 158,686 109,505 PROPERTY, PLANT AND EQUIPMENT, NET 162,998 159,826 OTHER ASSETS: Goodwill, net of accumulated amortization of $31,655 and $30,942 82,604 83,317 Investment in affiliates 27,912 25,855 Deferred financing costs, net of accumulated amortization of $2,077 and $1,634 12,166 12,609 Deferred income taxes 1,760 3,287 Other 10,724 10,526 ----------- ----------- TOTAL $ 456,850 $ 404,925 ----------- ----------- ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Accounts payable $ 38,183 $ 27,008 Current portion of long-term debt 1,350 1,350 Short term notes payable 5,211 3,911 Accrued payroll and compensation 7,088 8,149 Accrued interest payable 5,370 9,807 Income taxes payable 1,663 Accrued and other liabilities 5,272 6,606 ----------- ----------- Total current liabilities 64,137 56,831 LONG-TERM DEBT, less current portion 424,328 387,939 OTHER LIABILITIES 12,345 12,021 MINORITY INTEREST 6,254 6,230 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY (DEFICIENCY): Preferred stock, $.01 par value; 5,000 shares authorized and unissued Common stock and additional paid in capital, $.01 par value; 45,000 shares authorized, 24,768 shares issued and outstanding in 1999 and 1998 24,158 24,158 Stock subscriptions receivable (1,086) (1,644) Retained earnings (deficit) (73,286) (80,610) ----------- ----------- Total stockholders' equity (deficiency) (50,214) (58,096) ----------- ----------- TOTAL $ 456,850 $ 404,925 ----------- ----------- ----------- -----------
See notes to unaudited consolidated financial statements. 3 ACCURIDE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (DOLLARS IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, -------------------------- 1999 1998 NET SALES $ 111,533 $ 93,908 COST OF GOODS SOLD 85,441 73,752 ----------- ----------- GROSS PROFIT 26,092 20,156 OPERATING: Selling, general and administrative 6,479 5,354 Start-up costs - 1,146 Management retention bonuses - 810 Recapitalization professional fees - 2,240 ----------- ----------- INCOME FROM OPERATIONS 19,613 10,606 OTHER INCOME (EXPENSE): Interest income 65 140 Interest (expense) (8,956) (6,703) Equity in earnings (losses) of affiliates 2,315 (2,700) Other (expense), net (368) (601) ----------- ----------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 12,669 742 INCOME TAX PROVISION 5,321 347 MINORITY INTEREST 24 (86) ----------- ----------- NET INCOME $ 7,324 $ 481 ----------- ----------- ----------- -----------
See notes to unaudited consolidated financial statements. 4 ACCURIDE CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (DOLLARS IN THOUSANDS)
COMMON STOCK AND ADDITIONAL STOCK RETAINED PAID IN SUBSCRIPTIONS EARNINGS CAPITAL RECEIVABLE (DEFICIT) TOTAL --------------------------------------------------------- BALANCE AT DECEMBER 31, 1998 $ 24,158 $ (1,644) $ (80,610) $ (58,096) Net income (Unaudited) 7,324 7,324 Proceeds from stock subscriptions receivable - 558 - 558 -------- --------- ---------- ---------- BALANCE AT MARCH 31, 1999 (Unaudited) $ 24,158 $ (1,086) $ (73,286) $ (50,214) -------- --------- ---------- ---------- -------- --------- ---------- ----------
See notes to unaudited consolidated financial statements. 5 ACCURIDE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, -------------------------- 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 7,324 $ 481 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 5,155 4,504 Amortization 1,243 1,012 Bonuses payable by a principal stockholder - 810 Deferred income taxes 1,257 (722) Equity in (earnings) losses of affiliates (2,315) 2,700 Minority interest 24 86 Changes in certain assets and liabilities: Receivables (14,392) (8,429) Inventories and supplies 626 525 Prepaid expenses and other assets 1,243 (2,354) Accounts payable 11,175 (246) Accrued and other liabilities (6,508) 8,181 --------- ---------- Net cash provided by operating activities 4,832 6,548 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (8,327) (7,323) Capitalized interest - (30) Net cash distribution from AKW L.P. 265 (349) Other (7) - --------- ---------- Net cash used in investing activities (8,069) (7,702) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of short term notes payable 1,300 3,000 Principal payments on short-term notes payable - (1,340) Net increase in revolving line of credit 36,362 29,750 Proceeds from issuance of long-term debt - 333,918 Deferred financing costs - (13,735) Proceeds from stock subscriptions receivable 558 905 Issuance of shares 108,000 Redemption of shares - (454,257) --------- ---------- Net cash provided by financing activities 38,220 6,241 --------- ---------- Increase in cash and cash equivalents 34,983 5,087 Cash and cash equivalents, beginning of period 3,471 7,418 --------- ---------- Cash and cash equivalents, end of period $ 38,454 $ 12,505 --------- ---------- --------- ----------
See notes to unaudited consolidated financial statements. 6 ACCURIDE CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) AS OF MARCH 31, 1999 AND 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 Note 1 - BASIS OF PRESENTATION - The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles, except that the unaudited consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of Accuride Corporation (the "Company"), all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the consolidated financial statements have been included. The results of operations for the three months ended March 31, 1999 are not necessarily indicative of the results to be expected for the year ending December 31, 1999. The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Note 2 - INVENTORIES - Inventories were as follows:
MARCH 31, DECEMBER 31, 1999 1998 -------- ----------- Raw materials $ 3,946 $ 8,920 Work in process 8,033 7,757 Finished manufactured goods 24,209 20,060 LIFO adjustment 1,143 1,122 Other (1,073) (879) -------- -------- Inventories, net $ 36,258 $ 36,980 -------- -------- -------- --------
Note 3 - LABOR RELATIONS -The Company's prior contract with the UAW covering employees at the Henderson Facility expired in February 1998 and the Company was not able to negotiate a mutually acceptable agreement with the UAW. Therefore, a strike occurred at the Henderson Facility on February 20, 1998. The Company is continuing to operate with its salaried employees and contractors. On March 31, 1998, the Company began an indefinite lock-out. The members of the UAW have rejected all of the Company's offers for a new contract. Currently, there is, and the Company believes that there will be, no supply disruption to the Company's customer base; however, there can be no assurance to that effect. Note 4 - SUPPLEMENTAL CASH FLOW DISCLOSURE - During the three months ended March 31, 1999, the Company paid $9,087 and $2,033 for interest and income taxes, respectively. Non-cash transactions that resulted from the redemption in 1998 included the issuance of common stock and the related stock subscriptions receivable of $1,539 and the increase in stockholders' equity and the net deferred tax asset in the amount of $18,480 from the increase in the tax basis of assets. Note 5 - NEW ACCOUNTING PRONOUNCEMENT - Statement of Financial Standards No. 133 ("SFAS 133"), "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," was issued in June 1998 and is effective for 7 all fiscal quarters of all fiscal years beginning after June 15, 1999. This statement establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial condition and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a fair value hedge, a cash flow hedge, or a hedge of foreign currency exposure. The accounting for changes in the fair value of a derivative (that is, gains and losses) depends on the intended use of the derivative and the resulting designation. Management has not yet fully evaluated the effect of the new standard on the financial statements. Note 6 - FOREIGN CURRENCY - As of January 1, 1999, the Mexican economy was determined not to be highly inflationary. Accordingly, management has reviewed the primary economic environment in which Accuride de Mexico, S.A. de C.V. ("ADM") operates and determined ADM's functional currency to be the U.S. dollar. Note 7 - SEGMENT REPORTING - The Company operates in one business segment: the design, manufacture and distribution of wheels and rims for trucks, trailers, and other vehicles. GEOGRAPHIC SEGMENTS - The Company has foreign operations in the United States, Canada, and Mexico, which are summarized below. Sales between geographic areas are made at negotiated selling prices.
United Three months ended March 31, 1999 States Canada Mexico Eliminations Combined Net Sales: Sales to unaffiliated customers-Domestic $ 101,123 $ 3,900 $ 4,519 $ - $ 109,542 Sales to unaffiliated customers-Export 390 30 1,571 - 1,991 Sales among geographic segments 8,162 35,599 2,506 (46,267) - ---------------------------------------------------------------------- Total $ 109,675 $ 39,529 $ 8,596 $ (46,267) $ 111,533 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Income from operations: $ 16,276 $ 2,241 $ 1,096 $ - $ 19,613 Assets: Identifiable assets $ 280,827 $ 113,795 $ 48,353 $ (14,037) $ 428,938 Investments in affiliates 27,912 - - - 27,912 ---------------------------------------------------------------------- Total $ 308,739 $ 113,795 $ 48,353 $ (14,037) $ 456,850 ---------------------------------------------------------------------- ----------------------------------------------------------------------
United Three months ended March 31, 1998 States Canada Mexico Eliminations Combined Net Sales: Sales to unaffiliated customers-Domestic $ 72,977 $ 11,907 $ 6,619 $ 91,503 Sales to unaffiliated customers-Export 416 175 1,814 2,405 Sales among geographic segments 2,291 30,058 501 (32,850) - ---------------------------------------------------------------------- Total $ 75,684 $ 42,140 $ 8,934 $ (32,850) $ 93,908 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Income from operations: $ 5,593 $ 4,478 $ 535 $ 10,606 Assets: Identifiable assets $ 225,061 $ 113,501 $ 32,006 $ (14,024) $ 356,544 Investments in affiliates 22,415 22,415 ---------------------------------------------------------------------- Total $ 247,476 $ 113,501 $ 32,006 $ (14,024) $ 378,959 ---------------------------------------------------------------------- ----------------------------------------------------------------------
8 Sales to three customers exceeded 10% of total net sales for the three months ended March 31, as follows:
1999 % OF 1998 % OF AMOUNT SALES AMOUNT SALES Customer one $ 27,794 24.9% $ 12,316 13.1% Customer two 12,926 11.6% 8,336 8.9% Customer three 11,710 10.5% 12,170 13.0% -------- ---- -------- ---- $ 52,430 47.0% $ 32,822 35.0% -------- ---- -------- ---- -------- ---- -------- ----
Each geographic segment made sales to all three major customers in the first quarter of 1999 and 1998. Note 8 - SUBSEQUENT EVENTS - On April 1, 1999, the Company acquired Kaiser Aluminum & Chemical Corporation's ("Kaiser") 50% interest in AKW L.P., a Delaware limited partnership ("AKW"), pursuant to the terms of a Purchase Agreement by and among the Company, Kaiser and Accuride Ventures, Inc., a wholly owned subsidiary of the Company (the "Acquisition"). In connection with the Acquisition, AKW and Kaiser amended and restated an existing lease agreement pursuant to which AKW leases certain property from Kaiser. AKW was formed in 1997 as a 50-50 joint venture between Kaiser and the Company to design, manufacture, and sell heavy-duty aluminum wheels. The Acquisition gives the Company, through its wholly owned subsidiary, 100% control of AKW. Total consideration paid to Kaiser for the 50% interest was approximately $70 million, which was determined through arms-length negotiations between the parties. The Company temporarily financed the acquisition through the Company's $140.0 million revolving line of credit (the "Revolver"). On April 16, 1999, the Company amended and restated its credit facility to reflect an additional $100 million term loan provided by a syndication of banks and other financial institutions with Citicorp USA, Inc. as administrative agent, Salomon Smith Barney, Inc. as arranger, Bankers Trust Company as syndication agent, and Wells Fargo Bank N.A. as documentation agent. The purpose of the new term loan is to refinance approximately $70 million of debt borrowed under the Revolver to fund the Acquisition of Kaiser's 50% interest in AKW and to otherwise reduce amounts outstanding under the Revolver. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the consolidated financial statements and notes included in Item 1 of Part I of this form. Except for the historical information contained herein, this report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. The Company's actual results may differ materially from those indicated by such forward-looking statements. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1998. NET SALES. Net sales increased by $17.6 million, or 18.8%, for the three months ended March 31, 1999 to $111.5 million, compared to $93.9 million for the three months ended March 31, 1998. The increase in net sales is primarily due to increased industry volume and sales of new products from the new Columbia, Tennessee facility which started operations in the third quarter of 1998. GROSS PROFIT. Gross profit increased by $5.9 million, or 29.4% to $26.1 million for the three months ended March 31, 1999 from $20.1 million for the three months ended March 31, 1998. Gross profit as a percentage of net sales increased to 23.4% for the three months ended March 31, 1999 from 21.5% for the three months ended March 31, 1998. The increase in gross profit as a percentage of sales is due to an overall increase in volume and improved margins at the Henderson, Kentucky facility. The improvements at Henderson, Kentucky were achieved by effectively controlling the costs associated with the labor strike. Gross profit was also favorably impacted by increased industry volumes and sales of new products from the Columbia, Tennessee facility. OPERATING EXPENSES. Operating expenses decreased by $3.1 million, or 32.2%, to $6.5 million for the three months ended March 31, 1999 from $9.6 million for the three months ended March 31, 1998. This decrease was primarily due to one time operating expenses incurred in the first three months of 1998 for professional fees of $2.2 million related to the Company's recapitalization, for start-up costs of $1.1 million relating to the new Tennessee light truck wheels facility, and the management retention bonuses of $0.8 million paid by Phelps Dodge Corporation, a previous principal stockholder ("Phelps Dodge") in conjunction with the Company's recapitalization. Excluding the expenses recorded for the three months ended March 31, 1998 for professional fees, start-up costs, and management retention bonuses, operating expenses increased by $1.1 million to $6.5 million for the three months ended March 31, 1999 from $5.4 million for the three months ended March 31, 1998. As a percentage of net sales, operating expenses for the three months ended March 31, 1999 were 5.8% as compared to 5.7% for the three months ended March 31, 1998, excluding the expenses for professional fees, start-up costs, and management retention bonuses. OTHER INCOME (EXPENSE). Interest expense increased to $9.0 million for the three months ended March 31, 1999 compared to $6.7 million for the three months ended March 31, 1998, due primarily to the debt incurred in the recapitalization of the Company on January 21, 1998, which was outstanding for a full quarter in 1999 compared to 1998. Equity in earnings (losses) of affiliates increased by approximately $5.0 million to $2.3 million for the three months ended March 31, 1999 from a loss of $2.7 million for the three months ended March 31, 1998. The increase was due to the increased equity earnings from the AKW joint venture which contributed $2.2 million of earnings in the first quarter of 1999 as compared to a loss of $2.8 million in the first quarter of 1998 which was due to the $3.4 million effect of a product recall campaign implemented at AKW. Excluding the $3.4 million effect of the product recall campaign, equity in earnings 10 of affiliates increased $1.6 million to $2.3 million for the first quarter 1999 compared to $0.7 million for the first quarter of 1998 primarily due to improved earnings at AKW. ADJUSTED EBITDA. Adjusted EBITDA increased by $5.5 million, or 24.5%, to $27.9 million for the three months ended March 31, 1999 from $22.4 million for the three months ended March 31, 1998 due primarily to higher steel product sales volume and higher equity in earnings of affiliates. In determining Adjusted EBITDA for the three months ended March 31, 1999, income from operations has been increased by (i) depreciation and amortization (except for amortization of deferred financing costs) and (ii) equity in earnings of affiliates. In determining Adjusted EBITDA for the three months ended March 31, 1998, income from operations has been increased by (i) depreciation and amortization, (ii) equity in earnings (losses) of affiliates, (iii) $2.2 million of professional fees related to the Company's recapitalization, (iv) $3.4 million relating to the AKW product recall, (v) $0.8 million of management retention bonuses paid by Phelps Dodge, and (vi) an estimated cost of $2.5 million incurred in connection with the labor strike at the Company's facility in Henderson, Kentucky. NET INCOME. Net income increased by $6.8 million to $7.3 million for the three months ended March 31, 1999 from $0.5 million for the three months ended March 31, 1998 due to higher pretax earnings, as described above, and a lower effective tax rate. The Company's effective tax rate was 42.0% for the three months ended March 31, 1999 compared to 46.8% for the three months ended March 31, 1998. The lower effective tax rate is the result of increased pre-tax income compared to the level of permanent differences. CHANGES IN FINANCIAL CONDITION At March 31, 1999, the Company's total assets amounted to $456.9 million, as compared to $404.9 million at December 31, 1998. The $52.0 million or 12.8% increase in total assets during the three months ended March 31, 1999 was primarily the result of a $35.0 million increase in cash, an increase in net property plant and equipment of $3.2 million, a $7.6 million increase in customer receivables and a $6.8 million increase in other receivables. The increase in cash is a result of a cash draw on the Revolver to fund the purchase of Kaiser's 50% interest in AKW (see Note 8 of the unaudited consolidated financial statements). The increase in net property, plant and equipment was primarily due to investments in AdM's new facility. The increase in customer receivables reflected increased sales volume from U.S. customers. Other receivables increase was primarily due to (i) a $2.0 million increase in accounts receivable from aluminum wheels sales by AKW, pursuant to the AKW formation agreement whereby the Company performs all billing and collection functions for AKW as a means of providing customer convenience, (ii) a $1.4 million increase in a receivable from AKW for rebates paid to aluminum wheel customers by the Company, (iii) a $2.1 million increase in a receivable due from Industria Automotriz, S.A. de C.V. (49% owner of AdM) , and (iv) a $0.8 million increase in an unrealized gain associated with the foreign currency forward contracts entered into by the Company. At March 31, 1999, the Company's total liabilities amounted to $500.8 million, as compared to $456.8 million at December 31, 1998. The $44.0 million or 9.6% increase in total liabilities was primarily due to the $35.0 million increase in long-term debt to fund the purchase of Kaiser's 50% interest in AKW (see Note 8 of the unaudited consolidated financial statements) and a $11.2 million increase in accounts payable due to increased production volumes and an improvement in managing payment terms. 11 CAPITAL RESOURCES AND LIQUIDITY The Company's primary sources of liquidity are cash flow from operations and borrowings under the Revolver. The Company's primary uses of cash are funding working capital, capital expenditures under the Company's expansion plans and debt service. As of March 31, 1999, the Company had cash and short-term investments of $38.5 million compared to $3.5 million at the beginning of the year. The Company's operating activities provided $4.8 million and the financing activities provided $38.2 million which was used to fund the Company's investing activities of $8.1 million and increase its cash and short-term investments $35.0 million to fund the purchase of AKW (see Note 8 of the unaudited consolidated financial statements). Investing activities during the three months ended March 31, 1999 were $8.1 million compared to $7.7 million for the three months ended March 31, 1998. Cash flow from financing activities during the three months ended March 31, 1999 were $38.2 million compared to $6.2 million for the three months ended March 31, 1998. The Company incurred capital expenditures in 1998 (excluding capital expenditures by AdM) of $29.9 million. The Company expects its capital expenditures (excluding capital expenditures by AdM) to decrease to approximately $26.2 in 1999. It is anticipated that these expenditures will fund (i) approximately $6.0 million of technology advancement projects; (ii) investments in productivity improvements in 1999 to the Company's steel wheel business of approximately $7.7 million and (iii) maintenance of business expenditures of approximately $10.5 million. Future investments in productivity improvements are expected to be focused on additional automation, shop floor and engineering systems and improved coating capabilities. The Company anticipates that AdM will require additional capital expenditures of approximately $5.3 million for the remainder of 1999 to finalize construction and equip the Monterrey, Mexico facility. The Monterrey, Mexico facility is expected to be operational in mid-1999 at an approximate cost for land and building of $9.2 million. Total project cost through 1999 is expected to be approximately $29.4 million, of which approximately $24.1 million was spent as of March 31, 1999. The Company finalized a $32.5 million credit facility for AdM on July 9, 1998. This is comprised of a term loan of $25.0 million and a working capital facility of $7.5 million. DESCRIPTION OF THE CREDIT FACILITY. In January 1998 the Company entered into a credit facility (the "Credit Facility") with a syndicate of banks and other financial institutions (the "Lenders") led by Citicorp USA, Inc., as administrative agent (the "administrative agent"), Salomon Smith Barney, Inc., as arranger, Bankers Trust Company, as syndication agent, and Wells Fargo Bank N.A. as documentation agent. The Credit Facility provides for term loans of $135.0 million (the "Term Loans") and a $140.0 million revolver (the "Revolver"). The Term Loans are comprised of a $60.0 million loan that will mature on January 21, 2005 ("Tranche A") and a $75.0 million loan that will mature on January 21, 2006 ("Tranche B"). The Company's Canadian subsidiary is the borrower under Tranche A, and the Company has guaranteed the repayment of such borrowing under Tranche A and all other obligations of such Canadian subsidiary under the Credit Facility. The Term Loans provide for nominal annual amortization (approximately 1% per year). The commitment under the Revolver will decline to $100.0 million on January 21, 2003 and final maturity of loans under the Revolver will be January 21, 2004. The Credit Facility was amended and restated in April 1999 to account for an additional $100 million term loan. (See "Subsequent Events"). 12 DESCRIPTION OF THE NOTES. In January 1998 the Company issued $200 million of notes (the "Notes") pursuant to an indenture (the "Indenture") between the Company and U.S. Trust Company, N. A., as trustee (the "Trustee"). The Indenture is limited in aggregate principal amount to $300.0 million, of which $200.0 million were issued as Private Notes and subsequently exchanged for Exchange Notes, which exchange has been registered under the Securities Act of 1933, as amended. Additional notes may be issued in one or more series from time to time, subject to the limitations set forth under the Indenture. The Indenture provides certain restrictions on the payment of dividends by the Company. The Indenture is subject to and governed by the Trust Indenture Act of 1939, as amended. The Notes are general unsecured obligations of the Company and are subordinated in right of payment to all existing and future Senior Indebtedness (as defined in the Indenture) of the Company. As of March 31, 1999, the aggregate amount of the Company's outstanding Senior Indebtedness was approximately $194.2 million. The Notes mature on February 1, 2008. Interest on the Notes accrues at the rate of 9 1?4% per annum and is due and payable semi-annually in arrears on February 1 and August 1, commencing on August 1, 1998, to holders of record of the Notes on the immediately preceding January 15 and July 15. Management believes that cash flow from operations and availability under the Revolver will provide adequate funds for the Company's foreseeable working capital needs for 1999, planned capital expenditures and debt service obligations. Any future acquisitions, joint ventures or other similar transactions will likely require additional capital, and there can be no assurance that any such capital will be available to the Company on acceptable terms or at all. The Company's ability to fund its working capital needs, planned capital expenditures and scheduled debt payments, to implement its expansion plans, to refinance indebtedness and to comply with all of the financial covenants under its debt agreements, depends on its future operating performance and cash flow, which in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond the Company's control. YEAR 2000 COMPLIANCE In 1997, a comprehensive project plan to address the Year 2000 issue as it relates to the Company's operation was developed and implemented. The scope of the plan includes seven phases including Awareness, Identification, Impact Analysis, Risk Evaluation, Remediation, Testing and Contingency Planning. A project team that consists of key members of the technology staff, representatives of functional business units and senior management was developed. An assessment of the impact of the Year 2000 issue on the Company's computer systems was completed in the fourth quarter of 1997. From the assessment, the Company identified and prioritized those systems deemed to be mission critical or those that have a significant impact on normal operations. The Company relies on third party vendors and service providers for certain data processing capabilities. Formal communications with these providers were initiated in 1997 to assess the Year 2000 readiness of their products and services. Responses indicate that the significant providers currently have compliant versions available or are well into the renovation and testing phases. However, the Company can give no guarantee that the systems of these service providers and vendors on which the Company's systems rely will be timely Year 2000 compliant. Additionally, the Company has implemented a plan to manage the potential risk posed by the impact of the Year 2000 issue on its major customers and suppliers. Formal communications have been initiated, and the assessment is moving forward on schedule. 13 CURRENT STATUS. The project team estimates that the Company's Year 2000 readiness project is approximately 75% complete. The following table provides a summary of the current status of the seven phases involved and a projected timetable for completion.
Project Phase % Completed Completion Comments - -------------- ----------- ---------- --------- Awareness 100% Completed Identification 100% Completed Impact Analysis 100% Completed Risk Evaluation 100% Completed --------------- Remediation 95% Oct. 31, 1999 All critical systems are completed. Testing 85% June 30, 1999 Involves ongoing testing of critical systems. Contingency Planning 10% Aug. 31, 1999 Overall Completion Estimate 77%
COSTS. The Company has thus far primarily used and expects to continue to use internal resources to implement its readiness plan and to upgrade or replace and test systems affected by the Year 2000 issue. During the three months ended March 31, 1999, the Company incurred approximately $44,000 of direct and indirect costs for Company-owned systems and applications related to Year 2000 remediation. A majority of these costs are currently believed to be incremental expenses that will not recur in the Year 2000 or thereafter. Year 2000 remediation costs were approximately $1.3 million and $1.4 million in 1998 and 1997, respectively. The Company estimates that its additional costs for Year 2000 remediation and testing of its computer systems through the end of 1999 will not exceed $1.1 million. The costs and the timetable in which the Company plans to complete the Year 2000 readiness activities are based on management's estimates, which were derived using numerous assumptions of future events including the continued availability of certain resources, third party readiness plans and other factors. The Company can make no guarantee that these estimates will be achieved, and actual results could differ from such plans. RISK ASSESSMENT. Given the information known at this time about the Company's systems that are non-compliant, coupled with the Company's ongoing, normal course of business efforts to upgrade or replace critical systems, as necessary, management does not expect Year 2000 compliance costs to have a material adverse impact on the Company. Although the Company believes that internal Year 2000 compliance will be achieved by December 31, 1999, there can be no assurance that the Year 2000 problem affecting the Company, its customers and suppliers will not have a material adverse effect on the Company's business, financial condition and results of operations. In light of the many adverse conditions that could happen to the Company associated with Year 2000 compliance, along with the speculation that some or many of them may not happen, it is difficult to hypothesize a most reasonably likely worst case Year 2000 scenario with any degree of certainty. With that in mind, the Company currently believes the most reasonably likely worst case scenario would be the failure of certain key production capabilities or similar failures occurring within the Company's supply chain. These types of catastrophic failures, although unlikely, would result in the inability of the Company to supply products to customers for a period of time. 14 CONTINGENCY PLAN. Realizing that some disruption may occur despite its efforts, the Company is in the process of developing contingency plans for each critical system in the event that one or more of those systems fail. Although not yet complete, the Company is considering the following items, among others, as key pieces of the contingency plans: the creation of special "rapid response" technology teams; scheduling availability of key personnel, additional testing and simulation activities, establishment of rapid decision processes, development of support critical customer functions in the event information systems or mechanized processes experience Year 2000 disruptions, determination of alternative suppliers and implementation of data retention and recovery procedures for customers and critical business data with on-site (primary) as well as off-site (secondary) data copies. While this is an ongoing process, the Company expects to have the contingency plan substantially completed by August 31, 1999. SUBSEQUENT EVENTS On April 1, 1999, the Company acquired Kaiser's 50% interest in AKW, pursuant to the terms of a Purchase Agreement by and among the Company, Kaiser and Accuride Ventures, Inc., a wholly owned subsidiary of Accuride. In connection with the Acquisition, AKW and Kaiser amended and restated an existing lease agreement pursuant to which AKW leases certain property from Kaiser. AKW was formed in 1997 as a 50-50 joint venture between Kaiser and Accuride to design, manufacture, and sell heavy-duty aluminum wheels. The Acquisition gives the Company, through its wholly owned subsidiary, 100% control of AKW. Total consideration paid to Kaiser for the 50% interest was approximately $70 million, which was determined through arms-length negotiations between the parties. The Company temporarily financed the Acquisition through the Company's Revolver. On April 16, 1999, the Company amended and restated the Credit Facility to account for an additional $100 million term loan provided by a syndication of banks and other financial institutions. The purpose of the additional term loan was to refinance approximately $70 million of debt under the Revolver used to fund the recent acquisition of 50% of AKW L.P. and to pay down an additional portion of the Revolver. FACTORS AFFECTING FUTURE RESULTS The factors discussed below, among others, could cause actual results to differ materially from those contained in forward-looking statements made in this report, including, without limitation, in "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's related press release and in oral statements made by authorized officers of the Company. When used in this report, any press release or oral statements, the words "estimate," "project," "anticipate," "expect," "intend," "believe" and similar expressions are intended to identify forward-looking statements. All of these forward-looking statements are based on estimates and assumptions made by management of the Company, which, although believed to be reasonable, are inherently uncertain. Therefore, undue reliance should not be placed upon such estimates and statements. No assurance can be given that any of such statements or estimates will be realized and actual results will differ from those contemplated by such forward-looking statements. Accordingly, the Company hereby identifies the following important factors which could cause the Company's financial results to differ materially from any such results which might be projected, forecast, estimated or budgeted by the Company in forward-looking statements: - - significant indebtedness of the Company may have important consequences, including, but not limited to, impairment of the Company's ability to obtain additional financing, reduction of funds available for operations and business opportunities or limitation on the Company's ability to dispose of assets; - - the Company's ability to service its indebtedness is dependent upon operating cash flow of its subsidiaries and joint ventures; - - loss of a major customer could have material adverse effect on the Company's business; 15 - - original equipment manufacturers' demands for price reduction may adversely affect profitability; - - cyclical nature of industry could cause fluctuations in demand for Company's products; - - labor strike may disrupt the Company's supply to its customer base; - - interruption in supply of steel or aluminum could reduce Company's ability to obtain favorable sourcing of such raw materials; - - Company's competitors could reduce market for the Company's product; - - potential liability of the Company for environmental matters and the costs of compliance with certain governmental regulations could have a material adverse effect on the Company's financial condition and may adversely affect the Company's ability to sell or rent such property or to borrow using such property as collateral; - - Company may have difficulty in achieving growth strategies and there is no assurance that such strategies will be successful or will improve operating results; - - continued service of key management personnel is not guaranteed; - - interests of the principal stockholder of the Company may conflict with the interests of the holders of securities of the Company; and - - no assurance that the Company's computer software and operating systems, or those of its customers or suppliers, will be Year 2000 compliant. The foregoing review of the factors should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made by the Company prior to this filing. For further information, refer to the "Risk Factors" section included in the Company's Annual Report on Form 10-K for the Fiscal Year ended December 31, 1998 filed with the Securities and Exchange Commission. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company, in the normal course of doing business, is exposed to the risks associated with foreign currency exchange rates and changes in interest rates. The Company uses foreign exchange contracts to hedge both balance sheet and off-balance sheet foreign currency commitments. Specifically, these foreign exchange contracts offset foreign currency denominated purchase commitments from suppliers, accounts receivable from and future committed sales to customers, and operating expenses in Canada. Management believes the use of foreign currency financial instruments reduces the risks that arise from doing business in international markets. Contracts are generally one year or less. At March 31,1999, the Company had open foreign exchange forward contracts with a notional amount of $54.5 million. The Company's hedging activities provide only limited protection against currency exchange risks. Factors that could impact the effectiveness of the Company's hedging programs include accuracy of sales estimates, volatility of currency markets and the cost and availability of hedging instruments. The counterparties to the forward contracts are financial institutions with investment grade credit ratings. The Company monitors its foreign currency cash flow transactions and executes forward contracts to reduce its foreign exchange exposures. The use of forward contracts protects the Company's cash flows against unfavorable movements in exchange rates, to the extent of the amount under contract. A 10% adverse change in currency exchange rates for the Company's foreign currency derivatives held at March 31,1999, would have an impact of approximately $5.4 million on the fair value of such instruments. This quantification of exposure to the market risk associated with foreign exchange financial instruments does not take into account the offsetting impact of changes in the fair value of the Company's foreign denominated assets, liabilities and firm commitments. Accuride uses long-term debt as a primary source of capital in its business. The following table presents the principal cash repayments and related weighted average interest rates by maturity date for Accuride long-term fixed-rate debt and its other types of long-term debt at March 31, 1999: 16
Long-Term Debt: (Dollars in thousands) 1999 2000 2001 2002 2003 Thereafter Total Fair Value ---- ---- ---- ---- ---- ---------- ----- ---------- Fixed $200,000 $200,000 $200,000 Avg. Rate 9.25% 9.25% Variable $0 $1,350 $10,725 $13,850 $4,475 $196,250 $226,650 $226,650 Avg. Rate 6.91% 8.08% 8.12% 7.85% 7.19% 7.30%
The Company has used an interest rate swap to alter interest rate exposures between fixed and floating rates on a portion of the Company's long-term debt. As of March 31, 1999, $100.0 million notional amount of interest rate swap was outstanding. On average during the three month period ended March 31, 1999, the Company paid 5.75% as a fixed rate and received 4.9933% on the interest rate swap. Under the terms of the interest rate swap, the Company agrees with the counterparty to exchange, at specified intervals, the difference between the fixed rate and floating rate interest amounts calculated by reference to the agreed notional principal amount. The interest rate swap matures in January, 2001. The Company also used an interest rate cap to set a ceiling on the maximum floating interest rate the Company would incur on a portion of the Company's long term debt. As of March 31, 1999, $35.0 million notional amount of interest rate cap was outstanding. Under the terms of the interest rate cap, the Company is entitled to receive from the counterparty on a quarterly basis the amount, if any, by which the three-month Eurodollar interest rate exceeds 7.5%. The interest rate cap matures in January, 2001. The Company is exposed to credit related losses in the event of nonperformance by the counterparties to the interest rate swap and interest rate cap, although no such losses are expected as the counterparties are financial institutions having an investment grade credit rating. PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company does not believe that there are any pending or threatened legal proceedings other than non-material legal proceedings incidental to the Company's business, that if adversely determined, could have a material adverse effect on the Company. Item 2. Changes in Securities Not applicable Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submissions of Matters to a Vote of Security Holders Not applicable. 17 Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K
Exhibit No Description ---------- ----------- a) *10.1 Purchase Agreement dated April 1, 1999, between the Company, Accuride Ventures, Inc. (the Company's wholly owned subsidiary) and Kaiser Aluminum and Chemical Corporation ("Kaiser"). *10.2 Amended and Restated Lease Agreement, dated April 1, 1999, between Kaiser and AKW, L.P. 10.3 Amended and Restated Credit Agreement, dated April 16, 1999, between the Company, Citicorp USA, Inc., as administrative agent, Salomon Smith Barney, Inc. as arranger, Bankers Trust Company as syndication agent and Wells Fargo Bank N.A. as the documentation agent. 10.4 Amended and Restated Pledge Agreement dated April 16, 1999 between the Company, Accuride Canada, Inc., and Accuride Ventures, Inc. as pledgors and Citicorp USA, Inc. as administrative agent. 27.1 Financial Data Schedule * Previously filed as an exhibit to the Company's Form 8-K filed on April 14, 1999 and incorporated herein by reference. (b) Form 8-K No Form 8-K reports were filed during the quarter ended March 31, 1999
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 thereunto duly authorized. ACCURIDE CORPORATION /s/ WILLIAM P. GREUBEL Dated: May 14, 1999 - ----------------------------- William P. Greubel President and Chief Executive Officer /s/ JOHN R. MURPHY Dated: May 14, 1999 - ----------------------------- John R. Murphy Vice President - Finance and Chief Financial Officer Principal Accounting Officer 18 EX-10.3 2 EXHIBIT 10.3 Exhibit 10.3 AMENDED AND RESTATED CREDIT AGREEMENT AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 16, 1999 among ACCURIDE CORPORATION, a Delaware corporation (the "U.S. BORROWER"), and ACCURIDE CANADA INC., a corporation organized and existing under the law of the Province of Ontario (the "CANADIAN BORROWER", and, together with the U.S. Borrower, the "Borrowers"), the banks, financial institutions and other institutional lenders listed on the signature pages hereof as the Initial Lenders (the "INITIAL LENDERS"), CITIBANK, N.A., a national banking association ("Citibank"), as the initial issuing bank (the "INITIAL ISSUING BANK"), CITICORP USA, INC., a Delaware corporation ("CITICORP"), as the swing line bank (the "SWING LINE BANK") and as administrative agent (together with any successor appointed pursuant to Article VIII, the "ADMINISTRATIVE AGENT") for the Lender Parties (as hereinafter defined), SALOMON SMITH BARNEY INC., as arranger (the "ARRANGER") for the Term C Facility (as hereinafter defined), BANKERS TRUST COMPANY ("BANKERS TRUST "), as syndication agent ("SYNDICATION AGENT") for the Lender Parties and WELLS FARGO BANK N.A. ("WELLS FARGO"), as documentation agent ("DOCUMENTATION AGENT") for the Lender Parties. PRELIMINARY STATEMENTS: (1) The Borrowers entered into a Credit Agreement dated as of January 21, 1998 (the "ORIGINAL CREDIT AGREEMENT") with the banks, financial institutions and other institutional lenders party thereto as Lenders (as defined therein), Citibank as Initial Issuing Bank, Citicorp as Swing Line Bank and as Administrative Agent, Citicorp Securities, Inc. as arranger for the Facilities (as defined therein), Bankers Trust Company as Syndication Agent and Wells Fargo Bank N.A. as Documentation Agent (such Lenders, Initial Issuing Bank and Swing Line Bank being the "ORIGINAL LENDER PARTIES"). (2) Pursuant to the Purchase Agreement dated as of April 1, 1999 (as amended, supplemented or otherwise modified in accordance with its terms, to the extent permitted in accordance with the Loan Documents (as hereinafter defined) the "AKW ACQUISITION AGREEMENT") among Accuride Ventures, Inc. a Delaware corporation ("ACCURIDE VENTURES"), the U.S. Borrower and Kaiser Aluminum & Chemical Corporation, a Delaware corporation ("KAC"), the U.S. Borrower has acquired (i) KAC's 50% membership interest in AKW General Partner L.L.C., a Delaware limited liability company ("AKW LLC"), and (ii) KAC's 49% limited partnership interest in AKW L.P., a Delaware limited partnership ("AKW LP"), for aggregate cash consideration of approximately $70,400,000 (such acquisitions being, collectively, the "AKW ACQUISITION"). Following the AKW Acquisition, (i) the U.S. Borrower owns a 50% membership interest in AKW LLC and a 49% limited partnership interest in AKW LP, and (ii) Accuride Ventures, Inc., a Delaware corporation ("ACCURIDE VENTURES") owns a 50% membership interest in AKW LLC and a 49% limited partnership interest in AKW LP. (3) The Borrowers have requested that the Original Lender Parties amend and restate the Original Credit Agreement so that the Term C Lenders (as defined herein) will lend hereunder $100,000,000 to the U.S. Borrower to enable the U.S. Borrower to (i) refinance debt incurred by the U.S. Borrower for the purposes of consummating the AKW Acquisition and paying transaction fees and expenses in connection therewith and (ii) prepay in part the Revolving Credit Advances outstanding under the Original Credit Agreement. (4) The Original Lender Parties have indicated their willingness to agree to so amend and restate the Original Credit Agreement on the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree that the Original Credit Agreement is amended and restated in its entirety to read as follows: ARTICLE I ARTICLE I DEFINITIONS AND ACCOUNTING TERMS DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. CERTAIN DEFINED TERMS.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "ACCURIDE VENTURES" has the meaning specified in the Preliminary Statements. "ACQUISITION" means the acquisition by Hubcap of approximately 90% of the U.S. Borrower from Phelps Dodge pursuant to the Stock Purchase Agreement. "ADMINISTRATIVE AGENT" has the meaning specified in the recital of parties to this Agreement. "ADMINISTRATIVE AGENT'S ACCOUNT" means the account of the Administrative Agent maintained by the Administrative Agent with Citibank at its office at 399 Park Avenue, New York, New York 10043, Account No. 3685-2248, Reference: Accuride. "ADVANCE" means a Term A Advance, a Term B Advance, a Term C Advance, a Revolving Credit Advance, a Swing Line Advance or a Letter of Credit Advance. "AFFILIATE" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person (or, in the case of any Lender which is an investment fund, (i) the investment advisor thereof, and (ii) any other investment fund having the same investment advisor), or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling," "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 10% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise. 2 "AKW ACQUISITION" has the meaning specified in the Preliminary Statements. "AKW ACQUISITION AGREEMENT" has the meaning specified in the Preliminary Statements. "AKW INFORMATION MEMORANDUM" means the information memorandum dated March 31, 1999, used by the Arranger in connection with the syndication of the Term C Commitments. "AKW LLC" has the meaning specified in the Preliminary Statements "AKW LLC AGREEMENT" means the Limited Liability Company Agreement of AKW LLC dated as of May 1, 1997, as modified pursuant to the AKW Acquisition Agreement, between Accuride Ventures and the U.S. Borrower which governs the formation and operation of AKW LLC, as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. "AKW LP" has the meaning specified in the Preliminary Statements. "AKW LP AGREEMENT" means the Limited Partnership Agreement of AKW LP dated as of May 1, 1997, as modified pursuant to the AKW Acquisition Agreement, among AKW LLC, Accuride Ventures and the U.S. Borrower as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. "APPLICABLE LENDING OFFICE" means, with respect to (a) each Term A Lender, such Lender Party's Canadian Lending Office in the case of a Base Rate Advance and such Lender Party's Eurodollar Lending Office in the case of a Eurodollar Rate Advance and (b) for each other Lender Party, such Lender Party's Domestic Lending Office in the case of a Base Rate Advance and such Lender Party's Eurodollar Lending Office in the case of a Eurodollar Rate Advance. "APPLICABLE MARGIN" means, for Advances outstanding under each of the Term A Facility, the Term B Facility, the Term C Facility and the Revolving Credit Facility, a percentage per annum determined by reference to the Performance Level as set forth for each such Facility below: (a) for Advances outstanding under the Term A Facility:
PERFORMANCE LEVEL BASE RATE ADVANCES EURODOLLAR RATE ADVANCES ----------------- ------------------ ------------------------ I 0.250% 1.250% ---------------------------------------------------------------------------------------------- II 0.250% 1.250% ----------------------------------------------------------------------------------------------
3 III 0.500% 1.500% ---------------------------------------------------------------------------------------------- IV 0.750% 1.750% ---------------------------------------------------------------------------------------------- V 1.125% 2.125% ---------------------------------------------------------------------------------------------- VI 1.375% 2.375% ----------------------------------------------------------------------------------------------
(b) for Advances outstanding under the Term B Facility:
---------------------------------------------------------------------------------------------- PERFORMANCE LEVEL BASE RATE ADVANCES EURODOLLAR RATE ADVANCES ---------------------------------------------------------------------------------------------- I 0.500% 1.500% ---------------------------------------------------------------------------------------------- II 0.500% 1.500% ---------------------------------------------------------------------------------------------- III 0.750% 1.750% ---------------------------------------------------------------------------------------------- IV 1.000% 2.000% ---------------------------------------------------------------------------------------------- V 1.250% 2.250% ---------------------------------------------------------------------------------------------- VI 1.500% 2.500% ----------------------------------------------------------------------------------------------
(c) for Advances outstanding under the Term C Facility:
---------------------------------------------------------------------------------------------- PERFORMANCE LEVEL BASE RATE ADVANCES EURODOLLAR RATE ADVANCES ---------------------------------------------------------------------------------------------- A 1.250% 2.250% ---------------------------------------------------------------------------------------------- B 1.500% 2.500% ---------------------------------------------------------------------------------------------- C 1.750% 2.750% ----------------------------------------------------------------------------------------------
(d) for Advances outstanding under the Revolving Credit Facility:
---------------------------------------------------------------------------------------------- PERFORMANCE LEVEL BASE RATE ADVANCES EURODOLLAR RATE ADVANCES ---------------------------------------------------------------------------------------------- I 0.000% 0.875% ---------------------------------------------------------------------------------------------- II 0.125% 1.125% ----------------------------------------------------------------------------------------------
4 III 0.375% 1.375% ---------------------------------------------------------------------------------------------- IV 0.625% 1.625% ---------------------------------------------------------------------------------------------- V 1.000% 2.000% ---------------------------------------------------------------------------------------------- VI 1.250% 2.250% ----------------------------------------------------------------------------------------------
For outstanding Advances under each of the Facilities, the Applicable Margin for each Base Rate Advance and each Eurodollar Rate Advance shall, (i) in the case of Advances other than Term C Advances, for the first six months following the Closing Date, be determined by reference to Performance Level V, (ii) in the case of Term C Advances, for the first six months following the date of the Term C Advances hereunder, be determined by reference to Performance Level B, and (iii) in each case thereafter, the Applicable Margin for each Base Rate Advance shall be determined by reference to the Performance Level in effect from time to time and the Applicable Margin for each Eurodollar Rate Advance shall be determined by reference to the Performance Level in effect on the first day of each Interest Period for such Advance. Changes in the Applicable Margin resulting from changes in the Performance Level shall become effective (for purposes of this definition only, the date of such effectiveness being the "EFFECTIVE DATE") as of the first day following the last day of the most recent Fiscal Quarter or Fiscal Year for which (A) financial statements are delivered to the Administrative Agent pursuant to Section 5.03(b) or (c) and (B) a certificate of the chief financial officer of the U.S. Borrower is delivered by the U.S. Borrower to the Administrative Agent setting forth, with respect to such financial statements, the then-applicable Performance Level and the basis of the calculations therefor, and shall remain in effect until the next change to be effected pursuant to this definition; PROVIDED that, (i) if either Borrower shall have made any payments in respect of interest during the period (for purposes of this definition only, the "INTERIM PERIOD") from and including the Effective Date to the day on which any change in Performance Level is determined as provided above, then the amount of the next such payment of interest due by such Borrower on or after such day shall be increased or decreased by an amount equal to any underpayment or overpayment so made by such Borrower during such Interim Period and (ii) each determination of the Performance Level pursuant to this definition shall be made with respect to the Measurement Period ending at the end of the fiscal period covered by the relevant financial statements. "APPLICABLE PERCENTAGE" means (a) for the six month period immediately following the Closing Date, a rate per annum equal to 0.425% and (b) thereafter, a rate per annum determined by reference to the applicable Performance Level as set forth below:
- -------------------------------------------------------------------------------- PERFORMANCE LEVEL COMMITMENT FEE - -------------------------------------------------------------------------------- I 0.250% - -------------------------------------------------------------------------------- II 0.300% - --------------------------------------------------------------------------------
5 III 0.350% - -------------------------------------------------------------------------------- IV 0.375% - -------------------------------------------------------------------------------- V 0.375% - -------------------------------------------------------------------------------- VI 0.425% - --------------------------------------------------------------------------------
The Applicable Percentage determined pursuant to clause (b) above shall be determined by reference to the Performance Level in effect from time to time. Changes in the Applicable Percentage resulting from changes in the Performance Level shall become effective (for purposes of this definition only, the date of such effectiveness being the "EFFECTIVE DATE") as of the first day following the last day of the most recent Fiscal Quarter or Fiscal Year for which (A) financial statements are delivered to the Administrative Agent pursuant to Section 5.03(b) or (c) and (B) a certificate of the chief financial officer of the U.S. Borrower is delivered by the U.S. Borrower to the Administrative Agent setting forth, with respect to such financial statements, the then-applicable Performance Level and the basis of the calculations therefor, and shall remain in effect until the next change to be effected pursuant to this definition; PROVIDED that, (i) if the U.S. Borrower shall have made any payments in respect of commitment fees during the period (for purposes of this definition only, the "INTERIM PERIOD") from the Effective Date to the day on which any change in Performance Level is determined as provided above, then the amount of the next such payment in respect of commitment fees due by such Borrower on or after such day shall be increased or decreased by an amount equal to any underpayment or overpayment so made by such Borrower during such Interim Period and (ii) each determination of the Performance Level pursuant to this definition shall be made with respect to the Measurement Period ending at the end of the fiscal period covered by the relevant financial statements. "APPLICABLE RATE" has the meaning specified in Section 2.11(d). "APPROPRIATE BORROWER" means, (a) with respect to the Term A Facility, the Canadian Borrower and (b) with respect to the Term B Facility, the Term C Facility, the Revolving Credit Facility, the Swing Line Facility or the Letter of Credit Facility, the U.S. Borrower. "APPROPRIATE LENDER" means, at any time, with respect to (a) any of Term A Facility, the Term B Facility, the Term C Facility or the Revolving Credit Facility, a Lender that has a Commitment with respect to such Facility at such time, (b) the Letter of Credit Facility, (i) the Issuing Bank and (ii) the other Revolving Credit Lenders and (c) the Swing Line Facility, (i) the Swing Line Bank and (ii) if the other Revolving Credit Lenders have made Swing Line Advances pursuant to Section 2.02(b) that are outstanding at such time, each such other Revolving Credit Lender. "ARRANGER" has the meaning specified in the recital of parties to this Agreement. 6 "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into by a Lender Party and an Eligible Assignee, and accepted by the Administrative Agent and the Appropriate Borrower, in accordance with Section 9.07 and in substantially the form of Exhibit C hereto. "AVAILABLE AMOUNT" means, as of any date of determination, an amount equal to (a) the sum of (i) the amount of any capital contributions (other than the capital contributions referred to in Section 3.01(b)) made in cash to the U.S. Borrower during the period from the Business Day immediately following the Closing Date to such date, (ii) the aggregate amount of Net Cash Proceeds which are required to be used to prepay Advances pursuant to Section 2.06(b)(ii) but are not so used, and are retained by the U.S. Borrower, pursuant to Section 2.06(c) on or prior to such date, (iii) an amount equal to (x) the cumulative amount of Excess Cash Flow for all Fiscal Years completed prior to such date MINUS (y) the portion of such Excess Cash Flow that has been on or prior to such date (or will be) applied to the prepayment of Advances in accordance with Section 2.06(b)(i), (iv) the aggregate amount of all cash dividends and other cash distributions received by the U.S. Borrower or any Subsidiary Guarantor on or prior to such date from any Persons which are not Restricted Subsidiaries (other than the portion of any such dividends and other distributions that is used by the U.S. Borrower or any Subsidiary Guarantor to pay taxes), (v) the aggregate amount of all cash repayments of principal received by the U.S. Borrower or any Subsidiary Guarantor on or prior to such date from any Persons which are not Restricted Subsidiaries in respect of loans made by the U.S. Borrower or such Subsidiary Guarantor to such Persons and (vi) the aggregate amount of all net cash proceeds received by the U.S. Borrower or any Subsidiary Guarantor on or prior to such date in connection with the sale, transfer or other disposition of its ownership interest in any Person which is not a Restricted Subsidiary LESS (b) any amounts in subclauses (i) through (vi) of clause (a) above used (i) for Investments pursuant to Section 5.02(e)(ix) or (xii), (ii) for prepayments of Debt pursuant to 5.02(g) or (iii) for Capital Expenditures pursuant to Section 5.02(j)(i). "AVAILABLE LC AMOUNT" of any Letter of Credit means, at any time, the maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance at such time with all conditions to drawing). "BANK HEDGE AGREEMENT" means any interest rate Hedge Agreement permitted under Article V that is entered into by and between the U.S. Borrower and any Hedge Bank. "BANKERS TRUST" has the meaning specified in the recital of parties to this Agreement. "BASE RATE" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of: (a) (i) with respect to Term B Advances, the Term C Advances and Revolving Credit Advances, the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate and (ii) with respect to Term A Advances, the variable rate of interest per annum specified from time to 7 time by Citibank as the reference rate of interest established or quoted from time to time by Citibank Canada and then in effect for determining interest rates on United States dollar denominated commercial loans made by Citibank Canada in Canada; (b) the sum (adjusted to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%) of (i) 1/2 of 1% per annum, PLus (ii) the rate obtained by dividing (A) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average (adjusted to the basis of a year of 360 days) being determined weekly on each Monday (or, if such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by Citibank on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by Citibank from three New York certificate of deposit dealers of recognized standing selected by Citibank, by (B) a percentage equal to 100% minus the average of the daily percentages specified during such three-week period by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, but not limited to, any emergency, supplemental or other marginal reserve requirement) for Citibank with respect to liabilities consisting of or including (among other liabilities) three-month U.S. dollar non-personal time deposits in the United States, plus (iii) the average during such three-week period of the annual assessment rates estimated by Citibank for determining the then current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation (or any successor) for insuring U.S. dollar deposits of Citibank in the United States; and (c) 1/2 of one percent per annum above the Federal Funds Rate. "BASE RATE ADVANCE" means an Advance that bears interest as provided in Section 2.07(a)(i). "BORROWERS" has the meaning specified in the recital of parties to this Agreement. "BORROWER'S ACCOUNT" means (i) with respect to the Canadian Borrower, the account of the Canadian Borrower maintained by the Canadian Borrower with Citibank Canada at its office at 123 Front Street West, 10th Floor, Toronto, Ontario, Canada, M5J2M3, Account No. 2/012752/019, Re: Accuride Canada Inc. and (ii) with respect to the U.S. Borrower, the account of the U.S. Borrower maintained by the U.S. Borrower with Citibank at its office at 399 Park Avenue, New York, New York 10043, Account No. 4075-2127, Re: Accuride Corporation. "BORROWING" means a Term A Borrowing, a Term B Borrowing, a Term C Borrowing, a Revolving Credit Borrowing or a Swing Line Borrowing. 8 "BUSINESS DAY" means a day of the year on which banks are not required or authorized by law to close in New York City and with respect to notices and determinations in connection with, and payments of principal and interest on, the Term A Advances, on which banks are not required or authorized to close in Toronto, Ontario, Canada, and if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. "CANADIAN BORROWER" has the meaning specified in the recital of parties to this Agreement. "CANADIAN LENDING OFFICE" means, with respect to any Term A Lender, the office of a Subsidiary or Affiliate of such Lender Party specified as its "Canadian Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party, as the case may be, or such other office of such Lender Party as such Lender Party may from time to time specify to the Canadian Borrower and the Administrative Agent. "CAPITAL EXPENDITURES" means, for any Person for any period, the sum, without duplication, of all expenditures made, directly or indirectly (whether paid in cash or accrued as liabilities and including in all events all amounts expended or capitalized under Capitalized Leases, but excluding any amount representing capitalized interest), by such Person or any of its Restricted Subsidiaries during such period for equipment, fixed assets, real property or improvements, or for replacements or substitutions therefor or additions thereto, that have been or should be, in accordance with GAAP, reflected as additions to property, plant or equipment on a Consolidated balance sheet of such Person, PROVIDED that Capital Expenditures shall not include (without duplication) (a) any expenditures made in connection with the replacement, substitution, repair or restoration of any assets to the extent financed (i) with insurance proceeds received by the U.S. Borrower or any of its Restricted Subsidiaries on account of the loss of, or any damage to, the assets being replaced, substituted for, repaired or restored or (ii) with the proceeds of any compensation awarded to the U.S. Borrower or any of its Restricted Subsidiaries as a result of the taking, by eminent domain or condemnation, of the assets being replaced or substituted for, (b) any expenditures for the purchase price of any equipment that is purchased simultaneously with the trade-in of any existing equipment by the U.S. Borrower or any of its Restricted Subsidiaries to the extent that the gross amount of such purchase price is reduced by any credit granted by the seller of such equipment for the equipment being traded in, (c) any expenditures for the purchase price of any property, plant or equipment purchased within one year of the consummation of any sale, lease, transfer or other disposition of any asset of the U.S. Borrower or any of its Restricted Subsidiaries in accordance with the provisions of Section 5.02(d) to the extent purchased with Net Cash Proceeds of such sale, lease, transfer or other disposition, (d) Investments made pursuant to Section 5.02(e)(vii), or (e) any acquisition by the U.S. Borrower or any of its Restricted Subsidiaries (by purchase or otherwise) of all or substantially all of the business, property or fixed assets of, or the stock or other evidence of beneficial ownership of, any Restricted Subsidiary or any division, business unit or line of business of any Restricted Subsidiary in accordance with Section 5.02(e). "CAPITALIZED LEASES" means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases. 9 "CASH COLLATERAL ACCOUNT" has the meaning specified in the Pledge Agreement. "CASH EQUIVALENTS" means (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States government or (b) issued by any agency of the United States of America the obligations of which are backed by the full faith and credit of the United States, in each case maturing within 24 months after the date of acquisition thereof; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within 24 months after the date of acquisition thereof and having, at the time of the acquisition thereof, an investment grade rating generally obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc. ("MOODY'S"); (iii) commercial paper maturing no more than 12 months from the date of creation thereof and having, at the time of the acquisition thereof, a rating of a least A-2 from S&P or at least P-2 from Moody's; (iv) domestic and eurodollar certificates of deposit or bankers' acceptances maturing within 24 months after the date of acquisition thereof and issued or accepted by any Lender or by any other commercial bank that has combined capital and surplus of not less than $250,000,000; (v) repurchase agreements with a term of not more than 30 days for underlying securities of the types described in clauses (i), (ii) and (iv) above entered into with any commercial bank meeting the requirements specified in clause (iv) above or with any securities dealer of recognized national standing, (vi) shares of investment companies that are registered under the Investment Company Act of 1940 and that invest solely in one or more of the types of investments referred to in clauses (i) through (v) above, and (vii) in the case of any Restricted Subsidiary which is not a U.S. Person, high quality, short-term liquid Investments made by such Restricted Subsidiary in the ordinary course of managing its surplus cash position in a manner consistent with past practices. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency. "CHANGE OF CONTROL" means, and shall be deemed to have occurred, if: (i) (a) the Investor Group shall at any time not own, in the aggregate, directly or indirectly, beneficially and of record, at least 35% of the outstanding Voting Stock of U.S. Borrower (other than as the result of one or more widely distributed offerings of common stock of the U.S. Borrower, in each case whether by the U.S. Borrower or by the Investor Group) and/or (b) any person, entity or "group" (within the meaning of Section 13(d) or 14 (d) of the Exchange Act) shall at any time have acquired direct or indirect beneficial ownership of a percentage of the outstanding Voting Stock of U.S. Borrower that exceeds the percentage of such Voting Stock then beneficially owned, in the aggregate, by the Investor Group, UNLESS, in the case of either clause (a) or (b) above, the Investor Group shall, at the relevant time, have the collective right or ability, either by contract or pursuant to a written proxy or other written evidence of voting power, to elect or designate for election a majority of the Board of Directors of the U.S. Borrower; and/or (ii) at any time Continuing Directors shall not constitute a majority of the 10 Board of Directors of the U.S. Borrower. For purposes of this definition, "Continuing Director" means, as of any date of determination, an individual (A) who is a member of the Board of Directors of the U.S. Borrower on the Closing Date, (B) who, as of such date of determination, has been a member of such Board of Directors for at least the 12 preceding months (or, if such date of determination occurs during the period comprising the first 12 months after the Closing Date, since the Closing Date), or (C) who has been nominated to be a member of such Board of Directors, directly or indirectly, by KKR or its Affiliates, or Persons nominated by KKR or its Affiliates, or who has been nominated to be a member of such Board of Directors by a majority of the other Continuing Directors then in office. "CITIBANK" has the meaning specified in the recital of parties to this Agreement. "CITICORP" has the meaning specified in the recital of parties to this Agreement. "CLOSING DATE" means January 21, 1998, the date on which the Initial Extension of Credit occurred under the Original Credit Agreement. "COLLATERAL" means all "Collateral" referred to in the Collateral Documents and all other property that is or is intended to be subject to any Lien in favor of the Administrative Agent for the benefit of the Secured Parties. "COLLATERAL DOCUMENTS" means the Pledge Agreement and any other agreement that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Secured Parties. "COMMITMENT" means a Term A Commitment, a Term B Commitment, a Term C Commitment, a Revolving Credit Commitment or a Letter of Credit Commitment. "CONFIDENTIAL INFORMATION" has the meaning specified in Section 9.11. "CONSENT" means the Consent attached hereto, executed by the Subsidiary Guarantors. "CONSOLIDATED" refers to the consolidation of accounts in accordance with GAAP. "CONVERSION", "CONVERT" and "CONVERTED" each refer to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.09 or 2.10. "CSI" means Citicorp Securities, Inc., a Delaware corporation. "CUMULATIVE AVAILABLE CONSOLIDATED NET INCOME" means, as of any date of determination, Consolidated Net Income of the U.S. Borrower and its Restricted Subsidiaries less cash dividends paid with respect to preferred stock for the period (taken as one accounting period) commencing on the Closing Date and ending on the last day of the most recent Fiscal Quarter for which financial statements have been delivered to the Lender Parties pursuant to Section 5.03(b) or (c). 11 "CURRENT ASSETS" of any Person means all assets of such Person that would, in accordance with GAAP, be classified as current assets of a company conducting a business the same as or similar to that of such Person, after deducting adequate reserves in each case in which a reserve is proper in accordance with GAAP, but excluding the current portion of any deferred income taxes. "CURRENT LIABILITIES" of any Person means (a) all Debt of such Person that by its terms is payable on demand or matures within one year after the date of determination (excluding any Debt renewable or extendible, at the option of such Person, to a date more than one year from such date or arising under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date) and (b) all other items (including taxes accrued as estimated) that in accordance with GAAP would be classified as current liabilities of such Person, but excluding the current portion of any deferred income taxes. "DEBT" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all Obligations of such Person for the deferred purchase price of property or services (other than trade payables and accrued expenses incurred in the ordinary course of such Person's business) that in accordance with GAAP would be shown on the liability side of the balance sheet of such Person, (c) all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), it being understood that if such Person has not assumed or otherwise become liable for such Obligations, the amount of the Debt of such Person in connection therewith shall be limited to the lesser of the face amount of the related Obligations or the fair market value of all property of such Person securing such Obligations, (e) all Obligations of such Person as lessee under Capitalized Leases, (f) all Obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities issued for the account of such Person, (g) all Obligations of such Person in respect of Hedge Agreements, (h) all Debt of others referred to in clauses (a) through (g) above or clause (i) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss; PROVIDED that any such guaranteed Obligations shall not include endorsements of instruments for deposit or collection in the ordinary course of business, and (i) all Debt referred to in clauses (a) through (h) above of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt; PROVIDED that the amount of Debt of such Person under clauses (h) and 12 (i) above shall (subject to any obligation set forth therein) be deemed to be the principal amount of the Debt guaranteed or secured thereby and, with respect to any Lien on property of such Person as described in clause (i) above, if such Person has not assumed or otherwise become liable for any such Debt, the amount of the Debt of such Person in connection therewith shall be limited to the lesser of the face amount of such Debt or the fair market value of all property of such Person securing such Debt. "DECLINED AMOUNT" has the meaning specified in Section 2.06(c). "DECLINING LENDER" has the meaning specified in Section 2.06(c). "DEFAULT" means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "DEFAULTED ADVANCE" means, with respect to any Lender Party at any time, the portion of any Advance required to be made by such Lender Party to either Borrower pursuant to Section 2.01 or 2.02 at or prior to such time which has not been made by such Lender Party or by the Administrative Agent for the account of such Lender Party pursuant to Section 2.02(e) as of such time. In the event that a portion of a Defaulted Advance shall be deemed made pursuant to Section 2.15(a), the remaining portion of such Defaulted Advance shall be considered a Defaulted Advance originally required to be made pursuant to Section 2.01 on the same date as the Defaulted Advance so deemed made in part. "DEFAULTED AMOUNT" means, with respect to any Lender Party at any time, any amount required to be paid by such Lender Party to the Administrative Agent or any other Lender Party hereunder or under any other Loan Document at or prior to such time which has not been so paid as of such time, including, without limitation, any amount required to be paid by such Lender Party to (a) the Swing Line Bank pursuant to Section 2.02(b) to purchase a portion of a Swing Line Advance made by the Swing Line Bank, (b) the Issuing Bank pursuant to Section 2.03(c) to purchase a portion of a Letter of Credit Advance made by the Issuing Bank, (c) the Administrative Agent pursuant to Section 2.02(e) to reimburse the Administrative Agent for the amount of any Advance made by the Administrative Agent for the account of such Lender Party, (d) any other Lender Party pursuant to Section 2.13 to purchase any participation in Advances owing to such other Lender Party and (e) the Administrative Agent or the Issuing Bank pursuant to Section 8.05 to reimburse the Administrative Agent or the Issuing Bank for such Lender Party's ratable share of any amount required to be paid by the Lender Parties to the Administrative Agent or the Issuing Bank as provided therein. In the event that a portion of a Defaulted Amount shall be deemed paid pursuant to Section 2.15(b), the remaining portion of such Defaulted Amount shall be considered a Defaulted Amount originally required to be paid hereunder or under any other Loan Document on the same date as the Defaulted Amount so deemed paid in part. "DEFAULTING LENDER" means, at any time, any Lender Party that, at such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take any action or be the subject of any action or proceeding of a type described in Section 7.01(f). 13 "DOCUMENTATION AGENT" has the meaning specified in the recital of parties to this Agreement. "DOMESTIC LENDING OFFICE" means, with respect to any Lender Party, the office of such Lender Party specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party, as the case may be, or such other office of such Lender Party as such Lender Party may from time to time specify to the U.S. Borrower and the Administrative Agent. "DOMESTIC SUBSIDIARY" means any Subsidiary of the U.S. Borrower which is not a Foreign Subsidiary. "EBITDA" means, for any period, the sum, determined on a Consolidated basis, of the amounts for such period of (a) Net Income PLUS (b) to the extent included in computing Net Income, the sum (without duplication) of (i) Interest Expense, (ii) taxes computed on the basis of income, (iii) depreciation expense, (iv) amortization expense (including amortization of deferred financing fees), (v) any expenses or charges incurred in connection with any issuance of debt or equity securities (including upfront fees payable in respect of bank facilities), (vi) any fees and expenses related to Investments permitted pursuant to Section 5.02(e) of this Agreement, (vii) losses on asset sales, (viii) restructuring charges or reserves, (ix) any deduction for minority interest expense, (x) fees or expenses incurred or paid by the U.S. Borrower or any of its Restricted Subsidiaries in connection with the Acquisition, the financing therefor and the other transactions contemplated hereby and thereby, (xi) any other non-cash charges, (xii) any other non-recurring charges, (xiii) currency losses and (xiv) additional expenses in connection with labor disruptions or the potential therefor, MINUS (c) to the extent included in computing Net Income the sum, without duplication, of the amounts for such period of (i) any non-recurring gains, (ii) all non-cash gains, (iii) gains on asset sales, and (iv) currency gains, in each case of the U.S. Borrower and its Restricted Subsidiaries, determined in accordance with GAAP for such period, PROVIDED that, for purposes of such calculation, in the case of any Restricted Subsidiary acquired by the U.S. Borrower or any of its Restricted Subsidiaries following the commencement of any such period, amounts attributable to such Restricted Subsidiary shall be calculated as though such Restricted Subsidiary had been acquired on the first day of such period, and PROVIDED FURTHER that for purposes of Section 5.02(e)(xi) and 5.04 only, in the case of each Person who becomes a Restricted Subsidiary of the U.S. Borrower or any of its Restricted Subsidiaries following the commencement of such period, EBITDA shall be increased or decreased, as the case may be, by the Pro Forma EBITDA Adjustment. "ELIGIBLE ASSIGNEE" means (a) with respect to the Term B Facility, the Term C Facility or the Revolving Credit Facility, (i) a Lender; (ii) an Affiliate of a Lender; (iii) a commercial bank organized under the laws of the United States, or any State thereof, and having total assets of at least $3,000,000,000; (iv) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof, and having total assets of at least $3,000,000,000; (v) a commercial bank organized under the laws of any other country that is a member of the OECD or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess of $3,000,000,000, so long as such bank 14 is acting through a branch or agency located in the United States; (vi) the central bank of any country that is a member of the OECD; and (vii) a finance company, insurance company or other financial institution or fund (whether a corporation, partnership, trust or other entity) that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and having total assets in excess of $250,000,000; and (viii) any other Person approved by the Administrative Agent and the U.S. Borrower, such approval not to be unreasonably withheld or delayed, (b) with respect to the Term A Facility, (i) a bank listed on Schedule I or II to the Bank Act (Canada), and having a combined capital and surplus of at least $250,000,000, and, so long as no Event of Default has occurred and is continuing, approved by the Canadian Borrower, such approval not to be unreasonably withheld or delayed, (ii) an Affiliate of a Lender or (iii) any other Person approved by the Administrative Agent and the Canadian Borrower, such approval not to be unreasonably withheld or delayed, and (c) with respect to the Letter of Credit Facility, a Person that is an Eligible Assignee under subclause (ii), (iii) or (v) of clause (a) of this definition and is approved by the Administrative Agent and the U.S. Borrower, such approval not to be unreasonably withheld or delayed; PROVIDED, HOWEVER, that neither any Loan Party nor any Affiliate of a Loan Party shall qualify as an Eligible Assignee under this definition. "ENVIRONMENTAL ACTION" means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, any Environmental Permit or Hazardous Material or arising from alleged injury or threat to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief. "ENVIRONMENTAL LAW" means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials. "ENVIRONMENTAL PERMIT" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. Section references to ERISA are to ERISA as in effect at the date of this Agreement and any subsequent provisions of ERISA amendatory thereof, supplemental thereto or substituted therefor. "ERISA AFFILIATE" means each person (as defined in Section 3(9) of ERISA) that together with any Loan Party would be deemed to be a "single employer" within the meaning of Section 414(b) or (c) of the Internal Revenue Code or, solely for purposes of Section 302 of 15 ERISA and Section 412 of the Internal Revenue Code, is treated as a single employer under Section 414 of the Internal Revenue Code. "EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "EURODOLLAR LENDING OFFICE" means, with respect to any Lender Party, the office of such Lender Party specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender Party as such Lender Party may from time to time specify to the Appropriate Borrower and the Administrative Agent. "EURODOLLAR RATE" means, for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple of 1/16 of 1%) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank's Eurodollar Rate Advance comprising part of such Borrowing to be outstanding during such Interest Period (or, if any Reference Bank shall not have such a Eurodollar Rate Advance, $1,000,000) and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. The Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing shall be determined by the Administrative Agent on the basis of applicable rates furnished to and received by the Administrative Agent from the Reference Banks two Business Days before the first day of such Interest Period, SUBJECT, HOWEVER, to the provisions of Section 2.07. "EURODOLLAR RATE ADVANCE" means an Advance that bears interest as provided in Section 2.07(a)(ii). "EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period. "EVENTS OF DEFAULT" has the meaning specified in Section 7.01. 16 "EXCESS CASH FLOW" means, for any period, an amount equal to the sum, without duplication, of: (a) Consolidated Net Income of the U.S. Borrower and its Restricted Subsidiaries for such period (other than any portion of Consolidated Net Income attributable to earnings in respect of joint venture interests in excess of dividends or distributions actually received by the U.S. Borrower and its Restricted Subsidiaries), PLUS (b) the aggregate amount of all non-cash charges deducted in arriving at such Consolidated Net Income, PLUS (c) the amount of any net decrease in the excess of Consolidated Current Assets (excluding cash and Cash Equivalents) over Consolidated Current Liabilities of the U.S. Borrower and its Restricted Subsidiaries during such period, MINUS (d) the aggregate amount of all non-cash credits included in arriving at such Consolidated Net Income, PLUS (e) the aggregate net non-cash loss realized by the U.S. Borrower and its Restricted Subsidiaries in connection with the sale, lease, transfer or other disposition of assets (other than sales of inventory in the ordinary course of business) by the U.S. Borrower and its Restricted Subsidiaries during such period, MINUS (f) the aggregate amount of Capital Expenditures made by the U.S. Borrower and its Restricted Subsidiaries in cash (excluding the principal amount of any Debt incurred to finance such Capital Expenditures, whether incurred in such period or a subsequent period) pursuant to Section 5.02(j), MINUS (g) the amount of any net increase in the excess of Consolidated Current Assets (less cash and Cash Equivalents) over Consolidated Current Liabilities of the U.S. Borrower and its Restricted Subsidiaries during such period, MINUS (h) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash during such period that are required in connection with any prepayment of Debt and that are accounted for by the U.S. Borrower as extraordinary items, MINUS (i) the aggregate amount of all mandatory prepayments of Revolving Credit Advances, Letter of Credit Advances and Swing Line Advances made during such period (to the extent the Revolving Credit Facility is permanently reduced by the amount of such prepayments), MINUS (j) the aggregate amount of all scheduled principal payments of Debt of the U.S. Borrower or its Restricted Subsidiaries (including, without limitation, Term A Advances, Term B Advances, and Term C Advances, the principal component of 17 payments with respect to Obligations under Capitalized Leases and, so long as the Mexico Subsidiary is a Restricted Subsidiary, all principal payments on revolving or term loans of the Mexico Subsidiary (whether or not commitments are reduced thereby), but excluding Revolving Credit Advances, Letter of Credit Advances and Swing Line Advances), MINUS (k) the amount of Investments made during such period pursuant to Section 5.02(e) to the extent that such Investments were financed with internally generated cash flow of the U.S. Borrower and its Restricted Subsidiaries, MINUS (l) the aggregate amount of expenditures actually made by the U.S. Borrower and its Restricted Subsidiaries in cash during such period (including, without limitation, the payment of financing fees) to the extent that such expenditures are not expensed during such period, MINUS (m) payments by the Borrowers and their Restricted Subsidiaries during such period in respect of long-term liabilities of the Borrowers and their Restricted Subsidiaries other than Debt, MINUS (n) the amount paid during such period by the U.S. Borrower to repurchase shares of its capital stock (and/or options or warrants in respect thereof) held by its officers, directors and employees so long as such repurchase is pursuant to, and in accordance with the terms of management and/or employee stock plans, stock subscription agreements or shareholder agreements, MINUS (o) the aggregate net non-cash gain realized by the U.S. Borrower and its Restricted Subsidiaries in connection with the sale, lease, transfer or other disposition of assets (other than sales of inventory in the ordinary course of business) by the U.S. Borrower and its Restricted Subsidiaries during such period. "EXISTING DEBT" means Debt of the U.S. Borrower and its Restricted Subsidiaries outstanding immediately before giving effect to the AKW Acquisition. "FACILITY" means the Term A Facility, the Term B Facility, the Term C Facility, the Revolving Credit Facility, the Swing Line Facility or the Letter of Credit Facility. "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per annum equal for each day during such period 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 that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. 18 "FISCAL QUARTER" means any fiscal quarter of the U.S. Borrower and its Consolidated Subsidiaries that occurs within any Fiscal Year. "FISCAL YEAR" means a fiscal year of the U.S. Borrower and its Consolidated Subsidiaries ending on December 31 in any calendar year. "FIXED CHARGE COVERAGE RATIO" means, as of any date of determination, the ratio of Consolidated EBITDA of the U.S. Borrower and its Restricted Subsidiaries to the sum of (i) Consolidated Interest Expense, PLUS (ii) Capital Expenditures made pursuant to Section 5.02(j)(i) from cash on hand or Borrowings under the Revolving Credit Facility, PLUS (iii) principal amounts of all Funded Debt payable (unless paid in a prior period), in each case, by the U.S. Borrower and its Restricted Subsidiaries for the most recently completed Measurement Period prior to such date (other than mandatory prepayments pursuant to Section 2.06(b)(i), (ii) or (iv)). "FOREIGN GOVERNMENT SCHEME OR ARRANGEMENT" has the meaning specified in Section 4.01(l)(ii). "FOREIGN PLAN" has the meaning specified in Section 4.01(l)(ii). "FOREIGN SUBSIDIARY" means any Subsidiary of the U.S. Borrower which is a corporation organized under the laws of any jurisdiction other than the United States or any state thereof. "FUNDED DEBT" of any Person means Debt in respect of the Advances, in the case of the Borrowers, and all other Debt of such Person that by its terms matures more than one year after the date of determination or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year after such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year after such date, including, without limitation, all amounts of Funded Debt of such Person required to be paid or prepaid within one year after the date of determination. "GAAP" has the meaning specified in Section 1.03. "GUARANTY" has the meaning specified in Section 6.01. "GUARANTEED OBLIGATIONS" has the meaning specified in Section 6.01(a). "HAZARDOUS MATERIALS" means (a) petroleum or petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law. 19 "HEDGE AGREEMENTS" means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts, commodities future or option contracts for materials used in the ordinary course of business and other similar agreements. "HEDGE BANK" means any Lender Party or any of its Affiliates in its capacity as a party to a Bank Hedge Agreement. "HUBCAP" means Hubcap Acquisition, L.L.C., an affiliate of KKR. "INDEMNIFIED PARTY" has the meaning specified in Section 9.04(b). "INFORMATION MEMORANDUM" means the information memorandum dated December 12, 1997 used by CSI, as arranger of the Facilities other than the Term C Facility in connection with the syndication of the Commitments other than the Term C Commitments. "INITIAL EXTENSION OF CREDIT" means the initial Borrowings under the Original Credit Agreement. "INITIAL ISSUING BANK" has the meaning specified in the recital of parties to this Agreement. "INITIAL LENDERS" has the meaning specified in the recital of parties to this Agreement. "INTEREST COVERAGE RATIO" means, as of any date of determination, the ratio of Consolidated EBITDA of the U.S. Borrower and its Restricted Subsidiaries to Consolidated Interest Expense of the U.S. Borrower and its Restricted Subsidiaries for the most recently completed Measurement Period prior to such date. "INTEREST EXPENSE" means, for any Person for any period, cash interest expense (including that attributable to Capital Leases in accordance with GAAP), net of cash interest income, of such Person with respect to all outstanding Debt of such Person, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and net costs under Hedge Agreements (other than currency swap agreements, currency future or option contracts and other similar agreements), but excluding, however, amortization of deferred financing costs and any other amounts of non-cash interest, all as calculated in accordance with GAAP; PROVIDED, that for purposes of the four Fiscal Quarters immediately following the Closing Date, Interest Expense for each Measurement Period shall be calculated after giving pro forma effect to Debt incurred in connection with the Acquisition, as though such Debt had been incurred on the first day of such Measurement Period and PROVIDED FURTHER that (a) except as provided in clause (b) below, there shall be excluded from any determination of Consolidated Interest Expense of the U.S. Borrower and its Restricted Subsidiaries for any 20 period the cash interest expense (or income) of all Unrestricted Subsidiaries for such period to the extent otherwise included in such Consolidated Interest Expense and (b) there shall be included in any determination of Consolidated Interest Expense for the U.S. Borrower and its Restricted Subsidiaries for any period the cash interest expense (or income) of any Person which becomes a Restricted Subsidiary (through an acquisition in accordance with Section 5.02(e) or designation or otherwise) for such entire period, assuming that any Debt incurred or prepaid in connection with any such acquisition or designation had been incurred or prepaid on the first day of such period. "INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising part of the same Borrowing to either Borrower, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance, and ending on the last day of the period selected by such Borrower pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by such Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months, or, if available to all of the Appropriate Lenders, nine or twelve months, as such Borrower may, upon notice received by the Administrative Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; PROVIDED, HOWEVER, that: (a) such Borrower may not select any Interest Period with respect to any Eurodollar Rate Advance under a Facility that ends after any principal repayment installment date for such Facility unless, after giving effect to such selection, the aggregate principal amount of Base Rate Advances and of Eurodollar Rate Advances having Interest Periods that end on or prior to such principal repayment installment date for such Facility shall be at least equal to the aggregate principal amount of Advances under such Facility due and payable on or prior to such date; (b) Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Borrowing shall be of the same duration; (c) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, PROVIDED, HOWEVER, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and (d) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. 21 "INVESTMENT" in any Person means any loan or advance to such Person, any purchase or other acquisition of any capital stock or other ownership or profit interest, warrants, rights, options, obligations or other securities of such Person, any capital contribution to such Person or any other investment in such Person, including, without limitation, any arrangement pursuant to which the investor incurs Debt of the types referred to in clause (h) or (i) of the definition of "DEBT" in respect of such Person. "INVESTOR GROUP" means KKR and Hubcap. "ISSUING BANK" means the Initial Issuing Bank and each Eligible Assignee to which the Letter of Credit Commitment hereunder has been assigned pursuant to Section 9.07. "KAC" has the meaning specified in the Preliminary Statements to this Agreement. "KKR" means Kohlberg Kravis Roberts & Co., L.P.. "L/C RELATED DOCUMENTS" has the meaning specified in Section 2.04(e)(ii)(A). "LENDER PARTY" means any Lender, the Issuing Bank or the Swing Line Bank. "LENDERS" means the Initial Lenders and each Person that shall become a Lender hereunder pursuant to Section 9.07. "LETTERS OF CREDIT" has the meaning specified in Section 2.01(e). "LETTER OF CREDIT ADVANCE" means an advance made by the Issuing Bank or any Revolving Credit Lender pursuant to Section 2.03(c). "LETTER OF CREDIT AGREEMENT" has the meaning specified in Section 2.03(a). "LETTER OF CREDIT COMMITMENT" means, with respect to the Issuing Bank at any time, the amount set forth opposite the Issuing Bank's name on Schedule I hereto under the caption "Letter of Credit Commitment" or, if the Issuing Bank has entered into one or more Assignments and Acceptances, set forth for the Issuing Bank in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as the Issuing Bank's "Letter of Credit Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.05. "LETTER OF CREDIT FACILITY" means, at any time, an amount equal to the lesser of (a) the amount of the Issuing Bank's Letter of Credit Commitment at such time and (b) $20,000,000, as such amount may be reduced at or prior to such time pursuant to Section 2.05. "LEVERAGE RATIO" means, as of any date of determination, the ratio of (a) total Funded Debt of the U.S. Borrower and its Restricted Subsidiaries, LESS the amount of cash reflected on the U.S. Borrower's balance sheet for the most recently ended Fiscal Quarter in excess of $5,000,000, to (b) (i) for purposes of determining compliance with Section 5.02(f)(v) and 5.04(a), 50% of Consolidated EBITDA and (ii) for all other purposes, Consolidated EBITDA, 22 in each case, of the U.S. Borrower and its Restricted Subsidiaries for the most recently completed Measurement Period prior to such date. "LIEN" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, any agreement to give any of the foregoing, any lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "LIGHT WHEELS FACILITY" means the manufacturing facility of the U.S. Borrower located in Columbia, Tennessee. "LOAN DOCUMENTS" means (a) for purposes of this Agreement and the Notes and any amendment or modification hereof or thereof and for all other purposes other than for purposes of the Guaranty, the Subsidiaries Guaranty and the Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the Guaranty, (iv) the Subsidiaries Guaranty, (v) the Collateral Documents, (vi) each Letter of Credit Agreement and (vii) the Consent and (b) for purposes of the Guaranty, the Subsidiaries Guaranty and the Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the Guaranty, (iv) the Subsidiaries Guaranty, (v) the Collateral Documents, (vi) each Letter of Credit Agreement and (vii) each Bank Hedge Agreement, in each case as amended, supplemented or otherwise modified from time to time. "LOAN PARTIES" means the Borrowers and the Subsidiary Guarantors. "MAJORITY LENDERS" means at any time Lenders owed or holding at least a majority in interest of the sum of (a) the aggregate principal amount of the Advances outstanding at such time, (b) the aggregate Available LC Amount of all Letters of Credit outstanding at such time, (c) the aggregate unused Commitments under the Term A Facility, the Term B Facility and the Term C Facility at such time and (d) the aggregate Unused Revolving Credit Commitments at such time; PROVIDED, HOWEVER, that, if any Lender shall be a Defaulting Lender at such time, there shall be excluded from the determination of Majority Lenders at such time (A) the aggregate principal amount of the Advances owing to such Lender (in its capacity as a Lender) and outstanding at such time, (B) such Lender's Pro Rata Share of the aggregate Available LC Amount of all Letters of Credit issued by such Lender and outstanding at such time, (C) the aggregate unused Term A Commitments, Term B Commitments and Term C Commitments of such Lender at such time and (D) the Unused Revolving Credit Commitment of such Lender at such time. For purposes of this definition, the aggregate principal amount of Swing Line Advances owing to the Swing Line Bank and of Letter of Credit Advances owing to the Issuing Bank and the Available LC Amount of each Letter of Credit shall be considered to be owed to the Revolving Credit Lenders ratably in accordance with their respective Revolving Credit Commitments. "MARGIN STOCK" has the meaning specified in Regulation U. "MATERIAL ADVERSE CHANGE" means any material adverse change in the business, financial condition, operations, assets or liabilities of any Loan Party or any of its Subsidiaries. 23 "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the business, financial condition, operations, assets or liabilities of any Loan Party or any of its Subsidiaries, (b) the rights and remedies of the Administrative Agent or any Lender Party under any Loan Document or Related Document or (c) the ability of any Loan Party to perform its Obligations under any Loan Document or Related Document to which it is or is to be a party. "MEASUREMENT PERIOD" means, as of any date of determination, (i) for purposes of calculating the Leverage Ratio pursuant to Section 5.02(f)(v) or 5.04(a), the most recently completed eight consecutive Fiscal Quarters ending on or immediately prior to such date and (ii) for all other purposes (including for purposes of calculating the Leverage Ratio pursuant to all provisions of this Agreement other than Section 5.02(f)(v) or 5.04(a)), the most recently completed four consecutive Fiscal Quarters ending on or immediately prior to such date. "MEXICO FACILITY" means the facility of the Mexico Subsidiary located in Monterrey, Mexico. "MEXICO SUBSIDIARY" means Accuride de Mexico, S.A. de C.V., a company organized and existing under the laws of Mexico. "NET CASH PROCEEDS" means, with respect to any sale, lease, transfer or other disposition of any asset, the aggregate amount of cash received from time to time (whether as initial consideration or through payment or disposition of deferred consideration, but only as and when received) by or on behalf of such Person in connection with such transaction after deducting therefrom only (without duplication): (a) reasonable and customary fees, commissions, expenses, issuance costs, discounts and other costs paid by the U.S. Borrower or any of its Restricted Subsidiaries in connection with such transaction, (b) the amount of taxes paid or estimated to be payable in connection with or as a result of such transaction, (c) the amount of the outstanding principal amount of, premium or penalty, if any, and interest on any Debt (other than pursuant to the Facilities) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of any such transaction, (d) the amount of any reasonable reserves established in accordance with GAAP against any liabilities (other than taxes described in clause (b) above) that are (i) associated with the assets that are the subject of such transaction and (ii) retained by the U.S. Borrower or any of its Restricted Subsidiaries and (e) the amount of any proceeds received from the sale, lease, transfer or other disposition of any assets pursuant to Section 5.02(d) to the extent that such proceeds are reinvested in the business within one year following such sale, lease, transfer or other disposition; PROVIDED, however, that in the event the amount of any estimated tax payable described in clause (b) above exceeds the amount actually paid, or upon any subsequent reduction in the amount of any reserve described in clause (d) above, the U.S. Borrower or its applicable Restricted Subsidiary shall be deemed to have received Net Cash Proceeds in an amount equal to such excess or reduction, at the time of payment of such taxes or on the date of such reduction, as the case may be; PROVIDED FURTHER that any portion of any proceeds received from the sale, lease, transfer or other disposition of any assets pursuant to Section 5.02(d) that has not been reinvested within such one-year period shall (i) be deemed to be Net Cash Proceeds of such a sale occurring on the last day of such one-year period and (ii) be applied to the prepayment of Advances in accordance with Section 2.06(b)(ii); PROVIDED FURTHER 24 that, for purposes of the preceding proviso, such one-year period shall be extended by up to six months from the last day of such one-year period so long as (A) such proceeds are to be reinvested within such additional six-month period under the U.S. Borrower's or any of its Restricted Subsidiaries' business plan as most recently adopted in good faith by its board of directors and (B) such Person believes in good faith that such proceeds will be so reinvested within such additional six-month period. "NET INCOME" means, with respect to any Person for any period, the net income (or loss) of such Person; PROVIDED that, for purposes of determining Net Income for any Person and its Restricted Subsidiaries on a Consolidated basis, there shall be excluded from such determination (i) any after-tax gains or losses, and any related fees and expenses, in each case to the extent attributable to the sale of assets, and (ii) any net extraordinary gains (or losses). "NOTE" means a Term A Note, a Term B Note, a Term C Note or a Revolving Credit Note. "NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement dated January 15, 1998 between the U.S. Borrower and the purchasers of the Subordinated Notes, pursuant to which the Subordinated Notes are issued. "NOTICE OF BORROWING" has the meaning specified in Section 2.02(a). "NOTICE OF ISSUANCE" has the meaning specified in Section 2.03(a). "NOTICE OF RENEWAL" has the meaning specified in Section 2.01(e). "NOTICE OF SWING LINE BORROWING" has the meaning specified in Section 2.02(b). "NOTICE OF TERMINATION" has the meaning specified in Section 2.01(e). "NPL" means the National Priorities List under CERCLA. "OBLIGATION" means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 7.01(f). Without limiting the generality of the foregoing, the Obligations of the Loan Parties under the Loan Documents include (a) the obligation to pay principal, interest, Letter of Credit commissions, charges, expenses, fees, attorneys' fees and disbursements, indemnities and other amounts payable by any Loan Party under any Loan Document and (b) the obligation of any Loan Party to reimburse any amount in respect of any of the foregoing that any Lender Party, in its sole discretion, may elect to pay or advance on behalf of such Loan Party. "OECD" means the Organization for Economic Cooperation and Development. 25 "ORIGINAL LENDER PARTIES" has the meaning specified in the Preliminary Statements. "OTHER TAXES" has the meaning specified in Section 2.12(b). "PBGC" means the Pension Benefit Guaranty Corporation (or any successor). "PERFORMANCE LEVEL" means, in respect of Advances outstanding under the Term A Facility, the Term B Facility and the Revolving Credit Facility, Performance Level I, Performance Level II, Performance Level III, Performance Level IV, Performance Level V or Performance Level VI, as the context may require, and in respect of Advances outstanding under the Term C Facility, Performance Level A, Performance Level B or Performance Level C, as the context may require. "PERFORMANCE LEVEL I" means, at any date of determination, that the U.S. Borrower and its Restricted Subsidiaries shall have maintained a Leverage Ratio of less than 3.25:1.00 for the most recently completed Measurement Period prior to such date. "PERFORMANCE LEVEL II" means, at any date of determination, that (a) the Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries does not meet the requirements for Performance Level I and (b) the U.S. Borrower and its Restricted Subsidiaries shall have maintained a Leverage Ratio of less than 3.75:1.00 for the most recently completed Measurement Period prior to such date. "PERFORMANCE LEVEL III" means, at any date of determination, that (a) the Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries does not meet the requirements for Performance Level I or Performance Level II and (b) the U.S. Borrower and its Restricted Subsidiaries shall have maintained a Leverage Ratio of less than 4.25:1.00 for the most recently completed Measurement Period prior to such date. "PERFORMANCE LEVEL IV" means, at any date of determination, that (a) the Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries does not meet the requirements for Performance Level I, Performance Level II or Performance Level III and (b) the U.S. Borrower and its Restricted Subsidiaries shall have maintained a Leverage Ratio of less than 4.75:1.00 for the most recently completed Measurement Period prior to such date. "PERFORMANCE LEVEL V" means, at any date of determination, that (a) the Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries does not meet the requirements for Performance Level I, Performance Level II, Performance Level III or Performance Level IV and (b) the U.S. Borrower and its Restricted Subsidiaries shall have maintained a Leverage Ratio of less than 5.25:1.00 for the most recently completed Measurement Period prior to such date. "PERFORMANCE LEVEL VI" means, at any date of determination, that the Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries does not meet the requirements for Performance Level I, Performance Level II, Performance Level III, Performance Level IV or Performance Level V. 26 "PERFORMANCE LEVEL A" means, at any date of determination, that the U.S. Borrower and its Restricted Subsidiaries shall have maintained a Leverage Ratio of less than 4.25:1.00 for the most recently completed Measurement Period prior to such date. "PERFORMANCE LEVEL B" means, at any date of determination, that (a) the Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries does not meet the requirements for Performance Level A, and (b) the U.S. Borrower and its Restricted Subsidiaries shall have maintained a Leverage Ratio of less than 5.25:1.00 for the most recently completed Measurement Period prior to such date. "PERFORMANCE LEVEL C" means, at any date of determination, that the Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries does not meet the requirements for Performance Level A or Performance Level B. "PERMITTED LIENS" means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's Liens and other similar Liens arising in the ordinary course of business outstanding at any time and securing indebtedness that is not overdue for a period of more than 30 days; (c) Liens arising from judgments or decrees in circumstances not constituting an Event of Default under Section 7.01(g); (d) Liens incurred or deposits made in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations incurred in the ordinary course of business; (e) ground leases in respect of real property on which facilities owned or leased by the U.S. Borrower or any of its Subsidiaries are located; (f) easements, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the business of the U.S. Borrower and its Subsidiaries taken as a whole; (g) any interest or title of a lessor or secured by a lessor's interest under any lease permitted by this Agreement and any Liens arising from any financing statement filed in connection with such lease; (h) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (i) Liens on goods the purchase price of which is financed by a documentary letter of credit issued for the account of the U.S. Borrower or any of its Subsidiaries, PROVIDED that such Lien secures only the obligations of the U.S. Borrower or such Subsidiaries in respect of such letter of credit to the extent permitted under Section 5.02(a); and (j) leases or subleases granted to others not interfering in any material respect with the business of the U.S. Borrower and its Subsidiaries, taken as a whole. "PERSON" means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. 27 "PHELPS DODGE" means Phelps Dodge Corporation. "PLAN" means any multiemployer or single-employer plan, as defined in Section 4001 of ERISA and subject to Title IV of ERISA, that is or was within any of the preceding five plan years maintained or contributed to by (or to which there is or was an obligation to contribute or to make payments of) any Loan Party or an ERISA Affiliate. "PLEDGE AGREEMENT" has the meaning specified in Section 3.04(b)(viii). "PLEDGE AGREEMENT SUPPLEMENT" has the meaning specified in the Pledge Agreement "PREFERRED STOCK" means, with respect to any corporation, capital stock issued by such corporation that is entitled to a preference or priority over any other capital stock issued by such corporation upon any distribution of such corporation's assets, whether by dividend or upon liquidation. "PREPAYMENT DATE" has the meaning specified in Section 2.06(c). "PRO FORMA EBITDA ADJUSTMENT" means, for any period, an amount equal to the pro forma increase or decrease in Consolidated EBITDA that the U.S. Borrower in good faith predicts will occur as a result of reasonably identifiable and supportable net cost savings or additional net costs that will be realizable during such period by combining the operations associated with an acquisition with the operations of the U.S. Borrower and its Subsidiaries; PROVIDED that, so long as such net cost savings or additional net costs will be realizable at any time during such period, it shall be assumed, for purposes of projecting such pro forma increase or decrease in such Consolidated EBITDA, that such net cost savings or additional net costs will be realizable during the entirety of such period; and PROVIDED FURTHER that any such pro forma increase or decrease in such Consolidated EBITDA shall be without duplication of any net cost savings or additional net costs actually realized during such period and already included in such Consolidated EBITDA. "PRO RATA SHARE" of any amount means, with respect to any Revolving Credit Lender at any time, the product of such amount TIMES a fraction the numerator of which is the amount of such Lender's Revolving Credit Commitment at such time and the denominator of which is the Revolving Credit Facility at such time. "PURCHASE PRICE ADJUSTMENT AMOUNT" means the amount, determined pursuant to Section 1.5 of the Stock Purchase Agreement, equal to the lesser of zero and the difference between the "Redemption Price" and the "Adjusted Redemption Price" (as such terms are defined in the Stock Purchase Agreement). "REDEEMABLE" means, with respect to any capital stock or other ownership or profit interest, Debt or other right or Obligation, any such right or Obligation that (a) the issuer has undertaken to redeem at a fixed or determinable date or dates, whether by operation of a sinking fund or otherwise, or upon the occurrence of a condition not solely within the control of the issuer or (b) is redeemable at the option of the holder. 28 "REDUCTION AMOUNT" has the meaning specified in Section 2.06(b)(v). "REFERENCE BANKS" means Citibank, Bankers Trust and Wells Fargo. "REGISTER" has the meaning specified in Section 9.07(d). "REGULATION U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "RELATED DOCUMENTS" means the Subordinated Debt Documents, the Stock Purchase Agreement, the AKW LLC Agreement, the AKW LP Agreement and the AKW Acquisition Agreement. "REPORTABLE EVENT" means an event described in Section 4043 of ERISA and the regulations thereunder. "REQUIREMENTS OF LAW" means, with respect to any Person, all laws, constitutions, statutes, treaties, ordinances, rules and regulations, all orders, writs, decrees, injunctions, judgments, determinations or awards of an arbitrator, a court or any other governmental authority, and all governmental authorizations, binding upon or applicable to such Person or to any of its properties, assets or businesses. "RESPONSIBLE OFFICER" means any officer of any Loan Party or any of its Subsidiaries. "RESTRICTED SUBSIDIARY" means, as of any date of determination, any Subsidiary of the U.S. Borrower which is not an Unrestricted Subsidiary. "REVENUES" means, for any Person for any period, an amount equal to the revenues of such Person; PROVIDED that, for purposes of such determination, (i) the revenues of any business acquired by the U.S. Borrower or any of its Subsidiaries during such period pursuant to Section 5.02(e)(xi) or (xii) shall be determined on a pro forma basis as if such acquisition had been consummated on the first day of such period and (ii) the revenues of any business sold or otherwise disposed of by the U.S. Borrower or any of its Subsidiaries in accordance with Section 5.02(d) during such period shall be excluded in their entirety. "REVOLVING CREDIT ADVANCE" has the meaning specified in Section 2.01(c). "REVOLVING CREDIT BORROWING" means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type made by the Revolving Credit Lenders. "REVOLVING CREDIT COMMITMENT" means, with respect to any Revolving Credit Lender at any time, the amount set forth opposite such Lender's name on Schedule I hereto under the caption "Revolving Credit Commitment" or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender's "Revolving Credit 29 Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.05. "REVOLVING CREDIT FACILITY" means, at any time, the aggregate amount of the Revolving Credit Lenders' Revolving Credit Commitments at such time. "REVOLVING CREDIT LENDER" means any Lender that has a Revolving Credit Commitment. "REVOLVING CREDIT NOTE" means a promissory note of the U.S. Borrower payable to the order of any Revolving Credit Lender, in substantially the form of Exhibit A-3 hereto, evidencing the aggregate indebtedness of the U.S. Borrower to such Lender resulting from the Revolving Credit Advances made by such Lender. "SECURED PARTIES" means the Administrative Agent, the Lender Parties and the Lenders party to Bank Hedge Agreements. "SOLVENT" and "SOLVENCY" mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "STANDBY LETTER OF CREDIT" means any Letter of Credit issued under the Letter of Credit Facility, other than a Trade Letter of Credit. "STOCK PURCHASE AGREEMENT" means the Stock Subscription and Redemption Agreement dated November 17, 1997, between Hubcap and Phelps Dodge. "SUBORDINATED DEBT" means the Debt evidenced by the Subordinated Notes and any other Debt of the Borrowers that is subordinated to the Obligations of the Borrowers under the Loan Documents on, and that otherwise contains, terms and conditions satisfactory to the Majority Lenders. "SUBORDINATED DEBT DOCUMENTS" means the Note Purchase Agreement and all other agreements, indentures and instruments pursuant to which Subordinated Debt is issued. "SUBORDINATED NOTES" means the subordinated notes of the U.S. Borrower in an aggregate principal amount of $200,000,000 issued pursuant to the Note Purchase Agreement. 30 "SUBSIDIARIES GUARANTY" has the meaning specified in Section 3.01(k)(vii). "SUBSIDIARIES GUARANTY SUPPLEMENT" means a Guaranty Supplement as defined in the Subsidiaries Guaranty. "SUBSIDIARY" of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "SUBSIDIARY GUARANTORS" means the Restricted Subsidiaries of the U.S. Borrower that are Domestic Subsidiaries and are listed on Schedule II hereto, and each other Restricted Subsidiary of the U.S. Borrower that shall be required to deliver a Subsidiaries Guaranty Supplement pursuant to this Agreement. "SURVIVING DEBT" has the meaning specified in Section 3.05(d). "SWING LINE ADVANCE" means an advance made by (a) the Swing Line Bank pursuant to Section 2.01(d) or (b) any Revolving Credit Lender pursuant to Section 2.02(b). "SWING LINE BANK" has the meaning specified in the recital of parties to this Agreement. "SWING LINE BORROWING" means a borrowing consisting of a Swing Line Advance made by the Swing Line Bank. "SWING LINE FACILITY" has the meaning specified in Section 2.01(d). "SYNDICATION AGENT" has the meaning specified in the recital of parties to this Agreement. "TAXES" has the meaning specified in Section 2.12(a). "TERM A ADVANCE" has the meaning specified in Section 2.01(a). "TERM A BORROWING" means a borrowing consisting of simultaneous Term A Advances of the same Type made by the Term A Lenders. "TERM A COMMITMENT" means, with respect to any Term A Lender at any time, the amount set forth opposite such Lender's name on Schedule I hereto under the caption "Term A 31 Commitment" or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender's "Term A Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.05. "TERM A FACILITY" means, at any time, the aggregate amount of the Term A Lenders' Term A Commitments at such time. "TERM A LENDER" means any Lender that has a Term A Commitment. "TERM A NOTE" means a promissory note of the Canadian Borrower payable to the order of any Term A Lender, in substantially the form of Exhibit A-1 hereto, evidencing the indebtedness of the Canadian Borrower to such Lender resulting from the Term A Advance made by such Lender. "TERM B ADVANCE" has the meaning specified in Section 2.01(b). "TERM B BORROWING" means a borrowing consisting of simultaneous Term B Advances of the same Type made by the Term B Lenders. "TERM B COMMITMENT" means, with respect to any Term B Lender at any time, the amount set forth opposite such Lender's name on Schedule I hereto under the caption "Term B Commitment" or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender's "Term B Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.05. "TERM B FACILITY" means, at any time, the aggregate amount of the Term B Lenders' Term B Commitments at such time. "TERM B LENDER" means any Lender that has a Term B Commitment. "TERM B NOTE" means a promissory note of the U.S. Borrower payable to the order of any Term B Lender, in substantially the form of Exhibit A-2 hereto, evidencing the indebtedness of the U.S. Borrower to such Lender resulting from the Term B Advance made by such Lender. "TERM C ADVANCE" has the meaning specified in Section 2.01(f). "TERM C BORROWING" means a borrowing consisting of simultaneous Term C Advances of the same Type made by the Term C Lenders. "TERM C COMMITMENT" means, with respect to any Term C Lender at any time, the amount set forth opposite such Lender's name on Schedule I hereto under the caption "Term C Commitment" or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to 32 Section 9.07(d) as such Lender's Term C Commitment, as such amount may be reduced at or prior to such time pursuant to Section 2.05. "TERM C FACILITY" means, at any time, the aggregate amount of the Term C Lenders' Term C Commitments at such time. "TERM C LENDER" means any Lender that has a Term C Commitment. "TERM C NOTE" means a promissory note of the U.S. Borrower payable to the order of any Term C Lender, in substantially the form of Exhibit A-4 hereto, evidencing the indebtedness of the U.S. Borrower to such Lender resulting from the Term C Advance made by such Lender. "TERMINATION DATE" means (a) with respect to the Revolving Credit Facility, the Letter of Credit Facility and the Swing Line Facility, the earlier of January 21, 2004 and the date of termination in whole of the Revolving Credit Commitments, the Letter of Credit Commitments and the Swing Line Commitments pursuant to Section 2.05 or 7.01, (b) with respect to the Term A Facility, the earlier of January 21, 2005 and the date of termination in whole of the Term A Commitments pursuant to Section 2.05 or 7.01, (c) with respect to the Term B Facility, the earlier of January 21, 2006 and the date of termination in whole of the Term B Commitments pursuant to Section 2.05 or 7.01, and (d) with respect to the Term C Facility, the earlier of January 21, 2007 and the date of termination in whole of the Term C Commitments pursuant to Section 2.05 or 7.01. "TRADE LETTER OF CREDIT" means any Letter of Credit that is issued under the Letter of Credit Facility for the benefit of a supplier of inventory or other goods to the U.S. Borrower or any of its Subsidiaries to effect payment for such inventory or other goods, the conditions to drawing under which include the presentation to the Issuing Bank of negotiable bills of lading, invoices and related documents sufficient, in the judgment of the Issuing Bank, to create a valid and perfected lien on or security interest in such inventory, bills of lading, invoices and related documents in favor of the Issuing Bank. "TYPE" refers to the distinction between Advances bearing interest at the Base Rate and Advances bearing interest at the Eurodollar Rate. "UNFUNDED CURRENT LIABILITY" of any Plan means the amount, if any, by which the present value of the accumulated benefits under the Plan as of the close of its most recent plan year, determined in accordance with Statement of Financial Accounting Standards No. 87 as in effect on the date hereof, but based upon the actuarial assumptions that would be used by the Plan's actuary in a termination of the Plan, exceeds the fair market value of the assets allocable thereto. "UNITED STATES" and "U.S." each mean the United States of America. "UNRESTRICTED SUBSIDIARY" means (a) any Subsidiary of the U.S. Borrower that is formed or acquired after the Closing Date, PROVIDED, that at the time of such formation or 33 acquisition (or promptly thereafter) the U.S. Borrower designates such Subsidiary as an Unrestricted Subsidiary in a written notice to the Administrative Agent, (b) any Restricted Subsidiary on the Closing Date (other than the Canadian Borrower) subsequently re-designated as an Unrestricted Subsidiary by the U.S. Borrower in a written notice to the Administrative Agent pursuant to Section 5.03(h), PROVIDED that such re-designation shall be deemed to be an Investment on the date of such re-designation in an Unrestricted Subsidiary in an amount equal to the sum of (i) the net worth of such re-designated Restricted Subsidiary immediately prior to such re-designation (such net worth to be calculated without regard to any guaranty provided by such re-designated Restricted Subsidiary pursuant to the Subsidiary Guaranty) plus (ii) the aggregate principal amount of any Debt owed by such redesignated Restricted Subsidiary to either Borrower or any other Restricted Subsidiary immediately prior to such re-designation, all calculated, except as set forth in the parenthetical to clause (i), on a consolidated basis in accordance with GAAP, and (c) any Subsidiary of any Unrestricted Subsidiary; PROVIDED, HOWEVER, that (i) at the time of any written re-designation by the U.S. Borrower to the Administrative Agent of any Unrestricted Subsidiary as a Restricted Subsidiary pursuant to Section 5.03(h), the Unrestricted Subsidiary so re-designated shall no longer constitute an Unrestricted Subsidiary, (ii) no Unrestricted Subsidiary may be re-designated as a Restricted Subsidiary if a Default or Event of Default has occurred and is continuing or would result from such re-designation and (iii) no Restricted Subsidiary may be re-designated as an Unrestricted Subsidiary if a Default or Event of Default has occurred and is continuing or would result from such re-designation; and PROVIDED FURTHER, HOWEVER, that on or promptly after the date of its formation, acquisition or re-designation, as applicable, each Unrestricted Subsidiary (other than an Unrestricted Subsidiary that is a Foreign Subsidiary) shall have entered into a tax sharing agreement containing terms that, in the reasonable judgment of the Administrative Agent, provide for an appropriate allocation of tax liabilities and benefits. "UNUSED REVOLVING CREDIT COMMITMENT" means, with respect to any Revolving Credit Lender at any time, (a) such Lender's Revolving Credit Commitment at such time MINUS (b) the sum of (i) the aggregate principal amount of all Revolving Credit Advances, Swing Line Advances and Letter of Credit Advances made by such Lender (in its capacity as a Lender) and outstanding at such time, PLUS (ii) such Lender's Pro Rata Share of (A) the aggregate Available LC Amount of all Letters of Credit outstanding at such time, (B) the aggregate principal amount of all Letter of Credit Advances made by the Issuing Bank pursuant to Section 2.03(c) and outstanding at such time and (C) the aggregate principal amount of all Swing Line Advances made by the Swing Line Bank pursuant to Section 2.01(d) and outstanding at such time. "U.S. BORROWER" has the meaning specified in the recital of parties to this Agreement. "U.S. PERSON" means any Person which is organized under the laws of a jurisdiction of the United States. "VOTING STOCK" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. 34 "WELLS FARGO" has the meaning specified in the recital of parties to this Agreement. SECTION 1.02. COMPUTATION OF TIME PERIODS.02. COMPUTATION OF TIME PERIODS. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". SECTION 1.03. ACCOUNTING TERMS.03. ACCOUNTING TERMS. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(f) ("GAAP"). SECTION 1.04. CURRENCY EQUIVALENT.04. CURRENCY EQUIVALENT. For purposes of construction of the terms hereof, the equivalent in another currency of an amount in U.S. dollars shall be determined by using the quoted spot rate at which Citibank's principal office in New York City offers to purchase such other currency with the equivalent in dollars in New York City at 9:00 A.M. (New York City time) on the date on which such equivalent is to be determined. ARTICLE II ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT SECTION 2.01. THE ADVANCES.01. THE ADVANCES. (a) THE TERM A ADVANCES. Each Term A Lender has made a single advance (a "TERM A ADVANCE") to the Canadian Borrower on the Closing Date under the Original Credit Agreement in an amount of such Lender's Term A Commitment at such time. The Term A Borrowing consisted of Term A Advances made simultaneously by the Term A Lenders ratably according to their Term A Commitments. Amounts borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed. (b) THE TERM B ADVANCES. Each Term B Lender has made a single advance (a "TERM B ADVANCE") to the U.S. Borrower on the Closing Date under the Original Credit Agreement in an amount of such Lender's Term B Commitment at such time. The Term B Borrowing consisted of Term B Advances made simultaneously by the Term B Lenders ratably according to their Term B Commitments. Amounts borrowed under this Section 2.01(b) and repaid or prepaid may not be reborrowed. (c) THE REVOLVING CREDIT ADVANCES. Each Revolving Credit Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a "REVOLVING CREDIT ADVANCE") to the U.S. Borrower from time to time on any Business Day during the period from the date of the Original Credit Agreement until the Termination Date in an amount for each such Advance not to exceed such Lender's Unused Revolving Credit Commitment at such time. Each Revolving Credit Borrowing shall be in an aggregate amount of $2,000,000 or an integral multiple of $500,000 in excess thereof (other than a Borrowing the proceeds of which shall be used solely to repay or prepay in full outstanding Swing Line Advances or outstanding Letter of Credit Advances) and shall consist of 35 Revolving Credit Advances made simultaneously by the Revolving Credit Lenders ratably according to their Revolving Credit Commitments. Within the limits of each Revolving Credit Lender's Unused Revolving Credit Commitment in effect from time to time, the U.S. Borrower may borrow under this Section 2.01(c), prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(c). (d) THE SWING LINE ADVANCES. The U.S. Borrower may request the Swing Line Bank to make, and the Swing Line Bank shall make, on the terms and conditions hereinafter set forth, Swing Line Advances to the U.S. Borrower from time to time on any Business Day during the period from the date of the Original Credit Agreement until the Termination Date in an aggregate amount not to exceed at any time outstanding the lesser of (i) $10,000,000 (the "SWING LINE FACILITY") and (ii) an amount not to exceed the aggregate of the Unused Revolving Credit Commitments of the Revolving Credit Lenders at such time. No Swing Line Advance shall be used for the purpose of funding the payment of principal of any other Swing Line Advance. Each Swing Line Borrowing shall be in an amount of $500,000 or an integral multiple of $250,000 in excess thereof and shall be made as a Base Rate Advance. Within the limits of the Swing Line Facility and within the limits referred to in clause (ii) above, the U.S. Borrower may borrow under this Section 2.01(d), repay pursuant to Section 2.04(d) or prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(d). (e) LETTERS OF CREDIT. The Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue letters of credit (the "LETTERS OF CREDIT") for the account of the U.S. Borrower from time to time on any Business Day during the period from the date of the Original Credit Agreement until five Business Days before the Termination Date (i) in an aggregate Available LC Amount for all Letters of Credit not to exceed at any time the Issuing Bank's Letter of Credit Commitment at such time and (ii) in an Available LC Amount for each such Letter of Credit not to exceed an amount equal to the Unused Revolving Credit Commitments of the Revolving Credit Lenders at such time. No Letter of Credit shall have an expiration date (including all rights of the U.S. Borrower or the beneficiary to require renewal) later than the earlier of five Business Days before the Termination Date and (A) in the case of a Standby Letter of Credit, one year after the date of issuance thereof, but may by its terms be renewable annually upon notice (a "NOTICE OF RENEWAL") given to the Issuing Bank and the Administrative Agent on or prior to any date for notice of renewal set forth in such Letter of Credit (but in any event at least three Business Days prior to the date of the proposed renewal of such Standby Letter of Credit) and upon fulfillment of the applicable conditions set forth in Article III, unless such Issuing Bank has notified the U.S. Borrower (with a copy to the Administrative Agent) on or prior to the date for notice of termination set forth in such Letter of Credit (but in any event at least 30 Business Days prior to the date of automatic renewal) of its election not to renew such Standby Letter of Credit (a "NOTICE OF TERMINATION") and (B) in the case of a Trade Letter of Credit, the later of 180 days after the date of issuance thereof or five Business Days before the Termination Date; PROVIDED that the terms of each Standby Letter of Credit that is automatically renewable annually shall (x) require the Issuing Bank that issued such Standby Letter of Credit to give the beneficiary named in such Standby Letter of Credit notice of any Notice of Termination, (y) permit such beneficiary, upon receipt of such notice, to draw under such Standby Letter of Credit prior to the date such Standby Letter of Credit otherwise would have been automatically renewed and (z) not permit the expiration date (after giving effect to any renewal) of such Standby Letter of Credit in any event to be extended to a date later than 60 days before the Termination Date. If either a Notice of Renewal is not given by the U.S. Borrower or a Notice of Termination is given by the Issuing Bank pursuant to the immediately preceding sentence, such Standby Letter of Credit shall expire on the date on which it 36 otherwise would have been automatically renewed; PROVIDED, HOWEVER, that even in the absence of receipt of a Notice of Renewal the Issuing Bank may in its discretion, unless instructed to the contrary by the Administrative Agent or the U.S. Borrower, deem that a Notice of Renewal had been timely delivered and in such case, a Notice of Renewal shall be deemed to have been so delivered for all purposes under this Agreement. Within the limits of the Letter of Credit Facility, and subject to the limits referred to above, the U.S. Borrower may request the issuance of Letters of Credit under this Section 2.01(e), repay any Letter of Credit Advances resulting from drawings thereunder pursuant to Section 2.03(c) and request the issuance of additional Letters of Credit under this Section 2.01(e). (f) THE TERM C ADVANCES. Each Term C Lender severally agrees, on the terms and conditions hereinafter set forth, to make a single advance (a "TERM C ADVANCE") to the U.S. Borrower on any Business Day during the period from the date hereof until April 16, 1999, in an amount not to exceed such Lender's Term C Commitment at such time. The Term C Borrowing shall consist of Term C Advances made simultaneously by the Term C Lenders ratably according to their Term C Commitments. Amounts borrowed under this Section 2.01(f) and repaid or prepaid may not be reborrowed. SECTION 2.02. MAKING THE ADVANCES.02. MAKING THE ADVANCES. (a) Except as otherwise provided in Section 2.02(b) or 2.03, each Borrowing shall be made on notice, given not later than 12:00 P.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances, or the first Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances, by the Appropriate Borrower to the Administrative Agent, which shall give to each Appropriate Lender prompt notice thereof by telex or telecopier; PROVIDED, however, that the Term C Borrowing hereunder shall consist of Base Rate Advances and shall be made on notice, given not later than 10:00 A.M. (New York City time) on the Business Day of the proposed Term C Borrowing, by the U.S. Borrower to the Administrative Agent, which shall give to each Appropriate Lender prompt notice thereof by telex or telecopier. Each such notice of a Borrowing (a "NOTICE OF BORROWING") shall be by telephone, confirmed immediately in writing, or telex or telecopier, in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Facility under which such Borrowing is to be made, (iii) Type of Advances comprising such Borrowing, (iv) aggregate amount of such Borrowing and (v) in the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Advance. Each Appropriate Lender shall, before 12:00 P.M. (New York City time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent's Account, in same day funds, such Lender's ratable portion of such Borrowing in accordance with the respective Commitments under the applicable Facility of such Lender and the other Appropriate Lenders. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Appropriate Borrower by crediting the applicable Borrower's Account; PROVIDED, HOWEVER, that, in the case of any Revolving Credit Borrowing, the Administrative Agent shall first make a portion of such funds equal to the aggregate principal amount of any Swing Line Advances and Letter of Credit Advances made by the Swing Line Bank or the Issuing Bank, as the case may be, and by any other Revolving Credit Lender and outstanding on the date of such Revolving Credit Borrowing, plus interest accrued and unpaid thereon to and as of such date, available to the Swing Line Bank or the Issuing Bank, as the case may be, and 37 such other Revolving Credit Lenders for repayment of such Swing Line Advances and Letter of Credit Advances. (b) Each Swing Line Borrowing shall be made on notice, given not later than 1:00 P.M. (New York City time) on the date of the proposed Swing Line Borrowing, by the U.S. Borrower to the Swing Line Bank and the Administrative Agent. Each such notice of a Swing Line Borrowing (a "NOTICE OF SWING LINE BORROWING") shall be by telephone, confirmed immediately in writing, or telex or telecopier, specifying therein the requested (i) date of such Borrowing, (ii) amount of such Borrowing and (iii) maturity of such Borrowing (which maturity shall be no later than the seventh day after the requested date of such Borrowing). The Swing Line Bank will make the amount thereof available to the Administrative Agent at the Administrative Agent's Account, in same day funds. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the U.S. Borrower by crediting its Borrower's Account. Upon written demand by the Swing Line Bank, with a copy of such demand to the Administrative Agent, each other Revolving Credit Lender shall purchase from the Swing Line Bank, and the Swing Line Bank shall sell and assign to each such other Revolving Credit Lender, such other Lender's Pro Rata Share of such outstanding Swing Line Advance as of the date of such demand, by making available for the account of its Applicable Lending Office to the Administrative Agent for the account of the Swing Line Bank, by deposit to the Administrative Agent's Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Swing Line Advance to be purchased by such Lender. The U.S. Borrower hereby agrees to each such sale and assignment. Each Revolving Credit Lender agrees to purchase its Pro Rata Share of an outstanding Swing Line Advance on (i) the Business Day on which demand therefor is made by the Swing Line Bank, PROVIDED that notice of such demand is given not later than 1:00 P.M. (New York City time) on such Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such assignment by the Swing Line Bank to any other Revolving Credit Lender of a portion of a Swing Line Advance, the Swing Line Bank represents and warrants to such other Lender that the Swing Line Bank is the legal and beneficial owner of such interest being assigned by it, but makes no other representation or warranty and assumes no responsibility with respect to such Swing Line Advance, the Loan Documents or any Loan Party. If and to the extent that any Revolving Credit Lender shall not have so made the amount of such Swing Line Advance available to the Administrative Agent, such Revolving Credit Lender agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Swing Line Bank until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate. If such Lender shall pay to the Administrative Agent such amount for the account of the Swing Line Bank on any Business Day, such amount so paid in respect of principal shall constitute a Swing Line Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Swing Line Advance made by the Swing Line Bank shall be reduced by such amount on such Business Day. (c) Anything in subsection (a) above to the contrary notwithstanding, (i) neither Borrower may select Eurodollar Rate Advances for the initial Borrowing hereunder or for any Borrowing if the aggregate amount of such Borrowing is less than $2,000,000 or if the obligation of the Appropriate Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.09 or Section 2.10 and (ii) the Term A Advances may not be outstanding as part of more than 3 separate Borrowings, the Term B Advances may not be outstanding as part of more than 3 separate 38 Borrowings, the Term C Advances may not be outstanding as part of more than 3 separate Borrowings and the Revolving Credit Advances made on any date may not be outstanding on any date as part of more than 10 separate Borrowings. (d) Each Notice of Borrowing and Notice of Swing Line Borrowing shall be irrevocable and binding on the Appropriate Borrower. In the case of any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Appropriate Borrower shall indemnify each Appropriate Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date. (e) Unless the Administrative Agent shall have received notice from an Appropriate Lender prior to the date of any Borrowing under a Facility under which such Lender has a Commitment that such Lender will not make available to the Administrative Agent such Lender's ratable portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection (a) or (b) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the Appropriate Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and such Borrower severally agree to repay or pay to the Administrative Agent forthwith on demand such corresponding amount and to pay interest thereon, for each day from the date such amount is made available to the Appropriate Borrower until the date such amount is repaid or paid to the Administrative Agent, at (i) in the case of such Borrower, the interest rate applicable at such time under Section 2.07 to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender's Advance as part of such Borrowing for all purposes. (f) The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing. SECTION 2.03. ISSUANCE OF AND DRAWINGS AND REIMBURSEMENT UNDER LETTERS OF CREDIT2.03. ISSUANCE OF AND DRAWINGS AND REIMBURSEMENT UNDER LETTERS OF CREDIT. (a) REQUEST FOR ISSUANCE. Each Letter of Credit shall be issued upon notice, given not later than 12:00 P.M. (New York City time) on the fifth Business Day prior to the date of the proposed issuance of such Letter of Credit, or such shorter period as may be agreed upon by the Issuing Bank, by the U.S. Borrower to the Issuing Bank, which shall give to the Administrative Agent and each Revolving Credit Lender prompt notice thereof by telex or telecopier. Each such notice of issuance of a Letter of Credit (a "NOTICE OF ISSUANCE") shall be by telephone, confirmed immediately in writing, or telex or telecopier, specifying therein the requested (A) date of such issuance (which shall be a Business Day), (B) Available LC Amount of such Letter of Credit, (C) expiration date of such Letter of Credit, 39 (D) name and address of the beneficiary of such Letter of Credit and (E) form of such Letter of Credit, and shall be accompanied by such application and agreement for letter of credit as the Issuing Bank may specify to the U.S. Borrower for use in connection with such requested Letter of Credit (a "LETTER OF CREDIT AGREEMENT"). If (x) the requested form of such Letter of Credit is acceptable to the Issuing Bank in its sole discretion and (y) it has not received notice of objection to such issuance from the Administrative Agent, the Issuing Bank will, upon fulfillment of the applicable conditions set forth in Article III, make such Letter of Credit available to the U.S. Borrower at its office referred to in Section 9.02 or as otherwise agreed with the U.S. Borrower in connection with such issuance. In the event and to the extent that the provisions of any Letter of Credit Agreement shall conflict with this Agreement, the provisions of this Agreement shall govern. (b) LETTER OF CREDIT REPORTS. The Issuing Bank shall furnish (A) to the Administrative Agent on the first Business Day of each week a written report summarizing issuance and expiration dates of Letters of Credit issued during the previous week and drawings during such week under all Letters of Credit, (B) to each Revolving Credit Lender on the first Business Day of each month a written report summarizing issuance and expiration dates of Letters of Credit issued during the preceding month and drawings during such month under all Letters of Credit and (C) to the Administrative Agent and each Revolving Credit Lender on the first Business Day of each calendar quarter a written report setting forth the average daily aggregate Available LC Amount during the preceding calendar quarter of all Letters of Credit. (c) DRAWING AND REIMBURSEMENT. The payment by the Issuing Bank of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by the Issuing Bank of a Letter of Credit Advance, which shall be a Base Rate Advance, in the amount of such draft. Upon written demand by the Issuing Bank, with a copy of such demand to the Administrative Agent, each Revolving Credit Lender shall purchase from the Issuing Bank, and the Issuing Bank shall sell and assign to each such Revolving Credit Lender, such Lender's Pro Rata Share of such outstanding Letter of Credit Advance as of the date of such purchase, by making available for the account of its Applicable Lending Office to the Administrative Agent for the account of the Issuing Bank, by deposit to the Administrative Agent's Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Letter of Credit Advance to be purchased by such Lender. Promptly after receipt thereof, the Administrative Agent shall transfer such funds to the Issuing Bank. The U.S. Borrower hereby agrees to each such sale and assignment. Each Revolving Credit Lender agrees to purchase its Pro Rata Share of an outstanding Letter of Credit Advance on (i) the Business Day on which demand therefor is made by the Issuing Bank, provided notice of such demand is given not later than 12:00 P.M. (New York City time) on such Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such assignment by the Issuing Bank to any other Revolving Credit Lender of a portion of a Letter of Credit Advance, the Issuing Bank represents and warrants to such other Lender that the Issuing Bank is the legal and beneficial owner of such interest being assigned by it, but makes no other representation or warranty and assumes no responsibility with respect to such Letter of Credit Advance, the Loan Documents or any Loan Party. If and to the extent that any Revolving Credit Lender shall not have so made the amount of such Letter of Credit Advance available to the Administrative Agent, such Revolving Credit Lender agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Issuing Bank until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate for its account or 40 the account of the Issuing Bank, as applicable. If such Lender shall pay to the Administrative Agent such amount for the account of the Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute a Letter of Credit Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Letter of Credit Advance made by the Issuing Bank shall be reduced by such amount on such Business Day. (d) FAILURE TO MAKE LETTER OF CREDIT ADVANCES. The failure of any Lender to make the Letter of Credit Advance to be made by it on the date specified in Section 2.03(c) shall not relieve any other Lender of its obligation hereunder to make its Letter of Credit Advance on such date, but no Lender shall be responsible for the failure of any other Lender to make the Letter of Credit Advance to be made by such other Lender on such date. SECTION 2.04. REPAYMENT OF ADVANCES.04. REPAYMENT OF ADVANCES. (a) TERM A ADVANCES. The Canadian Borrower shall repay to the Administrative Agent for the ratable account of the Term A Lenders the aggregate outstanding principal amount of the Term A Advances on the following dates in the amounts indicated (which amounts shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.06):
Date Amount ---- ------ January 21, 1999 $600,000 January 21, 2000 $600,000 January 21, 2001 $600,000 January 21, 2002 $600,000 January 21, 2003 $600,000 January 21, 2004 $600,000 January 21, 2005 $56,400,000
PROVIDED, HOWEVER, that the final principal installment shall be repaid on the Termination Date and in any event shall be in an amount equal to the aggregate principal amount of the Term A Advances outstanding on such date. (b) TERM B ADVANCES. The U.S. Borrower shall repay to the Administrative Agent for the ratable account of the Term B Lenders the aggregate outstanding principal amount of the Term B Advances on the following dates in the amounts indicated (which amounts shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.06):
Date Amount ---- ------ January 21, 1999 $750,000 January 21, 2000 $750,000 January 21, 2001 $750,000 January 21, 2002 $750,000 January 21, 2003 $750,000 January 21, 2004 $750,000 January 21, 2005 $750,000 January 21, 2006 $69,750,000
41 PROVIDED, HOWEVER, that the final principal installment shall be repaid on the Termination Date and in any event shall be in an amount equal to the aggregate principal amount of the Term B Advances outstanding on such date. (c) REVOLVING CREDIT ADVANCES. The U.S. Borrower shall repay to the Administrative Agent for the ratable account of the Revolving Credit Lenders on the Termination Date the aggregate outstanding principal amount of the Revolving Credit Advances then outstanding. (d) SWING LINE ADVANCES. The U.S. Borrower shall repay to the Administrative Agent for the account of the Swing Line Bank and each other Revolving Credit Lender that has made a Swing Line Advance the outstanding principal amount of each Swing Line Advance made by each of them on the earlier of the maturity date specified in the applicable Notice of Swing Line Borrowing (which maturity shall be no later than the seventh day after the requested date of such Borrowing) and the Termination Date. (e) LETTER OF CREDIT ADVANCES. (i) The U.S. Borrower shall repay to the Administrative Agent for the account of the Issuing Bank and each other Revolving Credit Lender that has made a Letter of Credit Advance on the earlier of demand and the Termination Date the outstanding principal amount of each Letter of Credit Advance made by each of them. (ii) The Obligations of the U.S. Borrower under this Agreement, any Letter of Credit Agreement and any other agreement or instrument relating to any Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, such Letter of Credit Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances: (A) any lack of validity or enforceability of any Loan Document, any Letter of Credit Agreement, any Letter of Credit or any other agreement or instrument relating thereto (all of the foregoing being, collectively, the "L/C RELATED DOCUMENTS"); (B) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of the U.S. Borrower in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents; (C) the existence of any claim, set-off, defense or other right that the U.S. Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), the Issuing Bank or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction; (D) any statement or any other document presented under 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; 42 (E) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or certificate or other document that does not strictly comply with the terms of such Letter of Credit; (F) any exchange, release or non-perfection of any Collateral or other collateral, or any release or amendment or waiver of or consent to departure from the Guaranty, the Subsidiaries Guaranty or any other guarantee, for all or any of the Obligations of the U.S. Borrower in respect of the L/C Related Documents; or (G) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the U.S. Borrower or a guarantor. (f) TERM C ADVANCES. The U.S. Borrower shall repay to the Administrative Agent for the ratable account of the Term C Lenders the aggregate outstanding principal amount of the Term C Advances on the following dates in the amounts indicated (which amounts shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.06):
Date Amount ---- ------ January 21, 2000 $1,000,000 January 21, 2001 $1,000,000 January 21, 2002 $1,000,000 January 21, 2003 $1,000,000 January 21, 2004 $1,000,000 January 21, 2005 $1,000,000 January 21, 2006 $47,000,000 January 21, 2007 $47,000,000
PROVIDED, HOWEVER, that the final principal installment shall be repaid on the Termination Date and in any event shall be in an amount equal to the aggregate principal amount of the Term C Advances outstanding on such date. SECTION 2.05. TERMINATION OR REDUCTION OF THE COMMITMENTS.05. TERMINATION OR REDUCTION OF THE COMMITMENTS. (a) OPTIONAL. Either Borrower may, upon at least two Business Days' notice to the Administrative Agent, terminate in whole or reduce in part the unused portions of the Term A Commitments, the Term B Commitments, the Term C Commitments, the Letter of Credit Facility and the Unused Revolving Credit Commitments; PROVIDED, HOWEVER, that each partial reduction of a Facility (i) shall be in an aggregate amount of $1,000,000 or an integral multiple of $500,000 in excess thereof and (ii) shall be made ratably among the Appropriate Lenders in accordance with their Commitments with respect to such Facility. (b) MANDATORY. (i) The Revolving Credit Facility shall be automatically and permanently reduced on a pro rata basis (A) on each date on which prepayment thereof is required to 43 be made pursuant to Section 2.06(b)(i), (ii) or (iv), in an amount equal to the applicable Reduction Amount and (B) if on January 21, 2003 the Revolving Credit Facility shall be greater than $100,000,000, on January 21, 2003, in an amount such that the Revolving Credit Facility immediately after giving effect to such reduction shall be $100,000,000, PROVIDED that each such reduction of the Revolving Credit Facility pursuant to clauses (A) and (B) above shall be made ratably among the Revolving Credit Lenders in accordance with their Revolving Credit Commitments. (ii) The Letter of Credit Facility shall be permanently reduced from time to time on the date of each reduction in the Revolving Credit Facility by the amount, if any, by which the amount of the Letter of Credit Facility exceeds the Revolving Credit Facility after giving effect to such reduction of the Revolving Credit Facility. SECTION 2.06. PREPAYMENTS.06. PREPAYMENTS. (a) OPTIONAL. The Appropriate Borrower may, on same Business Day's notice in the case of Base Rate Advances and one Business Day's notice in the case of Eurodollar Rate Advances, in each case to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Appropriate Borrower shall, prepay the outstanding aggregate principal amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the aggregate principal amount prepaid; PROVIDED, HOWEVER, that (x) each partial prepayment shall be in an aggregate principal amount of $1,000,000 or an integral multiple of $500,000 in excess thereof and (y) if any prepayment of a Eurodollar Rate Advance is made on a date other than the last day of an Interest Period for such Advance such Borrower shall also pay any amounts owing pursuant to Section 9.04(c). Each such prepayment of any Term A Advances or Term B Advances shall be applied to the installments thereof in the manner specified by the Appropriate Borrower. (b) MANDATORY. (i) The Borrowers shall, on the 130th day following the end of each Fiscal Year, if the Leverage Ratio for the Measurement Period ending on the last day of such Fiscal Year exceeds 4.00:1.00, prepay an aggregate principal amount of the Advances comprising part of the same Borrowings in an amount equal to the remainder of (A) 50% of the amount of Excess Cash Flow for such Fiscal Year MINUS (B) the aggregate amount of any optional prepayments of Term Advances or, to the extent such prepayments permanently reduced the Revolving Credit Facility, the amount of any optional prepayments of Revolving Credit Advances, Swing Line Advances or Letter of Credit Advances made during such Fiscal Year. Each such prepayment shall, except as otherwise provided in Section 2.06(c) below, be applied FIRST to the Term A Facility and/or the Term B Facility and to the installments thereof in the manner specified by the Appropriate Borrower (but pro rata among the Term A Lenders and/or the Term B Lenders which are not Declining Lenders), SECOND to the Revolving Credit Facility as set forth in clause (v) below and, THIRD to the Term C Facility and to the installments thereof in the manner specified by the U.S. Borrower (but pro rata among the Term C Lenders). (ii) The Borrowers shall, on the date of receipt of the Net Cash Proceeds by any Loan Party or any of its Restricted Subsidiaries from the sale, lease, transfer or other disposition of any assets of any Loan Party or any of its Restricted Subsidiaries, prepay an aggregate principal amount of the Advances comprising part of the same Borrowings equal to the amount of such Net Cash Proceeds. Each such prepayment shall, except as otherwise provided in Section 2.06(c) below, be applied FIRST 44 ratably to the Term A Facility and the Term B Facility and to the next two installments thereof, SECOND ratably to the Term A Facility and the Term B Facility and pro rata to the remaining installments thereof, THIRD to the Revolving Credit Facility as set forth in clause (v) below, and FOURTH to the Term C Facility and pro rata to the remaining installments thereof. (iii) The U.S. Borrower shall, on each Business Day, prepay an aggregate principal amount of the Revolving Credit Advances comprising part of the same Borrowings, the Letter of Credit Advances and the Swing Line Advances equal to the amount by which (A) the sum of the aggregate principal amount of (x) the Revolving Credit Advances, (y) the Letter of Credit Advances and (z) the Swing Line Advances then outstanding plus the aggregate Available LC Amount of all Letters of Credit then outstanding exceeds (B) the Revolving Credit Facility on such Business Day (after giving effect to any permanent reduction thereof pursuant to Section 2.05 on such Business Day). (iv) In the event that a Term A Lender or a Term B Lender is a Declining Lender pursuant to Section 2.06(c) below, the U.S. Borrower shall prepay, in accordance with clause (v) below, an aggregate principal amount of the Revolving Credit Advances comprising part of the same Borrowings in an amount equal to 50% of the Declined Amount. (v) Prepayments of the Revolving Credit Facility made pursuant to clause (i), (ii), (iii) or (iv) of this Section 2.06(b) or pursuant to Section 2.06(c) below shall be FIRST applied to prepay Letter of Credit Advances then outstanding until such Advances are paid in full, SECOND applied to prepay Swing Line Advances then outstanding until such Advances are paid in full and THIRD applied to prepay Revolving Credit Advances then outstanding comprising part of the same Borrowings until such Advances are paid in full; and, in the case of prepayments of the Revolving Credit Facility required pursuant to clause (i), (ii) or (iv) above, the amount remaining (if any) after the prepayment in full of the Advances then outstanding (the sum of such prepayment amounts and remaining amount being referred to herein as the "REDUCTION AMOUNT") may be retained by the U.S. Borrower and the Revolving Credit Facility shall be permanently reduced as set forth in Section 2.05(b)(i). (vi) All prepayments under this subsection (b) shall be made together with accrued interest to the date of such prepayment on the principal amount prepaid. (vii) Notwithstanding any of the other provisions of this Section 2.06(b), so long as no Default under Section 7.01(a) or 7.01(f) or Event of Default shall have occurred and be continuing, if any prepayment of Eurodollar Rate Advances is required to be made under this Section 2.06(b) other than on the last day of the Interest Period therefor, the Borrower to which such Eurodollar Rate Advances were made may, in its sole discretion, deposit the amount of any such prepayment otherwise required to be made hereunder into the Cash Collateral Account of such Borrower until the last day of such Interest Period, at which time the Administrative Agent shall, subject to the provisions of Section 2.06(c) below, be authorized (without any further action by or notice to or from such Borrower) to apply such amount to the prepayment of such Advances in accordance with Section 2.06(b). (c) TERM OPT-OUT. Notwithstanding anything to the contrary contained in Section 2.06(b), with respect to any prepayment of the Term A Advances or Term B Advances required pursuant to Section 2.06(b)(i) or Section 2.06(b) (ii) above, any Term A Lender or Term B Lender, at its option, may elect not to accept its ratable portion of such prepayment, in which event the provisions 45 of the next sentence shall apply. Any Lender declining such prepayment (such Lender being a "DECLINING LENDER" and the amount of such Lender's ratable portion of such prepayment being the "DECLINED AMOUNT") shall give written notice to the Administrative Agent by 11:00 a.m. (New York City time) on the Business Day immediately preceding the date on which such prepayment would otherwise be made (the "PREPAYMENT DATE"). On the Prepayment Date, 50% of the Declined Amount shall be used to prepay outstanding Revolving Credit Advances in accordance with Section 2.06(b)(iv) above, and the Borrowers may elect, in their discretion to retain the remaining portion of any such Declined Amount. With respect to any prepayment of the Term C Advances required pursuant to Section 2.06(b) (i) or (ii) above, any Term C Lender, at its option, may elect not to accept its ratable portion of such prepayment in which event the provisions of the next sentence shall apply. Any Term C Lender declining such prepayment (such Lender being a "DECLINING TERM C LENDER" and the amount of such Lender's ratable portion of such prepayment being the "DECLINED TERM C AMOUNT") shall give written notice to the Administrative Agent by 11:00 A.M. (New York City Time) on the Business Day immediately preceding the date on which such prepayment would otherwise be made (the "TERM C PREPAYMENT DATE"). On the Term C Prepayment Date, the Declined Term C Amount shall be retained by the U.S. Borrower. SECTION 2.07. INTEREST.07. INTEREST. (a) SCHEDULED INTEREST. Each Borrower shall pay interest on the unpaid principal amount of each Advance owing by it to each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum: (i) BASE RATE ADVANCES. During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (A) the Base Rate in effect from time to time PLUS (B) the Applicable Margin in effect from time to time, payable in arrears quarterly on the last Business Day of each March, June, September and December during such periods, SUBJECT, HOWEVER, to the provisions of subsection (b) of this Section 2.07. (ii) EURODOLLAR RATE ADVANCES. During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (A) the Eurodollar Rate for such Interest Period for such Advance PLUS (B) the Applicable Margin in effect on the first day of such Interest Period, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full, SUBJECT, HOWEVER, to the provisions of subsection (b) of this Section 2.07. (b) DEFAULT INTEREST. If all or a portion of (i) the principal amount of any Advance or (ii) any interest payable thereon or fees or other amounts payable under this Agreement shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amounts shall bear interest, payable on demand, at a rate per annum that is (x) in the case of overdue principal, the rate that would otherwise be applicable thereto PLUS 2% per annum or (y) in the case of any overdue interest, fees or other amounts payable, to the extent permitted by applicable law, the rate described in Section 2.07(a)(i) PLUS 2% per annum, in each case, from the date of such non-payment to the date on which such amount is paid in full (after as well as before judgment). 46 (c) NOTICE OF INTEREST RATE. Promptly after receipt of a Notice of Borrowing pursuant to Section 2.02(a), the Administrative Agent shall give notice to the Appropriate Borrower and each Appropriate Lender of the applicable interest rate determined by the Administrative Agent for purposes of clause (a)(i) or (ii), and the applicable rate, if any, furnished by each Reference Bank for the purpose of determining the applicable interest rate under clause (a)(ii). (d) INTEREST RATE DETERMINATION. (i) Each Reference Bank agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate. If any one or more of the Reference Banks shall not furnish such timely information to the Administrative Agent for the purpose of determining any such interest rate, the Administrative Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks. (ii) If fewer than two Reference Banks are able to furnish timely information to the Administrative Agent for determining the Eurodollar Rate for any Eurodollar Rate Advances, (A) the Administrative Agent shall forthwith notify the Appropriate Borrower and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances, (B) each such Advance will automatically, on the last day of the then existing Interest Period therefor, convert into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and (C) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Appropriate Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.08. FEES.08. FEES. (a) COMMITMENT FEE. The U.S. Borrower shall pay to the Administrative Agent for the account of each Lender having a Revolving Credit Commitment a commitment fee, from the date hereof in the case of each Initial Lender and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Termination Date, payable in arrears on the date of the initial Borrowing hereunder, thereafter quarterly on the last Business Day of each March, June, September and December, commencing March 31, 1998, and on the Termination Date, at the rate per annum equal to the Applicable Percentage of the sum of the average daily Unused Revolving Credit Commitment of such Lender PLUS its Pro Rata Share of the average daily outstanding Swing Line Advances during such quarter; PROVIDED, HOWEVER, that no commitment fee shall accrue on any of the Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. (b) LETTER OF CREDIT FEES, ETC. (i) The U.S. Borrower shall pay to the Administrative Agent for the account of each Revolving Credit Lender a commission, payable in arrears quarterly on the last Business Day of each March, June, September and December, commencing March 31, 1998, and on the earliest to occur of the full drawing expiration, termination or cancellation of any such Letter of Credit and on the Termination Date, on such Lender's Pro Rata Share of the average daily aggregate Available LC Amount of all Letters of Credit outstanding from time to time at a rate per annum equal to the Applicable Margin for Eurodollar Rate Advances then in effect LESS 0.125% per annum. 47 (ii) The U.S. Borrower shall pay to the Issuing Bank, for its own account, (A) a fronting fee, payable in arrears quarterly on the last Business Day of each March, June, September and December, commencing March 31, 1998, and on the Termination Date, on the average daily aggregate Available LC Amount of all Letters of Credit outstanding from time to time at the rate of 0.125% per annum and (B) such other reasonable and customary commissions, transfer fees and other fees and charges in connection with the issuance or administration of each Letter of Credit as the U.S. Borrower and the Issuing Bank shall agree. (c) ADMINISTRATIVE AGENT'S FEES. The U.S. Borrower shall pay to the Administrative Agent for its own account such fees as may from time to time be agreed between the U.S. Borrower and the Administrative Agent. SECTION 2.09. CONVERSION OF ADVANCES.09. CONVERSION OF ADVANCES. (a) OPTIONAL. Either Borrower may on any Business Day, upon notice given to the Administrative Agent not later than 12:00 P.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.07 and 2.10, Convert all or any portion of the Advances of one Type owed by it comprising the same Borrowing into Advances of the other Type; PROVIDED, HOWEVER, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(c), no Conversion of any Advances shall result in more separate Borrowings than permitted under Section 2.02(c) and each Conversion of Advances comprising part of the same Borrowing under any Facility shall be made ratably among the Appropriate Lenders in accordance with their Commitments under such Facility. Each such notice of Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for such Advances. Each notice of Conversion shall be irrevocable and binding on such Borrower. (b) MANDATORY. (i) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $2,000,000, such Advances shall automatically Convert into Base Rate Advances. (ii) If the Appropriate Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Administrative Agent will forthwith so notify such Borrower and the Appropriate Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance. (iii) Upon the occurrence and during the continuance of any Default under Section 7.01(a), (x) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (y) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended. 48 SECTION 2.10. INCREASED COSTS, ETC..10. INCREASED COSTS, ETC. (a) In the event that, due to either (i) the introduction of or any change (other than any change by way of imposition or increase of reserve requirements included in the Eurodollar Rate Reserve Percentage) in or in the interpretation or administration of any applicable law or regulation after the Closing Date, (ii) the compliance with any applicable guideline or request from any central bank or other governmental authority (whether or not having the force of law) or (iii) any other circumstance affecting the interbank Eurodollar market or the position of any Lender Party in such market which leads such Lender Party to reasonably determine that the Eurodollar Rate for any Interest Period for any Eurodollar Rate Advance made by such Lender Party will not adequately reflect the cost to such Lender of making, funding or maintaining such Eurodollar Rate Advance for such Interest Period, there shall be any increase in the cost to or reduction in the amount received or receivable by any Lender Party as a result of agreeing to make or of making, funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of issuing or maintaining Letters of Credit or of agreeing to make or of making or maintaining Letter of Credit Advances (excluding for purposes of this Section 2.10 any such increased costs resulting from (A) Taxes or Other Taxes (as to which Section 2.12 shall govern) and (B) changes in the basis of taxation of overall net income or overall gross income by the United States or Canada or by the foreign jurisdiction or state under the laws of which such Lender Party is organized or has its Applicable Lending Office or any political subdivision thereof), then the U.S. Borrower shall from time to time, upon demand by such Lender Party (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender Party additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender Party, in its reasonable discretion, shall determine) sufficient to compensate such Lender Party for such increased cost; PROVIDED, HOWEVER, that a Lender Party claiming additional amounts under this Section 2.10(a) agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office for any Advances affected by such event if the making of such a designation would avoid the need for, or reduce the amount of, such increased cost that may thereafter accrue; PROVIDED that such designation is made on terms that such Lender Party and its Applicable Lending Office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of this subsection (a). A certificate as to the amount of such increased cost and showing in reasonable detail the basis for the calculation thereof, submitted to such Borrower by such Lender Party at the time of demand, shall be conclusive and binding for all purposes, absent manifest error. (b) If, due to either (i) the introduction of or any change in or in the interpretation or administration of any applicable law or regulation after the Closing Date or (ii) the compliance with any applicable guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the amount of capital required or expected to be maintained by any Lender Party or any corporation controlling such Lender Party which has or would have the effect of reducing the rate of return on such Lender Party's capital or assets as a result of or based upon the existence of such Lender Party's commitments and obligations under this Agreement to a level below that which such Lender Party could have achieved but for such change or compliance (taking into consideration such Lender Party's or any corporation controlling such Lender Party's policies with respect to capital adequacy), then, upon demand by such Lender Party (with a copy of such demand to the Administrative Agent), the U.S. Borrower shall pay to the Administrative Agent for the account of such Lender Party, from time to time as specified by such Lender Party, additional amounts sufficient to compensate such Lender Party in the light of such circumstances, it 49 being understood and agreed that a Lender Party shall not be entitled to such compensation as a result of such Lender Party's compliance with, or pursuant to any request or directive to comply with, any such law, regulation, guideline or request in effect on the Closing Date. Any amount payable pursuant to this Section 2.10(b) shall be payable only to the extent that such Lender Party reasonably determines such increase in capital to be allocable to the existence of such Lender Party's commitment to lend or to issue Letters of Credit hereunder or to the issuance or maintenance of any Letters of Credit. A certificate as to such amounts and showing in reasonable detail the basis for the calculation thereof submitted to such Borrower by such Lender Party at the time of demand shall be conclusive and binding for all purposes, absent manifest error. (c) Notwithstanding any other provision of this Agreement, if the introduction of or any change in or in the interpretation of any law or regulation shall make it unlawful, or any central bank or other governmental authority shall assert that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder, with respect to any Eurodollar Rate Advance affected by circumstances described in this subsection (c), such Borrower will, and with respect to any Eurodollar Rate Advance affected by circumstances described in subsections (a) or (b) above, such Borrower may, either (i) on the last day of the then existing Interest Period therefor, convert each Eurodollar Rate Advance affected by such circumstances into a Base Rate Advance or (ii) if the affected Eurodollar Rate Advance is then being made pursuant to a Borrowing, cancel such Borrowing by giving the Administrative Agent telephonic notice (confirmed promptly in writing) thereof on the same date that such Borrower was notified by a Lender Party pursuant to subsection (a) or (b) above or this subsection (c) (as applicable); PROVIDED, that if more than one Lender Party is affected at any time, then all affected Lender Parties must be treated in the same manner pursuant to this Section 2.10(c). In the event of an illegality as described in clause (i) of this subsection (c) the obligation of the Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Appropriate Borrower that such Lender has determined that the circumstances causing such suspension no longer exist; PROVIDED, HOWEVER, that, before making any such demand, such Lender Party agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office for any Advances affected by such event if the making of such a designation would allow such Lender Party or its Applicable Lending Office to continue to perform its obligations to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances; PROVIDED that such designation is made on terms that such Lender Party and its Applicable Lending Office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of this subsection. (d) Anything in this Agreement to the contrary notwithstanding, to the extent any notice under Section 2.10, 2.12 or 9.04(c) is given by any Lender Party more than 180 days after such Lender Party has knowledge (or should have had knowledge) of the occurrence of the event giving rise to the additional cost, reduction in amounts, loss, tax or other additional amounts described in such Section 2.10, 2.12 or 9.04(c), as the case may be, such Lender Party shall not be entitled to compensation under such Section for any such amounts incurred or accruing prior to the giving of such notice to the Appropriate Borrower. 50 SECTION 2.11. PAYMENTS AND COMPUTATIONS.11. PAYMENTS AND COMPUTATIONS. (a) Each Borrower shall make each payment owed by it hereunder and under the Notes, irrespective of any right of counterclaim or set-off (except as otherwise provided in Section 2.15), not later than 12:00 P.M. (New York City time) on the day when due (or, in the case of payments made by the U.S. Borrower pursuant to Section 6.01, on the date of demand therefor) in U.S. dollars to the Administrative Agent at the Administrative Agent's Account in same day funds. The Administrative Agent will promptly thereafter cause like funds to be distributed (i) if such payment by a Borrower is in respect of principal, interest, commitment fees or any other Obligation then payable hereunder and under the Notes to more than one Lender Party, to such Lender Parties for the account of their respective Applicable Lending Offices ratably in accordance with the amounts of such respective Obligations then payable to such Lender Parties and (ii) if such payment by a Borrower is in respect of any Obligation then payable hereunder to one Lender Party, to such Lender Party for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(d), from and after the effective date of such Assignment and Acceptance, the Administrative Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender Party assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) If the Administrative Agent receives funds for application to the Obligations under the Loan Documents under circumstances for which the Loan Documents do not specify the Advances or the Facility to which, or the manner in which, such funds are to be applied, the Administrative Agent may, but shall not be obligated to, elect to distribute such funds to each Lender Party ratably in accordance with such Lender Party's proportionate share of the principal amount of all outstanding Advances and the Available LC Amount of all Letters of Credit then outstanding, in repayment or prepayment of such of the outstanding Advances or other Obligations owed to such Lender Party, and for application to such principal installments, as the Administrative Agent shall direct. (c) The Borrowers hereby authorize each Lender Party, if and to the extent payment owed to such Lender Party is not made when due hereunder or, in the case of a Lender, under the Note held by such Lender, to charge from time to time against any or all of the Appropriate Borrower's accounts with such Lender Party any amount so due. (d) All computations of interest, fees and commissions shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fees or commissions are payable; PROVIDED that (i) interest in respect of which the rate of interest is calculated on the basis of clause (a) of the definition of "Base Rate" contained in Section 1.01, (ii) commitment fees payable pursuant to Section 2.08(a) and (iii) Letter of Credit fees payable pursuant to Section 2.08(b) shall be calculated on the basis of a year of 365 (or 366, as the case may be) days for the actual number of days elapsed; and PROVIDED FURTHER, that for purposes of the INTEREST ACT (Canada), whenever interest hereunder is to be calculated at a rate based upon a 360 day period (the "APPLICABLE RATE"), the rate or percentage of interest on a yearly basis is equivalent to such Applicable Rate multiplied by the actual number of days in the year divided by 360. Each determination by the 51 Administrative Agent of an interest rate, fee or commission hereunder shall be conclusive and binding for all purposes, absent manifest error. (e) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment fee, as the case may be; PROVIDED, HOWEVER, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (f) Unless the Administrative Agent shall have received notice from the Appropriate Borrower prior to the date on which any payment is due to any Lender Party hereunder that such Borrower will not make such payment in full, the Administrative Agent may assume that such Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each such Lender Party on such due date an amount equal to the amount then due such Lender Party. If and to the extent such Borrower shall not have so made such payment in full to the Administrative Agent, each such Lender Party shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender Party together with interest thereon, for each day from the date such amount is distributed to such Lender Party until the date such Lender Party repays such amount to the Administrative Agent, at the Federal Funds Rate. SECTION 2.12. TAXES.12. TAXES. (a) Any and all payments by either Borrower hereunder or under the Notes shall be made, in accordance with Section 2.11, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, EXCLUDING, (i) in the case of each Lender Party and the Administrative Agent, (A) taxes that are imposed on its overall net income by the United States and taxes that are imposed on its overall net income or, in the case of any Term A Lender, capital (and franchise taxes imposed in lieu thereof) by the state, province or other jurisdiction under the laws of which such Lender Party or the Administrative Agent (as the case may be) is organized or any political subdivision thereof and (B) any taxes imposed on the Administrative Agent or any Lender Party as a result of a current or former connection between the Administrative Agent or such Lender Party, as the case may be, and the jurisdiction imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising from the Administrative Agent or such Lender Party having executed, delivered or performed its obligations or received any payment under, or sought enforcement of, this Agreement) and, (ii) (A) in the case of each Lender Party, taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state, province or other jurisdiction of such Lender Party's Applicable Lending Office or any political subdivision thereof and (B) in the case of each Term A Lender, taxes that are imposed on its overall capital under the federal or provincial laws of Canada (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as "TAXES") unless such Borrower is required by law or the interpretation or administration thereof to withhold or deduct Taxes. If either Borrower shall be required by law or the interpretation or administration thereof by the relevant taxing authority to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender Party or the Administrative Agent, (x) the sum payable shall be increased as may be necessary so that after making all required deductions 52 (including deductions applicable to additional sums payable under this Section 2.12) such Lender Party or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (y) such Borrower shall make such deductions and (z) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law; PROVIDED, however, that no Borrower shall be required to increase any such amounts otherwise payable to a Lender Party that is not organized under the laws of the United States or a state thereof so long as such Lender Party fails to comply with the requirements of subsection (e) below. (b) In addition, each Borrower shall pay any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made by it hereunder or under the Notes or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "OTHER TAXES"). (c) Each Borrower shall indemnify each Lender Party and the Administrative Agent for and hold it harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed by any jurisdiction on amounts payable under this Section 2.12, imposed on or paid by such Lender Party or the Administrative Agent (as the case may be), and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto that would not have arisen but for the Appropriate Borrower's failure to pay any Taxes or Other Taxes when due to the appropriate taxing authority or remit to the Administrative Agent the receipts or other documentary evidence required under subsection (d) below. This indemnification shall be made within 30 days from the date such Lender Party or the Administrative Agent (as the case may be) makes written demand therefor. (d) Promptly after the date of any payment of Taxes, the Appropriate Borrower shall furnish to the Administrative Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing such payment. In the case of any payment hereunder or under the Notes by or on behalf of such Borrower through an account or branch outside the United States or by or on behalf of such Borrower by a payor that is not a United States person, if such Borrower determines that no Taxes are payable in respect thereof, such Borrower shall furnish, or shall cause such payor to furnish, to the Administrative Agent, at such address, an opinion of counsel reasonably acceptable to the Administrative Agent stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms "UNITED STATES" and "UNITED STATES PERSON" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (e) Each Lender Party organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender or Initial Issuing Bank, as the case may be, and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender Party in the case of each other Lender Party, and from time to time thereafter as requested in writing by the U.S. Borrower (but only so long thereafter as such Lender Party remains lawfully able to do so), provide each of the Administrative Agent and the U.S. Borrower with two original properly completed and duly executed Internal Revenue Service forms 1001 or 4224 or (in the case of a Lender Party that has certified in writing to the Administrative Agent that it is not a "bank" as defined in Section 881(c)(3)(A) of the Internal Revenue Code) form W-8 (and, if such Lender Party delivers a form W-8, a certificate representing that such Lender Party is 53 not a "bank" for purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of such Borrower and is not a controlled foreign corporation related to such Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue Code)), as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender Party is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes or, in the case of a Lender Party providing a form W-8, certifying that such Lender Party is a foreign corporation, partnership, estate or trust. Each such Lender Party hereby agrees, from time to time after the initial delivery by such Lender Party of such forms or certificates, whenever a lapse in time or change in circumstances renders such forms or certificates obsolete or inaccurate in any material respect, that such Lender Party shall promptly (i) deliver to the U.S. Borrower and the Administrative Agent two new original copies of Internal Revenue Service forms 1001 or 4224, or (in the case of a Lender Party that has certified in writing to the Administrative Agent that it is not a "bank" as defined in Section 881(c)(3)(A) of the Internal Revenue Code) form W-8 (and, if such Lender Party delivers a form W-8, a certificate representing that such Lender Party is not a "bank" for purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of such Borrower and is not a controlled foreign corporation related to such Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue Code)), as appropriate, properly completed and duly executed by such Lender Party or (ii) notify the Administrative Agent and the U.S. Borrower of its inability to deliver any such forms or certificates. If the forms provided by a Lender Party at the time such Lender Party first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender Party provides the appropriate form certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form; PROVIDED, HOWEVER, that, if at the date of the Assignment and Acceptance pursuant to which a Lender Party becomes a party to this Agreement, the Lender Party assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender Party assignee on such date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date of the Original Credit Agreement (in the case of Lender Parties other than Term C Lenders) or on the date hereof (in the case of Term C Lenders) by Internal Revenue Service form 1001, 4224 or W-8 (or the related certificate described above), that the Lender Party reasonably considers to be confidential, the Lender Party shall give notice thereof to such Borrower and shall not be obligated to include in such form or document such confidential information. (f) In respect of any Term A Advance made to the Canadian Borrower by any Lender Party, such Lender Party (i) represents and warrants to the Canadian Borrower that, in respect of any payments of interest, fees or other amounts constituting income that would be taxable to such Term A Lender pursuant to Part I of the INCOME TAX ACT (CANADA) made to it by the Canadian Borrower, such Lender Party will be entitled to receive such payments free and clear of, and without any obligation on the part of the Canadian Borrower to make deduction for or on account of, any income or capital taxes imposed by Canada or any political subdivision or taxing authority thereof or 54 therein, PROVIDED, that such Lender Party is a resident of Canada for purposes of the INCOME TAX ACT (CANADA) at the time such payments are made; and (ii) agrees that if such Lender Party is not a resident of Canada at the time such payments are made that the Canadian Borrower may withhold and remit Taxes pursuant to subsection (a) (and (c), if applicable) and that such Lender Party shall not be entitled to indemnification under subsection (a) or (c) with respect to Taxes or Other Taxes imposed by Canada or any political subdivision or taxing authority thereof or therein that arise by virtue of such Lender Party being a non-resident of Canada for purposes of the INCOME TAX ACT (CANADA); and (iii) covenants and agrees to promptly advise the U.S. Borrower if such Lender Party changes its residency for purposes of the INCOME TAX ACT (CANADA) and to cooperate with the Canadian Borrower to provide, at either Borrower's reasonable request, information necessary to determine the amount of withholding or deduction that may be required. (g) For any period with respect to which either (i) a Lender Party has failed to provide the U.S. Borrower with the appropriate form described in subsection (e) above (OTHER THAN if such failure is due to a change in law occurring after the date on which a form originally was required to be provided or if such form otherwise is not required under subsection (e) above) or (ii) any representation or certification made by a Lender Party pursuant to subsection (e) or (f) above is incorrect in any material respect at the time a payment hereunder is made (other than by reason of any change in treaty, law or regulation having effect after the date of such representation or certification when made), such Lender Party shall not be entitled to indemnification under subsection (a) or (c) with respect to Taxes imposed by the United States or Canada by reason of such failure or incorrectness, as the case may be; PROVIDED, HOWEVER, that should a Lender Party become subject to Taxes because of its failure to deliver a form required hereunder, such Borrower shall take such steps as such Lender Party shall reasonably request to assist such Lender Party to recover such Taxes. (h) Any Lender Party claiming any additional amounts payable pursuant to this Section 2.12 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office or designate a different Applicable Lending Office if the making of such a change or designation would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue, PROVIDED, that such change or designation is made on terms that such Lender Party and its Applicable Lending Office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of subsection (a) or (c) above. (i) If the U.S. Borrower determines in good faith that a reasonable basis exists for contesting any taxes for which indemnification has been demanded hereunder, the relevant Lender Party or the Administrative Agent, as applicable, shall cooperate with the U.S. Borrower in challenging such taxes at the U.S. Borrower's expense if so requested by the U.S. Borrower. If any Lender Party or the Administrative Agent, as applicable, receives a refund of a tax for which a payment has been made by the U.S. Borrower pursuant to this Section, which refund in the good faith judgment of such Lender Party or Administrative Agent, as the case may be, is attributable to such payment made by the U.S. Borrower, then the Lender Party or the Administrative Agent, as the case may be, shall reimburse the U.S. Borrower for such amount as the Lender Party or the Administrative Agent, as the case may be, determines to be the proportion of the refund as will leave it, after such reimbursement, in no better or worse position than it would have been in if the payment had not been required. If a Lender Party or the Administrative Agent is required to return all or a portion of any refund for which 55 reimbursement was made under the preceding sentence to the authority that granted such refund, the U.S. Borrower shall pay over to such Lender Party or the Administrative Agent, as the case may be, the portion of such reimbursement as will leave such Lender Party or the Administrative Agent, as the case may be, in no better or worse position than if no such reimbursement had been made. A Lender Party or the Administrative Agent shall claim any refund that it determines in good faith is available to it, unless it concludes in its reasonable discretion that it would be adversely affected by making such a claim; PROVIDED, HOWEVER, that each Lender Party and the Administrative Agent shall be fully justified in refusing to claim any such refund, unless, if it so requests, it shall first be indemnified to its satisfaction against any expense that may be incurred by it in connection therewith. Nothing herein contained shall interfere with the right of a Lender or the Administrative Agent to arrange its tax affairs in whatever manner it thinks fit nor oblige any Lender or the Administrative Agent to disclose any information relating to its tax affairs or any computations in respect thereof or require any Lender or the Administrative Agent to do anything that would prejudice its ability to benefit from any other reliefs, remissions or repayments to which it may be entitled. (j) Each Lender Party represents and agrees that, on the date hereof and at all times during the term of this Agreement, it is not and will not be a conduit entity participating in a conduit financing arrangement (as defined United States Treasury regulations Section 881-3) with respect to the Borrowings hereunder (other than a conduit financing arrangement in which the Appropriate Borrower, or an Affiliate thereof, is a financing entity) unless the Appropriate Borrower has consented to such arrangement prior thereto. SECTION 2.13. SHARING OF PAYMENTS, ETC..13. SHARING OF PAYMENTS, ETC. If any Lender Party shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) (a) on account of Obligations due and payable to such Lender Party hereunder and under the Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender Party at such time to (ii) the aggregate amount of the Obligations due and payable to all Lender Parties hereunder and under the Loan Documents at such time) of payments on account of the Obligations due and payable to all Lender Parties hereunder and under the Loan Documents at such time obtained by all the Lender Parties at such time or (b) on account of Obligations owing (but not due and payable) to such Lender Party hereunder and under the Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such Lender Party at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Loan Documents at such time) of payments on account of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Loan Documents at such time obtained by all of the Lender Parties at such time, such Lender Party shall forthwith purchase from the other Lender Parties such participations in the Obligations due and payable or owing to them, as the case may be, as shall be necessary to cause such purchasing Lender Party to share the excess payment ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender Party, such purchase from each other Lender Party shall be rescinded and such other Lender Party shall repay to the purchasing Lender Party the purchase price to the extent of such Lender Party's ratable share (according to the proportion of (i) the purchase price paid to such Lender Party to (ii) the aggregate purchase price paid to all Lender Parties) of such recovery together with an amount equal to such Lender Party's ratable share (according to the proportion of (i) the amount of such other Lender Party's required repayment to 56 (ii) the total amount so recovered from the purchasing Lender Party) of any interest or other amount paid or payable by the purchasing Lender Party in respect of the total amount so recovered. Each Borrower agrees that any Lender Party so purchasing a participation from another Lender Party pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender Party were the direct creditor of such Borrower in the amount of such participation. SECTION 2.14. USE OF PROCEEDS.14. USE OF PROCEEDS. The proceeds (i) of the Advances (other than the Term C Advances) and issuances of Letters of Credit shall be available (and each Borrower agrees that it shall use such proceeds and Letters of Credit), directly or indirectly, solely to finance a portion of the cash consideration paid in connection with the Acquisition and to pay transaction fees and expenses associated therewith, and (ii) of the Term C Advances shall be available (and each Borrower agrees that it shall use such proceeds), directly or indirectly, solely to refinance debt incurred by the U.S. Borrower for the purposes of consummating the AKW Acquisition and paying transaction fees and expenses associated therewith and to prepay in part the Revolving Credit Advances outstanding under the Original Credit Agreement, and, in each case, to provide working capital for the U.S. Borrower and its Subsidiaries and for other general corporate purposes. SECTION 2.15. DEFAULTING LENDERS.15. DEFAULTING LENDERS. (a) In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Advance to either Borrower and (iii) such Borrower shall be required to make any payment hereunder or under any other Loan Document to or for the account of such Defaulting Lender, then such Borrower may, so long as no Default shall occur or be continuing at such time and to the fullest extent permitted by applicable law, set off and otherwise apply the Obligation of such Borrower to make such payment to or for the account of such Defaulting Lender against the obligation of such Defaulting Lender to make such Defaulted Advance. In the event that, on any date, such Borrower shall so set off and otherwise apply its obligation to make any such payment against the obligation of such Defaulting Lender to make any such Defaulted Advance on or prior to such date, the amount so set off and otherwise applied by such Borrower shall constitute for all purposes of this Agreement and the other Loan Documents an Advance by such Defaulting Lender made on the date under the Facility pursuant to which such Defaulted Advance was originally required to have been made pursuant to Section 2.01. Such Advance shall be a Base Rate Advance and shall be considered, for all purposes of this Agreement, to comprise part of the Borrowing in connection with which such Defaulted Advance was originally required to have been made pursuant to Section 2.01, even if the other Advances comprising such Borrowing shall be Eurodollar Rate Advances on the date such Advance is deemed to be made pursuant to this subsection (a). Each Borrower shall notify the Administrative Agent at any time such Borrower exercises its right of set-off pursuant to this subsection (a) and shall set forth in such notice (A) the name of the Defaulting Lender and the Defaulted Advance required to be made by such Defaulting Lender and (B) the amount set off and otherwise applied in respect of such Defaulted Advance pursuant to this subsection (a). Any portion of such payment otherwise required to be made by either Borrower to or for the account of such Defaulting Lender which is paid by such Borrower, after giving effect to the amount set off and otherwise applied by such Borrower pursuant to this subsection (a), shall be applied by the Administrative Agent as specified in subsection (b) or (c) of this Section 2.15. 57 (b) In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to the Administrative Agent or any of the other Lender Parties and (iii) the Appropriate Borrower shall make any payment hereunder or under any other Loan Document to the Administrative Agent for the account of such Defaulting Lender, then the Administrative Agent may, on its behalf or on behalf of such other Lender Parties and to the fullest extent permitted by applicable law, apply at such time the amount so paid by such Borrower to or for the account of such Defaulting Lender to the payment of each such Defaulted Amount to the extent required to pay such Defaulted Amount. In the event that the Administrative Agent shall so apply any such amount to the payment of any such Defaulted Amount on any date, the amount so applied by the Administrative Agent shall constitute for all purposes of this Agreement and the other Loan Documents payment, to such extent, of such Defaulted Amount on such date. Any such amount so applied by the Administrative Agent shall be retained by the Administrative Agent or distributed by the Administrative Agent to such other Lender Parties, ratably in accordance with the respective portions of such Defaulted Amounts payable at such time to the Administrative Agent and such other Lender Parties and, if the amount of such payment made by such Borrower shall at such time be insufficient to pay all Defaulted Amounts owing at such time to the Administrative Agent and the other Lender Parties, in the following order of priority: (i) FIRST, to the Administrative Agent for any Defaulted Amount then owing to the Administrative Agent; and (ii) SECOND, to any other Lender Parties for any Defaulted Amounts then owing to such other Lender Parties, ratably in accordance with such respective Defaulted Amounts then owing to such other Lender Parties. Any portion of such amount paid by such Borrower for the account of such Defaulting Lender remaining, after giving effect to the amount applied by the Administrative Agent pursuant to this subsection (b), shall be applied by the Administrative Agent as specified in subsection (c) of this Section 2.15. (c) In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance or a Defaulted Amount and (iii) either Borrower, the Administrative Agent or any other Lender Party shall be required to pay or distribute any amount hereunder or under any other Loan Document to or for the account of such Defaulting Lender, then such Borrower or such other Lender Party shall pay such amount to the Administrative Agent to be held by the Administrative Agent, to the fullest extent permitted by applicable law, in escrow or the Administrative Agent shall, to the fullest extent permitted by applicable law, hold in escrow such amount otherwise held by it. Any funds held by the Administrative Agent in escrow under this subsection (c) shall be deposited by the Administrative Agent in an account with Citibank, in the name and under the control of the Administrative Agent, but subject to the provisions of this subsection (c). The terms applicable to such account, including the rate of interest payable with respect to the credit balance of such account from time to time, shall be Citibank's standard terms applicable to escrow accounts maintained with it. Any interest credited to such account from time to time shall be held by the Administrative Agent in escrow under, and applied by the Administrative Agent from time to time in accordance with the provisions of, this subsection (c). The Administrative Agent shall, to the fullest extent permitted by applicable law, apply all funds so held in escrow from time to time to the extent necessary to make any Advances required to be made by 58 such Defaulting Lender and to pay any amount payable by such Defaulting Lender hereunder and under the other Loan Documents to the Administrative Agent or any other Lender Party, as and when such Advances or amounts are required to be made or paid and, if the amount so held in escrow shall at any time be insufficient to make and pay all such Advances and amounts required to be made or paid at such time, in the following order of priority: (i) FIRST, to the Administrative Agent for any amount then due and payable by such Defaulting Lender to the Administrative Agent hereunder; (ii) SECOND, to any other Lender Parties for any amount then due and payable by such Defaulting Lender to such other Lender Parties hereunder, ratably in accordance with such respective amounts then due and payable to such other Lender Parties; and (iii) THIRD, to such Borrower for any Advance then required to be made by such Defaulting Lender pursuant to a Commitment of such Defaulting Lender. In the event that any Lender Party that is a Defaulting Lender shall, at any time, cease to be a Defaulting Lender, any funds held by the Administrative Agent in escrow at such time with respect to such Lender Party shall be distributed by the Administrative Agent to such Lender Party and applied by such Lender Party to the Obligations owing to such Lender Party at such time under this Agreement and the other Loan Documents ratably in accordance with the respective amounts of such Obligations outstanding at such time. (d) The rights and remedies against a Defaulting Lender under this Section 2.15 are in addition to other rights and remedies that either Borrower may have against such Defaulting Lender with respect to any Defaulted Advance and that the Administrative Agent or any Lender Party may have against such Defaulting Lender with respect to any Defaulted Amount. ARTICLE III ARTICLE III CONDITIONS OF EFFECTIVENESS AND LENDING CONDITIONS OF EFFECTIVENESS AND LENDING SECTION 3.01. CONDITIONS PRECEDENT TO THE INITIAL 3.01. CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The obligation of each Lender to have made an Advance on the occasion of the Initial Extension of Credit hereunder was subject to the satisfaction of the following conditions precedent before or concurrently with the Initial Extension of Credit: (a) The Acquisition shall have been consummated in accordance with the terms of the Stock Purchase Agreement without any waiver or amendment thereto (unless such amendment or waiver in the reasonable judgment of the Administrative Agent is not adverse in any material respect to the interests of the Lender Parties), and in compliance with all applicable laws. (b) The U.S. Borrower (i) shall have received not less than $108,000,000 in cash for the purchase of common equity by the Investor Group, representing approximately 90% of 59 the outstanding common equity, and (ii) shall have received approximately $200,000,000 in gross cash proceeds from the sale of the Subordinated Notes. (c) The Administrative Agent shall be reasonably satisfied with the corporate and legal structure and capitalization of each Loan Party, including the terms and conditions of the charter, bylaws and each class of capital stock of each Loan Party and of each agreement or instrument relating to such structure or capitalization. (d) The Administrative Agent shall be reasonably satisfied that all Debt of the U.S. Borrower and its Restricted Subsidiaries outstanding immediately before giving effect to the Acquisition, other than the Debt identified on Schedule 3.01(d), has been prepaid, redeemed or defeased in full or otherwise satisfied and extinguished and that all such Debt on Schedule 3.01(d) shall be on terms and conditions reasonably satisfactory to the Administrative Agent. (e) Before giving effect to the Acquisition and the other transactions contemplated by this Agreement, there shall have occurred no material adverse change in the business, financial condition, operations, assets, liabilities or prospects of any Loan Party or any of its Subsidiaries since June 30, 1997. (f) There shall have occurred no material adverse change in loan syndication, financial or capital market conditions generally that has impaired or could reasonably be expected to impair syndication of the Facilities. (g) There shall exist no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or threatened before any court, governmental agency or arbitrator that (i) would reasonably be likely to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of the Acquisition, this Agreement, any Note, any other Loan Document, any Related Document or the consummation of the transactions contemplated hereby. (h) Nothing shall have come to the attention of the Lender Parties to lead them to believe (i) that the Information Memorandum was or has become misleading, incorrect or incomplete in any material respect, (ii) that, following the consummation of the Acquisition, either Borrower or its Subsidiaries would not have good and marketable title to all material assets of such Borrower and such Subsidiaries reflected in the Information Memorandum and (iii) that the Acquisition will have a Material Adverse Effect; without limiting the generality of the foregoing, the Lender Parties shall have been given such access to the management, records, books of account, contracts and properties of the Borrowers and their respective Restricted Subsidiaries as they shall have reasonably requested. (i) All governmental and third party consents and approvals necessary in connection with the Acquisition, the Loan Documents and the Related Documents and the transactions contemplated thereby shall have been obtained (without the imposition of any conditions that are not reasonably acceptable to the Administrative Agent) and shall remain in effect; all applicable waiting periods shall have expired without any action being taken by any competent authority; and no law or regulation shall be applicable in the reasonable judgment of 60 the Administrative Agent that restrains, prevents or imposes materially adverse conditions upon the Acquisition, the Loan Documents and the Related Documents and the transactions contemplated thereby. (j) The Administrative Agent shall have received the fees referred to in Section 2.08(c) to be received on the Closing Date and under a separate letter agreement dated December 2, 1997 between the U.S. Borrower and the Administrative Agent. (k) The Administrative Agent shall have received on or before the day of the Initial Extension of Credit the following, each dated such day (unless otherwise specified), in form and substance reasonably satisfactory to the Administrative Agent (unless otherwise specified) and (except for the Notes) in sufficient copies for each Lender Party: (i) The Notes (other than the Term C Notes) payable to the order of the Lenders (other than the Term C Lenders). (ii) Certified copies of the resolutions of the Board of Directors of each Borrower and each other Loan Party approving each Loan Document and Related Document to which it is or is to be a party and the transactions contemplated thereby, and of all documents evidencing other necessary corporate action and governmental and other third party approvals and consents, if any, with respect to the Acquisition, this Agreement, the Notes, each other Loan Document and each Related Document. (iii) A copy of a certificate of the Secretary of State of the jurisdiction of its incorporation, or in the case of the Canadian Borrower, the Ministry of Consumer and Commercial Relations of the Province of Ontario, dated reasonably near the date of the Initial Extension of Credit, listing the charter of each Borrower and each other Loan Party and each amendment thereto on file in his office and certifying that (A) such amendments are the only amendments to such Borrower's or such other Loan Party's charter on file in his office, (B) each such Borrower and each such other Loan Party have paid all franchise taxes to the date of such certificate and (C) each Borrower and each other Loan Party are duly incorporated and in good standing under the laws of the State or Province of the jurisdiction of its incorporation. (iv) A certificate of each Borrower and each other Loan Party, signed on behalf of such Borrower and such other Loan Party by its President or a Vice President and its Secretary or any Assistant Secretary, dated the date of the Initial Extension of Credit (the statements made in which certificate shall be true on and as of the date of the Initial Extension of Credit), certifying as to (A) the absence of any amendments to the charter of such Borrower or such other Loan Party since the date of the certificate referred to in Section 3.01(k)(iii), (B) a true and correct copy of the bylaws of such Borrower and such other Loan Party as in effect on the date of the Initial Extension of Credit, (C) the absence of any proceeding for the dissolution or liquidation of such Borrower or such other Loan Party, (D) the truth and accuracy of the representations and warranties contained in the Loan Documents in all material respects as though made on and as of the date of the Initial Extension of Credit, (E) the absence of any 61 event occurring and continuing, or resulting from the Initial Extension of Credit, that constitutes a Default, and (F) in the case of the U.S. Borrower only, the completion of the restructuring contemplated by the memorandum attached hereto as Schedule 3.01(l). (v) A certificate of the Secretary or an Assistant Secretary of each Borrower and each other Loan Party certifying the names and true signatures of the officers of such Borrower and such other Loan Party authorized to sign this Agreement, the Notes, each other Loan Document and each Related Document to which they are or are to be parties and the other documents to be delivered hereunder and thereunder. (vi) A pledge agreement in substantially the form of Exhibit D to the Original Credit Agreement duly executed by the U.S. Borrower and the Canadian Borrower, together with: (A) certificates representing 100% of the issued and outstanding stock (or other ownership or profit interest) owned by the U.S. Borrower of all of its first-tier Subsidiaries (other than Unrestricted Subsidiaries), accompanied by undated stock powers executed in blank; PROVIDED that no more than 66% of the issued and outstanding stock of any first-tier Foreign Subsidiaries of the U.S. Borrower (other than Unrestricted Subsidiaries and the Canadian Borrower) shall be required to be pledged, (B) copies of proper financing statements, to be duly filed on or before the day of the Initial Extension of Credit under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under such pledge agreement, covering the Collateral described in the Pledge Agreement, (C) completed requests for information, dated on or before the date of the Initial Extension of Credit, listing all other effective financing statements filed in the jurisdictions referred to in clause (B) above that name the U.S. Borrower or any other Loan Party as debtor, together with copies of such other financing statements, (D) evidence of the completion of all other recordings and filings of or with respect to such pledge agreement that the Administrative Agent may reasonably deem necessary or desirable in order to perfect and protect the Liens created thereby, and (E) evidence that all other action that the Administrative Agent may reasonably deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under such pledge agreement has been taken. 62 (vii) A guaranty in substantially the form of Exhibit E hereto (together with each other guaranty or Subsidiaries Guaranty Supplement required to be delivered pursuant to Section 5.01(k) or Section 3.04, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "SUBSIDIARIES GUARANTY"), duly executed by each of the Subsidiary Guarantors. (viii) Certified copies of each of the Related Documents, duly executed by the parties thereto and in form and substance satisfactory to the Lender Parties, together with all agreements, instruments and other documents delivered in connection therewith. (ix) Such financial, business and other information regarding each Loan Party as the Lender Parties shall have reasonably requested, including, without limitation, (A) audited Consolidated financial statements of the U.S. Borrower and its Consolidated Subsidiaries for Fiscal Years 1995 and 1996, (B) unaudited Consolidated financial statements of the U.S. Borrower and its consolidated Subsidiaries for each Fiscal Quarter in Fiscal Year 1997 that ended more than 45 days prior to the initial Closing Date, (C) a Consolidated pro forma balance sheet of the U.S. Borrower and its Consolidated Subsidiaries as of the Closing Date after giving effect to the Acquisition and other transactions and financings contemplated by the Related Documents and the Loan Documents, and (D) Consolidated forecasted financial statements of the U.S. Borrower and its Consolidated Subsidiaries for the five-year period after the Closing Date, all of the foregoing (including, without limitation, the statements to be delivered pursuant to clauses (A) through (D) above) to be in form and substance reasonably satisfactory to the Administrative Agent. (x) Letters and certificates, in substantially the form of Exhibit H and I hereto, respectively, attesting to the Solvency of each of the Borrowers after giving effect to the Acquisition and the other transactions contemplated hereby, from its chief financial officer or, in the case of the Canadian Borrower, its assistant treasurer, and a nationally recognized appraisal firm, valuation consultant or investment banking firm satisfactory to the Administrative Agent. (xi) A favorable opinion of Latham and Watkins, U.S. counsel for the Borrowers, in substantially the form of Exhibit F to the Original Credit Agreement and as to such other matters as any Lender Party through the Administrative Agent may reasonably request. (xii) A favorable opinion of Osler, Hoskin & Harcourt, Canadian counsel for the Canadian Borrower, in substantially the form of Exhibit G to the Original Credit Agreement and as to such other matters as any Lender Party through the Administrative Agent may reasonably request. (xiii) A favorable opinion of Shearman & Sterling, counsel for the Administrative Agent, in form and substance satisfactory to the Administrative Agent. 63 (l) On or prior to the Closing Date the U.S. Borrower shall have completed the restructuring contemplated by the memorandum attached hereto as Schedule 3.01(l). SECTION 3.02. CONDITIONS PRECEDENT TO EACH BORROWING AND ISSUANCE.02. CONDITIONS PRECEDENT TO EACH BORROWING AND ISSUANCE. The obligation of each Appropriate Lender to make an Advance (other than a Letter of Credit Advance made by the Issuing Bank or a Revolving Credit Lender pursuant to Section 2.03(c) and a Swing Line Advance made by a Revolving Credit Lender pursuant to Section 2.02(b)) on the occasion of each Borrowing (including the Initial Extension of Credit), and the obligation of the Issuing Bank to issue a Letter of Credit (including the initial issuance) or renew a Letter of Credit and the right of the U.S. Borrower to request a Swing Line Borrowing, shall be subject to the further conditions precedent that on the date of such Borrowing or issuance or renewal (a) the following statements shall be true in all material respects (and each of the giving of the applicable Notice of Borrowing, Notice of Swing Line Borrowing, Notice of Issuance or Notice of Renewal and the acceptance by the Appropriate Borrower of the proceeds of such Borrowing or of such Letter of Credit or the renewal of such Letter of Credit shall constitute a representation and warranty by such Borrower that both on the date of such notice and on the date of such Borrowing or issuance or renewal such statements are true): (i) the representations and warranties contained in each Loan Document are correct in all material respects on and as of such date, before and after giving effect to such Borrowing or issuance or renewal and to the application of the proceeds therefrom, as though made on and as of such date, other than any such representations or warranties that, by their terms, refer to a specific date other than the date of such Borrowing or issuance or renewal, in which case, as of such specific date; and (ii) no event has occurred and is continuing, or would result from such Borrowing or issuance or renewal or from the application of the proceeds therefrom, that constitutes a Default. SECTION 3.03. DETERMINATIONS UNDER SECTIONS 3.01, 3.04 AND 3.05.03. DETERMINATIONS UNDER SECTIONS 3.01, 3.04 AND 3.05. For purposes of determining compliance with the conditions specified in Sections 3.01, 3.04 and 3.05, each Lender Party shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lender Parties unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender Party prior to the Initial Extension of Credit or making of the Term C Advances, as the case may be, specifying its objection thereto and, if the Initial Extension of Credit consists of a Borrowing and, in the case of the Term C Borrowing, such Lender Party shall not have made available to the Administrative Agent such Lender Party's ratable portion of such Borrowing. SECTION 3.04. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AGREEMENT3.04. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall become effective on and as of the date hereof when the following conditions precedent shall have been satisfied: 64 (a) The Administrative Agent shall have received (i) counterparts of this Agreement executed by each Borrower, the Administrative Agent, the Majority Lenders (as defined in the Original Credit Agreement), and the Term C Lenders or, as to any of such Majority Lenders or Term C Lenders, notice from such Lender that such Lender has executed a counterpart of this Agreement and (ii) counterparts of the Consent executed by the Subsidiary Guarantors. (b) The Administrative Agent shall have received the following, each dated the date hereof (unless otherwise specified), in form and substance reasonably satisfactory to the Administrative Agent (unless otherwise specified) and (except for the Term C Notes) in sufficient copies for each Lender Party: (i) The Term C Notes payable to the order of the Term C Lenders. (ii) Certified copies of the resolutions of the Board of Directors (or Persons performing similar functions) of each Borrower, AKW LLC and AKW LP and each other Loan Party approving this Agreement and each other Loan Document or Related Document to be delivered by it under this Section 3.04 and the transactions contemplated thereby, and of all documents evidencing other necessary corporate, limited liability company, or partnership (as the case may be) action and governmental and other third party approvals and consents, if any, with respect to the AKW Acquisition, this Agreement, and such other Loan Document or Related Document. (iii) A certified copy of the AKW LLC Agreement and the Certificate of Formation of AKW LLC. (iv) A certified copy of the AKW LP Agreement and the Certificate of Limited Partnership of AKW LP. (v) A copy of a certificate of the Secretary of the State of Delaware, dated reasonably near the date hereof, listing the constitutive documents of each of AKW LLC and AKW LP and each amendment thereto on file in his office and certifying that (A) such amendments are the only amendments to such documents on file in his office, and (B) each of AKW LLC and AKW LP is duly formed and in good standing under the laws of the State of Delaware. (vi) A certificate of each Borrower, each of AKW LLC and AKW LP and each other Loan Party, signed on behalf of such Borrower, each of AKW LLC and AKW LP and such other Loan Party by its President or a Vice President and its Secretary or any Assistant Secretary or by its managing member in the case of AKW LLC or by a duly authorized officer in the case of AKW LP, dated the date hereof (the statements made in which certificate shall be true on and as of the date hereof), certifying as to (A) the absence of any amendments to the constitutive documents of such Borrower, AKW LLC, AKW LP or such other Loan Party since the date of the certificate referred to in Section 3.01(k)(iii) or Section 3.04(b)(v), as applicable, (B) if such Loan Party is a corporation, the absence of any amendments to the bylaws of such 65 Borrower and such other Loan Party since the date of the certificate referred to in Section 3.01(k)(iv), (C) the absence of any proceeding for the dissolution or liquidation of such Borrower, AKW LLC, AKW LP or such other Loan Party, (D) the truth and accuracy of the representations and warranties contained in the Loan Documents in all material respects as though made on and as of the date hereof, and (E) the absence of any event occurring and continuing, or resulting from the Term C Advances made on the date hereof, that constitutes a Default. (vii) A certificate of the Secretary, Assistant Secretary managing member or duly authorized officer of each Borrower, AKW LLC and AKW LP and each other Loan Party certifying the names and true signatures of the officers of such Borrower, AKW LLC and AKW LP and such other Loan Party authorized to sign this Agreement, the Term C Notes, the Pledge Agreement, the Consent and each other Loan Document to which such Loan Party is, or is to be, a party and each other document to be delivered by it under this Section 3.04. (viii) An amended and restated pledge agreement duly executed by each of the Borrowers and Accuride Ventures substantially in the form of Exhibit D hereto (together with each other pledge agreement or Pledge Agreement Supplement delivered pursuant to Section 5.01(k), in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "PLEDGE AGREEMENT"), together with: (A) Assignments in blank of the 50% limited liability company membership interest of the U.S. Borrower in AKW LLC, the 49% limited partnership interest of the U.S. Borrower in AKW LP, the 50% limited liability company membership interest of Accuride Ventures in AKW LLC and the 49% limited partnership interest of Accuride Ventures in AKW LP, in each case, pledged under the Pledge Agreement, (B) copies of proper financing statements, to be duly filed under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect and protect the first priority security interest with respect to the Collateral described in subclause (A) above, (C) completed requests for information, dated on or before the date hereof, listing all other effective financing statements filed in the jurisdictions referred to in clause (B) above that name the U.S. Borrower as debtor, together with copies of such other financing statements, and (D) evidence that all other action that the Administrative Agent may reasonably deem necessary or desirable in order to perfect and protect the first priority security interest created under the Pledge Agreement has been taken. 66 (ix) A Subsidiaries Guaranty Supplement duly executed by each of AKW LLC and AKW LP. (x) Certified copies of the AKW Acquisition Agreement, duly executed by the parties thereto, together with all agreements, instruments and other documents delivered in connection therewith. (xi) A favorable opinion of Latham and Watkins, U.S. counsel for the Borrowers, in substantially the form of Exhibit F hereto and as to such other matters as any Lender Party through the Administrative Agent may reasonably request. (xii) A favorable opinion of David K. Armstrong, General Counsel of the U.S. Borrower, in substantially the form of Exhibit G and as to such other matters as any Lender Party through the Administrative Agent may reasonably request. (xiii) A favorable opinion of Kahn, Dees, Donovan & Kahn, Kentucky counsel for the U.S. Borrower and Accuride Ventures, in substantially the form of Exhibit J and as to such other matters as any Lender Party through the Administrative Agent may reasonably request. (xiv) A favorable opinion of Shearman & Sterling, counsel for the Administrative Agent, in form and substance satisfactory to the Administrative Agent. SECTION 3.05. CONDITIONS PRECEDENT TO THE TERM C ADVANCES. The obligation of each Term C Lender to make a Term C Advance is subject to the satisfaction of the following conditions precedent before, or concurrently with, the making of such Term C Advance: (a) This Agreement shall have become effective pursuant to Section 3.04. (b) The conditions set forth in Section 3.02 shall have been satisfied. (c) The Administrative Agent shall be reasonably satisfied with the corporate and legal structure and capitalization of AKW LLC and AKW LP, including the terms and conditions of the AKW LLC Company Agreement, the AKW LP Limited Partnership Agreement and the other constitutive documents of AKW LLC and AKW LP and with each class of membership interest and limited partnership interest of such Loan Parties AKW and of each agreement or instrument relating to such structure or capitalization. (d) The Administrative Agent shall be reasonably satisfied that all Existing Debt, other than the Debt identified on Schedule 3.05(d) (the "SURVIVING DEBT"), has been prepaid, redeemed or defeased in full or otherwise satisfied and extinguished and that all such Surviving Debt shall be on terms and conditions reasonably satisfactory to the Administrative Agent. (e) Nothing shall have come to the attention of the Term C Lenders to lead them to believe (i) that the AKW Information Memorandum was or has become misleading, incorrect or incomplete in any material respect, (ii) that the U.S. Borrower or any of its Subsidiaries 67 does not have good and marketable title to all material assets of such Borrower and such Subsidiaries reflected in the AKW Information Memorandum and (iii) that the AKW Acquisition has had or will have a Material Adverse Effect. (f) All governmental and third party consents and approvals necessary in connection with the AKW Acquisition, the Term C Facility and the transactions contemplated thereby shall have been obtained (without the imposition of any conditions that are not reasonably acceptable to the Administrative Agent) and shall remain in effect; all applicable waiting periods shall have expired without any action being taken by any competent authority; and no law or regulation shall be applicable in the reasonable judgment of the Administrative Agent that restrains, prevents or imposes materially adverse conditions upon the AKW Acquisition, the Term C Facility and the transactions contemplated thereby. (g) The Administrative Agent shall have received the certificate required pursuant to Section 5.03(g) with respect to the AKW Acquisition. (h) The Administrative Agent shall have received the fees referred to in Section 2.08(c) to be received on the date hereof and under a separate letter agreement dated as of April 16, 1999 among the U.S. Borrower, the Administrative Agent and the Arranger. ARTICLE IV ARTICLE IV REPRESENTATIONS AND WARRANTIES REPRESENTATIONS AND WARRANTIES SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF EACH BORROWER.01. REPRESENTATIONS AND WARRANTIES OF EACH BORROWER. Each Borrower represents and warrants as follows: (a) LOAN PARTIES - DUE ORGANIZATION AND FORMATION; GOOD STANDING; CORPORATE, COMPANY AND PARTNERSHIP POWER AND AUTHORITY; CAPITAL STOCK. Each Loan Party (other than AKW LLC and AKW LP) (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed, except where the failure to be so qualified or in good standing has not had or would not reasonably be likely to have a Material Adverse Effect and (iii) has all requisite corporate power and authority (including, without limitation, all material governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. All of the outstanding capital stock of the U.S. Borrower has been validly issued, is fully paid and non-assessable and is owned by the Investor Group in the amounts specified on Schedule 4.01(a) free and clear of all Liens. AKW LLC (i) is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, (ii) is duly qualified and in good standing in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed, except where the failure to be so qualified or in good standing has not had or would not reasonably be likely to have a Material Adverse Effect and (iii) has all requisite limited 68 liability company power and authority (including, without limitation, all material governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. AKW LP (i) is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware, (ii) is duly qualified and in good standing in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed, except where the failure to be so qualified or in good standing has not had or would not reasonably be likely to have a Material Adverse Effect and (iii) has all requisite partnership power and authority (including, without limitation, all material governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. (b) LOAN PARTIES' SUBSIDIARIES - DUE ORGANIZATION AND FORMATION; GOOD STANDING; CORPORATE, LIMITED LIABILITY COMPANY OR PARTNERSHIP AUTHORIZATION AND AUTHORITY; CAPITAL STOCK, MEMBERSHIP INTERESTS, LIMITED PARTNERSHIP INTERESTS. Set forth on Schedule 4.01(b) hereto is a complete and accurate list of all Subsidiaries of each Loan Party as of the date of such schedule, showing as of the date hereof (as to each such Subsidiary) the jurisdiction of its incorporation or formation, the number of limited liability company membership interests or limited partnership interests or shares of each class of capital stock authorized, and the number outstanding, on the date hereof and the percentage of the outstanding limited liability company membership interests, limited partnership interests and shares of each such class owned (directly or indirectly) by such Loan Party and the number of limited liability company membership interests, limited partnership interests or shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the date hereof. All of the outstanding capital stock, limited liability company membership interests and limited partnership interests of all of such Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by such Loan Party or one or more of its Subsidiaries free and clear of all Liens, except those created under the Loan Documents. Each such Subsidiary (i) is a corporation, limited liability company or limited partnership (as applicable) duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, (ii) is duly qualified and in good standing as a foreign corporation or other entity in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed, except where the failure to be so qualified or in good standing has not had or would not reasonably be likely to have a Material Adverse Effect and (iii) has all requisite corporate, limited liability company or partnership (as applicable) power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. (c) DUE AUTHORIZATION OF LOAN DOCUMENTS; NON-CONTRAVENTION, ETC. The execution, delivery and performance of each Loan Document and each Related Document have been duly authorized by all necessary corporate, limited liability company or partnership (as applicable) action on the part of each Loan Party that is a party thereto, and do not (i) contravene such Loan Party's charter or bylaws, partnership agreement or limited liability company agreement, as the case may be, or any of its other constitutive documents, (ii) violate any applicable provision of any material law (including, without limitation, the Securities 69 Exchange Act of 1934 and the Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act of 1970), rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award applicable to such Borrower or to its Subsidiaries, (iii) result in the breach of, or constitute a default under, any loan agreement, indenture, mortgage, deed of trust or other financial instrument, or any material contract or agreement, binding on or affecting any Loan Party, any of its Subsidiaries or any of their properties or (iv) except for the Liens created under the Loan Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries. (d) GOVERNMENTAL AND THIRD PARTY APPROVALS. Other than those that have already been obtained and as set forth in Schedule 4.01(d) and are in full force and effect, or as would not reasonably be expected to have a Material Adverse Effect, no authorization or approval (including, in the case of the Canadian Borrower, exchange control approval) or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the due execution, delivery, recordation, filing or performance by any Loan Party of any Loan Document or any Related Document to which it is or is to be a party and (ii) the consummation of the transactions contemplated by the Loan Documents and the Related Documents. (e) DUE EXECUTION AND DELIVERY; BINDING OBLIGATION. Each of the Loan Documents has been duly executed and delivered by each Loan Party party thereto and is the legal, valid and binding obligation of each Loan Party party thereto, enforceable against such Loan Party in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditor's rights generally or by general principles of equity. (f) HISTORICAL FINANCIAL STATEMENTS. The Consolidated balance sheet of each of such Borrower and its respective Subsidiaries as at December 31, 1998, and the related Consolidated statements of income and cash flow of such Borrower and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Deloitte & Touche LLP, independent public accountants, copies of which have been furnished to each Lender Party, fairly present in all material respects the Consolidated financial condition of such Borrower and its respective Subsidiaries as at such dates and the Consolidated results of the operations of such Borrower and its Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles applied on a consistent basis (unless otherwise expressly noted therein), and since December 31, 1998, there has been no Material Adverse Change other than as a result of the AKW Acquisition and the transactions contemplated hereby. (g) PRO FORMA FINANCIAL STATEMENTS. The Consolidated pro forma balance sheet of such Borrower and its Subsidiaries as at December 31, 1998, and the related Consolidated pro forma statement of income and cash flow of such Borrower and its Subsidiaries for the fiscal year then ended, certified by the chief financial officer of such Borrower, copies of which have been furnished to each Lender Party, fairly present in all material respects the Consolidated pro forma financial condition of such Borrowers and its Subsidiaries as at such 70 date and the Consolidated pro forma results of operations of such Borrower and its Subsidiaries for the fiscal year ended on such date, in each case giving effect to the AKW Acquisition and the other transactions contemplated hereby. (h) FORECASTS. The Consolidated forecasted balance sheets, income statements and cash flows statements of the U.S. Borrower and its Subsidiaries delivered to the Lender Parties pursuant to Section 3.01(k)(ix) or 5.03 were prepared in good faith on the basis of the estimates and assumptions stated therein, which estimates and assumptions were believed to be reasonable and fair in the light of conditions existing at the time made, it being understood by the Lender Parties that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results. (i) OTHER INFORMATION. Neither the Information Memorandum nor the AKW Information Memorandum nor any other information, exhibit or report furnished by any Loan Party to the Administrative Agent or any Lender Party in writing in connection with the negotiation of the Loan Documents or pursuant to the terms of the Loan Documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made herein and therein, taken as a whole, not misleading at such time in light of the circumstances in which the same were made, it being understood that for purposes of this Section 4.01(i), such factual information does not include projections and pro forma financial information. (j) LITIGATION, ETC. There is no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries, including any Environmental Action, pending or, to the knowledge of either Borrower, threatened before any court, governmental agency or arbitrator that (i) could reasonably be expected to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of the Acquisition, the AKW Acquisition, this Agreement, any Note, any other Loan Document or any Related Document or the consummation of the transactions contemplated hereby. (k) COMPLIANCE WITH MARGIN REGULATIONS. (i) Such Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Advance or drawings under any Letter of Credit will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. (ii) Following application of the proceeds of each Advance or drawing under each Letter of Credit, not more than 25 percent of the value of the assets (either of either Borrower only or of either Borrower and its Subsidiaries on a Consolidated basis) subject to the provisions of Section 5.02(a) or 5.02(d) or subject to any restriction contained in any agreement or instrument between either Borrower and any Lender Party or any Affiliate of any Lender Party relating to Debt and within the scope of Section 7.01(e) will be Margin Stock. (l) EMPLOYEE BENEFIT PLANS AND ERISA RELATED MATTERS. (i) Each Plan is in compliance with ERISA, the Internal Revenue Code and any applicable Requirement of Law; 71 no Reportable Event has occurred (or is reasonably likely to occur) with respect to any Plan; no Plan is insolvent or in reorganization (or is reasonably likely to be insolvent or in reorganization), and no written notice of any such insolvency or reorganization has been given to the Borrower, any Subsidiary or any ERISA Affiliate; no Plan (other than a multiemployer plan ) has an accumulated or waived funding deficiency (or is reasonably likely to have such a deficiency); neither any Loan Party nor any ERISA Affiliate has incurred (or is reasonably expected to incur) any liability to or on account of a Plan pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Internal Revenue Code or has been notified in writing that it will incur any liability under any of the foregoing Sections with respect to any Plan; no proceedings have been instituted (or are reasonably likely to be instituted) to terminate or to reorganize any Plan or to appoint a trustee to administer any Plan, and no written notice of any such proceedings has been given to any Loan Party or any ERISA Affiliate; and no lien imposed under the Internal Revenue Code or ERISA on the assets of any Loan Party or any ERISA Affiliate exists on account of any Plan (or is reasonably likely to exist) nor has any Loan Party or any ERISA Affiliate been notified in writing that such a lien will be imposed on the assets of any Loan Party or any ERISA Affiliate on account of any Plan, EXCEPT to the extent that a breach of any of the foregoing representations and warranties in this Section 4.01(l)(i) would not result, individually or in the aggregate, in an amount of liability that would be reasonably likely to have a Material Adverse Effect. No Plan (other than a multiemployer plan) has an Unfunded Current Liability that would, individually or when taken together with any other liabilities referenced in this Section 4.01(l)(i), be reasonably likely to have a Material Adverse Effect. With respect to Plans that are multiemployer plans (as defined in Section 3(37) of ERISA), the representations and warranties in this Section 4.01(l)(i), other than any made with respect to (a) liability under Section 4201 or 4204 of ERISA or (b) liability for termination or reorganization of such Plans under ERISA, are made to the best knowledge of the Borrowers. (ii) With respect to each scheme or arrangement mandated by a government other than the United States (a "FOREIGN GOVERNMENT SCHEME OR ARRANGEMENT") and with respect to each employee benefit plan maintained or contributed to by any Subsidiary of any Loan Party that is not subject to United States law (a "FOREIGN PLAN"), except as in the aggregate could not reasonably be expected to have Material Adverse Effect: (A) Any employer and employee contributions required by law or by the terms of any Foreign Government Scheme or Arrangement or any Foreign Plan have been made, or if applicable, accrued, in accordance with normal accounting practices. (B) The fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance or the book reserve established for any Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations, as of the date hereof, with respect to all current and former participants in such Foreign Plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Foreign Plan. 72 (C) Each Foreign Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities. (m) ENVIRONMENTAL MATTERS. (i) Other than instances of noncompliance that could not reasonably be expected to have a Material Adverse Effect: (A) the U.S. Borrower and its Subsidiaries are in compliance with all Environmental Laws in all jurisdictions in which such Borrower and each of its Subsidiaries are currently doing business (including, without limitation having obtained all material Environmental Permits required under Environmental Laws) and (B) the U.S. Borrower will comply and cause each of their Subsidiaries to comply with all such Environmental Laws (including, without limitation, all Environmental Permits required under Environmental Laws). (ii) Neither Borrower nor any of its Subsidiaries has treated, stored, transported or disposed of Hazardous Materials at or from any currently or formerly owned real estate or facility relating to its business in a manner that could reasonably be expected to have a Material Adverse Effect. (n) SECURITIES LAWS. Neither any Loan Party nor any of its Subsidiaries is an "investment company," or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. (o) SOLVENCY. Each Loan Party is, individually and together with its Subsidiaries, Solvent. (p) EXISTING DEBT. Set forth on Schedule 4.01(p) hereto is a complete and accurate list of all Existing Debt (other than Surviving Debt), showing as of the date of such Schedule the principal amount outstanding thereunder, and such principal amount has not been increased from that amount shown on such Schedule. (q) SURVIVING DEBT. Set forth on Schedule 3.01(d) hereto is a complete and accurate list of all Debt surviving the Initial Extension of Credit and set forth on Schedule 3.05(d) is a complete and accurate list of all Surviving Debt, showing as of the date of such Schedules the principal amount outstanding thereunder, the maturity date thereof and the amortization schedule therefor, and such principal amount has not been increased from that amount shown on such Schedule. ARTICLE V COVENANTS OF THE BORROWERS ARTICLE V COVENANTS OF THE BORROWERS SECTION 5.01. AFFIRMATIVE COVENANTS.01. AFFIRMATIVE COVENANTS. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, each Borrower will: 73 (a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA, Environmental Laws and the Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act of 1970, except such as may be contested in good faith or as to which a bona fide dispute may exist and except to the extent that noncompliance therewith could not reasonably be expected to have a Material Adverse Effect. (b) PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges or levies imposed upon it or upon its property prior to the date on which material penalties attach thereto, and (ii) all lawful material claims that, if unpaid, might by law become a material Lien upon the property of the U.S. Borrower or its Restricted Subsidiaries not otherwise expressly permitted under this Agreement; PROVIDED, HOWEVER, that neither Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves (in the good faith judgment of its management) are being maintained in accordance with GAAP. (c) MAINTENANCE OF INSURANCE. Maintain, and cause each of its Restricted Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (at the time the relevant coverage is placed or renewed) in such amounts and covering such risks as is usually carried by companies engaged in the same or similar businesses and owning similar properties in the same general areas in which such Borrower or such Restricted Subsidiary operates. (d) PRESERVATION OF CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP EXISTENCE, ETC. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its existence, legal structure, legal name, rights (charter and statutory), permits, licenses, approvals, privileges and franchises, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; PROVIDED, HOWEVER, that each Borrower and its Restricted Subsidiaries may consummate any merger or consolidation permitted under Section 5.02(c) and PROVIDED FURTHER that neither Borrower nor any of its Restricted Subsidiaries shall be required to preserve any right, permit, license, approval, privilege or franchise if the Board of Directors of such Borrower or such Restricted Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Borrower or such Restricted Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to such Borrower, such Restricted Subsidiary or the Lender Parties. (e) CONDUCT OF BUSINESS. From and after the Closing Date, engage, and cause its Subsidiaries (taken as a whole) to engage, primarily in (i) the vehicle component business and any activity or business incidental, directly related or similar thereto, or any other lines of business carried on by such Borrower and its Subsidiaries on the Closing Date or utilizing such Borrower's or Subsidiaries' manufacturing capabilities on the Closing Date and (ii) other 74 businesses or activities that constitute a reasonable extension, development or expansion thereof or that are ancillary or reasonably related thereto. (f) VISITATION RIGHTS. At any reasonable time and from time to time, upon reasonable notice and during normal business hours, permit any authorized representatives designated by the Administrative Agent or the Majority Lenders to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, such Borrower and any of its Restricted Subsidiaries, and to discuss the affairs, finances and accounts of such Borrower and any of its Restricted Subsidiaries with any of their officers or directors and with their independent certified public accountants, PROVIDED, that such Borrower may, if it so chooses, be present at or participate in any such discussion. (g) KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of such Borrower and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time. (h) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause each of its Restricted Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business (including intellectual property) in good working order and condition, ordinary wear and tear excepted, in each case consistent with past practice, and will from time to time make or cause to be made all appropriate repairs, renewals and replacements thereof, except where the failure to do so would not reasonably be likely to have a Material Adverse Effect. (i) TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of its Restricted Subsidiaries to conduct, all transactions otherwise permitted under the Loan Documents with any of their Affiliates on terms that are fair and reasonable and no less favorable to such Borrower or such Restricted Subsidiary than it would obtain in a comparable arm's-length transaction with a Person not an Affiliate, other than (i) transactions between or among the Loan Parties and any Restricted Subsidiaries of the U.S. Borrower, (ii) payment of customary annual fees to KKR or its Affiliates for management consulting and financial services rendered to such Borrower and its Restricted Subsidiaries and investment banking fees paid to KKR or its Affiliates for services rendered to such Borrower and its Restricted Subsidiaries in connection with divestitures, acquisitions, financings and other transactions to the extent permitted under this Agreement, (iii) reasonable and customary fees paid to members of the U.S. Borrower's board of directors, (iv) transactions permitted by Section 5.02(f), and (v) transactions otherwise expressly permitted hereunder. (j) APPLICATION OF TERM A ADVANCE. On the day on which the Term A Loan is borrowed, cause the proceeds received by the Canadian Borrower from the Term A Advance to be distributed by dividend or intercompany loan to the U.S. Borrower, net of the amount of any Canadian withholding taxes or to repay outstanding intercompany loans owed to the U.S. Borrower. 75 (k) COVENANT TO GUARANTY OBLIGATIONS AND TO GIVE SECURITY. When any new Restricted Subsidiary of the U.S. Borrower is formed, acquired or designated by the U.S. Borrower or any of its Restricted Subsidiaries, then, in each case at the expense of the U.S. Borrower, (i) within 20 days after such formation, acquisition or designation, in the case of a new Restricted Subsidiary that is a Domestic Subsidiary of the U.S. Borrower or any of its Restricted Subsidiaries, cause each such Restricted Subsidiary to duly execute and deliver to the Administrative Agent a Subsidiaries Guaranty Supplement under which such Restricted Subsidiary guarantees payment of all the Obligations of the Borrowers under the Loan Documents; PROVIDED, that no Restricted Subsidiary which is not wholly-owned (directly or indirectly) by the U.S. Borrower and the organizational documents or agreements with other shareholders of which prohibit the issuance of any such guaranty shall be required to issue such guaranty if, after using its reasonable efforts, the U.S. Borrower has failed to obtain any necessary consents or approvals for the issuance of such guaranty, (ii) within 20 days after such formation, acquisition or designation in the case of a wholly-owned Restricted Subsidiary which is a first-tier Subsidiary of the U.S. Borrower, cause the U.S. Borrower, to pledge the stock or other equity interests of each such Restricted Subsidiary and to duly execute and deliver a Pledge Agreement Supplement covering such stock and/or a new pledge agreement in substantially the form of the Pledge Agreement or otherwise in form and substance satisfactory to the Administrative Agent, pledging 100% of the issued and outstanding stock or other equity interests owned by the U.S. Borrower in such Restricted Subsidiary, together with delivery to the Administrative Agent of certificates representing such pledged stock or other equity interests accompanied by undated stock powers or other appropriate powers or assignments executed in blank; PROVIDED, in the case of a first-tier Restricted Subsidiary which is a Foreign Subsidiary (other than Canadian Borrower) the U.S. Borrower shall not be required to pledge more than 66% of the issued and outstanding stock or other equity interests of such Restricted Subsidiary, and PROVIDED FURTHER, that the stock of any Restricted Subsidiary which is not wholly-owned (directly or indirectly) will be owned by a wholly owned first-tier Restricted Subsidiary of the U.S. Borrower whose stock or other equity interests have been pledged in accordance with the Loan Documents, (iii) within 20 days after such request, take whatever action (including, without limitation, the filing of Uniform Commercial Code financing statements, the giving of notices and the endorsement of notices on title documents) as may be reasonably necessary or advisable in the opinion of the Administrative Agent to vest in the Administrative Agent (or in any representative of the Administrative Agent designated by it) valid and perfected Liens on the properties purported to be subject to the Pledge Agreement Supplement or pledge agreement delivered pursuant to this Section 5.01(k), enforceable against all third parties in accordance with their terms, and 76 (iv) within 60 days after such request, deliver to the Administrative Agent a signed copy of a favorable opinion, addressed to the Administrative Agent, of counsel for the Borrowers reasonably acceptable to the Administrative Agent as to the matters contained in clauses (i), (ii) and (iii) above, as to such guarantees and security agreements being legal, valid and binding obligations of each of the Borrowers and their respective Restricted Subsidiaries enforceable in accordance with their terms and as to such other matters as the Administrative Agent may reasonably request. (l) INVESTMENTS IN CANADIAN BORROWER. In the case of the U.S. Borrower, make loans or advances, or make equity contributions, to the Canadian Borrower from time to time in amounts sufficient to enable the Canadian Borrower to perform its Obligations pursuant to Sections 2.02(d), 2.04, 2.06, 2.07, 2.12, 9.04(b) and 9.12(b). (m) ESTABLISHMENT OF CASH MANAGEMENT SYSTEMS. Within 180 days of the Closing Date, establish and maintain lockbox accounts and other cash management systems reasonably acceptable to the Administrative Agent. SECTION 5.02. NEGATIVE COVENANTS.02. NEGATIVE COVENANTS. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, neither Borrower will, at any time: (a) LIENS, ETC. Create, incur, assume or suffer to exist, or permit any of its Restricted Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, except: (i) Liens created under the Loan Documents; (ii) Permitted Liens; (iii) Liens existing on the date hereof and described on Schedule 5.02(a) hereto; (iv) (A) purchase money Liens upon or in real property or equipment acquired or held by the Borrowers or any of their Restricted Subsidiaries in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of any such property or equipment to be subject to such Liens, or Liens existing on any such property or equipment at the time of acquisition (other than any such Liens created in contemplation of such acquisition that do not secure the purchase price), or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount and (B) Liens to secure Debt incurred within 270 days of the acquisition, construction or improvement of fixed or capital assets to finance the acquisition, construction or improvement of such fixed or capital assets or otherwise incurred during such 270 day period in respect of Capital Expenditures permitted pursuant to Section 5.02(j); PROVIDED, HOWEVER, that no such Lien shall 77 extend to or cover any property other than the property or equipment being acquired, constructed or improved, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced; and PROVIDED FURTHER, HOWEVER, that the aggregate principal amount of the Debt secured by Liens permitted by this clause (iv) shall not exceed the aggregate amount permitted under Section 5.02(b)(iii)(B) at any time outstanding and that any such Debt shall not otherwise be prohibited by the terms of the Loan Documents; (v) Liens arising in connection with Capitalized Leases permitted under Section 5.02(b)(iii)(B); PROVIDED that no such Lien shall extend to or cover any Collateral or assets other than the assets subject to such Capitalized Leases; (vi) with respect to any Debt incurred pursuant to Section 5.02(b)(iii)(D) or (F) Liens (A) placed upon the assets of any Restricted Subsidiary to secure Debt of such Restricted Subsidiary incurred in connection with any acquisition by such Restricted Subsidiary or (B) placed upon the assets or stock (unless required to be pledged to the Administrative Agent pursuant to Section 5.01(k)) of any acquired Person to secure a guarantee by such Person of any Debt of a Borrower or any Restricted Subsidiary; (vii) the replacement, extension or renewal of any Lien permitted hereunder upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby; (viii) Liens on the stock and/or assets of the Mexico Subsidiary to secure Debt permitted under Section 5.02(b)(ii)(B); and (ix) other Liens securing Obligations of the U.S. Borrower and its Restricted Subsidiaries in an aggregate principal amount not to exceed $10,000,000 at any time outstanding. (b) DEBT. Create, incur, assume or suffer to exist, or permit any of its Restricted Subsidiaries to create, incur, assume or suffer to exist, any Debt other than: (i) in the case of the Borrowers, (A) Subordinated Debt evidenced by the Subordinated Notes, and any Debt extending the maturity of, or refinancing, in whole or in part such Subordinated Notes, PROVIDED that the terms of any such extension or refinancing, and of any agreement entered into and of any instrument issued in connection therewith, are not prohibited by the Loan Documents, PROVIDED, FURTHER, that the principal amount of such Debt shall not be increased above the principal amount thereof outstanding immediately prior to such extension or 78 refinancing, PROVIDED, FURTHER, that the terms relating to principal amount, amortization, maturity, interest rate, subordination, and other material terms of any such extension or refinancing and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lender Parties than the terms of the Subordinated Notes. (B) Debt in respect of Hedge Agreements incurred in the ordinary course of business and consistent with prudent business practice, and (C) Debt consisting of any undertaking by the U.S. Borrower to guaranty the obligations of the Mexico Subsidiary, in an aggregate principal amount not to exceed $35,000,000; (ii) in the case of any of its Restricted Subsidiaries (A) Debt owed to the Borrowers or to a Restricted Subsidiary of the Borrowers, and (B) in the case of the Mexico Subsidiary only, Debt in an aggregate amount not to exceed $35,000,000 at any time outstanding; and (iii) in the case of the Borrowers and any of their Restricted Subsidiaries, (A) Debt under the Loan Documents, (B) Debt secured by Liens permitted by Section 5.02(a)(iv) and Capitalized Leases not to exceed an aggregate amount equal to $50,000,000 at any time outstanding, (C) the Surviving Debt, and any Debt extending the maturity of, or refunding or refinancing, in whole or in part, any Surviving Debt, provided that the terms of any such extending, refunding or refinancing Debt, and of any agreement entered into and of any instrument issued in connection therewith, are not prohibited by the Loan Documents, PROVIDED that the principal amount of such Surviving Debt shall not be increased above the principal amount thereof outstanding immediately prior to such extension, refunding or refinancing, and the direct and contingent obligors therefor shall not be changed, as a result of or in connection with such extension, refunding or refinancing, (D) Debt of any Person existing at the time such Person is merged into or consolidated with, or acquired by, either Borrower or any Restricted Subsidiary or becomes a Restricted Subsidiary of either Borrower in accordance with the provisions of Section 5.02(e)(xi) or (xii); PROVIDED that such Debt was not incurred in contemplation of such merger, consolidation or investment; and PROVIDED FURTHER that neither Borrower nor any Restricted Subsidiary which acquired such Person is liable for such Debt; and PROVIDED FURTHER, that the aggregate amount of all Debt incurred pursuant hereunder 79 shall, when taken together with any Debt incurred pursuant to clause (F) of this Section 5.02(b)(iii), in no event exceed $100,000,000 in the aggregate at any time outstanding, (E) indorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, (F) Debt incurred in connection with an Investment made pursuant to Section 5.02(e)(xi) or (xii); PROVIDED, that the aggregate amount of all Debt incurred pursuant hereunder shall, when taken together with any Debt incurred pursuant to clause (D) of this Section 5.02(b)(iii), in no event exceed $100,000,000 in the aggregate at any time outstanding, (G) Debt consisting of guaranty Obligations in the ordinary course of business of the obligations of suppliers, customers, franchisees and licensees of the U.S. Borrower and its Restricted Subsidiaries, (H) Debt in respect of any bankers' acceptance, letter of credit, warehouse receipt or similar facilities entered into in the ordinary course of business, and (I) other Debt outstanding in an aggregate amount not to exceed $50,000,000 at any time outstanding. (c) MERGERS, ETC. Merge into or consolidate with any Person or permit any Person to merge into it, or permit any of its Restricted Subsidiaries to do so, except that (i) any Restricted Subsidiary of either Borrower may merge into or consolidate with any other Restricted Subsidiary of such Borrower, (ii) either Borrower's Restricted Subsidiaries may merge into such Borrower and (iii) either Borrower or any of its Restricted Subsidiaries may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it; PROVIDED HOWEVER, that in each case referred to in clause (i) through (iii) above, immediately after giving effect thereto, no event shall occur and be continuing or result therefrom that constitutes a Default and, in the case of any merger or consolidation to which any Loan Party is a party, the corporation formed by such consolidation or into which such Loan Party shall be merged shall, at the effective time of such merger or consolidation, (A) assume such Loan Party's Obligations under the Loan Documents and performance of such Loan Party's covenants under the Loan Documents to which it is a party in a writing satisfactory in form and substance to the Majority Lenders and (B), if a party to the Pledge Agreement, take or have taken all action required by Section 8 of the Pledge Agreement, and take or have taken such other action as may be necessary or desirable, or as the Administrative Agent may request, in order to preserve the Liens, and continue the perfection thereof with the same priority, as granted and provided for or purported to be granted and provided for by the Pledge Agreement. (d) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise dispose of, or permit any of its Restricted Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except: 80 (i) sales, transfers or other dispositions of used or surplus equipment, vehicles, inventory or other assets in the ordinary course of its business; (ii) sales of assets for fair value in an aggregate amount not to exceed $100,000,000 during the term of this Agreement; PROVIDED that (A) any non-cash consideration in respect of such sale in the form of Debt of any Person in an amount in excess of $5,000,000 shall be evidenced by a promissory note which shall be pledged to the Administrative Agent for the benefit of the Secured Parties pursuant to the Pledge Agreement as security for the Obligations of such pledgor hereunder, and the Net Cash Proceeds of any such sales shall be applied pursuant to, and in the amount and the order of priority set forth in, Section 2.06(b)(ii), (B) immediately before and after giving effect to such sale, no Default shall have occurred and be continuing or would result therefrom and (C) with respect to any such sale (or series of related sales) in an aggregate amount in excess of $10,000,000, immediately after giving effect to such sale, the U.S. Borrower and its Restricted Subsidiaries shall be in pro forma compliance with the covenants contained in Section 5.04, calculated based on the relevant financial statements delivered pursuant to Section 5.03(b) or (c), as though such sale had occurred at the beginning of the Measurement Period covered thereby, as evidenced by a certificate of the chief financial officer of the U.S. Borrower furnished to the Lender Parties demonstrating such compliance; and (iii) sales or contributions of equipment or other personal property to Restricted Subsidiaries or other joint ventures; PROVIDED, that the aggregate fair market value of the assets so sold or contributed (determined, in each case, at the time of such sale or contribution) does not exceed $15,000,000 during the term of this Agreement. (e) INVESTMENTS IN OTHER PERSONS. Make or hold, or permit any of its Restricted Subsidiaries to make or hold, any Investment in any Person other than: (i) Investments existing on December 31, 1997 and described on Schedule 5.02(e), and any extensions, renewals or reinvestments thereof, so long as the aggregate amount of all Investments pursuant to this clause (measured by the amount actually invested) is not increased at any time above the amount of such Investments existing on such date; (ii) loans and advances to employees in the ordinary course of the business of the Borrowers and their Restricted Subsidiaries as presently conducted in an aggregate amount not to exceed $5,000,000 at any time outstanding and other loans and advances to employees for the purchase of capital stock of the U.S. Borrower; (iii) Investments by the Borrowers and their Restricted Subsidiaries in Cash Equivalents; (iv) Investments by the Borrowers in Hedge Agreements permitted under Section 5.02(b)(i)(B); 81 (v) Investments consisting of intercompany Debt permitted under Section 5.02(b)(ii); (vi) Investments received in connection with the bankruptcy or reorganization of suppliers or customers and in settlement of delinquent obligations of, and other disputes with, customers arising in the ordinary course of business; (vii) Investments to the extent that payment for such Investments is made solely with capital stock of the U.S. Borrower; (viii) Investments constituting non-cash proceeds of sales, transfers and other dispositions of assets to the extent permitted by Section 5.02(d)(ii); (ix) Investments made to pay for the repurchase, retirement or other acquisition of the capital stock of the U.S. Borrower in an aggregate amount at the time of such Investment not in excess of the lesser of (i) the Available Amount at such time and (ii) the aggregate amount of such Investments then permitted to be made under the Subordinated Debt Documents; (x) In the case of the U.S. Borrower, Investments required pursuant to Section 5.01(l); (xi) (A) Investments in Restricted Subsidiaries and (B) Investments in other Persons in an aggregate amount not to exceed $25,000,000; PROVIDED that with respect to all such Investments (A) immediately before and after giving effect thereto, no Default shall have occurred and be continuing or would result therefrom; (B) any business acquired or invested in pursuant to this clause shall comply with the requirements of Section 5.01(e); (C) immediately after giving effect to the acquisition of a company or business pursuant to this clause, the U.S. Borrower and its Restricted Subsidiaries shall be in pro forma compliance with the covenants contained in Section 5.04, calculated based on the relevant financial statements delivered pursuant to Section 5.03(b) or (c), as though such acquisition had occurred at the beginning of the Measurement Period covered thereby, as evidenced by a certificate of the chief financial officer of the U.S. Borrower furnished to the Lender Parties demonstrating such compliance; and (D) the U.S. Borrower shall have a Leverage Ratio, calculated based on the relevant financial statements delivered pursuant to Section 5.03(b) or (c), as though such acquisition had occurred at the beginning of the Measurement Period covered thereby, as evidenced by a certificate of the chief financial officer of the U.S. Borrower furnished to the Lender Parties demonstrating such compliance, for any such Investment made prior to December 31, 2000, of less than or equal to 6.50:1.00 and for any such Investment made thereafter, of less than or equal to 6.00:1.00; and (xii) other Investments in other Persons in an aggregate amount not to exceed $25,000,000 plus, at any time, the Available Amount at such time; PROVIDED that with respect to all such Investments (A) immediately before and after giving effect 82 thereto, no Default shall have occurred and be continuing or would result therefrom; (B) any business acquired or invested in pursuant to this clause shall comply with the requirements of Section 5.01(e); (C) immediately after giving effect to the acquisition of a company or business pursuant to this clause, the U.S. Borrower and its Restricted Subsidiaries shall be in pro forma compliance with the covenants contained in Section 5.04, calculated based on the relevant financial statements delivered pursuant to Section 5.03(b) or (c), as though such acquisition had occurred at the beginning of the Measurement Period covered thereby, as evidenced by a certificate of the chief financial officer of the U.S. Borrower furnished to the Lender Parties demonstrating such compliance. (f) DIVIDENDS, ETC. In the case only of the U.S. Borrower, declare or pay any dividends, purchase, redeem, retire, defease or otherwise acquire for value any of its capital stock or any warrants, rights or options to acquire such capital stock, now or hereafter outstanding, return any capital to its stockholders as such, make any distribution of assets, capital stock, warrants, rights, options, obligations or securities to its stockholders as such, or permit any of its Subsidiaries to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of the U.S. Borrower or any warrants, rights or options to acquire such capital stock or to issue or sell any such capital stock or any warrants, rights or options to acquire such capital stock, except that, so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom, (i) the U.S. Borrower may declare and pay dividends and distributions payable only in common stock of the U.S. Borrower, (ii) the U.S. Borrower may redeem in whole or in part any capital stock of the U.S. Borrower for another class of capital stock or rights to acquire capital stock of the U.S. Borrower or with proceeds from substantially concurrent equity contributions or issuances of new shares of capital stock, PROVIDED that such other class of capital stock contains terms and provisions at least as advantageous to the Lender Parties as those contained in the capital stock redeemed thereby, (iii) the U.S. Borrower may repurchase shares of its capital stock (and/or options or warrants in respect thereof) held by its officers, directors and employees so long as such repurchase is pursuant to, and in accordance with the terms of, management and/or employee stock plans, stock subscription agreements on shareholder agreements, (iv) either Borrower may make Investments permitted by Section 5.02(e)(vii), and (v) the U.S. Borrower may, so long as after giving effect to the payment of any dividends pursuant to this subclause (v) the Leverage Ratio is less than or equal to 4.00:1.00, pay dividends in any Fiscal Year in an amount not to exceed 50% of the Cumulative Available Consolidated Net Income. (g) PREPAYMENTS, ETC. OF DEBT. Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Subordinated Debt; PROVIDED, HOWEVER, that so long as no Default or Event of Default has occurred and is continuing, the U.S. Borrower may optionally prepay, repurchase or redeem Subordinated Notes (i) for an aggregate price not in excess of the Available Amount at the time of such prepayment, repurchase or redemption or (ii) with the proceeds of subordinated Debt that (A) is permitted by Section 5.02(b) and (B) has terms material to the interests of the Lender Parties not materially less advantageous to the Lender Parties. 83 (h) AMENDMENT, ETC. OF DOCUMENTS. Amend or otherwise change, or consent to any amendment or change of, any of the terms of the AKW LLC Agreement, the AKW LP Agreement or any Subordinated Debt Document in a manner that would be adverse to the Lender Parties in any material respect or permit any of its Subsidiaries to do any of the foregoing; PROVIDED, HOWEVER, that the U.S. Borrower may cause AKW LLC or AKW LP to merge or liquidate into a wholly-owned Restricted Subsidiary of the U.S. Borrower without a breach of this subsection (h), subject to the provisions of Section 5.01(k). (i) PARTNERSHIPS, ETC. Become a general partner in any general or limited partnership or joint venture which is not a limited liability entity, or permit any of its Restricted Subsidiaries to do so, other than any Restricted Subsidiary the sole assets of which consist of its interest in such partnership or joint venture. (j) CAPITAL EXPENDITURES. (i) Make, or permit any of its Restricted Subsidiaries to make, any Capital Expenditures that would cause the aggregate amount of all Capital Expenditures of the U.S. Borrower and its Restricted Subsidiaries in any Fiscal Year (exclusive of those described in clauses (ii), (iii), (iv) and (v) below) to exceed an amount equal to (A) for the Fiscal Year 1998, $35,000,000, (B) for the Fiscal Years 1999 and 2000, the greater of $20,000,000 and 5% of Consolidated Revenues as determined for and at the end of the prior Fiscal Year, and (C) for each year thereafter, the greater of $15,000,000 and 5% of Consolidated Revenues, in each case as determined for and at the end of the prior Fiscal Year PLUS, in each case, the Available Amount, PROVIDED that the unused portion of Capital Expenditures permitted in any Fiscal Year and not used in such period may be carried over and added to the amount otherwise permitted in the immediately three succeeding Fiscal Years, it being understood that for purposes of the foregoing, the Borrowers and their Restricted Subsidiaries shall be deemed to have used the amount originally available during each such succeeding Fiscal Year prior to any such carry-over amount, and PROVIDED FURTHER, that the aggregate amount so carried over at any time may not exceed $20,000,000; (ii) Make, or permit any of its Restricted Subsidiaries to make, any Capital Expenditures in the Light Wheels Facility, except that such Capital Expenditures may be made in an amount not to exceed $42,000,000 in the aggregate through December 31, 2002, plus an amount of Capital Expenditures in the Light Wheels Facility pursuant to Section 5.02(j)(i); (iii) Make or permit any of its Restricted Subsidiaries to make, any Capital Expenditures in the Mexico Facility, except that the Mexico Subsidiary may make such Capital Expenditures in an amount not to exceed $36,000,000 in the aggregate through December 31, 2002, plus an amount of Capital Expenditures in the Mexico Facility pursuant to Section 5.02(j)(i); (iv) Make, or permit any of its Restricted Subsidiaries to make, any Capital Expenditures for AKW LP, except that such Capital Expenditures may be made in an amount not to exceed $50,000,000 in the aggregate through December 31, 2002, plus an amount of Capital Expenditures for AKW LP pursuant to Section 5.02(j)(i); and 84 (v) Make, or permit any of its Restricted Subsidiaries to make, any additional Capital Expenditures, except that such additional Capital Expenditures may be made in an aggregate amount not to exceed the lesser of $10,000,000 and the Purchase Price Adjustment Amount. SECTION 5.03. REPORTING REQUIREMENTS.03. REPORTING REQUIREMENTS. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, each Borrower will furnish to the Lender Parties: (a) DEFAULT OR LITIGATION NOTICE. Promptly upon any Responsible Officer of either Borrower or any of their respective Subsidiaries obtaining knowledge thereof, notice of (i) the occurrence of any event that constitutes a Default or an Event of Default, which notice shall specify the nature thereof, the period of existence thereof and what action the appropriate Borrower proposes to take with respect thereto, and (ii) any litigation or governmental proceeding pending against either Borrower or any of their respective Subsidiaries that could reasonably be expected to result in a Material Adverse Effect. (b) QUARTERLY FINANCIALS. As soon as available and in any event within 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, a Consolidated balance sheet of (i) the U.S. Borrower and its Subsidiaries and (ii) if the U.S. Borrower has any Unrestricted Subsidiaries, the U.S. Borrower and its Restricted Subsidiaries, in each case as of the end of such Fiscal Quarter and the related Consolidated statements of income and cash flow for the period commencing at the end of the previous Fiscal Quarter and ending with the end of such Fiscal Quarter and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding Fiscal Year, all in reasonable detail and duly certified (subject to year-end audit adjustments) by the chief financial officer of such Borrower as having been prepared in accordance with GAAP, together with (i) a certificate of said officer stating that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to the nature thereof and the action that such Borrower has taken and proposes to take with respect thereto, (ii) a schedule in form satisfactory to the Administrative Agent of the computations used by the U.S. Borrower in determining compliance with the covenants contained in Sections 5.02(j) and 5.04, PROVIDED that in the event of any change in GAAP used in the preparation of such financial statements, the U.S. Borrower shall also provide, if necessary for the determination of compliance with Sections 5.02(j) and 5.04, a statement of reconciliation conforming such financial statements to GAAP and (iii) if there is any change in the Pro Forma EBITDA Adjustment from the amount set forth in any certificate previously delivered to the Administrative Agent pursuant to Section 5.03(g), setting forth the recalculated amount of such Pro Forma EBITDA Adjustment and, in reasonable detail satisfactory to the Administrative Agent, the calculations and basis thereof. (c) ANNUAL FINANCIALS. As soon as available and in any event within 120 days after the end of each Fiscal Year, a Consolidated balance sheet of (i) such Borrower and its Subsidiaries and (ii) if the U.S. Borrower has any Unrestricted Subsidiaries, such Borrower and its Restricted Subsidiaries, in each case as of the end of such Fiscal Year and the related Consolidated statements of income and cash flow for such Fiscal Year setting forth in each case 85 in comparative form the corresponding figures for the previous Fiscal Year, accompanied by an opinion which shall be unqualified as to the scope of the audit and as to the going concern status of such Borrower and its Subsidiaries or such Borrower and its Restricted Subsidiaries, as the case may be, taken as a whole, of Deloitte & Touche LLP or other independent public accountants of recognized standing acceptable to the Majority Lenders, together with (A) a certificate of such accounting firm to the Lender Parties stating that in the course of the regular audit of the business of such Borrower and its Subsidiaries or such Borrower and its Restricted Subsidiaries, as the case may be, which audit was conducted by such accounting firm in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge that a Default has occurred and is continuing, or if, in the opinion of such accounting firm, a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof, (B) a schedule in form satisfactory to the Administrative Agent of the computations used by the U.S. Borrower in determining, as of the end of such Fiscal Year, compliance with the covenants contained in Sections 5.02(j) and 5.04, PROVIDED that in the event of any change in GAAP used in the preparation of such financial statements, the U.S. Borrower shall also provide, if necessary for the determination of compliance with Sections 5.02(j) and 5.04, a statement of reconciliation conforming such financial statements to GAAP and (C) a certificate of the chief financial officer of such Borrower stating that no Default has occurred and is continuing or, if a default has occurred and is continuing, a statement as to the nature thereof and the action that such Borrower has taken and proposes to take with respect thereto. (d) ANNUAL FORECASTS. As soon as available and in any event no later than 60 days after the beginning of each Fiscal Year, forecasts prepared by management of such Borrower, in reasonable detail and in form customarily prepared by management of such Borrower for its internal use and setting forth an explanation for the principal assumptions on which such forecasts were based, of balance sheets, income statements and cash flow statements on a monthly basis for the Fiscal Year following such Fiscal Year then ended and on an annual basis for each of the four Fiscal Years thereafter. (e) ERISA. Promptly after any Loan Party or any ERISA Affiliate obtains knowledge, or has reason to know, of the occurrence of any of the following events that individually or in the aggregate (including in the aggregate such events previously disclosed or exempt from disclosure hereunder, to the extent the liability therefor remains outstanding), would be reasonably likely to have a Material Adverse Effect, a certificate of a Responsible Officer of the U.S. Borrower setting forth details as to such occurrence and the action, if any, that any Loan Party or any ERISA Affiliate is required or proposes to take, together with any notices (required, proposed or otherwise) given to or filed with or by or received by any Loan Party, any ERISA Affiliate, the PBGC, a Plan participant (other than notices relating to an individual participant's benefits) or the Plan administrator with respect thereto: that a Reportable Event has occurred; that an accumulated funding deficiency has been incurred or an application has been or is to be made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Internal Revenue Code with respect to a Plan; that a Plan having an Unfunded Current Liability has been or is to be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA (including 86 the giving of written notice thereof); that a Plan has an Unfunded Current Liability that has or is reasonably expected to result in a lien under ERISA or the Internal Revenue Code; that proceedings are reasonably expected to be or have been instituted to terminate a Plan having an Unfunded Current Liability (including the giving of written notice thereof); that a proceeding has been instituted against any Loan Party or any ERISA Affiliate pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan; that the PBGC has notified any Loan Party or any ERISA Affiliate of its intention to appoint a trustee to administer any Plan; that any Loan Party or any ERISA Affiliate has failed to make a required installment or other payment pursuant to Section 412 of the Internal Revenue Code with respect to a Plan; or that any Loan Party or any ERISA Affiliate has incurred or is reasonably expected to incur (or has been notified in writing that it will incur) any liability (including any contingent or secondary liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 or the Internal Revenue Code. (f) ENVIRONMENTAL CONDITIONS. Promptly after obtaining knowledge of any one or more of the following environmental matters, unless such environmental matters would not, individually or when aggregated with all other such matters, be reasonably expected to result in a Material Adverse Effect: (i) notice of any pending or threatened Environmental Claim against the U.S. Borrower or any of its Subsidiaries or any Real Estate (as defined below); (ii) notice of any condition or occurrence on any Real Estate that (x) results in noncompliance by the U.S. Borrower or any of its Subsidiaries with any applicable Environmental Law or (y) could reasonably be anticipated to form the basis of an Environmental Claim against the U.S. Borrower or any of its Subsidiaries or any Real Estate; (iii) notice of any condition or occurrence on any Real Estate that could reasonably be anticipated to cause such Real Estate to be subject to any restrictions on the ownership, occupancy, use or transferability of such Real Estate under any Environmental Law; and (iv) notice of the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Estate. All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and the U.S. Borrower's response thereto. The term "REAL ESTATE" shall mean land, buildings and improvements owned or leased by the U.S. Borrower or any of its Subsidiaries, but excluding all operating fixtures and equipment, whether or not incorporated into improvements. (g) PRO FORMA EBITDA ADJUSTMENT CERTIFICATE. Upon the consummation of the acquisition of any Restricted Subsidiary, a certificate of the chief financial officer of the U.S. Borrower demonstrating compliance with the provisions of Section 5.02(e)(xi) and 5.04 and, if there is to be any Pro Forma EBITDA Adjustment, setting forth the amount of such Pro Forma 87 EBITDA Adjustment and, in reasonable detail satisfactory to the Administrative Agent, setting forth the calculations and basis therefor. (h) DESIGNATION CERTIFICATE. Upon the designation of any Subsidiary (A) as a Restricted Subsidiary from an Unrestricted Subsidiary or (B) as an Unrestricted Subsidiary from a Restricted Subsidiary, a certificate of the chief financial officer of the U.S. Borrower certifying as to compliance with the provisions of Section 5.02(a), 5.02(b) and 5.02(e) and demonstrating compliance with the provisions of Section 5.04 and setting forth the calculations and basis therefor, in each case after giving effect to such designation in reasonable detail satisfactory to the Administrative Agent. (i) AMENDMENT OF DOCUMENTS. Promptly after the same shall become effective, copies of any amendment or supplement to, or other modification of, the AKW LP Agreement, the AKW LLC Agreement or any Subordinated Debt Document. (j) SECURITIES REPORTS/OTHER INFORMATION. Promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports that any Loan Party or any of its Subsidiaries sends to its stockholders, and copies of all regular, periodic and special reports, and all registration statements, that any Loan Party or any of its Subsidiaries files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor, or with any national securities exchange (in each case to the extent not theretofore delivered to the Lender Parties pursuant to this Agreement), and with reasonable promptness such other information (financial or otherwise) as the Administrative Agent on its own behalf or on behalf of any Lender Party may reasonably request in writing from time to time SECTION 5.04. FINANCIAL COVENANTS.04. FINANCIAL COVENANTS. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, the U.S. Borrower will: (a) LEVERAGE RATIO. Maintain at the end of each Fiscal Quarter a Leverage Ratio of not more than the ratio set forth below for each Measurement Period set forth below:
MEASUREMENT PERIOD ENDING RATIO ------------- ----- December 31, 1998 6.000:1 March 31, 1999 5.750:1 June 30, 1999 5.750:1 September 30, 1999 5.750:1 December 31, 1999 5.750:1 March 31, 2000 5.500:1 June 30, 2000 5.500:1 September 30, 2000 5.500:1 December 31, 2000 5.500:1 March 31, 2001 5.250:1 June 30, 2001 5.250:1 September 30, 2001 5.250:1
88
MEASUREMENT PERIOD ENDING RATIO ------------- ----- December 31, 2001 5.000:1 March 31, 2002 5.000:1 June 30, 2002 5.000:1 September 30, 2002 4.750:1 December 31, 2002 4.750:1 March 31, 2003 4.500:1 June 30, 2003 4.500:1 September 30, 2003 4.250:1 December 31, 2003 4.250:1 March 31, 2004 4.000:1 and thereafter
(b) INTEREST COVERAGE RATIO. Maintain at the end of each Fiscal Quarter an Interest Coverage Ratio of not less than the ratio set forth below for each Measurement Period set forth below:
MEASUREMENT PERIOD ENDING RATIO ------------- ----- December 31, 1998 1.500:1 March 31, 1999 1.500:1 June 30, 1999 1.500:1 September 30, 1999 1.500:1 December 31, 1999 1.500:1 March 31, 2000 1.625:1 June 30, 2000 1.625:1 September 30, 2000 1.625:1 December 31, 2000 1.625:1 March 31, 2001 1.750:1 June 30, 2001 1.750:1 September 30, 2001 1.750:1 December 31, 2001 1.750:1 March 31, 2002 2.000:1 June 30, 2002 2.000:1
89
MEASUREMENT PERIOD ENDING RATIO ------------- ----- September 30, 2002 2.000:1 December 31, 2002 2.000:1 March 31, 2003 2.000:1 June 30, 2003 2.000:1 September 30, 2003 2.000:1 December 31, 2003 2.000:1 March 31, 2004 2.000:1 June 30, 2004 2.000:1 September 30, 2004 2.500:1 and thereafter
(c) FIXED CHARGE COVERAGE RATIO. Maintain at the end of each Fiscal Quarter a Fixed Charge Coverage Ratio of not less than the ratio set forth below for each Measurement Period set forth below:
MEASUREMENT PERIOD ENDING RATIO ------------- ----- December 31, 1998 1.050: 1 and thereafter
90 ARTICLE VI GUARANTY ARTICLE VI GUARANTY SECTION 6.01. GUARANTY.01. GUARANTY. The U.S. Borrower hereby unconditionally and irrevocably guarantees (the provisions set forth in this Article VI being the "GUARANTY") the punctual payment when due, whether at scheduled maturity or at a date fixed for prepayment or by acceleration, demand or otherwise, of all of the Obligations of the Canadian Borrower now or hereafter existing under or in respect of the Loan Documents, whether direct or indirect, absolute or contingent, and whether for principal, interest, fees, indemnification payments, costs, expenses or otherwise (such Obligations being the "GUARANTEED OBLIGATIONS"), and agrees to pay any and all expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by the Administrative Agent or any of the other Lender Parties in enforcing any rights under this Guaranty. Without limiting the generality of the foregoing, the liability of the U.S. Borrower shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Canadian Borrower under or in respect of the Loan Documents but for the fact that such Guaranteed Obligations are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Canadian Borrower. SECTION 6.02. GUARANTY ABSOLUTE.02. GUARANTY ABSOLUTE. (a) The U.S. Borrower guarantees that all of the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any Requirements of Law now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Administrative Agent or any of the other Lender Parties with respect thereto. The Obligations of the U.S. Borrower under this Guaranty are independent of the Guaranteed Obligations or any other Obligations of the Canadian Borrower under or in respect of the Loan Documents, and a separate action or actions may be brought and prosecuted against the U.S. Borrower to enforce this Guaranty, irrespective of whether any action is brought against the Canadian Borrower or whether the Canadian Borrower is joined in any such action or actions. The liability of the U.S. Borrower under this Guaranty shall be absolute, unconditional and irrevocable irrespective of, and the U.S. Borrower hereby irrevocably waives any defenses it may now have or may hereafter acquire in any way relating to, any and all of the following: (i) any lack of validity or enforceability of any of the Loan Documents or any other agreement or instrument relating thereto; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of the Canadian Borrower under or in respect of the Loan Documents, or any other amendment or waiver of or any consent to departure from any of the Loan Documents (including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Canadian Borrower or any of its Subsidiaries or otherwise); (iii) any taking, exchange, release or nonperfection of any of the Collateral, or any taking, release or amendment or waiver of, or consent to departure from, the Subsidiaries Guaranty or any other guarantee, for all or any of the Guaranteed Obligations; 91 (iv) any manner of application of Collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral for all or any of the Guaranteed Obligations or any other Obligations of the Canadian Borrower under or in respect of the Loan Documents, or any other property and assets of the Canadian Borrower or any of its Subsidiaries; (v) any change, restructuring or termination of the legal structure or existence of the Canadian Borrower or any of its Subsidiaries; (vi) any failure of any of the Lender Parties to disclose to the Canadian Borrower any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Canadian Borrower now or hereafter known to such Lender Party; (vii) the failure of any other Person to execute the Subsidiaries Guaranty or any other guarantee or agreement or the release or reduction of liability of the Canadian Borrower or any other guarantor or surety with respect to the Guaranteed Obligations; or (viii) any other circumstance (including, without limitation, any statute of limitations or any existence of or reliance on any representation by the Administrative Agent or any of the other Lender Parties) that might otherwise constitute a defense available to, or a discharge of, the U.S. Borrower or any other guarantor or surety. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Administrative Agent or any of the other Lender Parties or by any other Person upon the insolvency, bankruptcy or reorganization of the Canadian Borrower or otherwise, all as though such payment had not been made, and the U.S. Borrower hereby unconditionally and irrevocably agrees that it will indemnify the Administrative Agent and each of the other Lender Parties, upon demand, for all of the costs and expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by the Administrative Agent or such other Lender Party in connection with any such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, a fraudulent transfer or a similar payment under any bankruptcy, insolvency or similar Requirements of Law. (b) The U.S. Borrower hereby further agrees that, as between the U.S. Borrower, on the one hand, and the Administrative Agent and the Lender Parties, on the other hand, (i) the Guaranteed Obligations of the Canadian Borrower may be declared to be forthwith due and payable as provided in Section 7.01 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 7.01) for purposes of this Guaranty, notwithstanding any stay, injunction or other prohibition preventing such declaration in respect of such Guaranteed Obligations (or preventing such Guaranteed Obligations from becoming automatically due and payable) as against any other Person and (ii) in the event of any declaration of acceleration of such Guaranteed Obligations (or such Guaranteed Obligations being deemed to have become automatically due and payable) as provided in Section 7.01, such Guaranteed Obligations (whether or not due and payable by the 92 Canadian Borrower) shall forthwith become due and payable by the U.S. Borrower for all purposes of this Guaranty. SECTION 6.03. WAIVERS AND ACKNOWLEDGMENTS.03. WAIVERS AND ACKNOWLEDGMENTS. (a) The U.S. Borrower hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, protest, dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty, and any requirement that the Administrative Agent or any of the other Lender Parties protect, secure, perfect or insure any Lien or any property or assets subject thereto or exhaust any right or take any action against the Canadian Borrower or any other Person or any of the Collateral. (b) The U.S. Borrower hereby waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by the Administrative Agent or the other Lender Parties which in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of the U.S. Borrower or any other rights of the U.S. Borrower to proceed against the Canadian Borrower, any other guarantor or any other Person or any of the Collateral, and (ii) any defense based on any right of setoff or counterclaim against or in respect of the Obligations of the U.S. Borrower under this Guaranty. (c) The U.S. Borrower hereby unconditionally and irrevocably waives any duty on the part of the Administrative Agent or any of the other Lender Parties to disclose to the U.S. Borrower any fact or other matter relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Canadian Borrower or any of its Subsidiaries or the property and assets thereof now or hereafter known by the Administrative Agent or such other Lender Party. (d) The U.S. Borrower hereby unconditionally waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. (e) The U.S. Borrower hereby acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in Section 6.02 and in this Section 6.03 are knowingly made in contemplation of such benefits. SECTION 6.04. SUBROGATION.04. SUBROGATION. The U.S. Borrower hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or may hereafter acquire against the Canadian Borrower or any other insider guarantor that arise from the existence, payment, performance or enforcement of the Obligations of the U.S. Borrower under this Guaranty or any of the other Loan Documents, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Administrative Agent or any of the other Lender Parties against the Canadian Borrower or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute, common law or any other Requirements of Law, including, without limitation, the right to take or receive from such other Loan Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, 93 payment or security on account of such claim, remedy or right, unless and until such time as all of the Guaranteed Obligations and all of the other amounts payable under this Guaranty shall have been paid in full in cash. If any amount shall be paid to the U.S. Borrower in violation of the immediately preceding sentence at any time prior to the latest of the payment in full in cash of all of the Guaranteed Obligations and all of the other amounts payable under this Guaranty, such amount shall be received and held in trust for the benefit of the Administrative Agent and the other Lender Parties, shall be segregated from the other property and funds of the U.S. Borrower and shall be delivered forthwith to the Administrative Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and the other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as Collateral for any of the Guaranteed Obligations or any of the other amounts payable under this Guaranty thereafter arising. If (i) the U.S. Borrower shall pay to the Administrative Agent all or any part of the Guaranteed Obligations and (ii) all of the Guaranteed Obligations and all of the other amounts payable under this Guaranty shall have been paid in full in cash, the Administrative Agent and the other Lender Parties will, at the U.S. Borrower's request and expense, execute and deliver to the U.S. Borrower appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer of subrogation to the U.S. Borrower of an interest in the Guaranteed Obligations resulting from the payment made by the U.S. Borrower under this Guaranty. SECTION 6.05. CONTINUING GUARANTY; ASSIGNMENTS.05. CONTINUING GUARANTY; ASSIGNMENTS. This Guaranty is a continuing guarantee and shall (a) remain in full force and effect until the payment in full in cash of all of the Guaranteed Obligations and all of the other amounts payable under this Guaranty, (b) be binding upon the U.S. Borrower and its successors and assigns and (c) inure to the benefit of, and be enforceable by, the Administrative Agent and the other Lender Parties and their respective successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, any of the Lender Parties may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitment or Commitments, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender under this Article VI or otherwise, in each case as provided in Section 9.07. ARTICLE VII ARTICLE VII EVENTS OF DEFAULT EVENTS OF DEFAULT SECTION 7.01. EVENTS OF DEFAULT.01. EVENTS OF DEFAULT. If any of the following events ("EVENTS OF DEFAULT") shall occur and be continuing: (a) either Borrower shall (i) fail to pay any principal of any Advance owing by it when the same shall become due and payable or (ii) fail to pay any interest on any Advance owing by it, or any fees payable pursuant to Section 2.08, or any other amounts owing by it under any Loan Document, in each case within five days after the due date thereof; or 94 (b) any representation or warranty made by any Loan Party in any Loan Document or any certificate delivered or required to be delivered pursuant thereto shall prove to have been untrue in any material respect on the date as of which made or deemed made; or (c) either Borrower shall default in the due performance or observance by it of any term, covenant or agreement required to be performed or observed by it contained in Section 5.01(j), 5.02, 5.03(a) or 5.04; or (d) any Loan Party shall default in the due performance or observance by it of any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the U.S. Borrower by the Administrative Agent or any Lender Party; or (e) any Loan Party or any of its Subsidiaries shall fail to pay any principal of, premium or interest on or any other amount payable in respect of any Debt that is outstanding in a principal amount of at least $20,000,000 (or its equivalent in another currency) either individually or in the aggregate (but excluding Debt outstanding hereunder) of such Loan Party or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt or otherwise to cause, or to permit the holder thereof to cause, such Debt to mature; or any such Debt shall be declared to be due and payable or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made other than in connection with a sale of assets permitted by Section 5.02(d), in each case prior to the stated maturity thereof; or (f) any Loan Party or any of its Subsidiaries shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against any Loan Party or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it) that is being diligently contested by it in good faith, either such proceeding shall remain undismissed or unstayed for a period of 60 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or any substantial part of its property) shall occur; or any Loan Party or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (f); or 95 (g) one or more judgments or decrees shall be entered against either Borrower or any of the Restricted Subsidiaries involving a liability of $20,000,000 or more in the aggregate for all such judgments and decrees for the Borrowers and their Restricted Subsidiaries (to the extent not paid or fully covered by insurance provided by a carrier not disputing coverage) and any such judgments or decrees shall not have been satisfied, vacated, discharged or stayed or bonded pending appeal within 60 days from the entry thereof; or (h) any provision of any Loan Document after delivery thereof pursuant to Section 3.01, 3.04 or 5.01(k) shall for any reason cease to be valid and binding on or enforceable against any Loan Party party to it, or any such Loan Party shall so state in writing; or (i) any Collateral Document after delivery thereof pursuant to Section 3.01, 3.04, 3.05 or 5.01(k) shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected first priority lien on and security interest in the Collateral purported to be covered thereby; or (j) any Change of Control shall occur; or (k) (i) Any Plan shall fail to satisfy the minimum funding standard required for any plan year or part thereof or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Internal Revenue Code; any Plan is or shall have been terminated or is the subject of termination proceedings under ERISA (including the giving of written notice thereof); an event shall have occurred or a condition shall exist in either case entitling the PBGC to terminate any Plan or to appoint a trustee to administer any Plan (including the giving of written notice thereof); any Plan shall have an accumulated funding deficiency (whether or not waived); or any Loan Party or any ERISA Affiliate has incurred or is likely to incur a liability to or on account of a Plan under Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Internal Revenue Code (including the giving of written notice thereof); and (ii) there could result from any event or events set forth in clause (i) of this Section 7.01(k) the imposition of a lien, the granting of a security interest, or a liability, or the reasonable likelihood of incurring a lien, security interest or liability; and (iii) such lien, security interest or liability will or would be reasonably likely to result in a liability of any Loan Party or any ERISA Affiliate of $20,000,000 or more; then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Appropriate Borrower, declare the obligation of each Appropriate Lender to make Advances (other than Letter of Credit Advances by the Issuing Bank or a Revolving Credit Lender pursuant to Section 2.03(c) and Swing Line Advances by a Revolving Credit Lender pursuant to Section 2.02(b)) and of the Issuing Bank to issue Letters of Credit to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Majority Lenders, (A) by notice to the Appropriate Borrower, declare the Notes, all interest thereon and all other amounts payable under this Agreement and the other Loan Documents to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, 96 all of which are hereby expressly waived by each Borrower and (B) by notice to each party required under the terms of any agreement in support of which a Standby Letter of Credit is issued, request that all Obligations under such agreement be declared to be due and payable; PROVIDED, HOWEVER, that in the event of an actual or deemed entry of an order for relief with respect to any Loan Party or any of its Restricted Subsidiaries under the Federal Bankruptcy Code, (x) the obligation of each Lender to make Advances (other than Letter of Credit Advances by the Issuing Bank or a Revolving Credit Lender pursuant to Section 2.03(c) and Swing Line Advances by a Revolving Credit Lender pursuant to Section 2.02(b)) and of the Issuing Bank to issue Letters of Credit shall automatically be terminated and (y) the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by each Borrower. ARTICLE VIII ARTICLE VIII THE ADMINISTRATIVE AGENT THE ADMINISTRATIVE AGENT SECTION 8.01. AUTHORIZATION AND ACTION.01. AUTHORIZATION AND ACTION. Each Lender Party (in its capacities as a Lender, the Swing Line Bank (if applicable), the Issuing Bank (if applicable) and a potential Hedge Bank) hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of the Notes), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lender Parties and all holders of Notes; PROVIDED, HOWEVER, that the Administrative Agent shall not be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to this Agreement or applicable law. The Administrative Agent agrees to give to each Lender Party prompt notice of each notice given to it by either Borrower pursuant to the terms of this Agreement. SECTION 8.02. ADMINISTRATIVE AGENT'S RELIANCE, ETC..02. ADMINISTRATIVE AGENT'S RELIANCE, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with the Loan Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Administrative Agent: (a) may treat the payee of any Note as the holder thereof until the Administrative Agent receives and accepts an Assignment and Acceptance entered into by the Lender that is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07; (b) may consult with legal counsel (including counsel for any Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender Party and shall not be responsible to any Lender Party for any statements, warranties or representations (whether written or oral) made in or in connection with the Loan Documents; (d) shall not have any 97 duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of any Loan Document on the part of any Loan Party or to inspect the property (including the books and records) of any Loan Party; (e) shall not be responsible to any Lender Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; and (f) shall incur no liability under or in respect of any Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, telecopy or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 8.03. CITICORP AND AFFILIATES.03. CITICORP AND AFFILIATES. With respect to its Commitments, the Advances made by it and the Notes issued to it, Citicorp shall have the same rights and powers under the Loan Documents as any other Lender Party and may exercise the same as though it were not the Administrative Agent; and the term "Lender Party" or "Lender Parties" shall, unless otherwise expressly indicated, include Citicorp in its individual capacity. Citicorp and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, any Loan Party, any of its Subsidiaries and any Person who may do business with or own securities of any Loan Party or any such Subsidiary, all as if Citicorp were not the Administrative Agent and without any duty to account therefor to the Lender Parties. SECTION 8.04. LENDER PARTY CREDIT DECISION.04. LENDER PARTY CREDIT DECISION. Each Lender Party acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender Party and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender Party also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 8.05. INDEMNIFICATION.05. INDEMNIFICATION. (a) Each Lender Party severally agrees to indemnify the Administrative Agent (to the extent not promptly reimbursed by the Borrowers) from and against such Lender Party's ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Administrative Agent under the Loan Documents; PROVIDED, HOWEVER, that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender Party agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any costs and expenses (including, without limitation, reasonable fees and expenses of counsel) payable by the Borrowers under Section 9.04, to the extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the Borrowers. For purposes of this Section 8.05(a), the Lender Parties' respective ratable shares of any amount shall be determined, at any time, according to the sum of (i) the aggregate principal amount of the Advances outstanding at such time and owing to the 98 respective Lender Parties, (ii) their respective Pro Rata Shares of the aggregate Available LC Amount of all Letters of Credit outstanding at such time, (iii) the aggregate unused portions of their respective Term A Commitments, Term B Commitments and Term C Commitments at such time and (iv) their respective Unused Revolving Credit Commitments at such time; PROVIDED that the aggregate principal amount of Swing Line Advances owing to the Swing Line Bank and of Letter of Credit Advances owing to the Issuing Bank shall be considered to be owed to the Revolving Credit Lenders ratably in accordance with their respective Revolving Credit Commitments. In the event that any Defaulted Advance shall be owing by any Defaulting Lender at any time, such Lender Party's Commitment with respect to the Facility under which such Defaulted Advance was required to have been made shall be considered to be unused for purposes of this Section 8.05(a) to the extent of the amount of such Defaulted Advance. The failure of any Lender Party to reimburse the Administrative Agent promptly upon demand for its ratable share of any amount required to be paid by the Lender Party to the Administrative Agent as provided herein shall not relieve any other Lender Party of its obligation hereunder to reimburse the Administrative Agent for its ratable share of such amount, but no Lender Party shall be responsible for the failure of any other Lender Party to reimburse the Administrative Agent for such other Lender Party's ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender Party hereunder, the agreement and obligations of each Lender Party contained in this Section 8.05(a) shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents. (b) Each Revolving Credit Lender severally agrees to indemnify the Issuing Bank (to the extent not promptly reimbursed by the Borrowers) from and against such Lender Party's ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Issuing Bank in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Issuing Bank under the Loan Documents; PROVIDED, HOWEVER, that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Issuing Bank's gross negligence or willful misconduct. Without limitation of the foregoing, each such Lender Party agrees to reimburse the Issuing Bank promptly upon demand for its ratable share of any costs and expenses (including, without limitation, reasonable fees and expenses of counsel) payable by the Borrowers under Section 9.04, to the extent that the Issuing Bank is not promptly reimbursed for such costs and expenses by the Borrowers. For purposes of this Section 8.05(b), the Lender Parties' respective ratable shares of any amount shall be determined, at any time, according to the sum of (i) the aggregate principal amount of the Advances outstanding at such time and owing to the respective Lender Parties, (ii) their respective Pro Rata Shares of the aggregate Available LC Amount of all Letters of Credit outstanding at such time, (iii) the aggregate unused portions of their respective Term A Commitments, Term B Commitments and Term C Commitments at such time PLUS (iv) their respective Unused Revolving Credit Commitments at such time; PROVIDED that the aggregate principal amount of Swing Line Advances owing to the Swing Line Bank and of Letter of Credit Advances owing to the Issuing Bank shall be considered to be owed to the Revolving Credit Lenders ratably in accordance with their respective Revolving Credit Commitments. In the event that any Defaulted Advance shall be owing by any Defaulting Lender at any time, such Lender Party's Commitment with respect to the Facility under which such Defaulted Advance was required to have been made shall be considered to be unused for purposes of this Section 8.05(b) to the extent of the amount of such Defaulted Advance. The failure of any Lender Party to reimburse the Issuing Bank promptly upon 99 demand for its ratable share of any amount required to be paid by the Lender Parties to the Issuing Bank as provided herein shall not relieve any other Lender Party of its obligation hereunder to reimburse the Issuing Bank for its ratable share of such amount, but no Lender Party shall be responsible for the failure of any other Lender Party to reimburse the Issuing Bank for such other Lender Party's ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender Party hereunder, the agreement and obligations of each Lender Party contained in this Section 8.05(b) shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents. SECTION 8.06. SUCCESSOR ADMINISTRATIVE AGENTS.06. SUCCESSOR ADMINISTRATIVE AGENTS. The Administrative Agent may resign as to any or all of the Facilities at any time by giving written notice thereof to the Lender Parties and the Borrowers and may be removed as to all of the Facilities at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall, with the consent of the U.S. Borrower (such consent not to be unreasonably withheld or delayed) have the right to appoint a successor Administrative Agent as to such of the Facilities as to which the Administrative Agent has resigned or been removed. If no successor Administrative Agent shall have been so appointed by the Majority Lenders and consented to by the U.S. Borrower, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent's giving of notice of resignation or the Majority Lenders' removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Lender Parties and with the consent of the U.S. Borrower (such consent not to be unreasonably withheld or delayed) appoint a successor Administrative Agent, which shall be a commercial bank organized under the laws of the United States or of any State thereof and having a combined capital and surplus of at least $250,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent as to all of the Facilities and upon the execution and filing or recording of such financing statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Majority Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under the Loan Documents. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent as to less than all of the Facilities and upon the execution and filing or recording of such financing statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Majority Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Administrative Agent as to such Facilities, other than with respect to funds transfers and other similar aspects of the administration of Borrowings under such Facilities, issuances of Letters of Credit (notwithstanding any resignation as Administrative Agent with respect to the Letter of Credit Facility) and payments by the Borrowers in respect of such Facilities, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement as to such Facilities, other than as aforesaid. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent as to all of the Facilities, the provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent as to any Facilities under this Agreement. 100 SECTION 8.07. ARRANGER, SYNDICATION AGENT AND DOCUMENTATION AGENT.07. ARRANGER, SYNDICATION AGENT AND DOCUMENTATION AGENT. The Arranger (both as defined herein and as defined in the Original Credit Agreement), the Syndication Agent and the Documentation Agent shall have no duties or obligations under this Agreement or the other Loan Documents in their respective capacities as such Arranger, Syndication Agent and Documentation Agent. ARTICLE IX MISCELLANEOUS ARTICLE IX MISCELLANEOUS SECTION 9.01. AMENDMENTS, ETC..01. AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement or the Notes or any other Loan Document, nor consent to any departure by either Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed (or, in the case of the Collateral Documents, consented to) by the Majority Lenders, 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 (a) no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders (other than any Lender that is, at such time, a Defaulting Lender), do any of the following at any time: (i) waive any of the conditions specified in Section 3.01, 3.04 or 3.05 or, in the case of the Initial Extension of Credit or the Term C Borrowing, Section 3.02, (ii) change the number of Lenders or the percentage of (x) the Commitments, (y) the aggregate unpaid principal amount of the Advances or (z) the aggregate Available LC Amount of outstanding Letters of Credit that, in each case, shall be required for the Lenders or any of them to take any action hereunder, (iii) release all or substantially all of the Collateral in any transaction or series of related transactions, (iv) amend this Section 9.01, (v) release the U.S. Borrower from its guaranty obligations or reduce or limit the obligations of the U.S. Borrower under Section 6.01 of the Guaranty or (vi) otherwise limit either Borrower's liability with respect to the Obligations owing to the Administrative Agent and the Lender Parties under any of the Loan Documents, (b) no amendment, waiver or consent shall, unless in writing and signed by the Majority Lenders and each Appropriate Lender if affected by such amendment, waiver or consent, (i) increase the Commitments of such Lender or subject such Lender to any additional obligations, (ii) reduce the principal of, or interest (other than a waiver of increased interest following Default pursuant to Section 2.07(b)) on, the Notes held by such Lender or any fees or other amounts payable hereunder to such Lender or (iii) postpone any date fixed for any payment of interest on the Notes held by such Lender or any fees or other amounts payable hereunder to such Lender or the final maturity date of any Facility and (c) no amendment, waiver or consent shall, unless in writing and signed by the Majority Lenders (all of which shall be Appropriate Lenders), waive, reduce, postpone or change the order of application of, or right to decline to receive, any repayment or prepayment of principal required to be paid pursuant Sections 2.04 or 2.06; PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Bank or the Issuing Bank, as the case may be, in addition to the Lenders required above to take such action, affect the rights or obligations of the Swing Line Bank or of the Issuing Bank, as the case may be, under this Agreement; and PROVIDED FURTHER that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement. 101 SECTION 9.02. NOTICES, ETC..02. NOTICES, ETC. All notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopy or telex communication) and mailed, telegraphed, telecopied, telexed or delivered, if to the U.S. Borrower, to its address at 2315 Adams Lane, P.O. Box 40, Henderson, KY 42420, Attn: William Greubel, with a copy to KKR at 2800 Sand Hill Road, Suite 200, Menlo Park, CA 94205, Attn: Todd Fisher; if to the Canadian Borrower, addressed to it c/o the U.S. Borrower at the U.S. Borrower's address; if to any Initial Lender or the Initial Issuing Bank, to its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender Party, to its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender Party; and if to the Administrative Agent, to its address at 399 Park Avenue, New York, New York 10043, Attention: James Garvin; or, as to either Borrower or the Administrative Agent, to such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the U.S. Borrower and the Administrative Agent pursuant to this Section 9.02. All such notices and communications shall, when mailed, telegraphed, telecopied or telexed, be effective when deposited in the mails, delivered to the telegraph company, transmitted by telecopier or confirmed by telex answerback, respectively, except that notices and communications to the Administrative Agent pursuant to Sections 2.02, 2.03, 2.05, 2.06(a) and (c) and 2.09(a) and with respect to selected Interest Periods in respect of Eurodollar Rate Advances shall not be effective until received by the Administrative Agent. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof. SECTION 9.03. NO WAIVER; REMEDIES.03. NO WAIVER; REMEDIES. No failure on the part of any Lender Party or the Administrative Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9.04. COSTS, EXPENSES.04. COSTS, EXPENSES. (a) Each Borrower agrees to pay on demand (i) all costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery, administration, modification and amendment of the Loan Documents (including, without limitation, (A) all due diligence, collateral review, syndication, transportation, computer, duplication, appraisal, audit, insurance, consultant, search, filing and recording fees and expenses and (B) the reasonable fees and expenses of counsel for the Administrative Agent with respect thereto, with respect to advising the Administrative Agent as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under the Loan Documents, with respect to negotiations with any Loan Party or with other creditors of any Loan Party or any of its Subsidiaries arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditors' rights generally and any proceeding ancillary thereto) and (ii) all costs and expenses of the Administrative Agent and the Lender Parties in connection with the enforcement of the Loan Documents, whether in any action, suit or litigation, any bankruptcy, insolvency or other similar proceeding affecting creditors' rights generally (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent and each Lender Party with respect thereto). 102 (b) Each Borrower agrees to indemnify and hold harmless the Administrative Agent, each Lender Party and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an "INDEMNIFIED PARTY") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated thereby, including, without limitation, any acquisition or proposed acquisition (including, without limitation, the Acquisition, the AKW Acquisition and any of the other transactions contemplated hereby) by the Investor Group or any of their Subsidiaries or Affiliates of all or any portion of the stock or substantially all the assets of such Borrower or any of its Subsidiaries or (ii) the actual or alleged presence of Hazardous Materials on any property of any Loan Party or any of its Subsidiaries or any Environmental Action relating in any way to any Loan Party or any of its Subsidiaries, except to the extent, in each case, such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Loan Party, its directors, shareholders or creditors or an Indemnified Party or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. (c) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by either Borrower to or for the account of a Lender Party other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.06, 2.09(b)(i) or 2.10(c), acceleration of the maturity of the Notes pursuant to Section 7.01 or for any other reason, such Borrower shall, upon demand by such Lender Party (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender Party any amounts required to compensate such Lender Party for any additional losses, costs or expenses that it may reasonably incur as a result of such payment, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender Party to fund or maintain such Advance. (d) If any Loan Party fails to pay when due any costs, expenses or other amounts payable by it under any Loan Document, including, without limitation, fees and expenses of counsel and indemnities, such amount may be paid on behalf of such Loan Party by the Administrative Agent or any Lender Party, in its sole discretion. (e) Without prejudice to the survival of any other agreement of any Loan Party hereunder or under any other Loan Document, the agreements and obligations of the Borrowers contained in Sections 2.10 and 2.12 and this Section 9.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under any of the other Loan Documents. SECTION 9.05. RIGHT OF SET-OFF.05. RIGHT OF SET-OFF. Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the 103 consent specified by Section 7.01 to authorize the Administrative Agent to declare the Notes due and payable pursuant to the provisions of Section 7.01, each Lender Party and each of its respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender Party or such Affiliate to or for the credit or the account of either Borrower against any and all of the Obligations of such Borrower now or hereafter existing under this Agreement and the Note or Notes (if any) held by such Lender Party, irrespective of whether such Lender Party shall have made any demand under this Agreement or such Note or Notes and although such obligations may be unmatured. Each Lender Party agrees promptly to notify such Borrower after any such set-off and application; PROVIDED, HOWEVER, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender Party and its respective Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender Party and its respective Affiliates may have. SECTION 9.06. BINDING EFFECT.06. BINDING EFFECT. This Agreement shall become effective when it shall have been executed by each Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Initial Lender and the Initial Issuing Bank that such Initial Lender and the Initial Issuing Bank has executed it and thereafter shall be binding upon and inure to the benefit of each Borrower, the Administrative Agent and each Lender Party and their respective successors and assigns, except that neither Borrower shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lender Parties. SECTION 9.07. ASSIGNMENTS AND PARTICIPATIONS.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may, with the consent of the Administrative Agent, and, so long as no Event of Default has occurred and is continuing, with the consent of the Appropriate Borrower (in each case, such consent not to be unreasonably withheld), assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment or Commitments, the Advances owing to it and the Note or Notes held by it); PROVIDED, however, that no consent by either Borrower or the Administrative Agent shall be required for an assignment to any Person who is an Affiliate of such Lender, and PROVIDED, FURTHER, that (i) each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under and in respect of one or more Facilities, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an assignment of all of a Lender's rights and obligations under this Agreement or all of a Lender's rights and obligations with respect to its Term B Commitment, the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000 (or integral multiples of $1,000,000 in excess thereof), (iii) each such assignment shall be to an Eligible Assignee, and (vi) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Note or Notes subject to such assignment and, other than in the case of an assignment to an Affiliate of such Lender, a processing and recordation fee of $3,000; PROVIDED, however, that the foregoing processing and recordation fee for any assignment made pursuant to this Section 9.07 on or prior to March 31, 1998 which is, in the opinion of the Administrative Agent, associated with the original syndication of the Facilities, will be waived. 104 (b) Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the case may be, hereunder and (y) the Lender or Issuing Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's or Issuing Bank's rights and obligations under this Agreement, such Lender or Issuing Bank shall cease to be a party hereto). (c) By executing and delivering an Assignment and Acceptance, the Lender Party assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender Party makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other Loan Document or any other instrument or document furnished pursuant hereto or thereto; (ii) such assigning Lender Party makes no representation or warranty and assumes no responsibility with respect to the financial condition of either Borrower or any other Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Lender Party or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Administrative Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender or Issuing Bank, as the case may be. (d) The Administrative Agent, acting for this purpose (but only for this purpose) as the agent of the Borrowers, shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lender Parties and the Commitment under each Facility of, and principal amount of the Advances owing under each Facility to, each Lender Party from time to time (the "REGISTER"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers, the Administrative Agent and the Lender Parties shall treat each Person whose name is recorded in the Register as a Lender Party hereunder for all purposes of this 105 Agreement. The Register shall be available for inspection by the Borrowers or any Lender Party at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender Party and an assignee, together with any Note or Notes subject to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Appropriate Borrower. In the case of any assignment by a Lender, within five Business Days after its receipt of such notice, the Appropriate Borrower, at its own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Note or Notes a new Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it under a Facility pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereunder under such Facility, a new Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A-1, A-2, A-3 or A-4 hereto, as the case may be. (f) The Issuing Bank may, with the consent of the Administrative Agent, and, so long as no Event of Default shall have occurred and be continuing, with the consent of the U.S. Borrower (such consent not to be unreasonably withheld), assign to an Eligible Assignee all of its rights and obligations under the undrawn portion of its Letter of Credit Commitment at any time; PROVIDED, HOWEVER, that (i) each such assignment shall be to an Eligible Assignee and (ii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with a processing and recordation fee of $3,000. (g) Each Lender Party may sell participations to one or more Persons (other than any Loan Party or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it and the Note or Notes (if any) held by it); PROVIDED, HOWEVER, that (i) such Lender Party's rights and obligations under this Agreement (including, without limitation, its Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender Party shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrowers, the Administrative Agent and the other Lender Parties shall continue to deal solely and directly with such Lender Party in connection with such Lender Party's rights and obligations under this Agreement, (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by any Loan Party therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest (other than increased interest following Default pursuant to Section 2.07(b)) on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, postpone any Termination Date, or date fixed for payment of interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or release the U.S. Borrower from its Obligations under Article VI hereof, or all or substantially all of the Collateral, and (vi) neither Borrower shall be subject to any increased liability to any Lender Party pursuant to this Agreement by virtue of such participation. 106 (h) Any Lender Party may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrowers furnished to such Lender Party by or on behalf of the Borrowers; PROVIDED, HOWEVER, that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Confidential Information received by it from such Lender Party. (i) Notwithstanding any other provision set forth in this Agreement, any Lender Party may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. SECTION 9.08. REPLACEMENTS OF LENDERS UNDER CERTAIN CIRCUMSTANCES9.08. REPLACEMENTS OF LENDERS UNDER CERTAIN CIRCUMSTANCES. The U.S. Borrower shall be permitted to replace any Lender that (a) requests reimbursement for amounts owing pursuant to Section 2.10 or 2.12, (b) is affected in the manner described in Section 2.10(c) and as a result thereof any of the actions described in such Section is required to be taken or (c) becomes a Defaulting Lender, with a replacement bank or other financial institution, PROVIDED that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) the Appropriate Borrower shall repay (or the replacement bank or institution shall purchase, at par) all Loans and other amounts (other than any disputed amounts), pursuant to Section 2.10, 2.11 or 2.12, as the case may be) owing to such replaced Lender prior to the date of replacement, (iv) the replacement bank or institution, if not already a Lender, and the terms and conditions of such replacement, shall be reasonably satisfactory to the Administrative Agent, (v) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 9.07 (provided that such Borrower shall be obligated to pay the registration and processing fee referred to therein) and (vi) any such replacement shall not be deemed to be a waiver of any rights that either Borrower, the Administrative Agent or any other Lender Party shall have against the replaced Lender. SECTION 9.09. EXECUTION IN COUNTERPARTS.09. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. 107 SECTION 9.10. NO LIABILITY OF THE ISSUING BANK.10. NO LIABILITY OF THE ISSUING BANK. The U.S. Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither the Issuing Bank nor any of its officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, EXCEPT that the U.S. Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to the U.S. Borrower, to the extent of any direct, but not consequential, damages suffered by the U.S. Borrower that the U.S. Borrower proves were caused by (i) the Issuing Bank's willful misconduct or gross negligence in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank 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. SECTION 9.11. CONFIDENTIALITY.11. CONFIDENTIALITY. The Administrative Agent and each Lender shall hold all non-public information furnished by or on behalf of either Borrower in connection with such Lender's evaluation of whether to become a Lender hereunder or obtained by such Lender or the Administrative Agent pursuant to the requirements of this Agreement ("CONFIDENTIAL INFORMATION"), in accordance with its customary procedure for handling confidential information of this nature and (in the case of a Lender that is a bank) in accordance with safe and sound banking practices. Neither the Administrative Agent nor any Lender Party shall disclose any Confidential Information to any Person without the consent of the Borrowers, other than (a) to the Administrative Agent's or such Lender Party's Affiliates and their officers, directors, employees, agents and advisors and to actual or prospective Eligible Assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process and (c) as requested or required by any state, federal or foreign authority or examiner regulating such Lender Party or the Administrative Agent. SECTION 9.12. JURISDICTION, ETC..12. JURISDICTION, ETC. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each Borrower irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Borrower at its address specified in Section 9.02 and agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall 108 limit the right to sue in any other jurisdiction. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction. (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. SECTION 9.13. JUDGMENT.13. JUDGMENT. (a) If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder or under any of the other Loan Documents in U.S. dollars into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase U.S. dollars with such other currency at Citibank on the Business Day preceding that on which final judgment is given. (b) The obligation of each Borrower in respect of any sum due from it to any Lender Party or the Administrative Agent hereunder or under any of the other Loan Documents held by such Lender Party shall, notwithstanding any judgment in a currency other than U.S. dollars, be discharged only to the extent that on the Business Day of receipt by such Lender Party or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such other currency such Lender Party or the Administrative Agent (as the case may be) may in accordance with normal banking procedures purchase U.S. dollars with such other currency; if the U.S. dollars so purchased are less than the sum originally due by such Borrower to such Lender Party or the Administrative Agent (as the case may be) in U.S. dollars, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender Party or the Administrative Agent (as the case may be) against such loss, and if the U.S. dollars so purchased exceed the sum originally due by such Borrower to any Lender Party or the Administrative Agent (as the case may be) in U.S. dollars, such Lender Party or the Administrative Agent (as the case may be) agrees to remit to such Borrower such excess. SECTION 9.14. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS9.14. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. Each Borrower hereby confirms and agrees that each of the Term A Notes, the Term B Notes and the Revolving Credit Notes, to the extent each is outstanding as of the date hereof, is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, upon the effectiveness of this Agreement and on and after the date hereof, each reference in such Notes to the "Credit Agreement", "thereunder", "thereof", "therein" or words of like import referring to the Original Credit Agreement shall mean and be a reference to this Agreement. 109 SECTION 9.15. GOVERNING LAW.15. GOVERNING LAW. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York, United States. SECTION 9.16. WAIVER OF JURY TRIAL.16. WAIVER OF JURY TRIAL. Each of the Borrowers, the Administrative Agent and the Lender Parties irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the Advances or the actions of the Administrative Agent or any Lender Party in the negotiation, administration, performance or enforcement thereof. 110 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. ACCURIDE CORPORATION By___________________________________________ Name: Title: ACCURIDE CANADA INC. By____________________________________________ Name: Title: CITICORP USA, INC., as Administrative Agent and Swing Line Bank By____________________________________________ Name: Title: CITIBANK, N.A., as Initial Issuing Bank By____________________________________________ Name: Title: SALOMON SMITH BARNEY INC., as Arranger By____________________________________________ Name: Title: BANKERS TRUST COMPANY, as Syndication Agent By___________________________________________ Name: Title: WELLS FARGO BANK N.A., as Documentation Agent By___________________________________________ Name: Title: INITIAL LENDERS BANK OF AMERICA CANADA By___________________________________________ Name: Title: BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION By__________________________________________ Name: Title: THE BANK OF NEW YORK By_________________________________________ Name: Title: THE BANK OF NOVA SCOTIA By_________________________________ Name: Title: BANKERS TRUST COMPANY By_________________________________ Name: Title: CITIBANK CANADA By_________________________________ Name: Title: CITICORP USA, INC. By_________________________________ Name: Title: COMERICA BANK By_________________________________ Name: Title: DEEPROCK & COMPANY By: Eaton Vance Management as Investment Advisor By_________________________________ Name: Title: THE FIRST NATIONAL BANK OF CHICAGO By_________________________________ Name: Title: FIRST CHICAGO NBD BANK, CANADA By_________________________________ Name: Title: FLEET NATIONAL BANK By_________________________________ Name: Title: FUJI BANK CANADA By_________________________________ Name: Title: THE FUJI BANK, LIMITED, NEW YORK BRANCH By_________________________________ Name: Title: KZH SOLEIL-2 LLC By_________________________________ Name: Title: KZH STERLING LLC By_________________________________ Name: Title: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. By_________________________________ Name: Title: MERRILL LYNCH PRIME RATE PORTFOLIO By_________________________________ Name: Title: MERRILL LYNCH INCOME STRATEGIES By_________________________________ Name: Title: MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST By_________________________________ Name: Title: NATIONAL WESTMINSTER BANK PLC By_________________________________ Name: Title: PRIME INCOME TRUST By_________________________________ Name: Title: ROYAL BANK OF CANADA By_________________________________ Name: Title: By_________________________________ Name: Title: THE SUMITOMO BANK, LIMITED By_________________________________ Name: Title: THE SUMITOMO BANK OF CANADA By_________________________________ Name: Title: WELLS FARGO BANK N.A. By_________________________________ Name: Title: BANK LEUMI USA By_________________________________ Name: Title: CITY NATIONAL BANK By_________________________________ Name: Title: FIRSTAR BANK, N.A. By_________________________________ Name: Title: NATIONSBANK, N.A. By_________________________________ Name: Title: SOUTHERN PACIFIC BANK By_________________________________ Name: Title: TORONTO DOMINION BANK By_________________________________ Name: Title: DEAN WITTER INTERCAPITAL By_________________________________ Name: Title: PACIFICA PARTNERS I, L.P. By: Imperial Credit Asset Management As its Investment Manager By_________________________________ Name: Title: EATON VANCE INSTITUTIONAL SENIOR LOAN TRUST By: Eaton Vance Management as Investment ___________________________________________ Name: Title: EATON VANCE INSTITUTIONAL SENIOR LOAN FUND By: Eaton Vance Management, as Investment Advisor ___________________________________________ Name: Title: EATON VANCE SENIOR INCOME TRUST By: Eaton Vance Management as Investment Advisor ___________________________________________ Name: Title: SENIOR DEBT PORTFOLIO By: Boston Management and Research, as Investment Advisor ___________________________________________ Name: Title: CYPRESS By_________________________________________ Name: Title: FIRST DOMINION CAPITAL, LLC By_________________________________________ Name: Title: FRANKLIN FLOATING RATE TRUST By_________________________________________ Name: Title: KZH WATERSIDE LLC By_________________________________________ Name: Title: HARCH CAPITAL MANAGEMENT, INC. By_________________________________________ Name: Title: HIGHLAND CAPITAL MANAGEMENT, L.P. By_________________________________________ Name: Title: IMPERIAL CREDIT INDUSTRIES By_________________________________________ Name: Title: FLOATING RATE PORTFOLIO By: INVESCO Senior Secured Management, Inc. as attorney in fact By_________________________________________ Name: Title: MASS. MUTUAL LIFE CO. By_________________________________________ Name: Title: SANKATY ADVISORS, INC. By_________________________________________ Name: Title: SUN AMERICA By_________________________________________ Name: Title: PINEHURST TRADING, INC. By_________________________________________ Name: Title: TRUST CO., OF THE WEST By_________________________________________ Name: Title: $373,650,000 AMENDED AND RESTATED CREDIT AGREEMENT Dated as of April 16, 1999 Among ACCURIDE CORPORATION and ACCURIDE CANADA INC. AS BORROWERS and THE INITIAL LENDERS, INITIAL ISSUING BANK AND SWING LINE BANK NAMED HEREIN AS INITIAL LENDERS, INITIAL ISSUING BANK AND SWING LINE BANK and CITICORP USA, INC. AS ADMINISTRATIVE AGENT and SALOMON SMITH BARNEY INC. AS ARRANGER and BANKERS TRUST COMPANY AS SYNDICATION AGENT and WELLS FARGO BANK N.A. AS DOCUMENTATION AGENT T A B L E O F C O N T E N T S
SECTION PAGE ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.01. Certain Defined Terms.............................................................................2 1.02. Computation of Time Periods......................................................................35 1.03. Accounting Terms.................................................................................36 1.04. Currency Equivalent..............................................................................36 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCESAND THE LETTERS OF CREDIT 2.01. The Advances.....................................................................................36 2.02. Making the Advances..............................................................................38 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit...............................40 2.04. Repayment of Advances............................................................................42 2.05. Termination or Reduction of the Commitments......................................................44 2.06. Prepayments......................................................................................45 2.07. Interest.........................................................................................47 2.08. Fees.............................................................................................48 2.09. Conversion of Advances...........................................................................49 2.10. Increased Costs, Etc.............................................................................49 2.11. Payments and Computations........................................................................51 2.12. Taxes............................................................................................53 2.13. Sharing of Payments, Etc.........................................................................57 2.14. Use of Proceeds..................................................................................58 2.15. Defaulting Lenders...............................................................................58 ARTICLE III CONDITIONS OF EFFECTIVENESS AND LENDING 3.01. Conditions Precedent to the Initial .............................................................60 3.02. Conditions Precedent to Each Borrowing and Issuance..............................................65 3.03. Determinations Under Sections 3.01, 3.04 and 3.05................................................65 3.04. Conditions Precedent to the Effectiveness of this Agreement......................................65 ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.01. Representations and Warranties of Each Borrower..................................................69 ARTICLE V COVENANTS OF THE BORROWERS 5.01. Affirmative Covenants............................................................................74 5.02. Negative Covenants...............................................................................77
5.03. Reporting Requirements...........................................................................85 5.04. Financial Covenants..............................................................................88 ARTICLE VIGUARANTY 6.01. Guaranty.........................................................................................90 6.02. Guaranty Absolute................................................................................91 6.03. Waivers and Acknowledgments......................................................................92 6.04. Subrogation......................................................................................93 6.05. Continuing Guaranty; Assignments.................................................................94 ARTICLE VII EVENTS OF DEFAULT 7.01. Events of Default................................................................................94 ARTICLE VIII THE ADMINISTRATIVE AGENT 8.01. Authorization and Action.........................................................................97 8.02. Administrative Agent's Reliance, Etc.............................................................97 8.03. Citicorp and Affiliates..........................................................................98 8.04. Lender Party Credit Decision.....................................................................98 8.05. Indemnification..................................................................................98 8.06. Successor Administrative Agents.................................................................100 8.07. Arranger, Syndication Agent and Documentation Agent.............................................101 ARTICLE IXMISCELLANEOUS 9.01. Amendments, Etc.................................................................................101 9.02. Notices, Etc....................................................................................102 9.03. No Waiver; Remedies.............................................................................102 9.04. Costs, Expenses.................................................................................102 9.05. Right of Set-off................................................................................103 9.06. Binding Effect..................................................................................104 9.07. Assignments and Participations..................................................................104 9.08. Replacements of Lenders Under Certain Circumstances.............................................107 9.09. Execution in Counterparts.......................................................................107 9.10. No Liability of the Issuing Bank................................................................107 9.11. Confidentiality.................................................................................108 9.12. Jurisdiction, Etc...............................................................................108 9.13. Judgment........................................................................................109 9.14. Reference to and Effect on the Loan Documents...................................................109 9.15. Governing Law...................................................................................109 9.16. Waiver of Jury Trial............................................................................110
CONSENT - ------- SCHEDULES - --------- Schedule I Commitments and Applicable Lending Offices Schedule II Subsidiary Guarantors Schedule 3.01(d) Original Credit Agreement Surviving Debt Schedule 3.01(l) Restructuring Memorandum Schedule 3.05(d) Surviving Debt Schedule 4.01(a) Investor Group Schedule 4.01(b) Subsidiaries Schedule 4.01(d) Government and Third Party Approvals Schedule 4.01(p) Existing Debt Schedule 5.02(a) Existing Liens Schedule 5.02(e) Existing Investments EXHIBITS - -------- Exhibit A-1 - Form of Term A Note Exhibit A-2 - Form of Term B Note Exhibit A-3 - Form of Revolving Credit Note Exhibit A-4 Form of Term C Note Exhibit B - Form of Notice of Borrowing Exhibit C - Form of Assignment and Acceptance Exhibit D - Form of Pledge Agreement Exhibit E - Form of Subsidiaries Guaranty Exhibit F - Form of Opinion of Borrowers' Counsel Exhibit G - Form of Opinion of Borrowers' General Counsel Exhibit H - Form of Solvency Opinion Exhibit I - Form of Solvency Certificate Exhibit J - Form of Opinion of Kentucky Counsel
CONSENT Dated as of April 16, 1999 Reference is made to the Amended and Restated Credit Agreement dated as of April 16, 1999 (the "AMENDED AND RESTATED CREDIT AGREEMENT") among Accuride Corporation, a Delaware corporation (the "U.S. BORROWER"), Accuride Canada Inc., a corporation organized and existing under the law of the Province of Ontario (the "CANADIAN BORROWER", and together with the U.S. Borrower, the "BORROWERS"), the banks, financial institutions and other institutional lenders party thereto as "INITIAL LENDERS" thereunder, Citibank, N.A., as the Initial Issuing Bank, Citicorp USA, Inc., as Swing Line Bank and as administrative agent (the "ADMINISTRATIVE AGENT") for the Lender Parties (as defined therein), Salomon Smith Barney Inc., as arranger for the Term C Facility (as defined therein), Bankers Trust Company, as syndication agent for the Lender Parties, and Wells Fargo Bank N. A, as documentation agent for the Lender Parties. The terms defined in the Amended and Restated Credit Agreement and not otherwise defined in this Consent are used in this Consent as defined in the Amended and Restated Credit Agreement. Each of the undersigned, as Subsidiary Guarantors under the Subsidiaries Guaranty dated January 21, 1998 (the "SUBSIDIARIES GUARANTY") in favor of the Administrative Agent and the other Secured Parties, hereby consents to the Amended and Restated Credit Agreement and hereby confirms and agrees that, notwithstanding the effectiveness of the Amended and Restated Credit Agreement, (a) the Subsidiaries Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, upon the effectiveness of the Amended and Restated Credit Agreement and on and after the date hereof, each reference in the Subsidiaries Guaranty to the "Credit Agreement", "thereunder", "thereof", "therein" or words of like import referring to the Original Credit Agreement shall mean and be a reference to the Amended and Restated Credit Agreement, and (b) the Subsidiaries Guaranty does, and shall continue to, guaranty the payment of all the Guaranteed Obligations as defined therein, including, without limitation, all Obligations of each of the Borrowers under the Amended and Restated Credit Agreement and the Notes for or in respect of the Term A Advances, the Term B Advances, the Term C Advances and the Revolving Credit Advances from time to time. ACCURIDE TEXAS INC. By______________________________ Name: Title: ACCURIDE VENTURES, INC. By______________________________ Name: Title: ACCURIDE KENTUCKY HOLDING COMPANY By______________________________ Name: Title: ACCURIDE HENDERSON FACILITIES MANAGEMENT CORPORATION By______________________________ Name: Title: ACCURIDE HENDERSON LIMITED LIABILITY COMPANY By______________________________ Name: Title: ACCURIDE TENNESSEE HOLDING COMPANY By______________________________ Name: Title: ACCURIDE COLUMBIA FACILITIES MANAGEMENT CORPORATION By______________________________ Name: Title: ACCURIDE COLUMBIA LIMITED PARTNERSHIP By Accuride Ventures, Inc., its General Partner By______________________________ Name: Title: EX-10.4 3 EXHIBIT 10.4 Exhibit 10.4 AMENDED AND RESTATED PLEDGE AGREEMENT AMENDED AND RESTATED PLEDGE AGREEMENT dated April 16, 1999 made by ACCURIDE CORPORATION, a Delaware corporation (the "U.S. BORROWER"), ACCURIDE CANADA INC., a corporation organized and existing under the laws of the Province of Ontario (the "CANADIAN BORROWER"), and ACCURIDE VENTURES, INC., a Delaware corporation ("ACCURIDE VENTURES") (together with the U.S. Borrower, the Canadian Borrower and each of the Additional Pledgors (as defined in Section 18(b) below), collectively the "PLEDGORS" and each individually a "PLEDGOR"), to CITICORP USA, INC. ("CUSA"), as administrative agent (the "ADMINISTRATIVE AGENT") for the Lenders and the other Secured Parties (each as defined in the Credit Agreement referred to below). PRELIMINARY STATEMENTS: (1) The U.S. Borrower and the Canadian Borrower entered into a Pledge Agreement dated January 21, 1998 (the "ORIGINAL PLEDGE AGREEMENT") in favor of the Administrative Agent, pursuant to which the U.S. Borrower pledged the Initial Pledged Shares (as defined therein). (2) The Lender Parties, the Administrative Agent, Salomon Smith Barney Inc, as arranger, Bankers Trust Company, as syndication agent and Wells Fargo Bank N.A., as documentation agent have entered into an Amended and Restated Credit Agreement dated as of April 16, 1999 (said Amended and Restated Credit Agreement, as it may hereafter be amended, supplemented or otherwise modified from time to time, being the "CREDIT AGREEMENT"; the terms defined therein and not otherwise defined herein being used herein as therein defined) with the U.S. Borrower and the Canadian Borrower. Pursuant to the Original Credit Agreement, the Term A Lenders made Term A Advances to the Canadian Borrower, the Term B Lenders made Term B Advances to the U.S. Borrower, and the Revolving Credit Lenders made Revolving Credit Advances to the U.S. Borrower, in each case to finance, in part, the acquisition by the Investor Group of not less than 90% of the outstanding shares of common stock of the U.S. Borrower pursuant to the Stock Purchase Agreement and to pay transaction fees and expenses in connection therewith and, in the case of Revolving Credit Advances, to provide working capital for, and for the general corporate purposes of, the U.S. Borrower and its Subsidiaries. Pursuant to the Credit Agreement, the Term C Lenders will make Term C Advances to the U.S. Borrower to refinance debt incurred by the U.S. Borrower in connection with the AKW Acquisition and to prepay in part Revolving Credit Advances outstanding under the Original Credit Agreement, and from time to time the Lender Parties will make Advances to and issue Letters of Credit for the benefit of the U.S. Borrower in order to provide working capital for the U.S. Borrower and its Subsidiaries. (3) The Borrowers may have invested in, or may from time to time hereafter invest in, Hedge Agreements with one or more Lenders to obtain protection against fluctuations in the interest rates applicable to outstanding Advances to the extent permitted by Section 5.02(b)(i)(B) of the Credit Agreement (collectively, the "BANK HEDGE AGREEMENTS"). (4) Each Pledgor is the owner of the type, number and percentage of the issued and outstanding shares of stock, limited liability company membership interests, limited partnership interests and other equity interests set forth opposite name of such Pledgor and described on Schedule I hereto. (5) (a) The U.S. Borrower has opened a cash collateral account (the "U.S. BORROWER CASH COLLATERAL Account") with Citibank, N.A. ("CITIBANK") at its offices at 399 Park --Avenue, New York, New York 10043, Account No. 4075-2223 and (b) the Canadian Borrower has opened a cash collateral account (the "CANADIAN BORROWER CASH COLLATERAL ACCOUNT" and, together with the U.S. Borrower Cash Collateral Account, the "CASH COLLATERAL ACCOUNTS") with Citibank at its Affiliate's offices at 123 Front Street West, Toronto, Ontario, Canada, Account No. 2/012752/027. Each of the Cash Collateral Accounts have been opened in the name of applicable Borrower pursuant to, and for the purpose set forth in Section 2.06(b)(vii) of the Credit Agreement and Section 15(e) of this Agreement, and are under the sole and exclusive dominion and control of the Administrative Agent and subject to the terms of this Agreement. (6) It is a condition precedent to the effectiveness of the Credit Agreement and the making of Term C Advances by the Term C Lenders under the Credit Agreement that the Original Pledge Agreement shall be amended and restated so that (i) the U.S. Borrower shall pledge hereunder, in addition to the Initial Pledged Shares (as defined in the Original Pledge Agreement), its 50% limited liability company membership interest in AKW General Partner L.L.C., a Delaware limited liability company ("AKW LLC"), and its 49% limited partnership interest in AKW L.P., a Delaware limited partnership ("AKW LP"), and (ii) Accuride Ventures shall pledge hereunder its 50% limited liability company membership interest in AKW LLC and its 49% limited partnership interest in AKW LP. NOW, THEREFORE, in consideration of the premises, each Pledgor hereby agrees with the Administrative Agent for its benefit and the ratable benefit of the Secured Parties as follows, and that the Original Pledge Agreement is amended and restated in its entirety to read as follows: SECTION 1. GRANT OF SECURITY1. GRANT OF SECURITY. Each Pledgor hereby assigns and pledges to the Administrative Agent for its benefit and the ratable benefit of the Secured Parties, and hereby grants to the Administrative Agent for its benefit and the ratable benefit of the Secured Parties a security interest in, the following (collectively, the "COLLATERAL"): (a) all of the following (the "SECURITY COLLATERAL"): (i) the shares of stock, limited liability company membership interests, limited partnership interests and other equity interests set forth opposite such Pledgor's name on Schedule I hereto and issued by the Persons named therein (such shares, limited liability company membership interests, limited partnership interests and other equity interests being collectively referred to herein as the "INITIAL PLEDGED INTERESTS", and, together with the Additional Pledged Interests referred to in clause (ii) below and the shares, limited liability company membership interests, limited partnership interests and other equity interests referred to in clause (iii) below, the "PLEDGED INTERESTS"), whether or not evidenced by certificates, and all certificates, if any, representing Initial Pledged Interests and all dividends, distributions, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Interests; 2 (ii) the Additional Pledged Interests as defined and described in each Pledge Agreement Supplement (as defined in Section 18(b) hereof) executed by such Pledgor, whether or not evidenced by certificates, and all certificates, if any, representing such Pledged Interests and all dividends, distributions, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Additional Pledged Interests; (iii) all additional shares of stock, limited liability company membership interests, limited partnership interests and other equity interests in any issuer or issuers of Pledged Interests from time to time acquired by such Pledgor in any manner, whether or not evidenced by certificates, and all certificates, if any, representing such Pledged Interests and all dividends, distributions, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; PROVIDED, HOWEVER, that such Pledgor shall not be required to pledge any shares of stock, limited liability company membership interests, limited partnership interests or other equity interest owned by it in any Foreign Subsidiary, other than the Canadian Borrower (subject, however, to the PROVISO to Section 2 hereof), to the extent that such pledge, when aggregated with all of the other shares, limited liability company membership interests, limited partnership interests or other equity interests in such Subsidiary pledged by such Pledgor and the other Pledgors would result in more than 66% of the voting shares, limited liability company membership interests, limited partnership interests and other equity interests (within the meaning of Treasury Regulation Section 1.956-2(c)(2) promulgated under the Internal Revenue Code) (the "VOTING INTERESTS") being pledged to the Administrative Agent on behalf of itself and the Secured Parties under this Agreement; and PROVIDED FURTHER that if as a result of any change in the tax laws of the United States after the date of this Agreement, the pledge by such Pledgor of any additional shares of stock, limited liability company membership interests or limited partnership interests or other equity interests in such Subsidiary would not result in an increase in the aggregate net consolidated tax liabilities of the U.S. Borrower and its Subsidiaries, then, promptly after the change in such laws, such Pledgor shall pledge all such additional shares of stock, limited liability company membership interests or limited partnership interests and other equity interests to the Administrative Agent under this Agreement; and (iv) all of the Debt from time to time owed to such Pledgor (including, without limitation, such Pledgor that is an Additional Pledgor) by any Person in an aggregate principal amount in excess of $5,000,000 incurred in connection with a transaction permitted by Section 5.02(d)(ii) of the Credit Agreement, and all of the instruments evidencing such Debt, all security therefor and all interest, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Debt; (b) all of the following (collectively, the "ACCOUNT COLLATERAL"): 3 (i) in the case of the U.S. Borrower, the U.S. Borrower Cash Collateral Account, all of the funds held therein and all of the certificates and instruments, if any, from time to time representing or evidencing the U.S. Borrower Cash Collateral Account; (ii) in the case of the Canadian Borrower, the Canadian Borrower Cash Collateral Account, all of the funds held therein and all of the certificates and instruments, if any, from time to time representing or evidencing the Canadian Borrower Cash Collateral Account; (iii) all of the Collateral Investments (as defined in Section 5(b)) made on behalf of such Pledgor from time to time and all of the certificates and instruments, if any, from time to time representing or evidencing any of the Collateral Investments made on behalf of such Pledgor; (iv) all of the notes, certificates of deposit, deposit accounts, checks and other instruments from time to time hereafter delivered to or otherwise possessed by the Administrative Agent for or on behalf of such Pledgor in respect of or in exchange for any or all of the then existing Account Collateral; and (v) all of the interest, dividends, distributions, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Account Collateral; and (c) all of such Pledgor's right, title and interest, whether now owned or hereafter acquired, in the AKW LP Agreement and the AKW LLC Agreement, in each case as such agreement may be amended, supplemented or otherwise modified from time to time (collectively, the "ASSIGNED AGREEMENTS"), including, without limitation, whether now existing or hereafter acquired or arising, (i) all rights of such Pledgor to receive monies and other property or assets due and to become due to such Pledgor under or pursuant to any of the Assigned Agreements, (ii) all claims of such Pledgor for damages arising out of or default under any Assigned Agreement, (iii) all rights of such Pledgor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to any Assigned Agreement, (iv) all rights of such Pledgor to perform under any Assigned Agreement and to receive and compel performance and otherwise exercise all remedies thereunder and (v) any and all other rights, interests and claims of such Pledgor under, relating to or arising in connection with the Assigned Agreements; and (d) all proceeds of any and all of the foregoing Collateral (including, without limitation, proceeds that constitute property of the types described in clauses (a) through (c) of this Section 1). SECTION 2. SECURITY FOR OBLIGATIONS2. SECURITY FOR OBLIGATIONS. The pledge and assignment of and the grant of a security interest in the Collateral by each Pledgor under this Agreement secure the payment of all Obligations of such Pledgor now or hereafter existing under the 4 Loan Documents, whether for principal, interest, fees, indemnities, costs, expenses or otherwise (all such Obligations being the "SECURED OBLIGATIONS" of such Pledgor); PROVIDED, HOWEVER, that the pledge and assignment by the U.S. Borrower of and the grant by the U.S. Borrower of a security interest in the Pledged Interests issued by the Canadian Borrower shall be limited as follows: (i) the pledge and assignment of and the grant of a security interest in 66%, and only 66%, of such Pledged Interests secure the payment of the Obligations of the U.S. Borrower now or hereafter existing under the Loan Documents other than the Obligations of the U.S. Borrower under the Guaranty and (ii) the pledge and assignment of and the grant of a security interest in 100% of such Pledged Interests secure the payment by the U.S. Borrower pursuant to the Guaranty of the Guaranteed Obligations of the Canadian Borrower now or hereafter existing under the Loan Documents. SECTION 3. DELIVERY OF SECURITY COLLATERAL AND ACCOUNT COLLATERAL; CONSENT TO PLEDGE3. DELIVERY OF SECURITY COLLATERAL AND ACCOUNT COLLATERAL; CONSENT TO PLEDGE. (a) All certificates or instruments representing or evidencing Security Collateral and the Account Collateral shall be delivered to and held by or on behalf of the Administrative Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Administrative Agent. Each Pledgor shall, in respect of each Pledged Interest pledged by it hereunder and not evidenced by a certificate or instrument, deliver to the Administrative Agent (i) an assignment in blank referred to in Section 3.04(b)(viii)(A) of the Credit Agreement with respect to such Pledged Interest and (ii) financing statements referred to in Section 3.04(b)(viii)(B) of the Credit Agreement covering such Pledged Interest. The Administrative Agent shall have the right, at any time upon the occurrence and continuance of a Default under Section 7.01(a) or (f) of the Credit Agreement or upon the occurrence of an Event of Default, in its sole discretion and without notice to any Pledgor, to transfer to or to register in the name of the Administrative Agent or any of its nominees any or all of the Security Collateral or the Account Collateral, subject only to the revocable rights specified in Section 10(a). In addition, the Administrative Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Security Collateral or the Account Collateral for certificates or instruments of smaller or larger denominations. (b) In the case of the Pledged Interests of the Canadian Borrower, the U.S. Borrower hereby agrees to deliver or cause to be delivered to the Administrative Agent any consent required under the articles of incorporation of the Canadian Borrower to the transfer of the Pledged Interests of the Canadian Borrower to the Administrative Agent effected by Section 1(a) hereof, concurrently with the delivery of duly executed instruments of transfer or assignment in blank in respect of such Pledged Interests in accordance with Section 3(a). (c) Each Pledgor shall (i) cause each of the issuers of the Pledged Interests owned by such Pledgor not to issue any shares of stock, limited liability company membership interests, limited partnership interests or other equity interests in addition to or in substitution for the Pledged Interests except to such Pledgor, and (ii) deliver or otherwise transfer to the Administrative Agent hereunder pursuant to subsections (a) and (b) above, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock, limited liability company membership interests, limited partnership interests or other equity interests of each of such issuers, subject to the PROVISOS contained in Section 1(a)(iii) of this Agreement. 5 (d) The U.S. Borrower and Accuride Ventures, as members of AKW LLC and limited partners of AKW LP, hereby (i) consent, for purposes of Article 9 of the AKW LLC Agreement and Article 9 of the AKW LP Agreement, to the assignment and pledge hereunder of, and the grant hereunder of security interests in, the Pledged Interests issued by AKW LLC and AKW LP and to the assignment, sale or other disposition of such Pledged Interests pursuant to Section 15 hereof and the transferee of such assignment, sale or other disposition becoming a Substituted Member under the AKW LLC Agreement and a Substituted Limited Partner under the AKW LP Agreement and (ii) agree that the provisions of Sections 9.2 through 9.6 of the AKW LLC Agreement and Sections 9.2 through 9.6 of the AKW LP Agreement shall not apply to the assignment or pledge hereunder of, or the grant hereunder of security interests in, the Pledged Interests issued by AKW LLC and AKW LP, or the assignment, sale or other disposition of such Pledged Interests pursuant to Section 15 hereof, and in that connection waive all of their rights under such provisions with respect to such assignment, pledge and grant and such assignment, sale and other disposition. SECTION 4. ESTABLISHMENT AND MAINTENANCE OF THE CASH COLLATERAL ACCOUNTS4. ESTABLISHMENT AND MAINTENANCE OF THE CASH COLLATERAL ACCOUNTS. So long as any of the Advances shall remain unpaid, any Letter of Credit shall be outstanding or any of the Lender Parties shall have any Commitment under the Credit Agreement: (a) Each of the Borrowers will maintain its Cash Collateral Account with Citibank in accordance with the terms of this Agreement and the letter agreement dated the Closing Date (each, a "CASH COLLATERAL ACCOUNT LETTER") among such Borrower, Citibank and the Administrative Agent, which agreement is in substantially the form of Exhibit A hereto or otherwise in form and substance reasonably satisfactory to the Administrative Agent. The Administrative Agent shall have sole and exclusive dominion and control of each of the Cash Collateral Accounts subject to the terms of this Agreement. (b) It shall be a term and condition of each of the Cash Collateral Accounts, notwithstanding any term or condition to the contrary in any other agreement relating to such Cash Collateral Account, that no amount (including, without limitation, interest on Collateral Investments related thereto) shall be paid or released to or for the account of, or withdrawn by or for the account of, any of the Pledgors or any other Person from such Cash Collateral Account, except as otherwise provided in Sections 6 and 15. Each of the Cash Collateral Accounts shall be subject to such applicable laws (including, without limitation, such applicable regulations of the Board of Governors of the Federal Reserve System and of any other appropriate banking authority or other governmental authority) as are in effect from time to time. SECTION 5. INVESTING OF AMOUNTS IN THE CASH COLLATERAL ACCOUNTS5. INVESTING OF AMOUNTS IN THE CASH COLLATERAL ACCOUNTS. (a) If requested by the applicable Borrower, the Administrative Agent will, subject to the provisions of Sections 6 and 15, from time to time, so long as no Default under Section 7.01(a) or 7.01(f) of the Credit Agreement or Event of Default has occurred and is continuing, (i) invest amounts on deposit in the Cash Collateral Account of such Borrower in 6 such Cash Equivalents as such Borrower may select, in each case which investments shall be made in the name of, and with the entitlement holder being, the Administrative Agent, on behalf of such Borrower, and (ii) invest interest paid on the Cash Equivalents referred to in clause (i) above, and reinvest other proceeds of any such Cash Equivalents that may mature or be sold, in each case in such Cash Equivalents as such Borrower may select, in each case which investments shall be made in the name of, and with the entitlement holder being, the Administrative Agent, on behalf of such Borrower (the Cash Equivalents referred to in clauses (i) and (ii) of this Section 5(a) being, collectively, the "BORROWERS' COLLATERAL INVESTMENTS"). (b) Upon the occurrence and during the continuance of a Default under Section 7.01(a) or 7.01(f) of the Credit Agreement or an Event of Default, the Administrative Agent may, subject to the provisions of Section 15, from time to time (i) invest amounts on deposit in each of the Cash Collateral Accounts, and any cash proceeds collected by or on behalf of the Administrative Agent and held pursuant to Section 15(e), in such Cash Equivalents as the Administrative Agent may select, in each case which investments shall be made in the name of, and with the entitlement holder being, the Administrative Agent, on behalf of the applicable Pledgors, and (ii) invest interest paid on the Cash Equivalents referred to in clause (i) above, and reinvest other proceeds of any such Cash Equivalents that may mature or be sold, in such Cash Equivalents as the Administrative Agent may select, in each case which investments shall be made in the name of, and with the entitlement holder being, the Administrative Agent, on behalf of the applicable Pledgors (the Cash Equivalents referred to in clauses (i) and (ii) of this Section 5(b), together with the Borrowers Collateral Investments, being, collectively, the "COLLATERAL INVESTMENTS"). (c) Interest and proceeds that are not invested or reinvested in Collateral Investments as provided in subsection (a) or (b) of this Section 5 shall be deposited and held in the applicable Cash Collateral Account. (d) The Administrative Agent shall not have any liability to any of the Pledgors or any of the other Secured Parties for, or as a result of, any losses suffered from any Collateral Investment made by it in accordance with this Section 5 or if the earnings realized on any such Collateral Investment are less than otherwise could have been achieved had other Cash Equivalents been selected by the Borrowers or the Administrative Agent pursuant to the terms of subsection (a) or (b), respectively, of this Section 5. (e) All of the Collateral Investments made in respect of the Cash Collateral Accounts and all interest and income received thereon and therefrom, and the net proceeds realized upon the maturity or sale thereof, shall be held in the applicable Cash Collateral Account as Account Collateral, which amounts may be released solely in accordance with the provisions of Sections 6 and 15. SECTION 6. RELEASE OF AMOUNTSSECTION 6. RELEASE OF AMOUNTS. The Administrative Agent is hereby authorized, without any further action by or notice to or from any of the Borrowers, to maintain any amounts deposited into the Cash Collateral Account of any such Borrower pursuant to Section 2.06(b)(vii) of the Credit Agreement until the last day of the Interest Period then in effect for any outstanding Eurodollar Rate Advances and, on such last day, to pay and 7 release such amounts from such Cash Collateral Account for the prepayment to each of the Appropriate Lenders (other than the Declining Lenders) of the Eurodollar Rate Advances outstanding on such day in accordance with Section 2.06(b) of the Credit Agreement, with any excess amounts in such Cash Collateral Account to be transmitted to the account designated by the applicable Borrower. SECTION 7. REPRESENTATIONS AND WARRANTIES7. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents and warrants as follows: (a) The chief executive office of such Pledgor and the office where such Pledgor keeps its records concerning the Collateral is located at the address set forth beneath the name of such Pledgor on the signature pages hereof (or, in the case of any Additional Pledgors at the address set forth below the name of such Additional Pledgor on the signature page of the Pledge Agreement Supplement (as defined in Section 18(b) below)). (b) Such Pledgor is the sole legal and beneficial owner of the Collateral pledged by such Pledgor hereunder, free and clear of any Lien, except for the security interest created by this Agreement. No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording office, except such as may have been filed in favor of the Administrative Agent relating to this Agreement or as otherwise permitted under Section 5.02(a) of the Credit Agreement. (c) The Pledged Interests owned by such Pledgor have been duly authorized and validly issued and, to the extent such Pledged Interests constitute shares of stock, are fully paid and non-assessable, and, in the case of such Pledged Interests issued by AKW LLC and AKW LP, are not represented by certificates. (d) The Pledged Interests owned by such Pledgor constitute the percentage of the issued outstanding shares of stock, limited liability company membership interests and limited partnership interests, as the case may be, of the issuers thereof indicated on Schedule I hereto. (e) This Agreement, and the delivery of and other actions taken with respect to the Security Collateral pursuant to Section 3 (including, without limitation, the proper filing of the financing statements referred to therein with respect to the Pledged Interests issued by AKW LLC and AKW LP, under the Uniform Commercial Code of the applicable jurisdiction), create a valid and perfected first priority security interest in the Collateral pledged by such Pledgor hereunder, securing the payment of the Secured Obligations of such Pledgor, and all filings and other actions necessary to perfect such security interest have been duly taken and are in full force and effect or will be made or taken in accordance with the terms of the Loan Documents, and all filing and recording fees and taxes related to any of the foregoing have been or will upon each filing be duly paid in full. (f) No consent of any other Person and no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other third party is required either (i) for the grant by such Pledgor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Agreement by such Pledgor, (ii) for the perfection of the security interest in the Collateral granted by such 8 Pledgor hereunder (including the first priority nature of such pledge, assignment or security interest) or (iii) for the exercise by the Administrative Agent of any voting or other rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with the disposition of any portion of the Security Collateral by laws affecting the offering and sale of securities generally. SECTION 8. FURTHER ASSURANCES8. FURTHER ASSURANCES. (a) Each of the Pledgors agrees from time to time, at its sole expense, to promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Administrative Agent may reasonably request, in order to perfect and protect any pledge, assignment or security interest granted or purported to be granted hereby or to enable the Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Pledgor will: (i) mark at the request of the Administrative Agent, each of its records pertaining to the Collateral with a legend, in form and substance satisfactory to the Administrative Agent, indicating that such Collateral is subject to the security interest granted hereby; (ii) if any Collateral shall be evidenced by a promissory note or other instrument, deliver and pledge to the Administrative Agent hereunder such note or instrument duly indorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Administrative Agent; and (iii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Administrative Agent may reasonably request, in order to perfect and preserve the pledge, assignment and security interest granted or purported to be granted hereby. (b) Each Pledgor hereby authorizes the Administrative Agent to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Collateral without the signature of such Pledgor where permitted by law. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. (c) Each Pledgor will furnish to the Administrative Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail. SECTION 9. PLACE OF PERFECTION; RECORDS9. PLACE OF PERFECTION; RECORDS. Each Pledgor shall keep its chief executive office and the office where it keeps its records concerning the Collateral at the location therefor specified in Section 7(a) or, upon 30 days' prior written notice to the Administrative Agent, at such other locations in a jurisdiction where all actions required by Section 8 shall have been taken with respect to the Collateral. Each Pledgor will hold and preserve such records and will permit representatives of the Administrative Agent at any time during normal business hours upon reasonable notice to inspect and make abstracts from such records. SECTION 10. VOTING RIGHTS; DIVIDENDS; ETC10. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no Default under Section 7.01(a) or (f) of the Credit Agreement shall have occurred and be continuing or no Event of Default shall have occurred and be continuing: 9 (i) Each Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Security Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the other Loan Documents; PROVIDED, HOWEVER, that such Pledgor shall not exercise or refrain from exercising any such right if such action would have a Material Adverse Effect on the value of the Security Collateral or any part thereof. (ii) The Administrative Agent shall execute and deliver (or cause to be executed and delivered) to each Pledgor all such proxies and other instruments as such Pledgor may reasonably request for the purpose of enabling such Pledgor to exercise the voting and other rights that it is entitled to exercise pursuant to paragraph (i) above. (iii) Each Pledgor shall be entitled to receive and retain any and all dividends, interest and other distributions paid or other amounts received in respect of its Security Collateral, PROVIDED, HOWEVER, that: (A) any and all dividends and other distributions paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Security Collateral except that the foregoing shall not apply to a liquidation of AKW LP or AKW LLC into a Restricted Subsidiary of the U.S. Borrower so long as all of the stock, limited liability company membership interests, limited partnership interests or other equity interests of such Restricted Subsidiary is pledged under this Agreement, (B) any and all dividends and other distributions paid or payable in cash in respect of any Security Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in-surplus, (C) any and all cash paid, payable or otherwise distributed in redemption of, or in exchange for, any Security Collateral, and (D) any and all dividends and distributions paid in cash in violation of the terms of the Credit Agreement, shall be, and shall be forthwith delivered to the Administrative Agent to hold as, Security Collateral and shall, if received by any Pledgor, be received in trust for the benefit of the Administrative Agent, be segregated from the other property or funds of such Pledgor and be forthwith delivered to the Administrative Agent as Security Collateral in the same form as so received (with any necessary indorsement or assignment). (b) Upon notice to the U.S. Borrower by the Administrative Agent following the occurrence and during the continuance of a Default under Section 7.01(a) or (f) of the Credit Agreement or an Event of Default, all rights of the Pledgors to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to 10 Section 10(a)(i) and all rights of the Pledgors to receive dividends and other distributions that it would otherwise be entitled to receive pursuant to Section 10(a)(iii) shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights or to receive or refrain from receiving such dividends and other distributions. SECTION 11. TRANSFERS AND OTHER LIENS11. TRANSFERS AND OTHER LIENS. No Pledgor shall (i) convey, transfer, sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option or other right to purchase or otherwise acquire, any of the Collateral, except for such conveyances, sales, transfers, assignments and dispositions that are expressly permitted under the Loan Documents, or (ii) create, incur, assume or suffer to exist any Lien upon or with respect to any of the Collateral except for the pledge, assignment and security interest created or otherwise expressly permitted under the terms of the Loan Documents. SECTION 12. ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT12. ADMINISTRATIVE AGENT APPOINTED Attorney-in-Fact. Each Pledgor hereby irrevocably appoints the Administrative Agent such Pledgor's attorney-in-fact, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, from time to time in the Administrative Agent's discretion following the occurrence and continuance of a Default under Section 7.01(a) or 7.01(f) or an Event of Default, to take any action and to execute any instrument that the Administrative Agent may deem necessary or advisable to accomplish the purposes of this Agreement and the other Loan Documents, including, without limitation: (a) to ask for, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (b) to receive, indorse, assign and collect any drafts, acceptances, instruments and other documents in connection with this Agreement (including, without limitation, all instruments representing or evidencing any dividend or other distribution in respect of the Collateral or any part thereof) and give full discharge to same, (c) to sell, transfer, assign or otherwise deal with the Collateral or any part thereof in the same manner and to the same extent as if the Administrative Agent were the absolute owner thereof, (d) (i) to direct any Person liable to such Pledgor for any payment with respect to its Collateral to make payment of any and all moneys due and to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct, (ii) to receive payment of and receipt for any and all moneys, claims and other amounts due and to become due at any time in respect of or arising out of any of its Collateral, (iii) to defend any action, suit or proceeding brought against such Pledgor with respect to any of its Collateral and (iv) to settle, compromise or adjust any action, suit or proceeding described in clause (iii) of this Section 12(d) and, in connection therewith, to give any such discharge or release as the Administrative Agent may deem appropriate, 11 (e) to file any application, petition or other request with any governmental authority for the purpose of obtaining any consent, approval or authorization therefrom or satisfying any registration, filing, notice or other requirement thereof necessary in order to fully and properly effect the sale, transfer or other disposition of any or all of its Collateral, and (f) to file any claims or take any action or institute any proceedings at the sole expense of such Pledgor that the Administrative Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Administrative Agent with respect to any of the Collateral. SECTION 13. ADMINISTRATIVE AGENT MAY PERFORM13. ADMINISTRATIVE AGENT MAY PERFORM. If the Borrower fails to perform any agreement contained herein, the Administrative Agent may itself perform, or cause performance of, such agreement, and the expenses of the Administrative Agent incurred in connection therewith shall be payable by the Borrower under Section 17(b). SECTION 14. THE ADMINISTRATIVE AGENT'S DUTIES14. THE ADMINISTRATIVE AGENT'S DUTIES. The powers conferred to the Administrative Agent hereunder are solely to protect its interest (and the interest of the other Secured Parties) in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder and to dispose of the Collateral in a commercially reasonable manner, the Administrative Agent shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Security Collateral, whether or not the Administrative Agent or any Lender has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own property. SECTION 15. REMEDIES15. REMEDIES. If any Event of Default shall have occurred and be continuing: (a) The Administrative Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party upon default under the Uniform Commercial Code in effect in the State of New York at such time (the "N.Y. UNIFORM COMMERCIAL CODE") (whether or not the N.Y. Uniform Commercial Code applies to the affected Collateral) and also may (i) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Administrative Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable, and (ii) notify each Pledgor that all of its rights to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise with respect to the Collateral pursuant to Section 10(a)(i) shall cease and, upon such notice, all such rights shall become vested in the Administrative Agent, who shall thereupon 12 have the sole right to exercise or refrain from exercising such voting and other consensual rights. Each Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten days' notice to such Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (b) If the Administrative Agent proceeds to exercise its right to sell any or all of the Security Collateral, each of the Pledgors shall, upon the written request of the Administrative Agent therefor, furnish to the Administrative Agent all such information as the Administrative Agent may reasonably request in order to determine the number of limited liability company membership interests, limited partnership interests, shares and other instruments included in such Security Collateral that may be sold by the Administrative Agent in transactions exempt under the Securities Act of 1933 (as amended, and together with the regulations promulgated and the rulings issued thereunder, the "SECURITIES ACT") or any similar laws in effect from time to time in any other relevant jurisdiction. (c) Each purchaser of all or any part of the Collateral at any such sale that has been made in accordance with applicable law shall hold the property sold absolutely free from any claim, encumbrance or other right on the part of each of the Pledgors, and each of the Pledgors hereby waives, to the fullest extent permitted by applicable law, all rights of redemption, stay and/or appraisal that it now has or may at any time in the future have under any applicable law now existing or hereafter enacted with respect to any such sale. (d) All proofs of claim, rights of action and rights to assert claims under this Agreement or any of the other Collateral Documents to which any Pledgor is or is to be a party may be enforced by the Administrative Agent without the possession of any of the Notes at any proceeding instituted by the Administrative Agent, and any such proceeding may be brought in its own name as agent, and any recovery or judgment shall be for the benefit of the Secured Parties. In any proceeding brought by the Administrative Agent (and in any proceeding involving the interpretation of any of the provisions of any of the Collateral Documents to which such Pledgor is a party), the Administrative Agent shall be held to represent all of the Secured Parties, and it shall not be necessary to make any of the other Secured Parties party to such proceeding. (e) All cash held by or on behalf of the Administrative Agent as Collateral and all cash proceeds received by or on behalf of the Administrative Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Administrative Agent, be held by the Administrative Agent as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Administrative Agent pursuant to Section 17(b)) in whole or in part by the Administrative Agent, for the ratable benefit of the Secured Parties, against all or any part of the Secured Obligations in such order as the Administrative Agent shall elect. In determining the amounts owing to the Hedge 13 Banks under the Bank Hedge Agreements, the Administrative Agent shall be entitled to rely, and be fully protected in relying, upon the Agreement Values (as hereinafter defined) of the Bank Hedge Agreements. The term "Agreement Value" means, with respect to any of the Bank Hedge Agreements at any date of determination, the amount, if any, that would be payable to the Hedge Bank party to such Bank Hedge Agreement in respect of any "AGREEMENT VALUE" under such Bank Hedge Agreement if such Bank Hedge Agreement were terminated on such date, calculated as provided in the International Swap Dealers Association, Inc. Code of Standard Wording, Assumptions and Provisions for Swaps, 1986 Edition. Each determination of the Agreement Value of any of the Bank Hedge Agreements shall be made by the Administrative Agent in good faith and in reliance on any information (including information provided by such Hedge Bank) that it believes to be accurate, but without any obligation to verify such information. Any surplus of cash or cash proceeds held by or on behalf of the Administrative Agent in accordance with this Section 15 and remaining after payment in full in cash of all of the Secured Obligations and all of the other Obligations of the Loan Parties owing under or in respect of the Loan Documents shall be paid over to the Pledgors or to whomsoever may be lawfully entitled to receive such surplus. (f) The Administrative Agent may exercise any and all rights and remedies of any of the Pledgors in respect of the Collateral (including, without limitation, any and all rights of any such Pledgor to demand or otherwise require payment of any amount under, or performance of any provision of any Collateral). (g) Except as otherwise permitted by this Agreement, all payments received by any of the Pledgors under, in connection with, or in respect of, any of the Collateral shall be received and held by such Pledgor in trust for the benefit of the Administrative Agent, shall be segregated from the other property and funds of such Pledgor and shall be delivered forthwith to the Administrative Agent in the same form as so received (with any necessary endorsement or assignment). SECTION 16. ACKNOWLEDGMENTS RELATING TO SECURITY COLLATERAL AND ACCOUNT COLLATERAL16. ACKNOWLEDGMENTS RELATING TO SECURITY COLLATERAL AND ACCOUNT COLLATERAL. (a) Each Pledgor recognizes and hereby acknowledges that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws (or other similar laws of other relevant jurisdictions), the Administrative Agent may be compelled with respect to any sale of all or any part of the Security Collateral comprised of limited liability company membership interests, limited partnership interests, shares or other equity interests or other securities that are not registered under the Securities Act to limit the purchasers thereof to those Persons who will agree, among other things, to acquire the Security Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Each Pledgor hereby further acknowledges that any such private sale may be at a price and on terms less favorable to the Administrative Agent and the other Secured Parties than those obtainable through a public sale without such restrictions (including, without limitation, a public offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances, such Pledgor hereby agrees that any private sale shall be deemed to have been made in a commercially reasonable manner and that the Administrative Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Security Collateral for the period of time 14 necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or any applicable state securities laws (or other similar law of other relevant jurisdictions), even if such Pledgor would agree to do so. Each Pledgor hereby waives any claims against the Administrative Agent arising by reason of the fact that the price at which any Security Collateral may have been sold at such a private sale was less than the price that might have been obtained at a public sale, even if the Administrative Agent accepts the first offer received and does not offer such Security Collateral to more than one offeree. (b) The Administrative Agent may sell or liquidate (and each of the Borrowers hereby irrevocably instructs the Administrative Agent, without any further action by or notice to or from any such Pledgor, to so sell or liquidate) all or any portion of the Collateral Investments held in or in respect of any of the Cash Collateral Accounts at any time following the occurrence and during the continuance of an Event of Default that the proceeds thereof are determined to be required for the satisfaction of all or any part of the Secured Obligations, and the Administrative Agent shall not have any liability to any of the Pledgors, any of the other Secured Parties or any other Person for, or as a result of, any losses suffered from any such sale or liquidation. SECTION 17. INDEMNITY AND EXPENSES17. INDEMNITY AND EXPENSES. (a) Without limiting any of the provisions of Section 9.04 of the Credit Agreement, each Pledgor agrees to indemnify the Administrative Agent from and against any and all claims, damages, expenses, losses and liabilities growing out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except claims, damages, expenses, losses or liabilities resulting from the Administrative Agent's gross negligence or willful misconduct as determined by a final, non-appealable judgment of a court of competent jurisdiction. (b) Without limiting any of the provisions of Section 9.04 of the Credit Agreement, each Pledgor will upon demand pay to the Administrative Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that the Administrative Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of the Administrative Agent or the Lenders hereunder or (iv) the failure by such Pledgor to perform or observe any of the provisions hereof. (c) Without prejudice to the survival of any of the other agreements of any of the Pledgors under this Agreement or any of the other Loan Documents, the agreements and obligations of each of the Pledgors contained in this Section 17 and in Section 22 shall survive the payment in full of all of the Secured Obligations and all of the other Obligations of any of the Pledgors owing under or in respect of the Loan Documents. SECTION 18. AMENDMENTS; WAIVERS; PLEDGE AGREEMENT SUPPLEMENT; ETC18. AMENDMENTS; WAIVERS; PLEDGE AGREEMENT SUPPLEMENT; ETC. (a) No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Pledgor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of the Administrative Agent to exercise, and no delay 15 in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. (b) Upon the execution and delivery by any Person of a supplement to this Agreement (whether pursuant to Section 5.01(k) of the Credit Agreement or otherwise), in each case in substantially the form of Exhibit B hereto (each, a "PLEDGE AGREEMENT SUPPLEMENT"), (i) such Person, if it is not then a Pledgor hereunder, shall be referred to as an "ADDITIONAL PLEDGOR" and shall be and become a Pledgor, and each reference in this Agreement to an "Additional Pledgor" or a "Pledgor" shall also mean and be a reference to such Additional Pledgor and each reference in any of the other Loan Documents to a "Pledgor" or a "Loan Party" shall also mean and be a reference to such Additional Pledgor, (ii) the supplements attached to each of the Pledge Agreement Supplements shall be incorporated into and become a part of and supplement the Schedules to this Agreement, as appropriate, and the Administrative Agent may attach such supplements to such Schedules, and each reference to such Schedules shall mean and be a reference to such Schedules, as supplemented pursuant hereto, and (iii) the assignment, pledge and grant of security interest contained in such Pledge Agreement Supplement shall, as to such Pledgor, operate as the assignment, pledge and grant of security interest, as if such assignment, pledge and grant were contained in Section 1 hereof and such Pledgor was a signatory hereto. SECTION 19. ADDRESSES FOR NOTICES19. ADDRESSES FOR NOTICES. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic, telex or cable communication) and, mailed, telegraphed, telecopied, telexed, cabled or delivered to the U.S. Borrower, the Canadian Borrower or to the Administrative Agent, as the case may be, in the case of the U.S. Borrower, the Canadian Borrower or the Administrative Agent, addressed to it at its address specified in the Credit Agreement, in the case of Accuride Ventures addressed to it at: 2315 Adams Lane, P.O. Box 40, Henderson KY 4240, Attn: William Greubel, with a copy to KKR at 2800 Sand Hill Road, Suite 200, Menlo Park, CA 94205, Attn: Todd Fisher, or to any other Pledgor addressed to it at its address set forth beneath the name of such other Pledgor on the signature pages of the Pledge Agreement Supplement pursuant to which it became a party hereto, or, as to any party, at such other address as shall be designated, in the case of the Administrative Agent, by the Administrative Agent in a written notice to the U.S. Borrower, and in the case of the U.S. Borrower or any other Pledgor, by the U.S. Borrower or such other Pledgor in a written notice to the Administrative Agent, in each case complying as to delivery with the terms of this Section. All such notices and other communications shall, when mailed, telecopied, telegraphed, telexed or cabled, respectively, be effective when deposited in the mails, telecopied, delivered to the telegraph company, confirmed by telex answerback or delivered to the cable company, respectively, addressed as aforesaid. SECTION 20. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE CREDIT AGREEMENT20. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE CREDIT AGREEMENT. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the later of the payment in full in cash of the Secured Obligations, the expiration or termination of all Letters of Credit and Bank Hedge Agreements and the Termination Date, (b) be binding upon each Pledgor, its successors and assigns and (c) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of the Administrative Agent and each of 16 the other Secured Parties and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender Party may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitment, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, subject, in each case, to the provisions of Section 9.07 of the Credit Agreement. SECTION 21. RELEASE AND TERMINATION21. RELEASE AND TERMINATION. (a) Upon the sale, transfer or other disposition of any item of Collateral in accordance with Section 5.02(d) of the Credit Agreement and the other terms of the Loan Documents, the Administrative Agent will, at the applicable Pledgor's expense, execute and deliver to such Pledgor such documents as such Pledgor shall reasonably request to evidence the release of such item of Collateral from the pledge and security interest granted hereunder; PROVIDED, HOWEVER, that: (i) at the time of and after giving PRO FORMA effect to such request and release, no Default shall have occurred and be continuing; (ii) such Pledgor shall have delivered to the Administrative Agent, at least five Business Days prior to the date of the proposed release, a written request for release describing the item of Collateral and the terms of the sale, transfer or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a form of release for execution by the Administrative Agent and a certification by such Pledgor to the effect that the subject transaction is in compliance with the Loan Documents and as to such other matters as the Administrative Agent may reasonably request; and (iii) the Net Cash Proceeds of any such sale, transfer or other disposition shall be applied to prepay the Advances outstanding at such time in accordance with, and to the extent required under, Section 2.06(b) of the Credit Agreement. (b) Upon the later of the payment in full in cash of the Secured Obligations, the termination or expiration of all Letters of Credit and Bank Hedge Agreements and the Termination Date, the pledge, assignment and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Pledgors. Upon any such termination, the Administrative Agent will, at each Pledgor's sole expense, return to such Pledgor such Collateral of such Pledgor in the Administrative Agent's possession as shall not have been sold or otherwise applied pursuant to the terms of the Loan Documents, and will execute and deliver to such Pledgor such documents as such Pledgor shall reasonably request to evidence such termination and revision. SECTION 22. SECURITY INTEREST ABSOLUTE22. SECURITY INTEREST ABSOLUTE. (a) The Obligations of each Pledgor under this Agreement are independent of any of the other Obligations of any of the other Loan Parties under or in respect of the Loan Documents, and a separate action or actions may be brought or prosecuted against each of the Pledgors to enforce this Agreement and the pledge, assignment and security interest granted by such Pledgor hereunder, irrespective of whether any action is brought against any of the other Loan Parties or whether any of the other Loan Parties is 17 joined in any such action or actions. All rights of the Administrative Agent and the other Secured Parties and the pledges, assignments and security interests created hereunder, and all obligations of each of the Pledgors hereunder, shall be absolute, unconditional and irrevocable irrespective of, and each of the Pledgors hereby irrevocably waives any defenses it may now have or may hereafter acquire in any way relating to, any or all of the circumstances described in Section 6.02 of the Credit Agreement or Section 2 of the Subsidiaries Guarantee or any other circumstance that might constitute a defense available to, or a discharge of, any of the Pledgors or the other Loan Parties. (b) This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Secured Obligations is rescinded or must otherwise be returned by the Administrative Agent or any of the other Secured Parties or by any other Person upon the insolvency, bankruptcy or reorganization of any of the Pledgors or otherwise, all as though such payment had not been made, and each of the Pledgors hereby unconditionally and irrevocably agrees that it will indemnify the Administrative Agent and each of the other Secured Parties, upon demand, for all of the costs and expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by the Administrative Agent or such other Secured Party in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, a fraudulent transfer or a similar payment under any bankruptcy, insolvency or similar law. SECTION 23. SEVERABILITY23. SEVERABILITY. The provisions of this Agreement are severable, and if any term or provision shall be held illegal, invalid or unenforceable in whole or in part in any jurisdiction, then such illegality, invalidity or unenforceability shall affect only such term or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such term or provision in any other jurisdiction, or any other term or provision of this Agreement in any jurisdiction. SECTION 24. EXECUTION IN COUNTERPARTS24. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 25. GOVERNING LAW; TERMS25. GOVERNING LAW; TERMS. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, except to the extent that the perfection and the effect of perfection of the security interest hereunder, or remedies hereunder, in respect of any particular Collateral, pursuant to the laws of the State of New York, are governed by the laws of a jurisdiction other than the State of New York. Unless otherwise defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of the N.Y. Uniform Commercial Code are used herein as therein defined. 18 IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. ACCURIDE CORPORATION By --------------------------- Title: Address: 2315 Adams Lane Henderson, KY 42420 ACCURIDE CANADA INC. By --------------------------- Title: Address: 31 Firestone Boulevard London, Ontario, Canada NSW 5S1 ACCURIDE VENTURES, INC. By --------------------------- Title: Address: [ ] 19 SCHEDULE I INITIAL PLEDGED INTERESTS
PERCENTAGE OF NAME OF PLEDGOR NAME OF ISSUER CLASS OF STOCK STOCK CERTIFICATE NO(S) NUMBER OF SHARES OUTSTANDING SHARES - --------------- -------------- -------------- ----------------------- ---------------- ------------------
EXHIBIT A TO THE PLEDGE AGREEMENT ---------------- FORM OF CASH COLLATERAL ACCOUNT LETTER [NAME OF BORROWER] [ADDRESS] [Date of Cash Collateral Account Letter] Citibank, N.A. 399 Park Avenue New York, New York 10043 Attention: _______________ [NAME OF APPLICABLE BORROWER] Gentlemen/women: Reference is made to (a) deposit account no.___________ (the "CASH COLLATERAL ACCOUNT") maintained with you by [Name of Borrower] (the "BORROWER"). Pursuant to the Pledge Agreement dated January 21, 1998 (as amended, supplemented or otherwise modified hereafter from time to time, the "PLEDGE AGREEMENT"; terms defined therein and not otherwise defined herein being used herein as therein defined) made by the Borrower and the other pledgors (the "PLEDGORS") party thereto in favor of Citicorp USA, Inc., as administrative agent (together with any successor thereto appointed pursuant to Article VIII of the Credit Agreement, the "ADMINISTRATIVE AGENT") for the Secured Parties referred to therein, the Borrower has granted to the Administrative Agent, on behalf of the Secured Parties, sole and exclusive dominion and control of the Cash Collateral Account and a lien on and security interest in certain property and assets of the Borrower, including, among other things, the following (collectively, the "ACCOUNT COLLATERAL"): (a) the Cash Collateral Account, all of the funds held therein and all of the certificates and instruments, if any, from time to time representing or evidencing the Cash Collateral Account; and (b) all of the Collateral Investments made on behalf of the Borrower from time to time and all of the certificates and instruments, if any, from time to time representing or evidencing any such Collateral Investments; and (c) all of the interest, dividends, distributions, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Account Collateral; and (d) all of the proceeds of any and all of the foregoing Account Collateral. It is a condition to the continued maintenance of the Cash Collateral Account with you that you agree to this letter agreement. By signing this letter agreement, you acknowledge notice of, and consent to the terms and conditions of, the Pledge Agreement and the grant of the lien and security interest in, and the pledge and assignment of, the Account Collateral to the Administrative Agent, on behalf of the Secured Parties, and you confirm to the Administrative Agent that (a) the Cash Collateral Account is maintained with you at your offices at Citibank, N.A., [399 Park Avenue, New York, New York, 10043][__________________________, Toronto, Ontario, Canada], and is entitled "_____________, cash collateral account for the benefit of Citicorp USA, Inc., as Administrative Agent" and the account number therefor is as set forth in the immediately preceding paragraph and (b) you have not received any notice of any other lien or security interest in, pledge or assignment of, or other claim (other than that of the Borrower) on or to the Cash Collateral Account or any of the other Account Collateral. Further, you hereby agree with the Administrative Agent that: (i) The Cash Collateral Account will be maintained solely for the benefit of the Administrative Agent, on behalf of the Secured Parties, will be and remain entitled as set forth in clause (a) of this paragraph and will be subject to written instructions only from an officer of the Administrative Agent. (ii) Notwithstanding anything to the contrary in any agreement relating to the Cash Collateral Account, the Cash Collateral Account is and will be subject to the terms and conditions of the Pledge Agreement and such applicable laws (including, without limitation, such applicable regulations of the Board of Governors of the Federal Reserve System and of any other appropriate banking or other governmental authority) as are in effect from time to time, and to the extent any term or condition of this letter agreement is inconsistent with the terms and conditions of the Pledge Agreement, the terms and conditions of the Pledge Agreement shall govern; PROVIDED, HOWEVER, that you shall not be liable for any amendment, supplement or other modification of any term or condition of the Pledge Agreement until you have received notice of such amendment, supplement or other modification from the Administrative Agent, and you hereby agree to promptly amend this letter agreement to comply with any such amendment, supplement or other modification. The Administrative Agent shall be entitled to exercise any and all rights of the Borrower in respect of the Cash Collateral Account in accordance with the terms of the Pledge Agreement, and you shall comply in all respects with such exercise. (iii) You will follow your usual operating procedures for the handling of any remittance received in the Cash Collateral Account that contains restrictive endorsements, irregularities (such as a variance between the written and numerical amounts), undated or postdated items, missing signatures, incorrect payees, etc. that are received for deposit in the Cash Collateral Account. (iv) You are hereby authorized by each of the Borrower and the Administrative Agent to endorse and process, and you hereby agree to endorse and process, all eligible checks 2 and other remittance items not covered by subparagraph (iii) above and to deposit such checks and remittance items into the Cash Collateral Account. (v) You will maintain a record of all checks, deposits and other remittance items received in, and all disbursements made from, the Cash Collateral Account and, in addition to providing the Borrower with photostats, vouchers, enclosures, records and other documents of such checks, deposits and disbursements on a monthly basis, you will furnish to the Administrative Agent a monthly statement of the Cash Collateral Account (which statement shall be mailed or telecopied to the Administrative Agent at the address set forth therefor below its name on the signature pages to this letter agreement). (vi) In accordance with written instructions received from the Administrative Agent, you will, subject to the provisions hereof, from time to time (A) invest amounts on deposit in the Cash Collateral Account in such Cash Equivalents as are set forth in such instructions of the Administrative Agent in the name of the Administrative Agent, on behalf of the Borrower, and (B) invest interest paid on the Cash Equivalents referred to in subclause (vi)(A) above, and reinvest other proceeds of any such Cash Equivalents that may mature or be sold, in each case in such Cash Equivalents as are set forth in the instructions of the Administrative Agent in the name of the Administrative Agent, on behalf of the Borrower (the Cash Equivalents referred to in subclauses (vi)(A) and (vi)(B) above being collectively "COLLATERAL INVESTMENTS"). All of the Collateral Investments and all of the interest and proceeds that are not invested or reinvested in Collateral Investments as provided above in this subparagraph (vi) shall constitute part of the Account Collateral. (vii) You shall promptly notify each of the Borrower and the Administrative Agent if the Cash Collateral Account (A) becomes subject to any writ, garnishment, judgment, warrant of attachment, execution or similar process or (B) becomes, or is asserted to have become, subject to any lien, security interest, adverse claim or other encumbrance of any person or entity other than the Administrative Agent. (viii) All transfers from the Cash Collateral Account shall be made by you irrespective of, and without deduction for, any counterclaim, defense, recoupment, setoff or similar rights in your favor and shall be final, and you will not seek to recover from the Administrative Agent for any reason any such payment once made; PROVIDED, HOWEVER, that you may charge against the Cash Collateral Account the face amount of any item deposited into or credited to the Cash Collateral Account which is subsequently returned unpaid due to uncollected or insufficient funds. Each such transfer of funds shall neither comprise only a part of a remittance nor reflect the rounding off of any funds so transferred. (ix) All service charges and fees with respect to the Cash Collateral Account shall be payable by the Borrower, but may be charged to another deposit account maintained by the Borrower with you (other than any other Cash Collateral Account maintained with you). (x) The lien and security interest of the Administrative Agent, on behalf of itself and the other Secured Parties, in the Cash Collateral Account and the other Account Collateral 3 of the Borrower shall not be terminated until you receive notice of such termination from the Administrative Agent. You hereby represent and warrant that the person executing this letter agreement on your behalf is duly authorized and fully empowered to do so. You shall exercise reasonable care in performing your duties and responsibilities in respect of the Account Collateral and in fulfilling your obligations under or in respect of this letter agreement. You shall not be held liable for any claims, damages, losses or expenses incurred by the Borrower or the Administrative Agent in connection therewith other than for (a) claims, damages, losses or expenses resulting from your gross negligence or willful misconduct or (b) your failure to maintain the Account Collateral or to fulfill your obligations under or in respect of this letter agreement with reasonable care; PROVIDED, HOWEVER, that in such case your liability shall extend only to any direct loss resulting therefrom, as opposed to any consequential or special loss or damage. Except as expressly agreed to in this letter agreement, you have no duty other than reasonable care and other customary duties with respect to the Cash Collateral Account and the other Account Collateral and the monitoring and safeguarding of all of the items deposited into the Cash Collateral Account. No amendment or waiver of any provision of this letter agreement, and no consent to any departure by you or the Borrower herefrom, shall be effective unless the same shall be in writing as signed by each of you, the Borrower and the Administrative Agent. This letter agreement shall be binding upon you and your successors and assigns and shall inure to the benefit of, and be enforceable by, the Administrative Agent and the other Secured Parties and their respective successors, transferees and assigns. You may terminate this letter agreement upon 30 days' prior written notice to the Borrower and the Administrative Agent. Upon such termination, you (a) shall close the Cash Collateral Account and transfer all funds in the Cash Collateral Account in accordance with the instructions of the Administrative Agent and (b) shall nonetheless remain obligated promptly to transfer to the Administrative Agent, as instructed by the Administrative Agent at such time, all funds and other property and assets received in respect of the Cash Collateral Account. This letter agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this letter agreement shall be effective as delivery of a manually executed counterpart of this letter agreement. This letter agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 4 Please indicate your acknowledgment of and agreement to the provisions of this letter agreement by signing in the appropriate space provided below and returning this letter agreement to Citicorp USA, Inc., 399 Park Avenue, New York, New York 10043, Telecopier No.: (212) 793-_____, Attention:________________. If you elect to deliver this letter agreement by telecopier, please arrange for the executed original to follow by next-day courier. Very truly yours, [NAME OF BORROWER], as Borrower By_______________________________ Name: Title: PERSON AND ADDRESS FOR NOTICES: --------------------- --------------------- --------------------- --------------------- Tel: ________________ Fax: ________________ CITICORP USA, INC., as Administrative Agent By______________________________ Name: Title: PERSON AND ADDRESS FOR NOTICES: Attn: _______________________ Citicorp USA, Inc. 399 Park Avenue New York, New York 10043 Tel: (212) 559-5601 Fax: (212) 793-8879 5 Acknowledged and agreed to as of the date first above written: CITIBANK, N.A. By___________________________ Name: Title: PERSON AND ADDRESS FOR NOTICES: Citibank, N.A. 399 Park Avenue New York, NY 10043 Attn: Charles Foster Tel: (212) 559-5320 Fax: (212) 758-6278 6 EXHIBIT B TO THE PLEDGE AGREEMENT FORM OF PLEDGE AGREEMENT SUPPLEMENT [Date] Citicorp USA, Inc., as the Administrative Agent for the Lender Parties party to the Credit Agreement referred to below 399 Park Avenue New York, New York 10043 Attention: _______________ ACCURIDE CORPORATION Ladies and Gentlemen: Reference is made to (i) the Amended and Restated Credit Agreement dated as of April 16, 1999 (such Credit Agreement, as in effect on the date hereof and as it may hereafter be amended or otherwise modified from time to time, being the "CREDIT AGREEMENT") among Accuride Corporation, a Delaware corporation, Accuride Canada Inc., a corporation organized and existing under the law of the Province of Ontario, the banks, financial institutions and other institutional lenders parties thereto as Lenders, Citibank, N.A., as Initial Issuing Bank, Citicorp USA, Inc., as Swing Line Bank and Administrative Agent (in such capacity or Administrative Agent, the "ADMINISTRATIVE AGENT"), Salomon Smith Barney Inc., as Arranger, Bankers Trust Company, as Syndication Agent, and Wells Fargo Bank N.A., as Documentation Agent, and (ii) the Amended and Restated Pledge Agreement dated April 16, 1999, (such Pledge Agreement, as in effect on the date hereof and as it may hereafter be amended or otherwise modified from time to time, being the "PLEDGE AGREEMENT") by the U.S. Borrower and the other Pledgors party thereto to the Administrative Agent. The terms defined in the Credit Agreement or the Pledge Agreement and not otherwise defined herein shall have the same meanings as specified in the Credit Agreement or the Pledge Agreement. [SECTION _. THE PLEDGE AGREEMENT. The undersigned hereby agrees, as of the date first above written, to be bound as a Pledgor by all of the terms and provisions of the Pledge Agreement to the same extent as each of the other Pledgors. The undersigned further agrees, as of the date first above written, that each reference in the Pledge Agreement to an "Additional Pledgor" or a "Pledgor" shall also mean and be a reference to the undersigned, and each reference in any of the other Loan Documents to a "Pledgor" or a "Loan Party" shall also mean and be a reference to the undersigned.] [SECTION _. ADDITIONAL PLEDGED INTERESTS. (a) Pursuant to the Pledge Agreement, the undersigned assigns and pledges to the Administrative Agent for its benefit and the ratable benefit of the Secured Parties, and grants to the Administrative Agent for its benefit and the ratable benefit of the Secured Parties, a security interest in the shares of stock and other equity interests set forth on Schedule I hereto and issued by the Person[s] named therein (such shares and other equity interests being collectively referred to herein as the "ADDITIONAL PLEDGED INTERESTS"). (b) The undersigned makes the assignment and pledge, and grants the security interest, contained in Section 1 of the Pledge Agreement, of and in the Additional Pledged Interests, as if the undersigned was an original party to the Pledge Agreement as a Pledgor with respect to the Additional Pledged Interests thereunder.] SECTION _. REPRESENTATION AND WARRANTIES. Without limiting the generality of the foregoing, the undersigned represents and warrants as a Pledgor as set forth in Section 7 of the Pledge Agreement, as supplemented by this Pledge Agreement Supplement. SECTION _. GOVERNING LAW. This Pledge Agreement Supplement shall be governed by, and construed in accordance with, the laws of the State of New York, except to the extent that the perfection or the effect of perfection of the security interest under the Pledge Agreement, or remedies under the Pledge Agreement, in respect of any Collateral are governed, pursuant to the laws of the State of New York, by the laws of a jurisdiction other than the State of New York. Very truly yours, [NAME OF ADDITIONAL PLEDGOR] By______________________________ Name: Title: Address: CONSENT dated as of April 16, 1999 Reference is made to the foregoing Amended and Restated Pledge Agreement dated April 16, 1999 (the "PLEDGE AGREEMENT") by Accuride Corporation, a Delaware corporation (the "U.S. BORROWER"), Accuride Canada, Inc., and Accuride Ventures, Inc., a Delaware corporation ("ACCURIDE VENTURES" and, together with the U.S. Borrower, the "U.S. PLEDGORS") in favor of Citicorp USA, Inc., as Administrative Agent. The terms defined in the Pledge Agreement are used in this Consent as defined in the Pledge Agreement. The undersigned, as the general partner of AKW LP, hereby (i) consents, for purposes of Article 9 of the AKW LP Agreement, to the U.S. Pledgors' assignment and pledge under the Pledge Agreement of, and the U.S. Pledgors' grant under the Pledge Agreement of security interests in, the Pledged Interests issued by AKW LP and to the assignment, sale or other disposition of such Pledged Interests pursuant to Section 15 of the Pledge Agreement and the transferee of such assignment, sale or other disposition becoming a Substituted Limited Partner under the AKW LP Agreement and (ii) agrees that the provisions of Sections 9.2 through 9.6 of the AKW LP Agreement shall not apply to the U.S. Pledgors' assignment or pledge under the Pledge Agreement of, or the U.S. Pledgors' grant under the Pledge Agreement of security interests in, the Pledged Interests issued by AKW LP, or the assignment, sale or other disposition of such Pledged Interests pursuant to Section 15 of the Pledge Agreement, and in that connection waives all of its rights under such provisions with respect to such assignment, pledge and grant and such assignment, sale and other disposition. This Consent shall be governed by, and construed in accordance with, the laws of the State of New York. AKW GENERAL PARTNER L.L.C. By: ACCURIDE CORPORATION By______________________ Name: Title: By: ACCURIDE VENTURES, INC. By______________________ Name: Title: AMENDED AND RESTATED PLEDGE AGREEMENT Dated April 16, 1999 From ACCURIDE CORPORATION, ACCURIDE CANADA INC., and ACCURIDE VENTURES, INC. AS PLEDGORS to CITICORP USA, INC. AS ADMINISTRATIVE AGENT T A B L E O F C O N T E N T S ---------------------------------
SECTION PAGE SECTION 1. Grant of Security...............................................................................2 SECTION 2. Security for Obligations........................................................................4 SECTION 3. Delivery of Security Collateral and Account Collateral..........................................4 SECTION 4. Establishment and Maintenance of the Cash Collateral Accounts...................................5 SECTION 5. Investing of Amounts in the Cash Collateral Accounts............................................6 SECTION 6. Release of Amounts..............................................................................7 SECTION 7. Representations and Warranties..................................................................7 SECTION 8. Further Assurances..............................................................................8 SECTION 9. Place of Perfection; Records....................................................................8 SECTION 10. Voting Rights; Dividends; Etc..................................................................8 SECTION 11. Transfers and Other Liens.....................................................................10 SECTION 12. Administrative Agent Appointed Attorney-in-Fact...............................................10 SECTION 13. Administrative Agent May Perform..............................................................11 SECTION 14. The Administrative Agent's Duties.............................................................11 SECTION 15. Remedies......................................................................................11 SECTION 16. Acknowledgments Relating to Security Collateral and Account Collateral........................13 SECTION 17. Indemnity and Expenses........................................................................14 SECTION 18. Amendments; Waivers; Pledge Agreement Supplement; Etc.........................................14 SECTION 19. Addresses for Notices.........................................................................15 SECTION 20. Continuing Security Interest; Assignments Under the Credit Agreement..........................15 SECTION 21. Release and Termination.......................................................................15
SECTION 22. Security Interest Absolute....................................................................16 SECTION 23. Severability..................................................................................16 SECTION 24. Execution in Counterparts.....................................................................17 SECTION 25. Governing Law; Terms..........................................................................17
SECTION PAGE Schedule I-Initial Pledged Interests Exhibit A-Form of Cash Collateral Account Letter Exhibit B-Form of Pledge Agreement Supplement
EX-27.1 4 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF ACCURIDE CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1999 MAR-31-1999 38,454 0 60,615 757 36,258 158,686 324,357 161,359 456,850 64,138 424,328 0 0 24,158 (74,372) 456,850 111,533 111,533 85,411 6,479 368 0 8,956 12,669 5,321 7,324 0 0 0 7,324 296 296
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