1 EXHIBIT 10(xiv)
U.S. $75,000,000
CREDIT AGREEMENT
Dated as of December 19, 1995
between
FIGGIE INTERNATIONAL INC.
as Borrower
and
THE LENDERS PARTY HERETO
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent
2
TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT. . . . . . . . . . . . . . . . 1
1.1. Revolving Credit Advances . . . . . . . . . . . . 1
1.2. Repayment; Termination of Commitment. . . . . . . 5
1.3. Use of Proceeds . . . . . . . . . . . . . . . . . 6
1.4. Interest on Revolving Credit Advances . . . . . . 7
1.5. Eligible Accounts, Inventory and Equipment. . . . 10
1.6. Fees. . . . . . . . . . . . . . . . . . . . . . . 10
1.7. Cash Management System. . . . . . . . . . . . . . 12
1.8. Receipt of Payments . . . . . . . . . . . . . . . 12
1.9. Pro Rata Treatment. . . . . . . . . . . . . . . . 13
1.10. Application and Allocation of Payments. . . . . . 13
1.11. Non-Receipt of Funds by Agent . . . . . . . . . . 14
1.12. Sharing of Payments, Etc. . . . . . . . . . . . . 16
1.13. Settlement Procedures . . . . . . . . . . . . . . 17
1.14. Accounting. . . . . . . . . . . . . . . . . . . . 20
1.15. Indemnity . . . . . . . . . . . . . . . . . . . . 21
1.16. Access; Confidentiality . . . . . . . . . . . . . 23
1.17. Taxes . . . . . . . . . . . . . . . . . . . . . . 25
1.18. Capital Adequacy; Increased Costs;
Illegality. . . . . . . . . . . . . . . . . . . . 28
1.19. Letters of Credit . . . . . . . . . . . . . . . . 30
2. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . 30
2.1. Conditions to the Initial Revolving Credit
Advance and/or the Initial Letter of Credit
Obligation. . . . . . . . . . . . . . . . . . . . 30
2.2. Further Conditions to Each Revolving Credit
Advance and Each Incurrence of a Letter of
Credit Obligation . . . . . . . . . . . . . . . . 32
3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 34
3.1. Corporate Existence; Compliance with Law. . . . . 34
3.2. Executive Offices; Corporate or Other
Names . . . . . . . . . . . . . . . . . . . . . . 34
3.3. Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . 35
3.4. Financial Statements and Projections. . . . . . . 36
3.5. Material Adverse Change; Solvency . . . . . . . . 37
3.6. Ownership of Real Property; Liens . . . . . . . . 38
3.7. Restrictions; No Default; Material
Contracts . . . . . . . . . . . . . . . . . . . . 39
3.8. Labor Matters . . . . . . . . . . . . . . . . . . 39
3.9. Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness;
Unrestricted Subsidiaries . . . . . . . . . . . . 40
3.10. Government Regulation . . . . . . . . . . . . . . 41
3.11. Margin Regulations. . . . . . . . . . . . . . . . 41
3.12. Taxes . . . . . . . . . . . . . . . . . . . . . . 42
3.13. ERISA . . . . . . . . . . . . . . . . . . . . . . 43
3.14. No Litigation . . . . . . . . . . . . . . . . . . 45
3.15. Brokers . . . . . . . . . . . . . . . . . . . . . 45
3.16. Patents, Trademarks, Copyrights and
Licenses. . . . . . . . . . . . . . . . . . . . . 45
3.17. Hazardous Materials . . . . . . . . . . . . . . . 46
3
3.18. Insurance Policies. . . . . . . . . . . . . . . . 46
3.19. Blocked Accounts and Lock Boxes . . . . . . . . . 46
4. FINANCIAL STATEMENTS AND INFORMATION. . . . . . . . . . . 47
4.1. Reports and Notices . . . . . . . . . . . . . . . 47
4.2. Communication with Accountants. . . . . . . . . . 47
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 47
5.1. Maintenance of Existence and Conduct of
Business. . . . . . . . . . . . . . . . . . . . . 48
5.2. Payment of Charges and Claims . . . . . . . . . . 48
5.3. Books and Records . . . . . . . . . . . . . . . . 49
5.4. Litigation. . . . . . . . . . . . . . . . . . . . 49
5.5. Insurance; Casualty and Condemnation. . . . . . . 49
5.6. Compliance with Laws. . . . . . . . . . . . . . . 52
5.7. Agreements. . . . . . . . . . . . . . . . . . . . 52
5.8. Supplemental Disclosure . . . . . . . . . . . . . 53
5.9. Environmental Matters . . . . . . . . . . . . . . 53
5.10. Landlord's and Bailee's/Warehousemen's
Agreements. . . . . . . . . . . . . . . . . . . . 54
5.11. Certain Obligations Respecting
Subsidiaries. . . . . . . . . . . . . . . . . . . 54
5.12. Application of Proceeds . . . . . . . . . . . . . 55
5.13. Fiscal Year . . . . . . . . . . . . . . . . . . . 55
5.14. Employee Plans. . . . . . . . . . . . . . . . . . 55
6. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . 55
6.1. Mergers and Acquisitions. . . . . . . . . . . . . 56
6.2. Investments . . . . . . . . . . . . . . . . . . . 58
6.3. Indebtedness. . . . . . . . . . . . . . . . . . . 59
6.4. Affiliate and Employee Loans and
Transactions; Employment Agreements . . . . . . . 60
6.5. Capital Structure and Business. . . . . . . . . . 61
6.6. Guaranteed Indebtedness . . . . . . . . . . . . . 62
6.7. Liens . . . . . . . . . . . . . . . . . . . . . . 62
6.8. Sale of Assets. . . . . . . . . . . . . . . . . . 63
6.9. ERISA . . . . . . . . . . . . . . . . . . . . . . 63
6.10. Financial Covenants . . . . . . . . . . . . . . . 64
6.11. Hazardous Materials . . . . . . . . . . . . . . . 67
6.12. Sale-Leasebacks . . . . . . . . . . . . . . . . . 67
6.13. Cancellation of Indebtedness; Amendments. . . . . 67
6.14. Restricted Payments . . . . . . . . . . . . . . . 68
6.15. Operating Leases. . . . . . . . . . . . . . . . . 69
6.16. Blocked Accounts. . . . . . . . . . . . . . . . . 69
6.17. No Speculative Transactions . . . . . . . . . . . 69
6.18. Margin Regulations. . . . . . . . . . . . . . . . 69
6.19. Limitation on Negative Pledge Clauses . . . . . . 70
6.20. Accounting Changes; Fiscal Year . . . . . . . . . 70
7. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.1. Duration. . . . . . . . . . . . . . . . . . . . . 70
7.2. Survival of Obligations . . . . . . . . . . . . . 70
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES. . . . . . . . . . 71
8.1. Events of Default . . . . . . . . . . . . . . . . 71
8.2. Remedies. . . . . . . . . . . . . . . . . . . . . 74
8.3. Waivers by Borrower . . . . . . . . . . . . . . . 74
4
9. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.1. Appointment, Powers and Immunities. . . . . . . . 75
9.2. Reliance by Agent . . . . . . . . . . . . . . . . 76
9.3. Defaults. . . . . . . . . . . . . . . . . . . . . 76
9.4. Rights as a Lender. . . . . . . . . . . . . . . . 76
9.5. Indemnification . . . . . . . . . . . . . . . . . 77
9.6. Non-Reliance on Agent and Other Lenders . . . . . 77
9.7. Failure to Act. . . . . . . . . . . . . . . . . . 78
9.8. Resignation of Agent. . . . . . . . . . . . . . . 78
9.9. Consents under Loan Documents . . . . . . . . . . 79
9.10. Collateral Matters. . . . . . . . . . . . . . . . 79
10. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . 80
10.1. Successors and Assigns. . . . . . . . . . . . . . 80
10.2. Assignments and Participations. . . . . . . . . . 80
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 83
11.1. Complete Agreement; Modification of
Agreement . . . . . . . . . . . . . . . . . . . . 83
11.2. Fees and Expenses . . . . . . . . . . . . . . . . 84
11.3. No Waiver . . . . . . . . . . . . . . . . . . . . 85
11.4. Remedies. . . . . . . . . . . . . . . . . . . . . 86
11.5. Severability. . . . . . . . . . . . . . . . . . . 86
11.6. Conflict of Terms . . . . . . . . . . . . . . . . 86
11.7. Right of Set-off. . . . . . . . . . . . . . . . . 86
11.8. Authorized Signature. . . . . . . . . . . . . . . 87
11.9. GOVERNING LAW . . . . . . . . . . . . . . . . . . 87
11.10. Notices . . . . . . . . . . . . . . . . . . . . . 88
11.11. Section Titles. . . . . . . . . . . . . . . . . . 89
11.12. Counterparts. . . . . . . . . . . . . . . . . . . 90
11.13. Time of the Essence . . . . . . . . . . . . . . . 90
11.14. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . 90
11.15. Press Releases; Publicity . . . . . . . . . . . . 90
5
INDEX OF ANNEXES, SCHEDULES AND EXHIBITS
Annex A - Definitions
Annex B - Cash Management System
Annex C - Schedule of Closing Documents
Annex D - Financial Statements, Projections
and Notices
Annex E - Insurance Requirements
Annex F - Letters of Credit
Schedule 3.2 - Executive Offices; Trade Names
Schedule 3.4 - Financial Statements and
Projections
Schedule 3.5 - Dividends
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Material Contracts
Schedule 3.8 - Labor Matters
Schedule 3.9 - Ventures, Subsidiaries and
Affiliates; Outstanding Stock
Schedule 3.12 - Tax Matters
Schedule 3.13 - ERISA Plans
Schedule 3.14 - Litigation
Schedule 3.16 - Patents, Trademarks, Copyrights and
Licenses
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance Policies
Schedule 3.19 - Disbursement and Deposit Accounts
Schedule 6.2 - Investments
Schedule 6.3 - Indebtedness
Schedule 6.4 - Loans to and Transactions with
Employees
Schedule 6.5 - Acquisitions
Schedule 6.6 - Guarantees
Schedule 6.7 - Liens
Schedule 6.8 - Asset Dispositions
Schedule 6.12 - Sale-Leaseback Transactions
Schedule 6.19 - Negative Pledge Clauses
Schedule 11.8 - Authorized Signatures
Exhibit A - Form of Notice of Revolving Credit
Advance
Exhibit A-1 - Form of Notice of Conversion
Exhibit B-1 - Form of Borrowing Base Certificate
Exhibit C - Form of Revolving Credit Note
Exhibit D - Form of Borrower Security Agreement
Exhibit E - Form of Borrower Pledge Agreement
6
CREDIT AGREEMENT, dated as of December 19, 1995, among
FIGGIE INTERNATIONAL INC., a Delaware corporation (the
"Borrower"), the lenders listed on the signature pages hereof
or which pursuant to Section 10.2 shall become a "Lender"
hereunder (each individually a "Lender" and collectively
"Lenders"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation, as agent hereunder for Lenders (in such
capacity, together with its successors in such capacity,
"Agent").
RECITALS
A. Borrower desires, in its discretion, to borrow up
to $75,000,000 from Lenders, and Lenders and Agent are
willing to make certain loans and other financial
accommodations in favor of Borrower of up to such amount upon
the terms and conditions set forth herein.
B. Capitalized terms used herein shall have the mean-
ings ascribed to them on Annex A. All Schedules, Annexes,
Attachments and Exhibits hereto, or expressly identified to
this Agreement, are incorporated herein by reference, and
taken together, shall constitute but a single agreement.
Unless otherwise expressly set forth herein, or in a written
amendment referring to such Schedules and Annexes, all
Schedules and Annexes referred to herein shall mean the
Schedules as in effect at the Closing Date. As used herein,
the plural shall include the singular, the singular includes
the plural, and pronouns in any gender (masculine, feminine
or neuter) all apply to all genders. These Recitals shall be
construed as part of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto
agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1. Revolving Credit Advances.
(a) Upon and subject to the terms and conditions
hereof, each Lender severally agrees to make available, from
time to time, from the Closing Date until the Commitment
Termination Date, for Borrower's use and upon the request of
Borrower therefor to Agent, advances (each, together with any
payments made in respect of any Letter of Credit Obligations
which are automatically deemed to constitute Advances
pursuant to paragraph 2 of Annex F, a "Revolving Credit
Advance") in an aggregate principal amount at any time
outstanding up to but not exceeding the Revolving Credit
Commitment of such Lender less such Lender's pro rata share
of the Letter of Credit Obligations, provided that in no
event shall the aggregate principal amount of the Revolving
Credit Loan be permitted to exceed the Borrowing Avail-
ability. Borrower may from time to time borrow, repay and
7
reborrow Revolving Credit Advances under this Section 1.1.
(b) Borrower shall give Agent (which shall
promptly notify Lenders) notice of each borrowing hereunder
as provided in Section 1.1(c) and, subject to Section 1.13,
on the date specified for such borrowing each Lender shall
make available the amount of the Revolving Credit Advance or
Advances to be made by it on such date to Agent to such
account of Agent as Agent may designate, in immediately
available funds, for the account of Borrower.
(c) Each notice of a borrowing of a Revolving
Credit Advance shall be given in writing (by telecopy, hand
delivery, or U.S. mail) by Borrower to Agent at its address
at 000 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000-0000,
Attention: Portfolio Analyst, Telephone No. (000) 000-0000,
Telecopy No. (000) 000-0000, given no later than 11:00 a.m.
(New York City time) on the Business Day of the proposed
Revolving Credit Advance. Each such notice of borrowing (a
"Notice of Revolving Credit Advance") shall be substantially
in the form of Exhibit A, specifying therein the requested
date, the amount of such Revolving Credit Advance, the Type
or Types of advance comprising such Revolving Credit Advance
and the amount of each such Type, and the Interest Period for
each such Revolving Credit Advance which is a LIBO Rate
Advance. Each Revolving Credit Advance shall be deemed to be
an Index Rate Advance unless otherwise specified by Borrower
in the Notice of Revolving Credit Advance delivered to Agent
in relation to such Revolving Credit Advance in accordance
with the procedures and time set forth in this Section
1.1(c). Agent and Lenders shall be entitled to rely upon and
shall be fully protected under this Agreement in relying upon
any Notice of Revolving Credit Advance believed by Agent to
be genuine and to assume that the persons executing and
delivering the same were duly authorized unless the
responsible individual acting thereon for Agent shall have
actual knowledge to the contrary. Each LIBO Rate Advance
shall be in a minimum amount of at least $1,000,000 or an
integral multiple of $500,000 in excess thereof.
(d) The Revolving Credit Advances made by each
Lender shall be evidenced by a single promissory note of
Borrower for each Lender substantially in the form of
Exhibit C, dated the date hereof, payable to such Lender in a
principal amount equal to the amount of its Revolving Credit
Commitment as originally in effect and otherwise duly
completed. The date, amount, Type and interest rate of each
Revolving Credit Advance of each Type made by each Lender and
each payment of principal with respect thereto shall be
recorded on the books and records of such Lender which books
and records shall constitute prima facie evidence of the
accuracy of the information therein recorded. The entire
unpaid balance of the Revolving Credit Loan shall be
immediately due and payable on the Commitment Termination
Date.
(e) Borrower shall furnish to Agent and each
Lender a Borrowing Base Certificate, completed and signed by
8
a Responsible Officer, which sets forth a calculation of the
Borrowing Base at the times and for the periods set forth in
Annex D. Borrower may furnish to Agent and each Lender more
frequent Borrowing Base Certificates. Upon the occurrence
and during the continuance of an Event of Default and upon
request of Agent, Borrower shall furnish to Agent and each
Lender a more frequent Borrowing Base Certificate, including,
without limitation, on a daily basis prepared as of the end
of each Business Day before the end of the next Business Day.
Agent shall provide Borrower with no less than two Business
Days' prior notice of a request for a more frequent Borrowing
Base Certificate. Borrower agrees that in making any
Revolving Credit Advance hereunder Agent and each Lender
shall be entitled to rely upon the most recent Borrowing Base
Certificate delivered to Agent and Lenders by Borrower.
(f) The failure of any Lender (such Lender, a
"Non-Funding Lender") to make any Advance to be made by it on
the date specified therefor shall not relieve any other
Lender (each such other Lender, an "Other Lender") of its
obligation to make its Revolving Credit Advance on such date,
but neither any Other Lender nor Agent shall be responsible
for the failure of any Non-Funding Lender to make a Revolving
Credit Advance to be made by such Non-Funding Lender, and no
Non-Funding Lender shall have any obligation to Agent or any
Other Lender for the failure by such Non-Funding Lender.
Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent
rights under or with respect to any Loan Document or
constitute a "Lender" (or be included in the calculation of
"Required Lenders" hereunder) for any voting or consent
rights under or with respect to any Loan Document. Anything
in this Agreement to the contrary notwithstanding, each
Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights
arising out of this Agreement or the Revolving Credit Notes
(including, without limitation, exercising any rights of off-
set) without first obtaining the prior written consent of
Agent or Required Lenders, it being the intent of Lenders
that any such action to protect or enforce rights under this
Agreement and the Revolving Credit Notes shall be taken in
concert and at the direction or with the consent of Agent or
Required Lenders and not individually by a single Lender.
(g) Not later than 11:00 a.m. (New York City time)
on the second Business Day prior to the end of any Interest
Period for each Revolving Credit Advance consisting of a LIBO
Rate Advance, Borrower shall deliver to Agent a Notice of
Conversion (a "Notice of Conversion"), substantially in the
form of Exhibit A-1, electing to convert such LIBO Rate
Advance into an Index Rate Advance or into a LIBO Rate
Advance (or part into an Index Rate Advance and part into a
LIBO Rate Advance), in each case effective at the end of the
Interest Period for such Revolving Credit Advance. Each such
Notice of Conversion shall be given in writing (by telecopy,
hand delivery, or U.S. mail) by Borrower to Agent at its
address at 000 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx
00000-0000, Attention: Portfolio Analyst, Telephone No.
9
(000) 000-0000, Telecopy No. (000) 000-0000, specifying
therein (consistent with this Agreement), inter alia, (i) the
aggregate amount and Type of Revolving Credit Advance which
is to be converted and the last day of the current Interest
Period for such Revolving Credit Advance, (ii) the Type or
Types of Revolving Credit Advance into which such Revolving
Credit Advance is to be converted and the amount of each such
Type and (iii) the Interest Period for such Revolving Credit
Advance which is to be a LIBO Rate Advance. If Borrower
shall fail to provide a Notice of Conversion on or prior to
11:00 a.m. (New York City time) on the second Business Day
prior to the end of the Interest Period in respect of any
LIBO Rate Advance, such Revolving Credit Advance shall
automatically convert into an Index Rate Advance on the day
following the last of such Interest Period.
(h) Borrower shall be entitled to convert all or
any part of any Index Rate Advance into a LIBO Rate Advance
by delivery to Agent, not later than 11:00 a.m. (New York
City time) on the second Business Day prior to the date such
conversion is to occur, of a Notice of Conversion in the
manner, and containing the relevant information indicated in,
Section 1.1(g); provided, however, that no such conversion
shall occur or be effective on any date which is not a
Business Day.
1.2. Repayment; Termination of Commitment.
(a) Borrower hereby promises to pay to Agent for
account of each Lender the entire outstanding Revolving
Credit Loan and all other outstanding Obligations, and the
Revolving Credit Loan and all other Obligations shall mature
and become immediately due and payable, on the Commitment
Termination Date.
(b) In the event that the outstanding balance of
the Revolving Credit Loan shall, at any time, exceed the
Borrowing Availability, Borrower upon obtaining knowledge of
such excess shall immediately repay the Revolving Credit Loan
and/or cash collateralize the Letter of Credit Obligations in
the amount of such excess.
(c) Borrower may repay the Revolving Credit Loan
without reducing the Maximum Revolving Credit Commitment, in
whole or in part, at any time, without penalty, subject,
however, to Section 1.15(c).
(d) Borrower shall have the right at any time on
ten (10) days' prior written notice to Agent to voluntarily
terminate the Maximum Revolving Credit Commitment (in whole
but not in part) without premium or penalty, other than
payment of the Termination Fee; provided, however, that the
Termination Fee shall not be payable in connection with any
such termination occurring on or after the first anniversary
of the Closing Date; and, provided, further, that Borrower
shall have the right at any time or from time to time after
the first anniversary of the Closing Date on ten (10) days'
prior written notice to Agent to voluntarily and permanently
10
reduce the Maximum Revolving Credit Commitment, in increments
of $5,000,000, to not less than $60,000,000 without premium
or penalty other than any losses, costs or expenses payable
pursuant to Section 1.15(c), provided that each Lender's
Revolving Credit Commitment shall be reduced on a pro rata
basis, and any such reduction of the Revolving Credit
Commitments shall be accompanied by a pro rata reduction
(based upon such percentage reduction of the Revolving Credit
Commitments) of the $60,000,000 amount referred to in clause
(i) of the definition of "Borrowing Availability" and clause
(ii)(x) of Section 2.2(c). Upon such termination in whole,
Borrower's right to receive Revolving Credit Advances and the
benefit of Letter of Credit Obligations shall simultaneously
terminate and Borrower's obligation to pay the Non-use Fee
shall terminate. On the date of such termination in whole,
Borrower shall pay to Agent in immediately available funds
all of the Obligations, including any accrued and unpaid
interest and any losses, costs and expenses payable pursuant
to Section 1.15(c) and, if such termination is prior to the
first anniversary of the Closing Date, the Termination Fee as
described above, and make arrangements, in accordance with
the terms and conditions of Annex F, for satisfaction with
respect to any Letter of Credit Obligations.
(e) If the unpaid principal balance of the
Revolving Credit Loan should at any time exceed the Borrowing
Availability, the excess balance shall nevertheless
constitute Obligations that are secured by the Collateral and
entitled to all of the benefits thereof and of the Loan Docu-
ments and shall be evidenced by the Revolving Credit Notes.
(f) Upon receipt by Borrower of the Net Proceeds
of any asset sales other than pursuant to asset sales
permitted by Section 6.8(i) or (v), Borrower shall repay the
Obligations in accordance with Section 1.10 by the amount of
such Net Proceeds; provided, however, that if after repaying
all outstanding Index Rate Advances and LIBO Rate Advances
whose Interest Period ends on such repayment date there are
LIBO Rate Advances then outstanding as to which any such
prepayment would occur on a day prior to the last day of the
Interest Period or Interest Periods applicable to such LIBO
Rate Advances and (i) no Event of Default shall have occurred
and be continuing on the date of receipt of such Net Proceeds
and (ii) Borrower would be permitted on such date to borrow
Advances under Section 2.2 in an aggregate amount at least
equal to the amount of such Net Proceeds, Borrower shall be
permitted to retain such remaining Net Proceeds until the
last day of such Interest Period and shall repay the
Revolving Credit Loan on such date by the amount of such Net
Proceeds.
1.3. Use of Proceeds. Borrower shall use the proceeds
of the Revolving Credit Advances for the refinancing of
certain outstanding Indebtedness as provided in Section
2.1(c), to provide for Letter of Credit Obligations and for
general corporate purposes, and to pay any losses, costs or
expenses payable by Borrower pursuant to Section 1.15(c).
11
1.4. Interest on Revolving Credit Advances.
(a) Borrower shall pay interest on the unpaid
principal amount of each Revolving Credit Advance from the
date of such Revolving Credit Advance until the principal
amount thereof shall be paid in full, at a rate based on
either the Index Rate or the LIBO Rate as follows: (i) with
respect to each Index Rate Advance, at a rate per annum equal
to the Index Rate plus the Applicable Margin, payable monthly
in arrears of the last day of each month commencing on or
after the Closing Date and on the date such Revolving Credit
Advance is repaid in full; and (ii) with respect to each LIBO
Rate Advance, at a rate per annum equal at all times during
the Interest Period therefor to the LIBO Rate for such
Interest Period plus the Applicable Margin, payable in
arrears on the last day of such Interest Period and on the
date such Revolving Credit Advance is repaid in full;
provided, however, that the Applicable Margin applicable to
LIBO Rate Advances shall be subject to periodic adjustments
after December 31, 1995, in accordance with the following
criteria.
Based on the Interest Coverage Ratio and Fixed
Charge Coverage Ratio calculated based upon the information
contained in Borrower's financial statements that are
required to be delivered to Agent and Lenders in accordance
with Section 4.1 (together with a certificate of a
Responsible Officer certifying such calculations (each, an
"Adjustment Certificate")) for the most recently ended Fiscal
Quarter in the most recently ended four Fiscal Quarter
period, the Applicable Margin for LIBO Rate Advances shall be
adjusted to be as follows:
If Interest If Fixed Charge
Coverage Ratio for Coverage Ratio for
previous four previous four Then
Fiscal Fiscal Applicable
Quarter period is Quarter period is Margin is
< 1.75 : 1 or < 1.20 : 1 2.50%
> or = 1.75 : 1 and > or = 1.20 : 1 2.25%
and < 2.50 : 1 and < 1.40 : 1
> or = 2.50 : 1 and > or = 1.40 : 1 2.00%
The adjustments set forth in this paragraph, if and when
applicable, shall be made to the Applicable Margin for LIBO
Rate Advances outstanding during the Fiscal Quarter
commencing immediately following the date that is three (3)
Business Days after Borrower shall have delivered to Agent
the required financial statements and Adjustment Certificate
showing the requisite Interest Coverage Ratio and Fixed
Charge Coverage Ratio for the relevant four Fiscal Quarter
period.
12
If any interest or other payment under this Agreement becomes
due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate
during such extension.
(b) All computations of interest shall be made by
Agent and on the basis of a three hundred and sixty (360) day
year, in each case for the actual number of days occurring in
the period for which such interest is payable. Each
determination by Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest
error or bad faith. In the event Borrower fails to select an
interest rate, the applicable Revolving Credit Advances shall
bear interest at a rate based upon the Index Rate. All
outstanding Obligations other than the principal amount of
the LIBO Rate Advances shall bear interest at the Index Rate.
(c) Upon the occurrence and during the continuance
of any Default the interest rate applicable to all of the
Obligations, including, without limitation, the Revolving
Credit Loan, may in the sole discretion of Required Lenders
be increased, effective upon notice to Borrower of such
increase from Agent on behalf of Required Lenders, to the
Default Rate, and shall be payable on demand; provided,
however, that upon the occurrence of an Event of Default
specified in Section 8.1(f), (g) or (h), the interest rate
applicable to all of the Obligations shall be increased
automatically to the Default Rate without the necessity of
any action on the part of Required Lenders and shall be
payable on demand. Upon the occurrence and during the
continuance of an Event of Default, Borrower shall not be
permitted to select an interest rate based on the LIBO Rate
or convert an Index Rate Advance to a LIBO Rate Advance.
(d) Notwithstanding anything to the contrary set
forth in this Section 1.4, if, at any time until payment in
full of all of the Obligations, the rate of interest payable
hereunder exceeds the highest rate of interest permissible
under any law which a court of competent jurisdiction shall,
in a final determination, deem applicable hereto (the
"Maximum Lawful Rate"), then in such event and so long as the
Maximum Lawful Rate would be so exceeded, the rate of
interest payable hereunder shall be equal to the Maximum
Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less
than the Maximum Lawful Rate, Borrower shall continue to pay
interest hereunder at the Maximum Lawful Rate until such time
as the total interest received by each Lender from the making
of Revolving Credit Advances hereunder is equal to the total
interest which such Lender would have received had the
interest rate payable hereunder been (but for the operation
of this paragraph) the interest rate payable since the
Closing Date as otherwise provided in this Agreement.
Thereafter, the interest rate payable hereunder shall be the
rate of interest provided in Sections 1.4(a) and (c) of this
Agreement, unless and until the rate of interest again
13
exceeds the Maximum Lawful Rate, in which event this
paragraph shall again apply. In no event shall the total
interest received by any Lender pursuant to the terms hereof
exceed the amount which such Lender could lawfully have
received had the interest due hereunder been calculated for
the full term hereof at the Maximum Lawful Rate. In the
event the Maximum Lawful Rate is calculated pursuant to this
paragraph, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of
days in the year in which such calculation is made. In the
event that a court of competent jurisdiction, notwithstanding
the provisions of this Section 1.4(d), shall make a final
determination that a Lender has received interest hereunder
or under any of the Loan Documents in excess of the Maximum
Lawful Rate, such Lender shall, to the extent permitted by
applicable law, promptly apply such excess first to any
lawful interest due and not yet paid hereunder, then to the
outstanding principal of the Obligations, then to Fees and
any other unpaid Obligations and thereafter shall refund any
excess to Borrower or as a court of competent jurisdiction
may otherwise order.
(e) Notwithstanding any other provision of this
Agreement, there shall not at any time be in effect (and
Borrower shall not be entitled to select) more than five
Interest Periods with respect to all outstanding LIBO Rate
Advances.
1.5. Eligible Accounts, Inventory and Equipment.
(a) Based on the most recent Borrowing Base
Certificate delivered by Borrower to Agent and on other
information available to Agent, Agent shall determine which
Accounts are, in accordance with the terms hereof, "Eligible
Accounts" for purposes of determining the amounts, if any, to
be advanced to Borrower.
(b) Based on the most recent Borrowing Base
Certificate delivered by Borrower to Agent and on other
information available to Agent, Agent shall determine which
Inventory is, in accordance with the terms hereof, "Eligible
Inventory" for purposes of determining the amounts, if any,
to be advanced to Borrower.
(c) Based on the most recent Borrowing Base
Certificate delivered by Borrower to Agent and on other
information available to Agent, Agent shall determine which
Equipment is, in accordance with the terms hereof, "Eligible
Equipment" for purposes of determining the amounts, if any,
to be advanced to Borrower.
1.6. Fees. As compensation for Agent's and Lender's
costs, skills, services and efforts incurred and expended in
making the Revolving Credit Loan and the Letters of Credit
available to Borrower, Borrower agrees to pay to Agent for
its own account or the account of Lenders, as the case may
be, the following fees and expenses and to Agent for its own
account such other fees as are set forth in a separate fee
14
letter, dated November 3, 1995, between Borrower and Agent:
(a) an unused facility fee (the "Non-use Fee")
payable to Agent for the ratable benefit of Lenders, subject
to the provisions of Section 1.13(e), equal to one-half of
one percent (0.5%) per annum on the average unused daily
balance of the Lenders' Revolving Credit Commitments, payable
in arrears (a) for the preceding calendar month, on the first
day of each calendar month commencing January 2, 1996, and
(b) on the Commitment Termination Date; provided, however,
that for purposes of determining the Non-use Fee, 100% of the
face amount of the Letter of Credit Obligations shall be
deemed to be used for purposes of such calculation. All
computations of the foregoing fees shall be made by Agent and
on the basis of a 360-day year, in each case for the actual
number of days occurring in the period for which such fee is
payable;
(b) a termination fee (the "Termination Fee")
payable to Agent for the ratable benefit of Lenders, in an
amount equal to one-half of one percent (0.5%) of the Maximum
Revolving Credit Commitment, payable on the date of any
termination of the Maximum Revolving Credit Commitment prior
to the first anniversary of the Closing Date. The
Termination Fee shall also be payable upon any acceleration
of the Revolving Credit Loan following an Intentional
Default. "Intentional Default" shall mean any action taken
by any Loan Party or omission by any of them to take any
action with the intent to create, and which shall have
resulted in, an Event of Default; and
(c) (i) to Agent, or the Issuing Bank, as the case
may be, as compensation for any Letter of Credit Obligations
incurred by it, all reasonable or customary costs and
expenses incurred by Agent or the Issuing Bank, as the case
may be, on account of such Letter of Credit Obligations and
(ii) to Agent for the account of Lenders, as compensation for
any Letter of Credit Obligations incurred by Lenders, a
letter of credit fee (the "Letter of Credit Fee") of one and
one-half percent (1.5%) per annum (calculated on the basis of
a 360-day year and actual days elapsed) on the face amount of
all Letter of Credit Obligations incurred by them, payable in
arrears (x) for the preceding calendar month, on the first
Business Day of the succeeding month, and (y) on the
Commitment Termination Date; provided, however, that the
Letter of Credit Fee shall be subject to periodic adjustments
after December 31, 1995, in accordance with the following
criteria.
Based on the Interest Coverage Ratio and Fixed
Charge Coverage Ratio calculated based upon the information
contained in Borrower's financial statements that are
required to be delivered to Agent and Lenders in accordance
with Section 4.1 (together with an Adjustment Certificate)
for the most recently ended Fiscal Quarter in the most
recently ended four Fiscal Quarter period, the Letter of
Credit Fee shall be adjusted to be as follows:
15
If Interest If Fixed Charge Then
Coverage Ratio for Coverage Ratio for Applicable
previous four previous four Letter of
Fiscal Fiscal Credit
Quarter period is Quarter period is Fee is
< 1.75 : 1 or < 1.20 : 1 1.50%
> or = 1.75 : 1 and > or = 1.20 : 1 1.25%
and < 2.50 : 1 and < 1.40 : 1
> or = 2.50 : 1 and > or = 1.40 : 1 1.00%
The adjustments set forth in this paragraph, if and when
applicable, shall be made to the Letter of Credit Fee for the
Fiscal Quarter commencing immediately following the date that
is three (3) Business Days after Borrower shall have
delivered to Agent the required financial statements and
Adjustment Certificate showing the requisite Interest
Coverage Ratio and Fixed Charge Coverage Ratio for the
relevant four Fiscal Quarter period.
Upon the occurrence and during the continuance of a Default,
the Letter of Credit Fee may in the sole discretion of
Required Lenders be increased, effective upon notice to
Borrower of each increase from Agent on behalf of Required
Lenders, to a per annum rate which is two percent (2.0%) per
annum in excess of the rate that would otherwise be
applicable, and shall be payable upon demand by Agent;
provided, however, that upon the occurrence of an Event of
Default specified in Sections 8.1(f), (g) or (h), the Letter
of Credit Fee shall be increased automatically to the rate
which is two percent (2.0%) per annum in excess of the
otherwise applicable rate without the necessity of any action
on the part of Required Lenders and shall be payable on
demand. The fees, costs and expenses provided for in this
paragraph (c) are in addition to any fees, costs and expenses
payable to the issuers of the Letters of Credit, all of which
will be paid by Borrower and, if not otherwise paid by
Borrower, will be charged to any accounts of Borrower
maintained by Agent as Revolving Credit Advances.
1.7. Cash Management System. On or prior to the Closing
Date, Borrower will establish and maintain until the Termina-
tion Date, the cash management system described in Annex B.
1.8. Receipt of Payments. Borrower shall make each
payment under this Agreement not later than 2:00 p.m. (New
York City time) on the day when due in lawful money of the
United States of America in immediately available funds to
the Collection Account. For purposes of computing interest
and Fees and determining the amount of funds available for
borrowing by Borrower pursuant to Section 1.1, (a) all
payments (including cash sweeps) consisting of cash, wire, or
electronic transfers in immediately available funds shall be
16
deemed received by Agent upon deposit in the Collection
Account and notice to Agent of such deposit and (b) all
payments consisting of checks, drafts, or similar non-cash
items shall be deemed received upon receipt of good funds
following deposit in the Collection Account (together with
notice to Agent of such deposit). Subject to Section 1.13,
each payment received by Agent under this Agreement or any
Revolving Credit Note for the account of any Lender shall be
paid by Agent promptly to such Lender, in the same funds
received, for application to the Revolving Credit Advances or
other obligation in respect of which such payment is made.
1.9. Pro Rata Treatment. Except to the extent otherwise
provided herein: (i) each borrowing of Revolving Credit
Advances from Lenders (including, without limitation, any
Revolving Credit Advances pursuant to Section 1.13(b)) shall
be incurred and made by the relevant Lenders, and each
payment of Non-use Fees and the Termination Fee shall be made
for the account of the relevant Lenders, pro rata according
to the amounts of their respective Revolving Credit
Commitments; provided, however, that payment of any Non-use
Fees shall be subject to the provisions of Section 1.13(e);
(ii) each payment or prepayment of principal of Revolving
Credit Advances by Borrower shall be made for the account of
the relevant Lenders pro rata in accordance with the
respective unpaid principal amounts of the Revolving Credit
Advances held by Lenders; and (iii) each payment of interest
on Revolving Credit Advances by Borrower shall be made for
the account of the relevant Lenders pro rata in accordance
with the amounts of interest on such Revolving Credit
Advances then due and payable to the respective Lenders.
1.10. Application and Allocation of Payments. Borrower
irrevocably waives the right to direct the application of any
and all payments at any time or times hereafter received from
or on behalf of Borrower, and Borrower irrevocably agrees
that Agent and Lenders shall have the continuing exclusive
right to apply any and all such payments against the then due
and payable Obligations of Borrower and in repayment of the
Revolving Credit Loan and the then due and payable Letter of
Credit Obligations as Lenders may deem advisable. In the
absence of a specific determination by all Lenders with
respect thereto, the same shall be applied in the following
order: (i) then due and payable Fees, expenses and other
Obligations (including Revolving Credit Advances made by
Agent in its capacity as Agent) owing to Agent; (ii) then due
and payable Fees and expenses of Lenders; (iii) then due and
payable interest payments on Revolving Credit Advances;
(iv) then due and payable Obligations to Lenders other than
Fees, expenses and interest and principal payments; (v) then
due and payable principal payments on Advances; and (vi) to
the extent there are no other Obligations then due and
payable, to Borrower or its successors or assigns or as a
court of competent jurisdiction may direct, it being
understood, subject to Sections 1.2(b) and 8.2, that the
foregoing clauses (i) through (vi) shall not require Borrower
to cash collateralize the Letter of Credit Obligations.
Notwithstanding any other provision of this Agreement, Agent
17
on behalf of Lenders is authorized to, and at its option may,
make or cause to be made Revolving Credit Advances by Lenders
on behalf of Borrower for payment of all Fees, expenses,
charges, costs, principal, interest, or other Obligations
then due and payable by Borrower under this Agreement or any
of the Loan Documents, even if the making of such Revolving
Credit Advance causes the outstanding balance of the
Revolving Credit Loan to exceed the Borrowing Availability,
and Borrower agrees that the making of any such Advance in
excess of the Borrowing Availability shall constitute an
automatic Event of Default unless Borrower repays such
Advance within one (1) Business Day after demand by Agent.
Any such Revolving Credit Advance shall be deemed to be a
Revolving Credit Advance for purposes of this Agreement
notwithstanding the fact that the conditions contained in
Section 2.2 have not been satisfied with respect to such
Revolving Credit Advance.
1.11. Non-Receipt of Funds by Agent. Unless Agent
shall have been notified by a Lender or Borrower ("Payor")
prior to the date on which Payor is to make payment to Agent
of (in the case of a Lender) the proceeds of a Revolving
Credit Advance to be made by such Lender hereunder or (in the
case of Borrower) a payment to Agent for account of one or
more of Lenders hereunder (such payment being herein called
the "Required Payment"), which notice shall be effective upon
receipt, that Payor does not intend to make the Required
Payment to Agent, Agent may assume that the Required Payment
has been made and may, in reliance upon such assumption (but
shall not be required to), make the amount thereof available
to the intended recipient(s) on such date; and, if Payor has
not in fact made the Required Payment to Agent, the
recipient(s) of such payment shall, on demand, repay to Agent
the amount so made available together with interest thereon
in respect of each day during the period commencing on the
date (the "Advance Date") such amount was so made available
by Agent until the date Agent recovers such amount at a rate
per annum equal to the Index Rate in the case of Borrower and
the Federal Funds Rate in the case of a Lender for such day
and, if such recipient(s) shall fail promptly to make such
payment, Agent shall be entitled to recover such amount, on
demand, from Payor, together with interest as aforesaid;
provided, however, that if neither the recipient(s) nor Payor
shall return the Required Payment to Agent within three (3)
Business Days after notice from Agent of such Advance, then,
retroactively to the Advance Date, Payor and the recipient(s)
shall each be obligated to pay interest on the Required
Payment as follows:
(i) if the Required Payment shall represent a
payment to be made by Borrower to Lenders, Borrower and
the recipient(s) shall each be obligated retroactively
to the Advance Date to pay interest in respect of the
Required Payment at the Default Rate (and, in case the
recipient(s) shall return the Required Payment to Agent,
without limiting the obligation of Borrower hereunder to
pay interest to such recipient(s) at the Default Rate in
respect of the Required Payment); and
18
(ii) if the Required Payment shall represent pro-
ceeds of a Revolving Credit Advance to be made by
Lenders to Borrower, Payor and Borrower shall (without
duplication) each be obligated retroactively to the
Advance Date to pay interest in respect of the Required
Payment at the rate of interest provided for such
Required Payment pursuant hereto (and, in case Borrower
shall return the Required Payment to Agent, without
limiting any claim Agent or Borrower may have against
Payor in respect of the Required Payment).
Nothing in this Section 1.11 or elsewhere in this Agreement
or the other Loan Documents shall be deemed to require Agent
to advance funds on behalf of any Lender or to relieve any
Lender from its obligation to fulfill its Revolving Credit
Commitment hereunder or to prejudice any rights that Agent or
Borrower may have against any Lender as a result of any
default by such Lender hereunder.
1.12. Sharing of Payments, Etc.
(a) Borrower agrees that, in addition to (and
without limitation of) any right of set-off, banker's lien or
counterclaim a Lender may otherwise have, each Lender shall
be entitled, at its option (but subject, as between Lenders,
to the provisions of the last sentence of Section 1.1(f)), to
offset balances held by it for the account of Borrower at any
of its offices, in Dollars or in any other currency, against
any principal of or interest on any of such Lender's
Revolving Credit Advances (including any such Advances deemed
made by such Lender under Section 1.13(b)) or any other
amount payable to such Lender hereunder, that in each of the
foregoing events is not paid when due beyond any applicable
grace period (regardless of whether such balances are then
due to Borrower), in which case it shall promptly notify
Borrower and Agent thereof; provided, however, that such
Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender shall obtain from Borrower
payment of any principal of or interest on any Revolving
Credit Advance owing to it or payment of any other amount
under this Agreement or any Revolving Credit Note held by it
or any other Loan Document through the exercise of any right
of set-off, banker's lien or counterclaim or similar right or
otherwise (other than from Agent as provided herein), and, as
a result of such payment, such Lender shall have received a
greater percentage of the principal of or interest on the
Revolving Credit Advances or such other amounts then due
hereunder or thereunder by Borrower to such Lender than the
percentage received by any other Lender, it shall promptly
pay to Agent, for the benefit of Lenders, the amount of such
excess and simultaneously purchase from such other Lenders a
participation in (or, if and to the extent specified by such
Lender, direct interests in) the Revolving Credit Advances or
such other amounts, respectively, owing to such other Lenders
(or in interest due thereon, as the case may be) in such
19
amounts, and make such other adjustments from time to time as
shall be equitable, to the end that all Lenders shall share
the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving
such excess payment) pro rata in accordance with the unpaid
principal of and/or interest on Revolving Credit Advances or
such other amounts, respectively, owing to each Lender.
Amounts received by Agent under this paragraph shall be
treated as a payment received from Borrower under Section
1.10. To such end all Lenders shall make appropriate
adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must
otherwise be restored.
(c) Borrower agrees that any Lender so purchasing
such a participation (or direct interest) pursuant to Section
1.12(b) may exercise, in a manner consistent with Section
1.12(a), all rights of set-off, banker's lien, counterclaim
or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Revolving Credit
Advances or other amounts (as the case may be) owing to such
Lender in the amount of such participation.
(d) Nothing contained herein shall require any
Lender to exercise any such right or shall affect the right
of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other
indebtedness or obligation of Borrower. If, under any
applicable bankruptcy, insolvency or other similar law, any
Lender receives a secured claim in lieu of a set-off to which
this Section 1.12 applies, such Lender shall, to the extent
practicable, assign such rights to Agent for the benefit of
Lenders and, in any event, exercise its rights in respect of
such secured claim in a manner consistent with the rights of
Lenders entitled under this Section 1.12 to share in the
benefits of any recovery on such secured claim.
1.13. Settlement Procedures.
(a) The Revolving Credit Loan balance may
fluctuate from day to day from Agent's disbursement of funds
to, and receipt of funds from, Borrower. In order to
minimize the frequency of transfers of funds between Agent
and Lenders, Revolving Credit Advances in an aggregate amount
not to exceed $5,000,000 may be made by Agent and payments in
respect thereof will be settled according to the procedures
set forth in this Section 1.13. Notwithstanding these pro-
cedures, each Lender's obligation to fund its portion of any
Revolving Credit Advance made to Borrower will commence on
the date such Advances are made. Such payments will be made
by each Lender without set-off, counterclaim or reduction of
any kind.
(b) Notwithstanding anything to the contrary
contained in this Agreement, Agent may elect, at its sole
option, to fund the amount of any Revolving Credit Advance
requested by Borrower in an aggregate amount not to exceed
$5,000,000. In the event Agent makes such election, such
20
Revolving Credit Advance made by Agent shall be deemed, and
shall constitute, as of the date of making thereof, a
Revolving Credit Advance made by each of Lenders in an amount
equal to such Lender's pro rata share thereof, and each
Lender shall be obligated to deliver to Agent such share of
such Revolving Credit Advance on the Weekly Settlement Date
in accordance with the procedure for weekly settlement set
forth in Section 1.13(c) or as otherwise provided in Section
1.13(d). Notwithstanding anything to the contrary contained
in this Agreement, for purposes of calculating interest
payable to any Lender (i) Agent shall be deemed a "Lender"
with respect to any outstanding Revolving Credit Advances
funded by Agent; and (ii) the amount of Revolving Credit
Advances of any Lender which are outstanding on any day shall
be equal to the amount of such Lender's Revolving Credit
Advances outstanding on such day (A) excluding any Revolving
Credit Advances which have been funded entirely by Agent with
respect to which such Lender has not funded its pro rata
share and (B) including Revolving Credit Advances of such
Lender which have been repaid by Borrower to Agent but not
yet received by such Lender from Agent.
(c) Each Lender shall settle with Agent, upon
Agent's request, on Thursday of each week (or on such other
day of the week as may be designated from time to time by
Agent) in each successive week (the "Weekly Settlement Date")
based on the outstanding principal amount of Revolving Credit
Advances as of the immediately preceding Business Day, on the
net Revolving Credit Advances and payments since the date of
the last settlement. On each Weekly Settlement Date, prior
to 12:00 Noon (New York City time), Agent shall notify each
Lender by telephone or by telex, telecopy or other form of
teletransmission of such Lender's pro rata share of the
outstanding Revolving Credit Advances and the amount of the
payment (or credit, as the case may be) necessary to adjust
such Lender's outstanding Revolving Credit Advances to such
Lender's pro rata share of such Advances as of such Weekly
Settlement Date (on a net basis taking into account any funds
in the Collection Account which Agent determines are avail-
able). Any such payment (or credit, as the case may be)
shall be made by the party from which such payment is due to
the other party, in same day funds, not later than 2:00 p.m.
(New York City time) on such Weekly Settlement Date. If any
Lender shall, for any reason, not settle with Agent within
one (1) Business Day after the Settlement Date, such Lender
agrees to pay and Borrower agrees to repay, severally, to
Agent forthwith on demand the amount due Agent on such
Settlement Date together with interest thereon for each day
from such Settlement Date until the day such amount is paid
to Agent, at (a) in the case of such Lender, the Index Rate
for the first three (3) days for which such amount remains
unpaid and thereafter at the Index Rate plus the Applicable
Margin, and (b) in the case of Borrower, the Index Rate plus
the Applicable Margin. If such Lender shall pay to Agent
such corresponding amount, such amount so paid shall
constitute such Lender's Revolving Credit Advance and, if
both such Lender and Borrower shall have paid and repaid,
respectively, such corresponding amount, Agent shall promptly
21
pay over to Borrower such corresponding amount in same day
funds, but Borrower shall remain obligated for all interest
thereon.
(d) As an alternative to the weekly settlement
provided for in paragraph (c) above, Agent may elect at its
sole option, to use the following same day settlement proc-
edure for borrowings of Revolving Credit Advances. Prior to
12:00 Noon (New York City time) on any date specified for a
borrowing of a Revolving Credit Advance in a Notice of
Revolving Credit Advance, Agent may notify each Lender by
telephone or by telex, telecopy or other form of
teletransmission, of the requested Revolving Credit Advance.
Not later than 2:00 p.m. (New York City time) on the date of
such proposed Revolving Credit Advance, each Lender shall
make available to Agent, in same day funds, to the Collection
Account, such Lender's pro rata share of such Revolving
Credit Advance. Notwithstanding the foregoing, to the extent
that there are available funds in the Collection Account,
Agent may, at Agent's discretion, notify each Lender that
such Lender's obligation to make available to Agent same day
funds as provided in the preceding sentence shall be
satisfied to the extent of its pro rata share out of such
funds in the Collection Account, or such portion of such
funds as Agent shall indicate are to be applied to fund such
Revolving Credit Advance.
(e) Each Revolving Credit Advance made by Agent
pursuant to Section 1.13(b) or (d) shall be made upon
fulfillment of the applicable conditions precedent set forth
in Section 2. All such Revolving Credit Advances shall be
made as Index Rate Loans. Each Lender shall be entitled to
receive its pro rata share of the Non-use Fee without giving
effect to any such Revolving Credit Advances funded by Agent
pursuant to Section 1.13(b) or (d) until such Lender has
funded its pro rata share of such Revolving Credit Advances
and Agent's pro rata share of the Non-use Fee shall be
reduced accordingly while such Revolving Credit Advances are
funded by Agent. Agent shall be entitled to receive interest
on any such Revolving Credit Advances funded by it pursuant
to Section 1.13(b) or (d) until such time as Lenders shall
have funded their pro rata shares of such Revolving Credit
Advances.
(f) During the continuance of a Default under
Section 8.1(f), (g) or (h), each Lender shall acquire,
without recourse or warranty, an undivided participation in
each Revolving Credit Advance funded by Agent pursuant to
Section 1.13(b) and otherwise required to be repaid by such
Lender pursuant to Section 1.13(b), which participation shall
be in a principal amount equal to such Lender's pro rata
portion of such Revolving Credit Advance, by paying to Agent
on the date on which such Lender would otherwise have been
required to make a payment in respect of such Revolving
Credit Advance pursuant to Section 1.13(b), in immediately
available funds, an amount equal to such Lender's pro rata
portion of such Revolving Credit Advance. If such amount is
22
not in fact made available to Agent on the date when the
Revolving Credit Advance would otherwise be required to be
made pursuant to Section 1.13(b), Agent shall be entitled to
recover such amount on demand from that Lender together with
interest accrued from such date at the Federal Funds Rate for
three Business Days and thereafter at the rate of interest
then applicable to the Revolving Credit Loan. From and after
the date on which any Lender purchases an undivided
participation interest in a Revolving Credit Advance pursuant
to this paragraph (f), Agent shall promptly distribute to
such Lender such Lender's pro rata portion of all payments of
principal and of interest on such Revolving Credit Advance,
other than those received from a Lender pursuant to Section
1.12 or this paragraph (f) or Section 1.13(c). If any
payment made by or on behalf of Borrower and received by
Agent with respect to any Revolving Credit Advance is
rescinded or must otherwise be returned by Agent for any
reason, each Lender shall, upon notice to Agent, forthwith
pay over to Agent an amount equal to such Lender's pro rata
share of the payment so rescinded or returned based on the
respective amounts paid in respect thereof to Lenders
pursuant to Section 1.13(b).
1.14. Accounting. Agent will provide a monthly
accounting of transactions under the Revolving Credit Loan to
Borrower. Each and every such accounting shall (absent
manifest error) be deemed final, binding and conclusive upon
Borrower in all respects as to all matters reflected therein,
unless Borrower, within 30 days after the date any such
accounting is rendered, shall notify Agent in writing of any
objection which Borrower may have to any such accounting,
describing the basis for such objection with reasonable
specificity. In that event, only those items (the "disputed
items") expressly objected to in such notice shall be deemed
to be disputed by Borrower. Agent's determination, based
upon the facts available, of any disputed item shall (absent
manifest error) be final, binding and conclusive on Borrower.
1.15. Indemnity.
(a) Borrower shall indemnify and hold Agent, each
Lender and their respective Affiliates and their respective
officers, directors, employees, attorneys and agents (each,
an "Indemnified Person"), harmless from and against any and
all suits, actions, costs, fines, deficiencies, penalties,
proceedings, claims, damages, losses, liabilities and
expenses (including reasonable attorneys' fees and
disbursements and other costs of investigations or defense,
including those incurred upon any appeal) (each, a "Claim")
which may be instituted or asserted against or incurred by
such Indemnified Person as the result of credit having been
extended under this Agreement or any other Loan Document or
in connection with or arising out of the transactions
contemplated hereunder and thereunder, including any and all
Environmental Liabilities and Costs; provided, however, that
Borrower shall not be responsible to any such Indemnified
Person (i) to the extent that any such losses, damages,
liabilities or expenses are determined by a final non-
23
appealable judgment of a court of competent jurisdiction to
be attributable solely to the gross negligence or willful
misconduct of such Indemnified Person or (ii) to the extent
that such losses, damages, liabilities or expenses are
determined by a final non-appealable judgment of a court of
competent jurisdiction to have arisen solely as the result of
an action, suit or proceeding initiated by Borrower against
such Indemnified Person which is resolved in a final non-
appealable judgment by a court of competent jurisdiction
unfavorably to such Indemnified Person. NO INDEMNIFIED
PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY
HERETO, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF
SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY,
INCIDENTAL OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF CREDIT HAVING BEEN EXTENDED UNDER THE LOAN
DOCUMENTS.
In any suit, proceeding or action brought by Agent or Lenders
relating to any Account, Chattel Paper, Contract, General
Intangible, Instrument, Equipment or Document for any sum
owing thereunder, or to enforce any provision of any Account,
Chattel Paper, Contract, General Intangible, Instrument or
Document, Borrower shall save, indemnify and keep Agent and
Lenders harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of the
obligor thereunder arising out of a breach by Borrower of any
obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to, or in favor
of, such obligor or its successors from Borrower, all such
obligations of Borrower shall be and remain enforceable
against, and only against, Borrower and shall not be
enforceable against Agent or Lenders.
(b) Borrower hereby acknowledges and agrees that
neither Agent nor any Lender (as of the date hereof) (i) is
now or has ever been in control of any of the Subject
Property or the affairs of any Loan Party, and (ii) has the
capacity through the provisions of the Loan Documents to
influence conduct with respect to the ownership, operation or
management of any of the Subject Property.
(c) Borrower understands that in connection with
Lenders' arranging to provide the LIBO Rate interest option
with respect to the Revolving Credit Loan from time to time
at the option of Borrower on the terms provided herein,
Lenders may enter into funding arrangements with third
parties ("Funding Arrangements") on terms and conditions
which could result in substantial losses to such Lenders if
such LIBO Rate funds do not remain outstanding at the
interest rates provided herein for the entire Interest Period
with respect to which the LIBO Rate has been fixed for the
term of a Revolving Credit Advance. Consequently, in order
to induce Lenders to provide such LIBO Rate option on the
terms provided herein and in consideration for the entering
into by Lenders of Funding Arrangements from time to time in
contemplation thereof, if any LIBO Rate funds are repaid in
24
whole or in part prior to the last day of such Interest
Period therefor, with respect to LIBO Rate funds (whether
such repayment is made pursuant to any provision of this
Agreement or any other Loan Document or is the result of
acceleration, by operation of law or otherwise), Borrower
shall indemnify and hold harmless each Lender from and
against and in respect of any and all losses, costs and
expenses resulting from, or arising out of or imposed upon or
incurred by such Lender by reason of the liquidation or
reemployment of funds acquired or committed to be acquired by
such Lender to fund such LIBO Rate option pursuant to the
Funding Arrangements. The amount of any losses, costs or
expenses resulting in an obligation of Borrower to make a
payment pursuant to the foregoing sentence shall not include
any losses attributable to lost profit to Lenders but shall
represent the excess, if any, of (A) such Lender's cost of
borrowing the LIBO Rate funds pursuant to the Funding
Arrangements over (B) the return to such Lender on its
reinvestment of such funds; provided, however, that if any
Lender terminates any Funding Arrangements in respect of the
LIBO Rate funds as contemplated by the second sentence of
this paragraph (c), the amount of such losses, costs and
expenses shall include the cost to such Lender of such
termination. In reinvesting any funds borrowed by any Lender
pursuant to the Funding Arrangements, such Lender shall take
into consideration the remaining maturity of such borrowings.
As promptly as practicable under the circumstances, each
Lender shall provide Borrower with its written calculation of
all amounts payable pursuant to the next preceding sentence,
which calculation shall be conclusive absent manifest error.
1.16. Access; Confidentiality.
(a) Borrower shall: (i) provide access during
normal business hours to Agent and any of its officers,
employees and agents, as frequently as Agent determines to be
appropriate, upon reasonable advance notice (unless a Default
shall have occurred and be continuing, in which event no
notice shall be required and Agent and its officers,
employees and agents shall have access at any and all times),
to the properties and facilities of Borrower or any of its
Subsidiaries; (ii) permit Agent and any of its officers,
employees and agents to inspect, audit and make extracts from
all of Borrower's and its Subsidiaries' records, files and
books of account; and (iii) subject to the terms of the Fee
Letter, permit Agent and any of its officers, employees and
agents on behalf of Lenders, upon prior notice to Borrower
(unless a Default shall have occurred and be continuing, in
which event no notice shall be required and Agent and its
officers, employees and agents shall be permitted to inspect,
audit and make such extracts at any and all times) to conduct
audits to inspect, review and evaluate the Collateral, and
Borrower agrees to render to Agent at Borrower's cost and
expense, such clerical and other assistance as may be
reasonably requested with regard thereto; provided, however,
that Borrower shall be permitted to have a representative of
Borrower present during any such visit, inspection or audit
by Agent or Agent's officers, employees or agents, it being
25
understood that Borrower's right to have a representative
present shall not result in a delay of any such visit,
inspection or audit. Borrower shall, and shall cause each of
its Subsidiaries to, make available to Agent and its counsel,
as quickly as practicable under the circumstances, originals
or copies of all books, records, board minutes, contracts,
insurance policies, environmental audits, business plans,
files, financial statements (actual and pro forma), filings
with federal, state and local regulatory agencies, and other
instruments and documents which Agent may reasonably request.
Borrower shall deliver any document or instrument reasonably
necessary for Agent, as it may from time to time reasonably
request, to obtain records from any service bureau or other
Person which maintains records for Borrower, and shall
maintain duplicate records or supporting documentation on
media, including, without limitation, computer tapes and
discs owned by Borrower. Upon notice from Agent, Borrower
shall instruct its certified public accountants and its
banking and other financial institutions to make available to
Agent such information and records as Agent may reasonably
request.
(b) Agent and each Lender shall use reasonable,
good faith efforts to maintain as confidential any
information (other than any public information) supplied to
them hereunder or under any other Loan Document (the
"Confidential Information") on the following terms and
conditions: (i) Agent and each Lender may disclose any
Confidential Information (x) only on a confidential and
"need-to-know" basis to Agent's or such Lender's outside
agents and consultants (including attorneys and accountants);
(y) to directors, officers and employees of Agent or such
Lender, and (z) to other employees of other Affiliates or
Subsidiaries of Agent or such Lender, but only on a
confidential and "need-to-know" basis; (ii) Agent or any
Lender may release or disclose without liability of any kind
any Confidential Information in its possession if such
release or disclosure is (w) reasonably believed by it to be
compelled by any court decree, subpoena, or other legal or
administrative order or process, provided that Borrower shall
be given prior notice of any such release or disclosure,
(x) in the opinion of its counsel, otherwise required by law,
(y) in the opinion of its counsel, necessary or appropriate
in connection with any litigation or other proceeding having
its or any of its Affiliates as a party thereto or (z) to
assignees or participants or potential assignees or
participants who agree to be bound by the provisions of this
Section 1.16(b). In no event shall Agent or any Lender or
any of their respective Affiliates be liable for any
indirect, punitive, exemplary, or consequential damages
resulting from any release or disclosure of Confidential
Information; and (iii) this Section 1.16(b) relates only to
Confidential Information disclosed by Borrower or any of its
Subsidiaries to Agent or any Lender. Any disclosure made by
Borrower or its Subsidiaries to any Affiliate of Agent or any
Lender, or any of their respective divisions or other
Subsidiaries shall be outside the scope of this Section
1.16(b) and shall be confidential or not as the party by whom
26
and the Person to whom such disclosures are made may agree.
Neither Agent nor any Lender shall be precluded from
disclosing or making use of any information (w) which is not
Confidential Information, (x) of which it was aware or which
was in its possession prior to any disclosure to it by
Borrower, (y) which subsequently comes into its possession
from sources independent of Borrower or Agent and is not
subject to an obligation of confidentiality of which Agent or
such Lender is aware, or (z) which was or is independently
developed by Agent or such Lender. Agent and each Lender
shall use the same standard of care in safeguarding
Confidential Information as it employs in protecting its own
proprietary information which it desires not to disseminate
or publish. Agent and each Lender shall advise any outside
agent or consultant receiving any Confidential Information of
the confidential nature of the material disclosed and the
purpose for which it is disclosed, but neither Agent nor any
Lender shall be liable for any misappropriation or misuse of
such information by such Person other than that occasioned by
its own gross negligence or wilful misconduct as determined
by a final nonappealable judgment of a court of competent
jurisdiction. Any Confidential Information given to Agent or
any Lender shall cease to be restricted or covered by this
Section 1.16(b), (i) the date two years after the Termination
Date, or (ii) once it has or is deemed to have entered into
the public domain or become known to the public or third
Persons from a source other than through or under Agent or
any Lender.
1.17. Taxes.
(a) Any and all payments by or on behalf of
Borrower hereunder or under the Revolving Credit Notes, or
any other Loan Document, shall be made, in accordance with
this Section 1.17, free and clear of and without deduction
for any and all present or future Taxes. If Borrower shall
be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or under the Revolving Credit Notes
or any other Loan Document to Agent or any Lender, (i) the
sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions
applicable to additional sums payable under this Section
1.17) Agent or such Lender receives an amount equal to the
sum it would have received had no such deductions been made,
(ii) Borrower shall make such deductions, and (iii) Borrower
shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law.
(b) In addition, Borrower agrees to pay any
present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies that
arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to,
this Agreement (hereinafter referred to as "Other Taxes").
(c) Borrower shall indemnify and pay, within ten
days of demand therefor, Agent and each Lender for the full
amount of Taxes or Other Taxes (including without limitation,
27
any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 1.17) paid by Agent or
such Lender and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or
legally asserted.
(d) Within 30 days after the date of any such
payment of Taxes or Other Taxes, Borrower shall furnish to
Agent or such Lender, at its address referred to in Section
11.10, the original or a certified copy of a receipt
evidencing payment thereof.
(e) If any Lender subsequently receives from a
taxing authority a refund of any Tax or Other Tax previously
paid by Borrower and for which Borrower has indemnified
Lender pursuant to this Section 1.17, such Lender shall
within 30 days after receipt of such refund, and to the
extent permitted by applicable law, pay to Borrower the net
amount of any such refund after deducting taxes and expenses
attributable thereto.
(f) Each Lender (or assignee) which is organized
outside the United States shall so notify Borrower thereof
and shall also promptly notify Borrower of any change in its
funding office and shall in each case deliver to Borrower
such certificates, documents or other evidence, as required
by the IRC or Treasury Regulations issued pursuant thereto,
including IRS Form 1001 or Form 4224 or any other certificate
or statement of exemption required by Treasury Regulation
Section 1.1441-1(a) or Section 1.1441-6(c) or any subsequent
version thereof, properly completed and duly executed by such
Lender (or assignee) establishing that such payment is
(i) not subject to withholding under the IRC because such
payment is effectively connected with the conduct by such
Lender (or assignee) of a trade or business in the United
States or (ii) totally exempt from United States tax under a
provision of an applicable tax treaty. Unless Borrower and
Agent have received forms or other documents reasonably
satisfactory to them indicating that payments hereunder or
under the Revolving Credit Notes are not subject to United
States withholding tax or are subject to such tax at a rate
reduced by an applicable tax treaty, Borrower or Agent shall
withhold taxes from such payments at the applicable statutory
rate in the case of payments to or for any Lender (or
assignee) organized under the laws of a jurisdiction outside
the United States.
(g) Borrower shall not be required to pay any
additional amounts to any Lender (or assignee) in respect of
United States withholding tax pursuant to paragraph (a) above
if the obligation to pay such additional amounts would not
have arisen but for a failure by such Lender (or assignee) to
comply with the provisions of paragraph (f) above other than
by reason of (i) a change in applicable law, regulation or
official interpretation thereof or (ii) an amendment,
modification or revocation of any applicable tax treaty or a
change in official position regarding the application or
28
interpretation thereof, in each case after the Closing Date
(and in the case of an assignee, after the date of assignment
or transfer).
(h) If, as a result of an event described in
subparagraph (i) or (ii) of paragraph (g) after the Closing
Date (or, in the case of an assignee, after the date of
assignment or transfer), a Lender (or assignee) (i) is unable
to provide to Borrower a form otherwise required to be
delivered by it pursuant to paragraph (f) above, or
(ii) makes any payment or becomes liable to make any payment
on account of any Taxes with respect to payments by Borrower
hereunder, Borrower may, at its option, continue to make
payments to such Lender (or assignee) under the terms of this
Agreement and the applicable Revolving Credit Note, which
payments shall be made in accordance with paragraph (a)
above. If Borrower exercises its option under subparagraph
(B) of this paragraph (h), any such Lender (or assignee)
agrees to take such steps as reasonably may be available to
it under applicable tax laws and any applicable tax treaty or
convention (including, if legally available, furnishing such
certificate) to obtain an exemption from, or reduction (to
the lowest applicable rate) of, such Taxes, except to the
extent that taking such a step would be disadvantageous to
such Lender (or assignee).
1.18. Capital Adequacy; Increased Costs; Illegality.
(a) Borrower shall pay directly to each Lender
from time to time on request such amounts as such Lender may
reasonably determine to be necessary to compensate such
Lender for any costs that it reasonably determines are
attributable to the maintenance by such Lender, pursuant to
any law or regulation or any interpretation, directive or
request (whether or not having the force of law and whether
or not failure to comply therewith would be unlawful) of any
court or governmental or monetary authority (i) following any
Regulatory Change or (ii) implementing after the date hereof
any risk-based capital guideline or other capital requirement
(whether or not having the force of law and whether or not
the failure to comply therewith would be unlawful) heretofore
or hereafter issued by any Governmental Authority in respect
of such Lender's Revolving Credit Commitment, Revolving
Credit Advances or incurrence of Letter of Credit Obligations
hereunder (such compensation to include, without limitation,
an amount equal to any reduction of the rate of return on
assets or equity of such Lender to a level below that which
such Lender could have achieved but for such law, regulation,
interpretation, directive or request).
(b) If, due to either (i) the introduction of or
any change in or in the interpretation of any law or regula-
tion or (ii) the compliance with any guideline or request
from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any
increase in the cost to any Lender of agreeing to make or
making, funding or maintaining any Revolving Credit Advance
or portion thereof bearing interest based on the LIBO Rate,
29
then Borrower shall from time to time, upon demand by such
Lender in accordance with paragraph (d) below, pay to Agent
for the account of such Lender additional amounts sufficient
to compensate such Lender for such increased cost. Each
Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to in clause (i)
or (ii) above which would result in any such increased cost
to such Lender, such Lender shall, to the extent not
inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize
costs and expenses incurred by it and payable to it by
Borrower pursuant to this Section 1.18(b).
(c) Notwithstanding anything to the contrary con-
tained herein, 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 to agree to
make or to make or to continue to fund or maintain any
Revolving Credit Advance bearing interest based on the LIBO
Rate, then, unless such Lender is able to agree to make or to
continue to fund or to maintain such Revolving Credit Advance
which bears interest based on the LIBO Rate at another branch
or office of such Lender without, in such Lender's opinion,
adversely affecting it or its Revolving Credit Advances or
the income obtained therefrom, on notice thereof and demand
therefor by such Lender to Borrower in accordance with
paragraph (d) below, (i) the obligation of such Lender to
agree to make or to make or to continue to fund or maintain
Revolving Credit Advances or any portion thereof bearing
interest based on the LIBO Rate shall terminate and
(ii) Borrower shall forthwith prepay in full all outstanding
Revolving Credit Advances or any portions thereof then
bearing interest based on the LIBO Rate, together with
interest accrued thereon (but without any penalty for such
prepayment, except as provided in Section 1.15(c)), of such
Lender unless Borrower, within five Business Days after the
delivery of such notice and demand, converts each such
Revolving Credit Advance into a Revolving Credit Advance
bearing interest based on the Index Rate.
(d) Each Lender shall notify Borrower of any event
occurring after the date of this Agreement entitling such
Lender to compensation under this Section 1.18 as promptly as
practicable after such Lender obtains actual knowledge
thereof; provided that if any Lender fails to give such
notice within 90 days after it obtains actual knowledge of
such an event, such Lender shall, with respect to
compensation payable pursuant to this Section 1.18 in respect
of any costs resulting from such event, only be entitled to
payment under this Section 1.18 for costs incurred from and
after the date 90 days prior to the date that such Lender
does give such notice. Each Lender will furnish to Borrower
a certificate setting forth the basis and amount of each
request by such Lender for compensation under this
Section 1.18. Determinations and allocations by any Lender
for purposes of this Section 1.18 of the effect of any
30
Regulatory Change pursuant to or of capital maintained
pursuant to this Section 1.18, on its costs or rate of return
of maintaining Revolving Credit Advances or its Revolving
Credit Commitment, and of the amounts required to compensate
such Lender under this Section 1.18, shall be conclusive
absent manifest error.
1.19. Letters of Credit. Subject to the terms and
conditions of this Agreement, Borrower shall have the right
to request, and Agent and the Issuing Bank agree to incur,
the Letter of Credit Obligations in accordance with the terms
and conditions set forth in Annex F.
1.20. Single Loan. The Revolving Credit Loan, all
Revolving Credit Advances, the Letter of Credit Obligations,
if any, and all of the other Obligations of Borrower arising
under this Agreement and the other Loan Documents shall
constitute one general obligation of Borrower secured, until
the Termination Date, by all of the Collateral.
2. CONDITIONS PRECEDENT
2.1. Conditions to the Initial Revolving Credit Advance
and/or the Initial Letter of Credit Obligation.
Notwithstanding any other provision of this Agreement
and without affecting in any manner the rights of Agent or
any Lender hereunder, Borrower shall have no rights under
this Agreement (but shall have all applicable obligations
hereunder), and Agent and Lenders shall not be obligated to
make any Revolving Credit Advances, and GE Capital or the
Issuing Bank, as the case may be, shall not be obligated to
incur any Letter of Credit Obligations, or to take, fulfill,
or perform any other action hereunder until the following
conditions have been fulfilled to the reasonable satisfaction
of Agent (and to the extent specified below, of Lenders):
(a) This Agreement or counterparts thereof shall
have been duly executed by, and delivered to, Borrower, Agent
and each Lender.
(b) Agent and Lenders shall have received such
documents, instruments, certificates, opinions and agreements
as Agent shall reasonably request in connection with the
transactions contemplated by this Agreement, including all
documents, instruments, agreements and other materials listed
in the Schedule of Closing Documents, each in form and
substance satisfactory to Agent and Required Lenders.
(c) Agent shall have received evidence
satisfactory to Agent that all Indebtedness and other
obligations of Borrower and its Subsidiaries, including all
outstanding letters of credit, under the Override Agreement
and the CIT Facility (as in effect immediately prior to the
Closing Date) will be paid in full from the proceeds of the
initial Revolving Credit Advances or the initial Letter of
Credit Obligation or other available sources of funds (and in
31
the case of such outstanding letters of credit, new
replacement letters of credit or back to back letters of
credit, as the case may be, shall be issued in respect
thereof and guarantees by GE Capital with respect thereto
shall have been executed as necessary) and all Liens upon any
of the property (including any cash collateral) of Borrower
or any Subsidiary thereof in favor of the collateral agent
under the Override Agreement and CIT under the CIT Facility
shall be terminated and released immediately upon such
payment or issuance of such replacement or back to back
letters of credit, as the case may be.
(d) Agent shall have received evidence
satisfactory to Agent that Borrower has obtained consents and
acknowledgments of all Persons whose consents and
acknowledgments may be required, including, but not limited
to, all requisite Governmental Authorities, to the terms and
to the execution and delivery, of this Agreement and the
other Loan Documents and the consummation of the transactions
contemplated hereby and thereby.
(e) Agent shall have received evidence
satisfactory to Agent that the insurance policies provided
for in Section 3.18 and Annex E are in full force and effect,
together with appropriate evidence showing a loss payable
and/or additional insured clauses or endorsements, as
appropriate, in favor of Agent and Lenders in form and
substance satisfactory to Agent.
(f) Payment by Borrower to Agent for its account
and the account of Lenders, as the case may be, of all Fees,
costs, and expenses of closing (including fees and expenses
of consultants and counsel to Agent presented as of the
Closing Date).
(g) No action, proceeding, investigation, regula-
tion or legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative
body to enjoin, restrain or prohibit, or to obtain damages in
respect of, or which is related to or arises out of this
Agreement or any of the other Loan Documents or the consumma-
tion of the transactions contemplated hereby and thereby and
which, in Agent's sole judgment, would make it inadvisable to
consummate the transactions contemplated by this Agreement or
any of the other Loan Documents.
(h) Agent shall be satisfied, in its sole judgment
reasonably exercised, with the terms of the proposed
transaction as well as the corporate, capital, tax, legal and
management structure of each Loan Party, and shall be
satisfied, in its sole judgment exercised reasonably, with
the nature and status of all contractual obligations,
securities, labor, tax, ERISA, employee benefit,
environmental, health and safety matters, in each case,
involving or affecting any Loan Party.
32
(i) Since September 30, 1995, there has been
(i) no Material Adverse Effect, (ii) no litigation which
could reasonably be expected to have a Material Adverse
Effect, (iii) no information or analyses which result in a
material change in Agent's understanding of Borrower or the
proposed transaction, (iv) no material increase in
liabilities, liquidated or contingent, and no material
decrease in assets of Borrower, and (v) no material adverse
change in the leveraged finance bank market.
(j) After giving effect to the transactions
contemplated hereby, on a pro forma basis including any
initial Letter of Credit Obligation incurred on the Closing
Date and all related expenses, Borrower shall have
unrestricted cash on hand equal to at least $20,000,000;
provided, however, that no Revolving Credit Advances shall be
outstanding.
2.2. Further Conditions to Each Revolving Credit Advance
and Each Incurrence of a Letter of Credit Obligation. It
shall be a further condition to the funding of the initial
and each subsequent Revolving Credit Advance and the
incurrence by GE Capital or the Issuing Bank, as the case may
be, of the initial and each subsequent Letter of Credit
Obligation, if any, that the following statements shall be
true on the date of each such funding, advance or incurrence,
as the case may be:
(a) Each Loan Party's representations and
warranties contained herein or in any of the Loan Documents
shall be true and correct on and as of the Closing Date and
the date on which each such Revolving Credit Advance is made
or any Letter of Credit Obligation, if any, is incurred, as
though made on or incurred on and as of such date, except to
the extent that any such representation or warranty expressly
relates to an earlier date (provided that any such
representation or warranty given as of the date hereof shall
also be true and correct on and as of the Closing Date) and
except for changes therein permitted or contemplated by this
Agreement.
(b) No event shall have occurred and be
continuing, or would result from the making of any Revolving
Credit Advance or the incurrence of any Letter of Credit
Obligation, as the case may be, which constitutes a Default
or Event of Default.
(c) After giving effect to such Revolving Credit
Advance or the incurrence of such Letter of Credit
Obligation, as the case may be, (i) the aggregate principal
amount of the Revolving Credit Loan shall not exceed the
lesser of (x) the Maximum Revolving Credit Commitment less
the outstanding Letter of Credit Obligations and (y) the
Borrowing Base, and (ii) the aggregate outstanding Letter of
Credit Obligations shall not exceed the lesser of
(x) $60,000,000 and (y) the Maximum Revolving Credit
Commitment less the outstanding Revolving Credit Loan,
provided that the Borrowing Base less the Revolving Credit
33
Loan shall not be a negative number.
The request and acceptance by Borrower of the proceeds of any
Revolving Credit Advance, and the request by Borrower for the
incurrence by GE Capital, or the Issuing Bank, as the case
may be, of Letter of Credit Obligations, as the case may be,
shall be deemed to constitute, as of the date of such request
or acceptance, (i) a representation and warranty by Borrower
that the conditions in this Section 2.2 (and, in the case of
the initial Revolving Credit Advance and/or Letter of Credit
Obligation made or incurred on the Closing Date, Section 2.1)
have been satisfied and (ii) a confirmation by Borrower of
the granting and continuance of Agent's Liens pursuant to the
Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Agent and Lenders to enter into this Agreement
and incur any obligations hereunder, Borrower represents and
warrants to Agent and Lenders that:
3.1. Corporate Existence; Compliance with Law.
(i) Borrower and each Material Subsidiary is a corporation
duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and is duly
qualified to do business and is in good standing in each
other jurisdiction where its ownership or lease of property
or the conduct of its business requires such qualification
and where any failure to so qualify, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect; (ii) Borrower and each Material Subsidiary
has the requisite corporate power and authority and the legal
right to own, pledge, mortgage or otherwise encumber and
operate its properties, to lease the property it operates
under lease, and to conduct its business as now, heretofore
and proposed to be conducted; (iii) each Loan Party has all
licenses, permits, consents or approvals from or by, and has
made all filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct other than
those licenses, permits, consents, approvals, filings or
notices which the failure to obtain, make or give,
individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect;
(iv) Borrower and each Material Subsidiary is in compliance
with its certificate or articles of incorporation and
by-laws; and (v) each Loan Party is in compliance in all
respects with all applicable provisions of law other than
those provisions of law any failure to comply with,
individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
3.2. Executive Offices; Corporate or Other Names. The
current locations of Borrower's and each Material
Subsidiary's executive offices and principal place of
business is set forth in Schedule 3.2, and, as of the date
hereof, except as set forth on Schedule 3.2, such location
34
has not changed during the preceding twelve months. During
the five years prior to the date hereof, except as set forth
on Schedule 3.2, neither Borrower nor any Material Subsidiary
has been known as or used any corporate, fictitious or trade
name, other than its current corporate name.
3.3. Corporate Power; Authorization; Enforceable
Obligations. The execution, delivery and performance by
Borrower and each Material Subsidiary of the Loan Documents
and all other instruments and documents to be delivered by
Borrower or such Material Subsidiary hereunder and thereunder
to the extent it is a party thereto and the creation of all
Liens provided for herein and therein: (i) are within
Borrower's or such Material Subsidiary's corporate power;
(ii) have been duly authorized by all necessary corporate and
shareholder action; (iii) are not in contravention of any
provision of Borrower's or such Material Subsidiary's
certificate or articles of incorporation or by-laws or other
organizational documents; (iv) will not violate any law or
regulation, or any order or decree of any court or
governmental instrumentality; (v) will not conflict with or
result in the breach or termination of, constitute a default
under or accelerate any performance required by, the Senior
Note Indenture, the Subordinated Indenture, any Material
Contract or any other indenture, mortgage, deed of trust,
lease, agreement or other instrument to which Borrower or any
Material Subsidiary is a party or by which any Loan Party or
any of its property is bound other than any such conflicts,
breaches or terminations which, individually or in the
aggregate, could not reasonably be expected to result in a
Material Adverse Effect; (vi) will not result in the creation
or imposition of any Lien upon any of the property of
Borrower or any Material Subsidiary other than those in favor
of Agent or Lenders, all pursuant to the Loan Documents; and
(vii) do not require the consent or approval of any Govern-
mental Authority or any other Person, except those referred
to in Section 2.1(d), all of which will have been duly
obtained, made or complied with prior to the Closing Date and
which are in full force and effect, other than any such
consents or approvals which the failure to obtain,
individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. At or prior to
the Closing Date, each of the Loan Documents shall have been
duly executed and delivered for the benefit of or on behalf
of Borrower and each shall then constitute a legal, valid and
binding obligation of Borrower, enforceable against Borrower
in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally.
3.4. Financial Statements and Projections.
(a) All of the following consolidated balance
sheets and statements of income, retained earnings and cash
flows of Borrower and its Subsidiaries, copies of which have
been furnished to Agent and Lenders prior to the date of this
Agreement, have been, except as noted therein, prepared in
35
conformity with GAAP consistently applied throughout the
periods involved and as of the date hereof present fairly in
all material respects the consolidated financial position,
results of operations and cash flows of Borrower and its
Subsidiaries at the dates thereof and for the periods then
ended (as to the unaudited interim financial statements,
subject to normal year-end audit adjustments):
(i) the unaudited consolidated balance sheet of
Borrower and its Subsidiaries as at September 30, 1995,
and the related consolidated statements of income,
retained earnings and cash flows for the nine-month
period ended on such date; and
(ii) the audited consolidated balance sheet of
Borrower and its Subsidiaries as at December 31, 1994,
and the related consolidated statements of income,
retained earnings and cash flows for the year then
ended, with the opinion thereon of Xxxxxx Xxxxxxxx LLC.
(b) Borrower, as of September 30, 1995, had no
obligations, contingent liabilities or liabilities for
Charges, long-term leases or unusual forward or long-term
commitments which are not reflected in the Quarterly Report
on Form 10-Q of Borrower for the Fiscal Quarter ended
September 30, 1995 and which could reasonably be expected to
have a Material Adverse Effect and are not otherwise
disclosed in this Agreement.
(c) The projections of Borrower's (i) monthly
operating budgets on a consolidated basis for the year ending
December 31, 1996 and (ii) annual operating budgets on a
consolidated basis, consolidated results of operations and
cash flows for the fiscal years ending on December 31, 1996
through December 31, 1998 (the "Projections"), copies of
which have been delivered to Agent and Lenders, disclose all
material assumptions made with respect to general economic,
financial and market conditions in formulating such
Projections. As of the date hereof, to the knowledge of
Borrower no facts exist which would likely result in any
material change in any of such Projections. To the best of
Borrower's knowledge, as of the date hereof the Projections
are based upon reasonable estimates and assumptions, all of
which are fair in light of known current conditions, have
been prepared on the basis of the assumptions stated therein,
and reflect the reasonable estimate of Borrower of the
results of operations and other information projected
therein.
(d) As of the date hereof, no information
contained in this Agreement, the other Loan Documents, the
Annual Report on Form 10-K of Borrower for the Fiscal Year
ended December 31, 1994, the Quarterly Reports on Form 10-Q
of Borrower for the Fiscal Quarters ended March 31, June 30
and September 30, 1995 or any written statement furnished by
or on behalf of any Loan Party or any Affiliate thereof
pursuant to the terms of this Agreement or any other Loan
Document, which has previously been delivered to Agent or any
36
Lender, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the
statements contained herein or therein not misleading in
light of the circumstances under which they were made.
3.5. Material Adverse Change; Solvency. As of the date
hereof, neither Borrower nor any Subsidiary thereof has any
obligations, contingent liabilities, or liabilities for
Charges, long-term leases or unusual forward or long-term
commitments which are not reflected in the Quarterly Report
on Form 10-Q of Borrower for the Fiscal Quarter ended
September 30, 1995 and which, individually or in the
aggregate, could reasonably be expected to result in a
Material Adverse Effect and which are not otherwise disclosed
in this Agreement. As of the date hereof, except as
otherwise permitted hereunder or as set forth on Schedule
3.5, from September 30, 1995 to the date hereof no dividends,
advances or other distributions have been declared, paid or
made upon any Stock of Borrower and, since September 30,
1995, no shares of Stock of Borrower have been, or are now
required to be, redeemed, retired, purchased or otherwise
acquired for value by Borrower, other than pursuant to the
Restricted Stock Plan. Since September 30, 1995, no event or
events have occurred to the best of Borrower's knowledge
which, individually or in the aggregate, have or could
reasonably be expected to result in a Material Adverse
Effect. After giving effect to (i) any Revolving Credit
Advances to be made on the Closing Date and/or Letter of
Credit Obligations to be incurred on the Closing Date,
(ii) the disbursement of the proceeds of any such Revolving
Credit Advances and/or Letter of Credit Obligations pursuant
to Borrower's instructions, and (iii) the payment and accrual
of all transaction costs in connection with the foregoing, to
the best of Borrower's knowledge, Borrower is Solvent and
Borrower and its Subsidiaries taken as a whole are Solvent.
3.6. Ownership of Real Property; Liens.
(a) Except as described on Schedule 3.6, as of the
date hereof the real estate listed on Schedule 3.6
constitutes all of the real property owned, leased, or used
in its business by Borrower, Interstate Electronics, Figgie
Properties and Figgie Real Estate. Except as set forth on
Schedule 3.6, each of Borrower, Interstate Electronics,
Figgie Properties and Figgie Real Estate holds as of the date
hereof (i) good and marketable fee simple title to all of its
real estate described as "owned" in fee on Schedule 3.6, and
(ii) valid leasehold interests in all of Borrower's,
Interstate Electronics', Figgie Properties' and Figgie Real
Estate's Leases (both as lessor and lessee, sublessee or
assignee) described as "leased" on Schedule 3.6. Except as
described on Schedule 3.6, as of the date hereof (i) neither
Borrower, Interstate Electronics, Figgie Properties nor
Figgie Real Estate or, to Borrower's knowledge, any other
party to any such material Lease described on Schedule 3.6 is
in default of its material obligations thereunder or has
delivered or received any notice of default under any such
material Lease, and no event has occurred which, with the
37
giving of notice, the passage of time, or both, would
constitute a default under any such Lease, other than any
such defaults which, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse
Effect; (ii) neither Borrower, Interstate Electronics, Figgie
Properties nor Figgie Real Estate owns or holds, or is
obligated under or a party to, any option, right of first
refusal or any other contractual right to purchase, acquire,
sell, assign or dispose of any material real property owned
or leased by Borrower, Interstate Electronics, Figgie
Properties or Figgie Real Estate except as set forth on
Schedule 3.6; and (iii) no portion of any material real
property owned or leased by Borrower, Interstate Electronics,
Figgie Properties or Figgie Real Estate has suffered any
material, uninsured damage by fire or other casualty loss
which has not heretofore been repaired and substantially
restored to its original condition. All permits required to
have been issued or appropriate to enable the real property
owned or leased by Borrower, Interstate Electronics, Figgie
Properties or Figgie Real Estate to be lawfully occupied and
used for all of the purposes for which they are currently
occupied and used, have been lawfully issued and are, as of
the date hereof, in full force and effect except any such
permits which the failure to obtain, individually or in the
aggregate, could not reasonably be expected to result in a
Material Adverse Effect.
(b) From and after the Closing Date, none of the
properties and assets of Borrower, Interstate Electronics,
Figgie Properties or Figgie Real Estate are subject to any
Liens, except (i) Permitted Encumbrances and Liens otherwise
permitted under Section 6.7 and (ii) the Lien in favor of
Agent for the ratable benefit of Lenders pursuant to the
Collateral Documents.
3.7. Restrictions; No Default; Material Contracts. No
contract, lease, agreement or other instrument to which any
Loan Party is a party or by which it or any of its properties
or assets is bound or affected and no provision of any
charter, corporate restriction, applicable law or
governmental regulation has resulted in or could reasonably
be expected to result in a Material Adverse Effect. No Loan
Party is in default and, to Borrower's knowledge, no third
party is in default, under or with respect to any Material
Contract other than any such defaults which, individually or
in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect. No Default has occurred and is
continuing. Schedule 3.7, as supplemented from time to time
by written disclosures to Agent, sets forth a complete and
accurate list of all Material Contracts of Borrower and each
of the Material Subsidiaries.
3.8. Labor Matters. Except as set forth on Schedule
3.8, as of the date hereof, there are no strikes or other
labor disputes against any Loan Party that are pending or, to
Borrower's knowledge, threatened which could reasonably be
expected to cause a Material Adverse Effect. Hours worked by
and payment made to employees of each Loan Party have not
38
been in violation of the Fair Labor Standards Act or any
other applicable law dealing with such matters which could
reasonably be expected to have a Material Adverse Effect.
All material payments due from any Loan Party on account of
employee health and welfare insurance have been paid or
accrued as a liability on the books of such Loan Party.
Except as set forth on Schedule 3.8, as of the date hereof,
no Loan Party has any obligation under any collective
bargaining agreement, management agreement, or any employment
agreement, and a correct and complete copy of each material
agreement listed on Schedule 3.8 will be provided to Agent
upon Agent's request. As of the date hereof, there are no
organizing activities involving any Loan Party pending or, to
Borrower's knowledge, threatened by any labor union or group
of employees which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse
Effect. Except as set forth on Schedule 3.14, as of the date
hereof, there are no representation proceedings pending or,
to Borrower's knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of
employees of any Loan Party has made a pending demand for
recognition, and, there are no complaints or charges against
any Loan Party pending or threatened to be filed with any
federal, state, local or foreign court, governmental agency
or arbitrator based on, arising out of, in connection with,
or otherwise relating to the employment or termination of
employment by any Loan Party of any individual, other than
any such proceedings, demands for recognition, complaints or
charges which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse
Effect. Except as set forth on Schedule 3.8, as of the date
hereof, there are no consent decrees, judgments, orders,
injunctions, arbitral awards or other decisions which have a
continuing effect on Borrower or any Loan Party as of the
date hereof, before any Governmental Authority or any other
tribunal (including any arbitral tribunal) which could
individually or in the aggregate reasonably be expected to
have a Material Adverse Effect.
3.9. Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness; Unrestricted Subsidiaries. Except as
set forth on Schedule 3.9, as of the date hereof Borrower has
no Subsidiaries, is not engaged in any joint venture or
partnership with any other Person, is not an Affiliate of any
other Person and does not have any Unrestricted Subsidiaries
(as defined in the Senior Note Indenture). Except as set
forth on Schedule 3.9, as of the date hereof each of
Borrower's Subsidiaries conducts no material business
operations and owns no material property or assets. The
Stock of each Loan Party (other than Borrower) owned by each
of the stockholders thereof named on Schedule 3.9 constitutes
as of the date hereof all of the issued and outstanding Stock
of such Loan Party. Except as set forth on Schedule 3.9, as
of the date hereof there are no outstanding rights to
purchase options, warrants or similar rights or agreements
pursuant to which any Material Subsidiary may be required to
issue, sell or purchase any Stock or other equity security.
Schedule 3.9 lists all outstanding Stock of each Loan Party
39
(other than Borrower) as of the Closing Date. Schedule 6.3
lists all Indebtedness of Borrower and each Material
Subsidiary and all Indebtedness in excess of $1,000,000 of
each other Subsidiary of Borrower as of the Closing Date. As
of the date hereof, the aggregate Fair Market Value of the
assets of the Unrestricted Subsidiaries, less the outstanding
principal amount of all Indebtedness for borrowed money
secured by the assets of the Unrestricted Subsidiaries, is
not more than $100,000,000 of which approximately $40,000,000
is represented by the Chagrin Highlands development described
in Schedule 3.14.
3.10. Government Regulation. Neither Borrower nor any
Material Subsidiary is (i) 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; or
(ii) is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or any other federal or state statute
that restricts or limits such Loan Party's ability to incur
Indebtedness, pledge its assets, or to perform its
obligations hereunder, or under any other Loan Document, and
the making of the Revolving Credit Advances, and the
incurrence of the Letter of Credit Obligations, in each case
by Lenders, the application of the proceeds and repayment
thereof by each Loan Party, and the consummation of the
transactions contemplated by this Agreement and the other
Loan Documents, will not violate any provision of any such
statute or any rule, regulation or order issued by the
Securities and Exchange Commission, other than any such
violations which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse
Effect.
3.11. Margin Regulations. No Loan Party is engaged in
the business of extending credit for the purpose of
purchasing or carrying Margin Stock and no proceeds of any
Revolving Credit Advance 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.
Following application of the proceeds of each Revolving
Credit Advance and Letter of Credit Obligation, not more than
25 percent of the value of the assets either of Borrower only
or of Borrower and its Subsidiaries on a consolidated basis
will be Margin Stock. Borrower will not take or permit to be
taken any action which might cause any Loan Document or any
document or instrument delivered pursuant hereto or thereto
to violate any regulation of the Board of Governors of the
Federal Reserve Board.
3.12. Taxes. Except as set forth on Schedule 3.12, all
federal, state, local and foreign income tax returns (other
than any income tax return required to be filed with any
Australian Governmental Authority which the failure to file
could not reasonably be expected to have a Material Adverse
Effect) and all other material tax returns, reports and
statements, including, but not limited to, information
40
returns (Form 1120-S) required to be filed by each Loan
Party, have been filed with the appropriate Governmental
Authority and, except to the extent permitted under Section
5.2(b), all Charges and other impositions shown thereon to be
due and payable have been paid prior to the date on which any
fine, penalty, interest or late charge may be added thereto
for nonpayment thereof, or any such fine, penalty, interest,
late charge or loss has been paid. Except to the extent
permitted under Section 5.2(b), each Loan Party has paid when
due and payable all material Charges required to be paid by
it. Proper and accurate amounts have been withheld by each
Loan Party from their respective employees for all periods in
full and complete compliance with the tax, social security
and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings
have been timely paid to the respective Governmental
Authorities other than any such withholdings which the
failure to pay could not reasonably be expected to result in
a Material Adverse Effect. Schedule 3.12 sets forth those
taxable years for which any of the tax returns of each Loan
Party are as of the date hereof being audited by the IRS or
any other applicable Governmental Authority; and any
assessments or threatened assessments in connection with such
audit or otherwise currently outstanding. Except as
described in Schedule 3.12, as of the date hereof no Loan
Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for
assessment or collection of any Charges. No Loan Party has
filed a consent pursuant to IRC Section 341(f) or agreed to
have IRC Section 341(f)(2) apply to any dispositions of
subsection (f) assets (as such term is defined in IRC Section
341(f)(4)). None of the property owned by any Loan Party is
property which is required to treat as being owned by any
other Person pursuant to the provisions of IRC Section
168(f)(8) of the Internal Revenue Code of 1954, as amended,
and in effect immediately prior to the enactment of the Tax
Reform Act of 1986 or is "tax-exempt use property" within the
meaning of IRC Section 168(h). No Loan Party has agreed or
been requested to make any adjustment under IRC Section
481(a) by reason of a change in accounting method or
otherwise, other than any such adjustments which,
individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Loan
Party has any obligation under any written tax sharing
agreement except as described on Schedule 3.12.
3.13. ERISA.
(a) Schedule 3.13 lists all Plans maintained or
contributed to as of the date hereof by any Loan Party and
all Qualified Plans maintained or contributed to by any ERISA
Affiliate, and separately identifies the Title IV Plans,
Multiemployer Plans, any multiple employer plans subject to
Section 4064 of ERISA, unfunded Pension Plans, Welfare Plans
and Retiree Welfare Plans. IRS determination letters
regarding the qualified status under Section 401 of the IRC
of each Qualified Plan have been received with respect to
41
such Plan as of the dates listed on Schedule 3.13. Each of
the Qualified Plans has been amended to comply with the Tax
Reform Act of 1986 and to make other necessary or desirable
changes. Except as set forth on Schedule 3.13, the Qualified
Plans as amended continue to qualify under Section 401 of the
IRC, the trusts created thereunder continue to be exempt from
tax under the provisions of Section 501(a) of the IRC, and
nothing has occurred which would cause the loss of such
qualification or tax-exempt status. Each Qualified Plan so
amended has been or will be submitted to the IRS for a
determination letter as to the ongoing qualified status of
the Plan under the IRC within the applicable IRC 401(b)
remedial amendment period for the Tax Reform Act of 1986; and
each such Plan shall be amended, including retroactive
amendments, as required during such determination letter
process to maintain the qualified status of such Plans.
Except as set forth on Schedule 3.13, each Plan is in
compliance in all material respects with the applicable
provisions of ERISA and the IRC, including the filing of all
reports required under the IRC or ERISA which are true and
correct as of the date filed, and all required contributions
and benefits have been paid in accordance with the provisions
of each such Plan except to the extent where a failure to
make such contribution or pay such benefit would be
immaterial to the Plan. No Loan Party or other ERISA
Affiliate, with respect to any Qualified Plan, has failed to
make any contribution or pay any amount due as required by
Section 412 of the IRC or Section 302 of ERISA. With respect
to all Retiree Welfare Plans, the present value of future
anticipated expenses pursuant to the latest actuarial
projections of liabilities is less than $1,000,000, and
copies of such latest projections have been provided to
Agent; with respect to Pension Plans, other than Qualified
Plans and the unfunded Pension Plans listed in Schedule 3.13,
the present value of the unfunded liabilities for current
participants thereunder using interest assumptions described
in IRC 411(a)(ii) is less than $1,000,000. Except as set
forth on Schedule 3.13, no Loan Party has engaged in a
prohibited transaction, as defined in Section 4975 of the IRC
or Section 406 of ERISA, in connection with any Plan which
would subject any such Person (after giving effect to any
exemption) to a material tax on prohibited transactions
imposed by Section 4975 of the IRC or any other material
liability.
(b) Except as set forth on Schedule 3.13: as of
the date hereof (i) no Title IV Plan has any Unfunded Pension
Liability; (ii) since December 11, 1989, no ERISA Event or
event described in Section 4062(e) of ERISA with respect to
any Title IV Plan has occurred or is reasonably expected to
occur; (iii) there are no pending, or to the knowledge of
Borrower, threatened claims, actions or lawsuits (other than
claims for benefits in the normal course), asserted or
instituted against (x) any Plan or its assets, (y) any
fiduciary with respect to any Plan or (z) any Loan Party or
any ERISA Affiliate with respect to any Plan; (iv) no Loan
Party or any ERISA Affiliate has incurred or reasonably
expects to incur any Withdrawal Liability (and no event has
42
occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Section 4201
of ERISA as a result of a complete or partial withdrawal from
a Multiemployer Plan; (v) within the last five years no Loan
Party or other ERISA Affiliate has engaged in a transaction
which resulted in a Title IV Plan with Unfunded Pension
Liabilities being transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA)
of any such entity; (vi) no Plan provides for continuing
benefits or coverage for any participant or any beneficiary
of a participant after such participant's termination of
employment (except as may be required by Section 4980B of the
IRC and at the sole expense of the participant or the
beneficiary of the participant); (vii) since December 31,
1990, each Loan Party or other ERISA Affiliate have complied
with the notice and continuation coverage requirements of
Section 4980B of the IRC and the proposed or final
regulations thereunder; and (viii) since December 11, 1989,
no liability under any Plan has been funded, nor has such
obligation been satisfied with, the purchase of a contract
from an insurance company that is not rated AAA by Standard &
Poor's Corporation and the equivalent by each other
nationally recognized rating agency; such that the liability
under any of (i) through (viii) above, or any combination
thereof, would equal or exceed $1,000,000.
3.14. No Litigation. Except as set forth on Schedule
3.14, no action, claim, investigation or other proceeding is
now pending or, to the knowledge of Borrower, threatened
against any Loan Party, at law, in equity or otherwise,
before any court, board, commission, agency or
instrumentality of any federal, state, or local government or
of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators, (i) which challenges any
such Person's right, power, or competence to enter into or
perform any of its obligations under the Loan Documents, or
the validity or enforceability of any Loan Document or any
action taken thereunder or (ii) which could reasonably be
expected to result in a Material Adverse Effect. To the
knowledge of Borrower, there does not exist a state of facts
which is reasonably likely to give rise to such proceedings.
3.15. Brokers. No broker or finder acting on behalf of
any Loan Party brought about the obtaining, making or closing
of the credit extended pursuant to this Agreement or the
transactions contemplated by the Loan Documents and no Loan
Party has any obligation to any Person in respect of any
finder's or brokerage fees in connection therewith.
3.16. Patents, Trademarks, Copyrights and Licenses.
Except as otherwise set forth on Schedule 3.16, Borrower and
each Material Subsidiary owns, licenses or otherwise has the
right to use all licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications
and trade names which are necessary to continue to conduct
its business as heretofore conducted by it, now conducted by
it and currently proposed to be conducted by it, each of
which is listed, together with Patent and Trademark Office
43
application or registration numbers, where applicable, on
Schedule 3.16. To the best of Borrower's knowledge, Borrower
and each Material Subsidiary conducts business without
infringement or claim of infringement of any license, patent,
copyright, service xxxx, trademark, trade name, trade secret
or other intellectual property right of others, except where
such infringement or claim of infringement could not
reasonably be expected to result in a Material Adverse
Effect. Except as set forth on Schedule 3.16, to Borrower's
knowledge, there is no infringement or claim of infringement
by others of any license, patent, copyright, service xxxx,
trademark, trade name, trade secret or other intellectual
property right of Borrower or any Material Subsidiary, other
than any such infringements or claims of infringement which,
individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. Schedule
3.16 contains as of the date hereof a complete and accurate
list of the License Agreements.
3.17. Hazardous Materials. Except as set forth on
Schedule 3.17, (i) Borrower and each Material Subsidiary is
in material compliance with all Environmental Laws, and
(ii) the Subject Property to the best of Borrower's knowledge
is free of any Hazardous Material. In addition, Schedule
3.17 discloses all existing or potential environmental
liabilities of Borrower and each Material Subsidiary of which
Borrower, after diligent inquiry, has knowledge as of the
date hereof, which individually or in the aggregate, could
reasonably be expected to result in a Material Adverse
Effect. Except as set forth on Schedule 3.17, neither
Borrower nor any Material Subsidiary has caused or suffered
to occur any Releases which, individually or in the
aggregate, could reasonably be expected to result in a
Material Adverse Effect. Neither Borrower nor any Material
Subsidiary is involved in operations which could lead to any
imposition of any Environmental Liabilities and Costs under
the Environmental Laws on the Subject Property which,
individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, or any Lien
on the Subject Property under the Environmental Laws, and
neither Borrower nor any Material Subsidiary knowingly has
permitted any tenant or occupant of such premises to engage
in any such activity or activities which, individually or in
the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
3.18. Insurance Policies. Schedule 3.18 lists all
insurance of any nature maintained as of the date hereof for
current occurrences by Borrower or any Material Subsidiary.
Borrower covenants that such insurance complies with and
shall at all times comply with the standards set forth on
Annex E.
3.19. Blocked Accounts and Lock Boxes. Schedule 3.19
lists all banks and other financial institutions at which
Borrower maintains the Blocked Accounts and each Lock Box and
such Schedule correctly identifies as of the date hereof the
name, address and telephone number of each depository, the
44
name in which each such account is held, a description of the
purpose of each such account, and the complete account
number. All cash receipts of Xxxxx Aviation, the Snorkel
Division and the Xxxxxx Division are deposited in the Blocked
Accounts.
The representations and warranties contained in
this Section 3 shall survive the execution and delivery of
this Agreement.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1. Reports and Notices. Borrower covenants and agrees
that from and after the Closing Date and until the
Termination Date, it shall deliver to each Lender the
Financial Statements, Projections and notices at the times
and in the manner set forth on Annex D, other than the items
referred to in paragraphs (b), (i), (l) and (m) of Annex D,
as to which Borrower shall only be required to deliver copies
thereof to Agent unless Agent requests copies thereof for
each Lender.
4.2. Communication with Accountants. Borrower (for
itself and each Subsidiary thereof) authorizes Agent to
communicate directly with its and its Subsidiaries'
independent certified public accountants and tax advisors and
authorizes those accountants to disclose to Agent and each
Lender any and all financial statements and other supporting
financial documents and schedules including copies of any
management letter with respect to the business, financial
condition and other affairs of Borrower and each Subsidiary
thereof; provided, however, that Borrower shall be given
advance notice by Agent of any meeting or conference between
Agent and/or Lenders and such accountants and Borrower shall
be permitted to attend any such meeting, it being understood
that Borrower's right to have a representative of Borrower
attend any such meeting or conference shall not result in a
delay of any such meeting or conference. At or before the
Closing Date, Borrower shall deliver a letter addressed to
such accountants and tax advisors instructing them to comply
with the provisions of this Section 4.
5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees (for itself and its
Subsidiaries) that, unless Required Lenders shall otherwise
consent in writing, from and after the date hereof and until
the Termination Date:
5.1. Maintenance of Existence and Conduct of Business.
Subject to Section 6.1, Borrower shall (and shall cause each
of the Material Subsidiaries to) (a) do or cause to be done
all things necessary to preserve and keep in full force and
effect its corporate existence and its rights and franchises;
(b) continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder; (c) at all
45
times maintain, preserve and protect all of its Intellectual
Property, and to the extent economically reasonable preserve
all the remainder of its property, in use or useful in the
conduct of its business and keep the same in good repair,
working order and condition (taking into consideration
ordinary wear and tear and casualties) and from time to time
make, or cause to be made, all necessary or appropriate
repairs, replacements and improvements thereto as determined
by Borrower in its reasonable judgment and consistent with
industry practices, so that the business carried on in
connection therewith may be properly and advantageously
conducted at all times; and (d) transact business only under
its current corporate name, the names set forth on
Schedule 3.2 or such other names to the extent that Borrower
has given 30 days' prior written notice thereof to Agent and
Agent shall have taken all actions that Agent deems necessary
or appropriate to continuously protect and perfect the Lien
upon the Collateral in favor of Agent for the ratable benefit
of Lenders.
5.2. Payment of Charges and Claims.
Borrower shall pay and discharge, or cause to be
paid and discharged in accordance with the terms thereof,
(a) all Charges imposed upon it or any Subsidiary or its or
their income and profits, or any of its property (real,
personal or mixed), and (b) lawful claims for labor,
materials, supplies and services or otherwise, which if
unpaid might by law become a Lien on its property; provided,
however, that Borrower or any Subsidiary shall not be
required to pay any such Charge or claim which is being
contested in good faith by proper legal actions or
proceedings and for which adequate reserves with respect
thereto are established and are maintained in accordance with
GAAP to the extent that such Charges or claims if adversely
determined, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
5.3. Books and Records. Borrower shall (and shall cause
each Subsidiary to) keep adequate records and books of
account with respect to its business activities, in which
proper entries, reflecting all of its consolidated and
consolidating financial transactions, are made in accordance
with GAAP and on a basis consistent with the Financials
referred to in paragraph I(b) of Schedule 3.4.
5.4. Litigation. Borrower shall notify Agent and each
Lender in writing, promptly upon learning thereof, of any
litigation, investigation, Claim or other action commenced or
threatened against Borrower or any Material Subsidiary, and
of the institution against any such Person after the date
hereof of any suit or administrative proceeding which
(i) could reasonably be expected to involve an amount in
excess of $1,000,000, individually or in the aggregate and
(ii) could reasonably be expected to result in a Material
Adverse Effect if adversely determined.
5.5. Insurance; Casualty and Condemnation.
46
(a) Borrower shall, at its (or its Subsidiary's)
sole cost and expense maintain or cause to be maintained, the
policies of insurance in such amounts and as otherwise
described in Annex E. Borrower shall notify Agent promptly
of any occurrence causing a material loss or decline in value
of any real or personal property and the estimated (or
actual, if available) amount of such loss or decline, except
as specified otherwise on Annex E. Borrower irrevocably
makes, constitutes and appoints Agent (and all officers,
employees or agents designated by Agent) as Borrower's true
and lawful agent and attorney-in-fact for the purpose during
the continuation of any Event of Default of (i) making,
settling and adjusting claims relating to the Collateral
under the "All Risk" policies of insurance, (ii) endorsing
the name of Borrower on any check, draft, instrument or other
item of payment for the proceeds of such "All Risk" policies
of insurance relating to the Collateral, and (iii) making all
determinations with respect to any settlements or adjustments
referred to in clause (i) above. In the event Borrower at
any time or times hereafter shall fail to obtain or maintain
(or fail to cause to be obtained or maintained) any of the
policies of insurance required above or to pay any premium in
whole or in part relating thereto, Agent or Lenders, without
waiving or releasing any Obligations or Default hereunder,
and after notice from Agent to Borrower, may at any time or
times thereafter (but shall not be obligated to) obtain and
maintain such policies of insurance and pay such premium and
take any other action with respect thereto which Agent or
Lenders deem advisable. All sums so disbursed, including
attorneys' fees, court costs and other charges related
thereto, shall be payable, on demand, by Borrower to Agent on
behalf of Lenders and shall be additional Obligations
hereunder secured by the Collateral; provided, however, that
if and to the extent Borrower fails to promptly pay any of
such sums upon Agent's demand therefor, Agent is authorized
to, and at its option may, make or cause to be made Revolving
Credit Advances on behalf of Borrower for payment thereof,
even if the making of any such Revolving Credit Advance
causes the outstanding balance of the Revolving Credit Loan
to exceed the Borrowing Availability, and Borrower agrees
that the making of any such Advance in excess of the
Borrowing Availability shall constitute an automatic Event of
Default, unless Borrower repays such Advance within one (1)
Business Day after demand by Agent. Any such Revolving
Credit Advance shall be deemed to be a Revolving Credit
Advance for purposes of this Agreement notwithstanding the
fact that the conditions contained in Section 2.2 have not
been satisfied with respect to such Revolving Credit Advance.
(b) Upon the occurrence and during the continuance
of an Event of Default, Agent and Required Lenders shall have
the right, upon review of Borrower's risk profile, to require
additional forms and limits of insurance to, in Agent's or
Required Lenders' sole opinion, adequately protect the
interests of Agent and Lenders. Borrower shall, if so
requested by Agent, deliver to Agent, as often as Agent may
request, a report of a reputable insurance broker
satisfactory to Agent with respect to its insurance policies.
47
(c) Borrower shall deliver to Agent its
endorsements and those of the Material Subsidiaries
constituting Unrestricted Subsidiaries to (i) "All Risk" and
business interruption insurance naming Agent on behalf of
Lenders as loss payee, and (ii) general liability and other
liability policies naming Agent and each Lender as additional
insureds as their interests may appear.
(d) (i) Subject to clause (ii) below, Borrower
hereby directs all present and future insurers under its "All
Risk" policies of insurance relating to any Collateral or any
real property owned by Borrower whether or not constituting
Collateral (collectively, "Property") to pay all proceeds
payable thereunder directly to Agent on behalf of Lenders,
and all condemnation and casualty proceeds and proceeds of
any taking relating to the Property shall be applied, as
follows: (x) in the event that such proceeds arise from
assets of Borrower which do not constitute Collateral and as
to which no Liens have been granted to another holder of
Borrower's Indebtedness, such proceeds resulting from one or
a series of related events up to $1,000,000 may be retained
by Borrower and such proceeds resulting from one or a series
of related events in excess of $1,000,000 shall be applied to
the repayment of the Obligations; (y) in the event that such
proceeds arise from the Collateral, such proceeds shall be
applied to the repayment of the Obligations; and (z) in the
event that such proceeds arise from assets of Borrower which
do not constitute Collateral but constitute collateral as to
which a Lien has been granted to another holder of Borrower's
Indebtedness to the extent such Lien and the Indebtedness
secured thereby are permitted under this Agreement, such
proceeds may be paid by Borrower to such holder as its
interests may appear and any excess proceeds shall be applied
as described in clause (x) above. (ii) So long as there
exists no Event of Default, Borrower may collect any and all
awards, payments or other proceeds of any loss, damage or
destruction to any of its Property or condemnation or taking
of any of its Property and use such proceeds, or any part
thereof, within one (1) year of receipt thereof, to replace,
repair or restore such Property as provided in paragraph (f)
below. Upon the occurrence and during the continuance of an
Event of Default, Agent on behalf of Lenders is hereby
authorized to adjust losses and collect all insurance
proceeds directly. If, notwithstanding the provisions hereof
which require that Agent be a loss payee, a check or other
instrument from an insurer is made payable to Borrower or
Borrower and Agent jointly, Agent upon the occurrence and
during the continuance of an Event of Default may endorse
Borrower's name thereon and take such other action as Agent
may elect to obtain the proceeds thereof.
(e) Borrower shall promptly notify Agent of
(i) any loss, damage, or destruction in excess of $1,000,000
to any Collateral and (ii) any loss, damage, or destruction
in excess of $2,500,000 to any other Property or arising from
its use, whether or not covered by insurance. Borrower shall
promptly upon learning of the institution of any proceeding
for the condemnation or other taking of any of its Property,
48
notify Agent of the pendency of such proceeding, and agrees
that Agent may participate in any such proceeding and
Borrower from time to time will deliver to Agent all
instruments reasonably requested by Agent to permit such
participation.
(f) Any Property which is to be replaced, repaired
or restored pursuant to paragraph (d) above shall be
replaced, repaired or restored with materials and workmanship
of substantially as good a quality as existed before such
loss or taking, and Borrower shall commence such replacement,
repair or restoration as soon as practicable and proceed
diligently with it until completion to Agent's reasonable
satisfaction; provided, however, that if any such replaced
Property constitutes Collateral, Agent shall receive a
perfected first priority security interest in the related
replacement Property. Upon request by Agent, Borrower shall
provide to Agent written progress reports, other information
and evidence of its compliance with the foregoing.
5.6. Compliance with Laws. Borrower shall (and shall
cause each of its Subsidiaries to) comply with all federal,
state and local laws, permits and regulations applicable to
it, including, without limitation, those relating to
licensing, environmental, ERISA and labor matters to the
extent that failure to comply with such laws, permits or
regulations, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse
Effect.
5.7. Agreements. Borrower shall (and shall cause each
of the Material Subsidiaries to) perform, within all required
time periods (after giving effect to any applicable grace
periods), all of its obligations and enforce all of its
rights under each agreement, contract, instrument or other
document to which it is a party, including, without
limitation, any leases and customer contracts to which it is
a party where the failure to so perform and enforce could
reasonably be expected to result in a Material Adverse
Effect. Borrower shall not (and shall not permit any of the
Material Subsidiaries to) terminate or modify any provision
of any agreement, contract, instrument or other document to
which it is a party which termination or modification could
reasonably be expected to result in a Material Adverse
Effect. Borrower shall (and shall cause each of the Material
Subsidiaries to) perform and comply with all obligations in
respect of Accounts, Chattel Paper, Contracts, Licenses,
Instruments, Documents and all other agreements constituting
or giving rise to Collateral to the extent that the failure
to so perform or comply, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse
Effect. Borrower shall not, without Agent's prior written
consent, with respect to any of the Accounts, Chattel Paper,
Instruments or amounts due under any Contract (i) grant any
extension of the time of payment of any thereof;
(ii) compromise or settle the same for less than the full
amount thereof (other than the compromise or settlement, for
adequate consideration, of Accounts which are not Eligible
49
Accounts in the ordinary course of business consistent with
past practices); (iii) release, in whole or in part, any
Person liable for the payment thereof; or (iv) allow any
credit or discount whatsoever thereon other than trade
discounts granted in the ordinary course of business of
Borrower, except to the extent that any such extensions,
compromises, settlements, releases, credits or discounts,
individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.8. Supplemental Disclosure. Upon Agent's reasonable
request, Borrower will supplement (or cause to be
supplemented) each Schedule hereto, or representation herein
or in any other Loan Document with respect to any matter
hereafter arising which, if existing or occurring at the date
of this Agreement, would have been required to be set forth
or described in such Schedule or as an exception to such
representation or which is necessary to correct any
information in such Schedule or representation which has been
rendered inaccurate thereby; provided, however, that such
supplement to such Schedule or representation shall not be
deemed an amendment thereof unless expressly consented to in
writing by Agent and Required Lenders, and no such
amendments, except as the same may be consented to in a
writing which expressly includes a waiver, shall be or be
deemed a waiver by Lenders of any Default disclosed therein.
Borrower shall, if so requested by Agent or Required Lenders,
furnish to Agent and Lenders as often as it reasonably
requests, statements and schedules further identifying and
describing the Collateral and such other reports in
connection with the Collateral as Agent or Required Lenders
may reasonably request, all in reasonable detail, and,
Borrower shall advise Agent and Lenders promptly, in reason-
able detail, of (i) any Lien, other than as permitted
pursuant to Section 6.7, attaching to or asserted against any
of the Collateral, (ii) any material change in the
composition of the Collateral and (iii) the occurrence of any
other event which could reasonably be expected to have a
Material Adverse Effect upon the Collateral and/or Agent's
Lien thereon.
5.9. Environmental Matters. Borrower shall, and shall
cause its Subsidiaries to, (i) comply in all material
respects with the Environmental Laws and permits applicable
to it, (ii) notify Agent promptly after Borrower becomes
aware of any Release which could reasonably be expected to
result in Environmental Liabilities and Costs in excess of
$500,000 upon any Subject Property, and (iii) promptly
forward to Agent a copy of any order, notice, permit,
application, or any communication or report (including, but
not limited to, any environmental assessment report) received
by any Loan Party in connection with any Release identified
in clause (ii) above or any other matter relating to the
Environmental Laws that may affect any Subject Property or
any Loan Party in any respect which could reasonably be
expected to result in Environmental Liabilities and Costs in
excess of $500,000. The provisions of this Section 5.9 shall
apply whether or not the Environmental Protection Agency, any
50
other federal agency or any state or local environmental
agency has taken or threatened any action in connection with
any Release or the presence of any Hazardous Materials.
5.10. Landlord's and Bailee's/Warehousemen's Agreements.
Borrower shall use its best efforts to obtain and maintain in
full force and effect a landlord's, bailee's and/or
warehousemen's agreement, as applicable, in form and
substance acceptable to Agent from the lessor of, or bailee
and/or warehousemen with respect to Collateral located on,
any present or future leased premises of Borrower or in the
possession of a bailee or warehouseman (or in a
warehouseman's warehouse), as the case may be.
5.11. Certain Obligations Respecting Subsidiaries.
(a) Borrower will, and will cause each of its
Material Subsidiaries to, take such action from time to time
as shall be necessary to ensure that each of its Material
Subsidiaries, except as set forth on Schedule 3.9, is a
wholly owned Subsidiary. Borrower will not permit any of its
Subsidiaries to enter into, after the date of this Agreement,
any indenture, agreement, instrument or other arrangement,
other than any Collateral Documents, that, directly or
indirectly, prohibits or restrains, or has the effect of
prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence or payment of Indebtedness,
the granting of Liens, the declaration or payment of
dividends or other Restricted Payments, the making of loans,
advances or Investments or the sale, assignment, transfer or
other disposition of any property or assets.
(b) Borrower shall (i) cause any Subsidiary of
Borrower designated after the date hereof as an Unrestricted
Subsidiary, to guaranty the Obligations pursuant to a
Subsidiary Guaranty and grant Liens on its assets to Agent
for the ratable benefit of Lenders as security for the
repayment of the Obligations pursuant to a Subsidiary
Security Agreement and, if applicable, a Mortgage, and
(ii) pledge the Stock of each such Unrestricted Subsidiary to
Agent for the ratable benefit of Lenders as security for the
repayment of the Obligations pursuant to the Borrower Pledge
Agreement; provided, however, that this paragraph (b) shall
not apply to the Unrestricted Subsidiaries in existence on
the date hereof, except as provided in the Borrower Pledge
Agreement.
5.12. Application of Proceeds. Borrower shall use the
proceeds of Revolving Credit Advances as provided in
Section 1.3.
5.13. Fiscal Year. Borrower shall, and shall cause each
Subsidiary to, maintain as its Fiscal Year the twelve month
period ending on December 31 of each year.
5.14. Employee Plans.
(a) With respect to each Qualified Plan hereafter
51
adopted or maintained by any Loan Party or any ERISA
Affiliate, other than a Multiemployer Plan, Borrower shall
(i) seek, or cause each of its ERISA Affiliate to seek, and
receive determination letters from the IRS to the effect that
such Qualified Plan is qualified within the meaning of
Section 401(a) of the IRC; and (ii) from and after the
adoption of any such Qualified Plan, cause such plan to be
qualified within the meaning of Section 401(a) of the IRC and
to be administered in all material respects in accordance
with the requirements of ERISA and Section 401(a) of the IRC.
(b) With respect to each welfare benefit plan, as
defined in Section 3(1) of ERISA, hereafter adopted or
maintained by any Loan Party or any ERISA Affiliate, Borrower
shall comply, or cause each of its ERISA Affiliates to
comply, with the notice and continuation coverage
requirements of Section 4980B of the IRC and the regulations
thereunder in all material respects.
6. NEGATIVE COVENANTS
Borrower covenants and agrees (for itself and each
Subsidiary of Borrower) that, without Required Lenders' prior
written consent, from and after the date hereof and until the
Termination Date:
6.1. Mergers and Acquisitions.
(a) Borrower shall not, and shall cause each of
its Subsidiaries not to, directly or indirectly, by operation
of law or otherwise, merge with, consolidate with, acquire
all or substantially all of the assets or capital Stock of,
or otherwise combine with, any Person, or acquire all or
substantially all of the assets of an operating division of
any Person, or form any Subsidiary; provided, however, that
subject to subparagraph (b) hereof, Borrower shall be
permitted to make acquisitions of the assets or Stock of any
Person or Persons, so long as, after giving effect to any
such acquisition, the Aggregate Purchase Price for all such
acquisitions made during the term of this Agreement pursuant
to this Section 6.1(a) does not exceed the available amount
under the Repayment/Acquisition Basket as evidenced by a
certificate of a Responsible Officer delivered to Agent not
less than three (3) Business Days prior to such acquisition
indicating that the conditions contained in this Section
6.1(a) shall have been satisfied; and, provided, further,
that (i) Borrower may dissolve any Subsidiary of Borrower
(other than Figgie Properties or Figgie Real Estate to the
extent Figgie Properties or Figgie Real Estate owns assets
other than cash or Cash Equivalents), (ii) any Subsidiary of
Borrower may merge, consolidate or otherwise combine with
Borrower or any other Subsidiary of Borrower so long as
(v) if Borrower is a party to such transaction, Borrower
shall be the surviving corporation, (w) no Default or Event
of Default shall have occurred and be continuing immediately
before and after giving effect to such merger, consolidation
or combination, (x) if an Unrestricted Subsidiary is a party
52
to such transaction, the surviving corporation shall not be a
Restricted Subsidiary, (y) if Borrower is not a party to such
transaction, the surviving corporation shall be a wholly-
owned Subsidiary of Borrower and if a Domestic Subsidiary is
party to such transaction, the surviving corporation shall be
a Domestic Subsidiary, and (z) if either Figgie Properties or
Figgie Real Estate is a party to such transaction,
(A) Borrower shall be the surviving corporation and
(B) immediately prior to such merger, consolidation or
combination, neither Figgie Properties nor Figgie Real
Estate, as the case may be, shall own any assets (other than
cash or Cash Equivalents), and (iii) Borrower may make
Investments to the extent permitted by Section 6.2(vii).
(b) Borrower shall not make any such acquisition
unless:
(i) immediately before and after giving effect
thereto, (A) any Subsidiaries acquired or created in
connection with such acquisition shall be a wholly-owned
Subsidiary of Borrower and shall be in compliance with
all warranties and representations and affirmative and
negative covenants under this Agreement, and (B) there
shall exist no Default or Event of Default and no
Default or Event of Default would be created;
(ii) in the event of an asset acquisition, any
acquired asset that is of the type that would be
required to be pledged as "Collateral" if it were owned
by Borrower on the Closing Date, shall be pledged as
Collateral to Agent, for the ratable benefit of Lenders,
pursuant to a security agreement in form and substance
substantially similar to the Borrower Security Agreement
and Borrower Pledge Agreement, as applicable, and
otherwise reasonably satisfactory to Agent;
(iii) in the event of a stock acquisition,
(A) Borrower shall pledge to Agent, for the ratable
benefit of Lenders, the Stock of any newly created or
acquired Subsidiary and each of its Subsidiaries, if
any, (B) such Subsidiary and each of its Subsidiaries,
if any, shall be an Unrestricted Subsidiary, and
(C) such Subsidiary and each of its Subsidiaries, if
any, shall each execute a Subsidiary Guaranty that will
be secured by all of its respective assets and a
Subsidiary Security Agreement and, if applicable, a
Mortgage;
(iv) any such entity acquired shall be engaged in a
line of business similar to that conducted at the time
of such acquisition by Xxxxx Aviation, the Snorkel
Division, the Xxxxxx Division or Interstate Electronics;
and
(v) in the case of any acquisition for which the
Aggregate Purchase Price is in excess of $5,000,000,
Borrower shall have given Agent (A) 30 days' advance
written notice of such acquisition, including a brief
53
description of the property being acquired, the
Aggregate Purchase Price (or range) thereof, and the
Person from whom such property is being acquired, and
(B) on the date of such acquisition, a certification, in
a form acceptable to Agent, from a Responsible Officer
stating that Borrower has complied with clause (b)(i) of
this Section 6.1;
provided, however, that any liabilities that are assumed by
Borrower or any newly created or acquired Subsidiary of
Borrower (including accounts payable) shall not be assumed by
Borrower unless any such liability is in a quantifiable
amount (or, if not in a quantifiable amount, a maximum amount
that can be reasonably ascertained by Borrower) and the
liability assumed is not greater than the amount permitted
under the Repayment/Acquisition Basket, provided that a
Responsible Officer shall have delivered to Agent immediately
prior to any such acquisition a certificate as to the
calculation of the Repayment/Acquisition Basket.
6.2. Investments. Borrower shall not (and shall not
permit any of its Subsidiaries to), directly or indirectly,
make or maintain any Investment except (i) as otherwise
permitted by Section 6.1, 6.3, 6.4 or 6.6; (ii) Investments
outstanding on the date hereof and listed on Schedule 6.2;
(iii) advances constituting trade credit representing the
purchase price of inventory or supplies sold to any Person
(other than a Subsidiary or Affiliate of Borrower) in the
ordinary course of business; (iv) Investments in Cash
Equivalents; (v) Investments consisting of promissory notes
and other securities received as proceeds of disposals
permitted by Section 6.8 and including proceeds of deferred
divestiture Investments described in Schedule 6.2 received in
transactions concluded prior to the date hereof ("Deferred
Divestiture Proceeds") and any replacement Investment so long
as such replacement Investment is at least as liquid as such
original Investment as evidenced by a certificate of a
Responsible Officer delivered to Agent not less than three
(3) Business Days prior to such transaction indicating that
the conditions contained in this Section 6.2(v) shall have
been satisfied; (vi) Investments consisting of guarantees,
indemnities and similar obligations in favor of any buyer in
any disposal transaction permitted under Section 6.8;
(vii) Investments in Joint Venture Subsidiaries or entities
which upon the occurrence of any such Investment shall become
a Joint Venture Subsidiary in an aggregate amount not to
exceed $2,000,000 made in any Fiscal Year, provided that any
excess of the amount provided above for any one Fiscal Year
over the actual aggregate Investments of Borrower or any
Subsidiary of Borrower in Joint Venture Subsidiaries made
during such Fiscal Year may be carried forward to, and made
available for, the next succeeding Fiscal Year; and
(viii) miscellaneous Investments not to exceed $200,000 in
the aggregate at any time based upon the book value of such
Investments.
6.3. Indebtedness. Borrower shall not (and shall not
permit any of its Subsidiaries to) create, incur, assume or
54
permit to exist any Indebtedness, except (i) the Obligations;
(ii) Deferred Taxes; (iii)(x) Capital Lease Obligations
secured by Liens permitted under clause (iv) of Section 6.7
and (y) Indebtedness secured by purchase money Liens permit-
xxx under clause (iv) of Section 6.7 in a maximum aggregate
amount outstanding at any time under clauses (x) and (y) not
to exceed $5,000,000; (iv) existing Indebtedness as of the
Closing Date, provided that any such Indebtedness in excess
of $1,000,000 in aggregate principal amount shall be set
forth on Schedule 6.3; (v) Indebtedness of any Subsidiary of
Borrower owing to Borrower or another Subsidiary of Borrower
and which is permitted under Section 6.4, provided that
(A) upon the request of Agent and/or Required Lenders such
Subsidiary of Borrower shall execute and deliver to Borrower
a demand note (collectively the "Intercompany Notes") to
evidence any such intercompany Indebtedness owing by such
Subsidiary to Borrower or by any Unrestricted Subsidiary to
another Unrestricted Subsidiary, and (B) Agent and/or
Required Lenders may request an Intercompany Note to evidence
any such Indebtedness outstanding on the Closing Date, which
Intercompany Notes shall be in form and substance
satisfactory to Agent and shall be pledged and delivered by
Borrower to Agent pursuant to the Borrower Pledge Agreement
as additional collateral security for the Obligations;
(vi) other Indebtedness not to exceed $5,000,000 in the
aggregate at any time outstanding; (vii) Indebtedness of
Borrower owing to any Subsidiary of Borrower and which is
permitted under Section 6.4 in the form of cash loans or
advances to Borrower, provided that (A) Agent and/or Required
Lenders may request an Intercompany Note for any such
Indebtedness outstanding on the Closing Date or arising
thereafter and, solely with respect to Unrestricted
Subsidiaries, that such Intercompany Note be pledged and
delivered to Agent as additional collateral security for the
Obligations, and (B) the documentation evidencing any such
Indebtedness shall provide that, and Borrower hereby agrees
that, upon the occurrence and during the continuance of any
Event of Default, the payment of principal of (and premium,
if any) and interest and other payment obligations in respect
of such Indebtedness shall be subordinate to the prior
payment in full of the Obligations and shall not occur prior
to the Termination Date; and (viii) any renewal, extension,
refinancing or refunding of any Indebtedness permitted in
clause (iv) above on terms no less favorable to Borrower,
Agent or any Lender, as determined by Required Lenders in the
case of any such renewal, extension, refinancing or refunding
of Indebtedness in excess of $5,000,000 or Agent in the case
of any such renewal, extension, refinancing or refunding of
Indebtedness secured by the CAFIG Mortgage, than the terms of
the Indebtedness being renewed, extended, refinanced or
refunded, including, without limitation, with respect to
amount, maturity, amortization, interest rate, premiums,
fees, covenants, events of default and remedies.
6.4. Affiliate and Employee Loans and Transactions;
Employment Agreements. Except as provided in Section 6.1,
Borrower shall not (and shall not permit any of its Subsidi-
aries to) enter into or suffer to exist any lending, borrow-
55
ing or other commercial transaction with any of its Subsidi-
aries, Affiliates, officers, directors or employees, includ-
ing, without limitation, payment of any management, consult-
ing, advisory or similar fee, other than any such transaction
with an Affiliate (other than a Subsidiary), officer,
director or employee of Borrower which is entered into on an
arm's-length basis and in the ordinary course of business of
Borrower; provided, however, (a) Borrower may (i) extend
loans to its officers, directors and employees in a maximum
aggregate principal amount outstanding at any time for all
officers, directors and employees of $2,000,000, (ii) extend
loans or make other advances to the Foreign Subsidiaries in
an aggregate amount not to exceed (x) in the case of any such
existing loans and advances, the amount of such loans and
advances listed on Schedule 6.4 and outstanding as of the
Closing Date (the "Existing Foreign Loans") and (y) in the
case of any such loans and advances made after the Closing
Date, $3,000,000 outstanding at any time (the amount referred
to in clause (y), the "Foreign Subsidiary Basket") for the
purpose of enabling such Foreign Subsidiaries to pay taxes,
pay insurance premiums, pay miscellaneous filing,
registration and other fees, repay Indebtedness to facilitate
Borrower's tax planning or otherwise satisfy obligations in
connection with Borrower's divestiture program and, in the
case of Snorkel Elevating Work Platforms Limited (New
Zealand) and Snorkel Elevating Work Platforms Pty. Limited
(Australia), otherwise meet working capital requirements,
provided that (A) subject to the terms of Section 6.13(iii),
the Existing Foreign Loans shall be permanently reduced from
time to time by repayments made in accordance with the terms
thereof as in effect on the date hereof, and (B) any repay-
ments made by any Foreign Subsidiary of loans or advances
made by Borrower to such Foreign Subsidiary pursuant to the
Foreign Subsidiary Basket shall be made in cash or Cash
Equivalents, (iii) extend loans or make other advances to the
Domestic Subsidiaries in an aggregate amount not to exceed
(x) in the case of any such existing loans and advances, the
amount of such loans and advances listed on Schedule 6.4 and
outstanding as of the Closing Date (the "Existing Domestic
Loans"), and (y) in the case of any such loans and advances
made after the Closing Date, $5,000,000 outstanding at any
time (the amount referred to in clause (y), the "Domestic
Subsidiary Basket"), for the purpose of (A) repaying
miscellaneous obligations of the Domestic Subsidiaries to the
extent Borrower would be permitted to pay such obligations
under Section 6.4 and (B) repaying Indebtedness secured by
mortgages on any such Domestic Subsidiary's real property to
the extent any such repayment is permitted by Section
6.13(iii), provided that the Existing Domestic Loans shall be
permanently reduced from time to time by repayments made in
accordance with the terms thereof as in effect on the date
hereof, (iv) extend loans to Joint Venture Subsidiaries to
the extent permitted by Section 6.2(vii), and (v) with
Subsidiaries of Borrower, provide payroll, accounting, legal
and similar administrative services and enter into real
property leases, intellectual property licenses, intercompany
sales of goods and similar transactions, in each case to the
extent entered into on an arm's-length basis in the ordinary
56
course of Borrower's business consistent with past practices,
(b) any Subsidiary of Borrower may extend loans or advances
to Borrower in accordance with Section 6.3(vii), and (c) any
Unrestricted Subsidiary may extend loans or advances to
another Unrestricted Subsidiary and any Restricted Subsidiary
may extend loans or advances to another Restricted Subsidi-
ary. With respect to any repayment provided for in clause
(a)(ii) or (iii) above, Borrower shall deliver to Agent not
less than three (3) Business Days in advance of any such
repayment a certificate of a Responsible Officer indicating
whether any repayments of Indebtedness pursuant to Section
6.13 are to be applied to the repayment of (x) loans or ad-
vances made pursuant to either the Foreign Subsidiary Basket
or the Domestic Subsidiary Basket or (y) Existing Domestic
Loans or Existing Foreign Loans. Set forth on Schedule 6.4
is a list of all such lending, borrowing or other commercial
transactions existing or outstanding as of the date hereof.
6.5. Capital Structure and Business. Except as
permitted under Section 5.1, Borrower shall not (and shall
not permit any of its Subsidiaries to) (i) make any changes
in its business objectives, purposes, or operations which,
individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, (ii) except
as permitted under Section 6.14, make any change in its
capital structure as described on Schedule 3.9 (including,
without limitation, the issuance or recapitalization of any
shares of Stock or other securities convertible into Stock or
any revision of the terms of its outstanding Stock);
provided, however, that Borrower may issue shares of its
Stock for cash or Cash Equivalents, or (iii) in the case of
Borrower or any Material Subsidiary, amend its articles or
certificate of incorporation, charter, by-laws or other
organizational documents other than any amendment to cure any
ambiguity, defect or inconsistency with any other provision
therein or to correct or supplement any provision therein
which may be inconsistent with any other provision therein,
provided that any such amendment shall not adversely affect
the interests of Lenders in any material respect. Notwith-
standing the foregoing terms of this Section 6.5, Borrower
may change its articles of incorporation, by-laws and other
organizational documents in order to create one class of
Stock to replace or consolidate Borrower's existing Class A
and Class B common Stock; provided, however, that any such
change may not provide for Restricted Payments, a Change of
Control, or other terms which in any such instance could
reasonably be expected to cause a Default or Event of Default
hereunder or otherwise, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse
Effect.
6.6. Guaranteed Indebtedness. Except as set forth in
Schedule 6.6, Borrower shall not (and, except as provided for
in Section 6.1(b), shall not permit any of its Subsidiaries
to) incur any Guaranteed Indebtedness except (i) by
endorsement of instruments or items of payment for collection
or deposit to the general account of such Person, (ii) for
Guaranteed Indebtedness incurred for the benefit of Borrower
57
if the primary obligation is permitted by this Agreement for
Borrower to incur (and such Guaranteed Indebtedness shall be
treated as a primary obligation for all purposes hereof),
(iii) for performance bonds, indemnities, product warranties
and similar obligations entered into in the ordinary course
of business consistent with past practices, (iv) guarantees
by Borrower of the obligations of Joint Venture Subsidiaries
to the extent permitted by Section 6.2(vii), and
(v) guarantees by Borrower of Indebtedness of any
Subsidiaries of Borrower to the extent Borrower would be
permitted to create, incur or assume such Indebtedness
hereunder.
6.7. Liens. Borrower shall not (and shall not permit
any of its Subsidiaries to) create or permit to exist any
Lien on any of its properties or assets except for
(i) presently existing or hereafter created Liens in favor of
Agent on behalf of Lenders to secure the Obligations;
(ii) Liens set forth on Schedule 6.7 existing on the date
hereof; (iii) Permitted Encumbrances; (iv) purchase money
liens or purchase money security interests upon or in
Equipment acquired by Borrower or any of its Subsidiaries in
the ordinary course of business to secure the purchase price
of such Equipment or to secure Indebtedness or Capital Lease
Obligations in each case to the extent permitted under
Section 6.3(iii) incurred solely for the purpose of financing
the acquisition of such Equipment, so long as such Equipment
is not a component, part or accessory installed on, or an
accession, addition or attachment to, any other Equipment or
other property of Borrower or any Subsidiary thereof (except
other Equipment on which a security interest exists under
this clause); and (v) extensions, renewals and replacements
of Liens referred to in clauses (ii) and (iv) above, provided
that any such extension, renewal or replacement Lien is
limited to the property or assets covered by the Lien
extended, renewed or replaced and does not secure
Indebtedness in an amount greater than the amount of the
outstanding Indebtedness secured thereby immediately prior to
the date of such extension, renewal or replacement.
6.8. Sale of Assets. Borrower shall not (and shall not
permit any of its Subsidiaries to) sell, transfer, convey,
assign or otherwise dispose of any of its assets or proper-
ties, including, without limitation, any Collateral;
provided, however, that the foregoing shall not prohibit
(i) the sale of Inventory in the ordinary course of business;
(ii) the sale or disposition of any assets which have become
obsolete or surplus to the business of Borrower or any of its
Subsidiaries; (iii) completion by Borrower of its divestiture
program, including sales or other dispositions of surplus
assets, in accordance with Schedule 6.8; (iv) the sale by
Borrower of certain assets as described in that certain
letter from Borrower to Agent and Lenders, dated December 19,
1995 (the "Side Letter"); (v) the sale by Borrower and its
Subsidiaries of assets other than the Collateral for a sale
price not less than the Fair Market Value of such assets and
for proceeds not to exceed $1,000,000 in the aggregate during
any calendar year; and (vi) the sale or exchange of
58
Investments received in connection with divestitures to the
extent permitted by Section 6.2(v).
6.9. ERISA. Neither Borrower nor any ERISA Affiliate
shall acquire any new ERISA Affiliate that (i) maintains or
has an obligation to contribute to a Pension Plan other than
a Multiemployer Plan that has an "accumulated funding
deficiency," as defined in Section 302 of ERISA; or (ii) has
an obligation to contribute to a Multiemployer Plan where its
share of any "unfunded vested benefits," as defined in
Section 4006(a)(3)(E)(iii) of ERISA equals or exceeds
$1,000,000. Additionally, neither Borrower nor any ERISA
Affiliate shall (i) terminate any Pension Plan that is
subject to Title IV of ERISA where such termination could
reasonably be anticipated to result in liability to Borrower;
(ii) permit any accumulated funding deficiency, as defined in
Section 302(a)(2) of ERISA, to be incurred with respect to
any Pension Plan; (iii) fail to make any contributions or
fail to pay any amounts due and owing as required by the
terms of any Plan before such contributions or amounts become
delinquent; (iv) make a complete or partial withdrawal
(within the meaning of Section 4201 of ERISA) from any
Multiemployer Plan; or (v) at any time fail to provide Agent
and any Lender with copies of any Plan documents or
governmental reports or filings, if reasonably requested by
Agent or any Lender; such that the liability under any of (i)
through (v) above, or any combination thereof, equals or
exceeds $1,000,000.
6.10. Financial Covenants. Borrower shall not breach or
fail to comply with any of the following financial covenants,
each of which shall be calculated in accordance with GAAP
consistently applied (and based upon the financial statements
delivered hereunder):
(a) Minimum EBITDA. Borrower shall maintain, for
the following periods, minimum EBITDA of not less than:
(i) $5,000,000 for the Fiscal Quarter ending Xxxxx 00, 0000,
(xx) $12,000,000 for the two Fiscal Quarter period ending
June 30, 1996 and (iii) $22,000,000 for the three Fiscal
Quarter period ending September 30, 1996. Borrower shall
maintain for each four Fiscal Quarter period, commencing with
the four Fiscal Quarter period ending December 31, 1996,
minimum EBITDA for such period of not less than the amount
for such period set forth below:
Four
Fiscal Quarter
Period Ending Minimum EBITDA
December 31, 1996 $32,500,000
March 31, 1997 32,500,000
June 30, 1997 32,500,000
September 30, 1997 32,500,000
December 31, 1997 38,000,000
March 31, 1998 43,000,000
June 30, 1998 43,000,000
September 30, 1998 43,000,000
59
December 31, 1998 45,000,000
(b) Minimum Xxxxx Aviation EBITDA. Borrower shall
maintain, for the following periods, minimum EBITDA
(calculated for Xxxxx Aviation on a stand-alone basis) of not
less than: (i) $4,000,000 for the Fiscal Quarter ending
Xxxxx 00, 0000, (xx) $8,000,000 for the two Fiscal Quarter
period ending June 30, 1996 and (iii) $12,000,000 for the
three Fiscal Quarter period ending September 30, 1996.
Borrower shall maintain for each four Fiscal Quarter period,
commencing with the four Fiscal Quarter period ending on
December 31, 1996, minimum EBITDA (calculated for Xxxxx
Aviation on a stand-alone basis) for such period of not less
than the amount for such period set forth below:
Four
Fiscal Quarter
Period Ending Minimum EBITDA
December 31, 1996 $18,000,000
March 31, 1997 18,000,000
June 30, 1997 18,000,000
September 30, 1997 20,000,000
December 31, 1997 20,000,000
March 31, 1998 20,000,000
June 30, 1998 20,000,000
September 30, 1998 20,000,000
December 31, 1998 20,000,000
(c) Fixed Charge Coverage Ratio. Borrower shall
maintain, for the following periods, a Fixed Charge Coverage
Ratio of not less than: (i) 1.0 to 1.0 for the Fiscal
Quarter ending Xxxxx 00, 0000, (xx) 1.0 to 1.0 for the two
Fiscal Quarter period ending June 30, 1996 and (iii) 1.0 to
1.0 for the three Fiscal Quarter period ending September 30,
1996. Borrower shall maintain for each four Fiscal Quarter
period, commencing with the four Fiscal Quarter period ending
on December 31, 1996, a Fixed Charge Coverage Ratio for such
period of not less than the amount for such period set forth
below:
Four
Fiscal Quarter
Period Ending Minimum Ratio
December 31, 1996 1.1:1.0
March 31, 1997 1.1:1.0
June 30, 1997 1.1:1.0
September 30, 1997 1.1:1.0
December 31, 1997 1.2:1.0
March 31, 1998 1.2:1.0
June 30, 1998 1.2:1.0
September 30, 1998 1.2:1.0
December 31, 1998 1.2:1.0
(d) Minimum Tangible Net Worth. Borrower shall
maintain, as at the end of each Fiscal Quarter set forth
below, Tangible Net Worth of not less than the amount for
60
such Fiscal Quarter:
Fiscal Quarter Minimum
Ending Tangible Net Worth
December 31, 1995 $24,000,000
March 31, 1996 27,000,000
June 30, 1996 30,000,000
September 30, 1996 33,000,000
December 31, 1996 36,000,000
March 31, 1997 40,500,000
June 30, 1997 45,000,000
September 30, 1997 49,500,000
December 31, 1997 54,000,000
March 31, 1998 60,000,000
June 30, 1998 66,000,000
September 30, 1998 72,000,000
December 31, 1998 79,000,000
(e) Current Ratio. Borrower shall maintain, as at
the end of each Fiscal Quarter set forth below, a ratio of
Current Assets to Current Liabilities of not less than the
amount for such Fiscal Quarter:
Fiscal Quarter
Ending Minimum Current Ratio
March 31, 1996 1.6:1.0
June 30, 1996 1.6:1.0
September 30, 1996 1.6:1.0
December 31, 1996 1.9:1.0
March 31, 1997 1.9:1.0
June 30, 1997 1.9:1.0
September 30, 1997 1.9:1.0
December 31, 1997 2.2:1.0
March 31, 1998 2.2:1.0
June 30, 1998 2.2:1.0
September 30, 1998 2.2:1.0
December 31, 1998 2.5:1.0
(f) Capital Expenditures. Borrower and its
Subsidiaries shall not make aggregate Capital Expenditures
(excluding any Capital Expenditures made by Borrower pursuant
to Section 5.5 to replace, repair or restore any Property
subject to any loss or taking described therein) in any
Fiscal Year in excess of $8,000,000. In the event Borrower
is not prohibited by any Governmental Authority from building
a new headquarters facility in the Chagrin Highlands
development as described in Schedule 3.14, and there are no
pending or, to Borrower's knowledge, threatened proceedings
or litigation which, if adversely determined, could prohibit
or limit Borrower's ability to build a new headquarters
facility in the Chagrin Highlands development as described in
Schedule 3.14 (including, without limitation, the Chagrin
Highlands litigation described in Schedule 3.14), Borrower
may make Capital Expenditures for the purpose of building
such headquarters in addition to Capital Expenditures
otherwise permitted by this Section 6.10(f) in an aggregate
61
amount not to exceed $5,000,000 during the term of this Agreement.
6.11. Hazardous Materials. Borrower shall not and shall
not knowingly permit any of its Subsidiaries or any other
Person to (a) cause or permit a Release of Hazardous Material
on, under in or about any Subject Property; (b) use, store,
generate, treat or dispose of Hazardous Materials, except in
compliance with Environmental Laws; or (c) transport any
Hazardous Materials to or from any Subject Property, except
in compliance with Environmental Laws.
6.12. Sale-Leasebacks. Except as set forth on Schedule
6.12, Borrower shall not (and shall not permit any of its
Subsidiaries to) engage in any sale-leaseback, synthetic
lease or similar transaction involving any of its property or
assets; provided, however, that Borrower may enter into any
new sale-leaseback, synthetic lease or similar transaction
after the date hereof on terms no less favorable to Borrower,
Agent or any Lender, as determined by Required Lenders in the
case of any such transaction with GE Capital and as deter-
mined by Agent otherwise, than those of the sale-leaseback
transactions listed on Schedule 6.12, including, without
limitation, with respect to lease payments, lease term,
covenants, events of default and remedies, provided that
Borrower shall be in compliance with Section 6.3(iii) after
giving effect to any such transaction.
6.13. Cancellation of Indebtedness; Amendments. Except
as permitted under Section 5.7 or Section 6.1, Borrower shall
not (and shall not permit any of its Subsidiaries to) cancel
any claim or Indebtedness owing to it, except for reasonable
consideration and in the ordinary course of its business, or
voluntarily prepay, redeem, purchase, retire, defease, or
make any sinking fund payment or similar payment in respect
of, any Indebtedness (other than the Obligations), except for
(i) regularly scheduled payments of Indebtedness as in effect
on the date hereof, (ii) prepayments in respect of personal
property leases in connection with the sale of the equipment
subject to such leases pursuant to Section 6.8, (iii) repay-
ments, prepayments, redemptions, retirements, defeasances or
open market purchases of Indebtedness to the extent there is
availability under the Repayment/Acquisition Basket, provided
that (x) no Event of Default exists and is continuing or
would exist by reason of any such repayment, prepayment,
redemption, retirement defeasance or purchase, and
(y) Borrower shall have delivered to Agent not less than
three (3) Business Days in advance of such transaction (or
such lesser period as may be acceptable to Agent) a
certificate of a Responsible Officer as to the calculation of
the Repayment/Acquisition Basket, and (iv) the cancellation,
conversion, sale and exchange of Investments obtained by
Borrower as a result of divestitures permitted under Section
6.8, pursuant to such discounts and other terms as Borrower
may reasonably deem beneficial for the purpose of enhancing
liquidity as evidenced by a certificate of a Responsible
Officer delivered to Agent not less than three (3) Business
Days prior to any such transaction indicating that the
62
liquidity conditions contained in this Section 6.13(iv) shall
have been satisfied; provided, however, that to the extent
the proceeds of any such cancellation, conversion, sale or
exchange represent Net Proceeds, such Net Proceeds shall be
applied in accordance with Section 6.8. Borrower shall not
amend the Senior Note Indenture or Subordinated Indenture
without the prior written consent of Required Lenders.
6.14. Restricted Payments. Except as permitted under
Section 6.4, Borrower shall not make any Restricted Payment
to any Person and Borrower shall not permit any of its
Subsidiaries to make any Restricted Payment other than to
Borrower or to a wholly-owned Subsidiary of Borrower which
owns the Stock of such Subsidiary; provided, however, that
Borrower may (a) make repurchases of its Stock pursuant to
the Restricted Stock Plan and the Key Employees Stock Option
Plan, (b) make repurchases of its Stock in an aggregate
amount not to exceed $2,000,000 during the term of this
Agreement, provided that in the case of either clause (a) or
(b) of this Section 6.14, no Default or Event of Default
exists and is continuing or would exist by reason of any such
repurchase, and (c) make repurchases of its Stock and/or pay
cash dividends, provided that in the case of clause (c)
(i) Borrower's Tangible Net Worth shall exceed $75 million
after giving effect to any such repurchase or dividend,
(ii) any such repurchases and/or dividend payments shall not
in the aggregate exceed 50% of the cumulative Net Income for
the period commencing January 1, 1996 and ending on the last
day of the last full Fiscal Quarter ending immediately
preceding the date of such repurchase or dividend (as reduced
by the amount of any repurchases or cash dividends previously
paid pursuant to this Section 6.14), (iii) no Default or
Event of Default exists and is continuing or would exist by
reason of any such repurchase or dividend, and (iv) after
giving effect to any such repurchase or dividend Borrower
will be in compliance with Section 6.10 as if such repurchase
or dividend had occurred prior to the end of the last full
Fiscal Quarter ending immediately preceding the date of such
repurchase or dividend as evidenced by a certificate of a
Responsible Officer delivered to Agent not less than three
(3) Business Days prior to such transaction indicating that
the conditions contained in this Section 6.14(iv) shall have
been satisfied.
6.15. Operating Leases. Except as permitted under
Section 6.12 and Section 6.13, Borrower shall not (and shall
not permit any of its Subsidiaries to) (i) cancel (by
amendment, modification or otherwise) any lease of personal
property with aggregate annual base rent in excess of
$3,000,000 which is not a Capital Lease without the prior
written consent of Required Lenders, (ii) renew (by
amendment, modification or otherwise) any lease of personal
property with aggregate annual base rent in excess of
$3,000,000 which is not a Capital Lease without the prior
written consent of Required Lenders, other than renewals of
existing personal property leases which are not Capital
Leases upon substantially the same terms as are in effect on
the Closing Date, or (iii) enter into any lease of personal
63
property with aggregate annual base rent in excess of
$1,000,000 which is not a Capital Lease without the prior
written consent of Required Lenders.
6.16. Blocked Accounts. Borrower shall not permit
collections from Xxxxx Aviation, the Snorkel Division or the
Xxxxxx Division to be deposited in any account other than the
Blocked Accounts identified on Schedule 3.19 or any other
account with respect to which Borrower has delivered to Agent
an effective Blocked Account Agreement.
6.17. No Speculative Transactions. Borrower shall not
(and shall not permit any of its Subsidiaries to) engage in
any speculative transaction or any transaction involving
commodity options or futures contracts (other than in the
ordinary course of business consistent with past practice and
interest rate swap, cap or collar agreements relating to the
Revolving Credit Advances).
6.18. Margin Regulations. Borrower shall not use or
permit any proceeds of any Revolving Credit Advance or Letter
of Credit Obligation to be used to purchase or carry any
Margin Stock or any equity security of a class which is
registered pursuant to Section 12 of the Exchange Act.
6.19. Limitation on Negative Pledge Clauses. Except as
set forth on Schedule 6.19, Borrower shall not (and shall not
permit any of its Subsidiaries to), directly or indirectly,
enter into any agreement with any Person other than Agent or
Lenders pursuant to a Loan Document which prohibits or limits
the ability of Borrower or any of its Subsidiaries to create,
incur, assume or suffer to exist any Lien upon any Collateral
or on any other material property, assets or revenues,
whether now owned or hereafter acquired.
6.20. Accounting Changes; Fiscal Year. Borrower shall
not (and shall not permit any of its Subsidiaries to) make,
any significant change in accounting treatment and reporting
practices except for changes concurred in by Borrower's
independent public accountants. Borrower shall not (and
shall not permit any of its Subsidiaries to) change its
Fiscal Year.
7. TERM
7.1. Duration. The financing arrangement contemplated
hereby shall be in effect until the Commitment Termination
Date. On the Commitment Termination Date, the Maximum
Revolving Credit Commitment shall terminate and the Revolving
Credit Loan and all other Obligations shall immediately
become due and payable in full, in cash.
7.2. Survival of Obligations. Except as otherwise
expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way
affect or impair the Obligations, duties, indemnities, and
64
liabilities of any Loan Party, or the rights of Agent or any
Lender relating to any Obligations, due or not due, liquida-
xxx, contingent or unliquidated or any transaction or event
occurring prior to such termination, or any transaction or
event, the performance of which is not required until after
the Commitment Termination Date. Except as otherwise
expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and repre-
sentations of or binding upon any Loan Party, and all rights
of Agent and each Lender, all as contained in the Loan
Documents shall not terminate or expire, but rather shall
survive such termination or cancellation and shall continue
in full force and effect until such time as all of the
Obligations have been indefeasibly paid in full in accordance
with the terms of the agreements creating such Obligations.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1. Events of Default. The occurrence of any one or
more of the following events (regardless of the reason
therefor) shall constitute an "Event of Default" hereunder:
(a) Borrower shall fail to make any payment in
respect of any Obligations hereunder or under any of the
other Loan Documents when due and payable or declared due and
payable, including, without limitation, any payment of
principal of, or interest on, the Revolving Credit Loan.
(b) Borrower shall fail or neglect to perform,
keep or observe any of the provisions of Section 1.7, Section
4.1 or Section 6, including, without limitation, any of the
provisions set forth on Annex B or Annex D.
(c) Any Loan Party shall fail or neglect to
perform, keep or observe any term or provision of this
Agreement (other than any such term or provision referred to
in paragraph (a) or (b) above) or of any of the other Loan
Documents to which such Loan Party is a party, and the same
shall remain unremedied for a period ending on the first to
occur of ten (10) days after Borrower shall receive written
notice of any such failure from Agent or any Lender or thirty
(30) days after Borrower shall become aware thereof.
(d) A default shall occur under any other
agreement, document or instrument to which Borrower or any
Material Subsidiary is a party or by which any such Person or
its property is bound, and such default (i) involves the
failure to make any payment (whether of principal, interest
or otherwise) due beyond any applicable grace period (whether
by scheduled maturity, required prepayment, acceleration,
demand or otherwise) in respect of any Indebtedness of such
Person in an aggregate amount exceeding $5,000,000 or
(ii) causes (or permits any holder of such Indebtedness or a
trustee to cause) such Indebtedness, or a portion thereof in
an aggregate amount exceeding $5,000,000, to become due prior
to its stated maturity or prior to its regularly scheduled
dates of payment.
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(e) Any representation or warranty herein or in
any Loan Document or in any written statement pursuant
thereto or hereto, any report, financial statement or
certificate made or delivered to Agent or any Lender by any
Loan Party shall be untrue or incorrect as of the date when
made or deemed made (including those made or deemed made
pursuant to Section 2.2).
(f) Any of the assets of Borrower, any Significant
Subsidiary or any Material Subsidiary shall be attached,
seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors
of Borrower, such Significant Subsidiary or such Material
Subsidiary and shall remain unstayed or undismissed for sixty
(60) consecutive days; or any Person other than Borrower, any
Significant Subsidiary or any Material Subsidiary, as the
case may be, shall apply for the appointment of a receiver,
trustee or custodian for Borrower's, such Significant
Subsidiary's or such Material Subsidiary's assets and shall
remain unstayed or undismissed for sixty (60) consecutive
days; or Borrower, any Significant Subsidiary or any Material
Subsidiary shall have concealed, removed or permitted to be
concealed or removed, any part of its property, with intent
to hinder, delay or defraud its creditors or any of them or
made or suffered a transfer of any of its property or the
incurring of an obligation which may be fraudulent under any
bankruptcy, fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced
against Borrower, any Significant Subsidiary or any Material
Subsidiary in a court having competent jurisdiction seeking a
decree or order (i) under Title 11 of the United States Code,
as now constituted or hereafter amended, or any other
applicable federal, state or foreign bankruptcy or other
similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar
official) of Borrower, such Significant Subsidiary or such
Material Subsidiary or of any substantial part of its
properties, or (iii) ordering the winding up or liquidation
of the affairs of Borrower, such Significant Subsidiary or
such Material Subsidiary and such case or proceeding shall
remain undismissed or unstayed for sixty (60) consecutive
days or such court shall enter a decree or order granting the
relief sought in such case or proceeding.
(h) Borrower, any Significant Subsidiary or any
Material Subsidiary shall (i) file a petition seeking relief
under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other applicable federal, state
or foreign bankruptcy or other similar law, (ii) consent to
the institution of proceedings thereunder or to the filing of
any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of Borrower,
such Significant Subsidiary or such Material Subsidiary or of
any substantial part of Borrower's, such Significant
Subsidiary's or such Material Subsidiary's properties,
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(iii) fail generally to pay its debts as such debts become
due, or (iv) take any corporate action in furtherance of any
such action.
(i) Final judgment or judgments (after the
expiration of all times to appeal therefrom) for the payment
of money in excess of $2,500,000 in the aggregate (and as to
which an insurer satisfactory to Required Lenders has not
acknowledged liability in writing) shall be rendered against
any Loan Party, unless the same shall be vacated, stayed,
bonded, paid or discharged within a period of thirty (30)
days from the date of such judgment.
(j) There shall occur any Material Adverse Effect
since the date hereof which shall not have been cured (or
waived by Required Lenders) within ten days of notice thereof
from Agent to Borrower.
(k) Any provision of any Loan Document shall for
any reason cease to be valid, binding and enforceable in
accordance with its terms against any Loan Party or any such
party shall so state in writing; or any Lien created under
any Collateral Document shall cease to be a valid and
perfected Lien having the first priority in any of the
Collateral purported to be covered thereby.
(l) There shall occur a Change of Control.
(m) There shall occur any "Event of Default" under
and as defined in the Senior Note Indenture or the
Subordinated Indenture.
(n) An event or condition specified in Section 6.9
hereof shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result of such event or
condition, together with all other such events or conditions
not shown on Schedule 3.13, Borrower, any Subsidiary thereof
or any ERISA Affiliate shall incur or in the opinion of
Required Lenders shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan, PBGC or any Person
(or any combination of the foregoing) which equals or exceeds
$1,000,000 in the aggregate.
8.2. Remedies. If any Default shall have occurred and
be continuing, the rate of interest applicable to the
Revolving Credit Loan and the fees payable in connection with
the Letter of Credit Obligations may, at Required Lenders'
sole discretion, be increased, effective upon notice of such
increase to Borrower from Agent on behalf of Required
Lenders, to the Default Rate as provided in Section 1.4(c)
or, in the case of Letter of Credit Obligations, increased by
2% per annum. If any Event of Default shall have occurred
and be continuing Agent may, or shall with the consent of
Required Lenders, without notice, take any one or more of the
following actions: (a) terminate the Maximum Revolving
Credit Commitment whereupon Lenders' obligation to make
further Revolving Credit Advances and Agent's or the Issuing
Bank's, as the case may be, obligation to incur Letter of
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Credit Obligations shall terminate; or (b) declare all or any
portion of the Obligations to be forthwith due and payable,
including any contingent liabilities with respect to Letter
of Credit Obligations, whereupon such Obligations shall
become and be due and payable; (c) require that all Letter of
Credit Obligations be fully cash collateralized in accordance
with the terms of Annex F; or (d) exercise any rights and
remedies provided to Agent or Lenders under the Loan
Documents and/or at law or equity, including all remedies
provided under the Code; provided, however, that upon the
occurrence of an Event of Default specified in Section
8.1(f), (g) or (h), the rate of interest applicable to all
Obligations shall be increased automatically to the Default
Rate as provided in Section 1.4(c) and the fees payable in
connection with the Letter of Credit Obligations shall be
increased by 2% per annum, and the Maximum Revolving Credit
Commitment shall immediately terminate and the Obligations
shall become immediately due and payable, in each case,
without declaration, notice or demand by any Person.
8.3. Waivers by Borrower. Except as otherwise provided
for in this Agreement and applicable law to the full extent
permitted by applicable law, Borrower waives (i) presentment,
demand and protest and notice of presentment, dishonor,
notice of intent to accelerate, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or
renewal of any or all Loan Documents, notes, commercial
paper, accounts, contract rights, documents, instruments,
chattel paper and guaranties at any time held by Agent or any
Lender on which Borrower may in any way be liable, and
Borrower hereby ratifies and confirms whatever Agent or any
Lender may do in this regard, (ii) all rights to notice and a
hearing prior to Agent's or Lenders' taking possession or
control of, or to Agent's or Lenders' replevy, attachment or
levy upon, the Collateral or any bond or security which might
be required by any court prior to allowing Agent or Lenders
to exercise any of their remedies, and (iii) the benefit of
any right of redemption and all valuation, appraisal and
exemption laws. Borrower acknowledges that it has been
advised by counsel of its choice with respect to this
Agreement, the other Loan Documents and the transactions
contemplated by this Agreement and the other Loan Documents.
9. AGENT
9.1. Appointment, Powers and Immunities. Each Lender
hereby irrevocably appoints and authorizes GE Capital to act
as its agent hereunder and under the other Loan Documents
with such powers as are specifically delegated to Agent by
the terms of this Agreement and of the other Loan Documents,
together with such other powers as are reasonably incidental
thereto. Agent (which term as used in this sentence and in
Section 9.5 and the first sentence of Section 9.6 hereof
shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and in the other Loan
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Documents, and shall not by reason of this Agreement or any
other Loan Document be a trustee or fiduciary for any Lender;
(b) shall not be responsible to Lenders for any recitals,
statements, representations or warranties contained in this
Agreement or in any other Loan Document, or in any
certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or any other
Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement
or any other Loan Document or any other document referred to
or provided for herein or therein or for any failure by any
Loan Party or any other Person to perform any of its
obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection
proceedings hereunder or under any other Loan Document;
(d) shall not be responsible to Lenders for any action taken
or omitted to be taken by it hereunder or under any other
Loan Document or under any other document or instrument
referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross
negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction. Agent may
employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such
agents or attorneys-in-fact selected by it in good faith.
Agent may deem and treat the payee of any Revolving Credit
Note as the holder thereof for all purposes hereof unless and
until a notice of the assignment or transfer thereof shall
have been filed with Agent.
9.2. Reliance by Agent. Agent shall be entitled to rely
upon any certification, notice or other communication
(including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it to be
genuine and correct and to have been signed or sent by or on
behalf of the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and
other experts selected by Agent. As to any matters not
expressly provided for by this Agreement or any other Loan
Document, Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or thereunder
in accordance with instructions given by Required Lenders or
all Lenders as is required in such circumstance, and such
instructions of such Lenders and any action taken or failure
to act pursuant thereto shall be binding on all Lenders.
9.3. Defaults. Agent shall not be deemed to have know-
ledge or notice of the occurrence of a Default (other than
the non-payment of principal of or interest on Revolving
Credit Advances or of Fees) unless Agent has received notice
from a Lender or Borrower specifying such Default and stating
that such notice is a "Notice of Default". In the event that
Agent receives such a notice of the occurrence of a Default,
Agent shall give prompt notice thereof to Lenders (and shall
give each Lender prompt notice of each such non-payment).
Agent shall (subject to Section 9.7) take such action with
respect to such Default as shall be directed by Required
Lenders; provided, however, that, unless and until Agent
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shall have received such directions, Agent may (but shall not
be obligated to) take such action, or refrain from taking
such action, with respect to such Default as it shall deem
advisable in the best interest of Lenders except to the
extent that this Agreement expressly requires that such
action be taken, or not be taken, only with the consent or
upon the authorization of Required Lenders or all Lenders as
is required in such circumstance.
9.4. Rights as a Lender. With respect to its Revolving
Credit Commitment and the Revolving Credit Advances made by
it, GE Capital (and any successor acting as Agent) in the
event it shall become a Lender hereunder shall have the same
rights and powers hereunder as any other Lender and may
exercise the same as though it were not acting as Agent, and
the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include Agent in its individual
capacity. GE Capital (and any successor acting as Agent) and
its affiliates may (without having to account therefor to any
Lender) lend money to, make investments in and generally
engage in any kind of business with the Loan Parties (and any
of their Subsidiaries or Affiliates) as if it were not acting
as Agent, and GE Capital and its affiliates may accept fees
and other consideration from the Loan Parties for services in
connection with this Agreement or otherwise without having to
account for the same to Lenders.
9.5. Indemnification. Lenders agree to indemnify Agent
(to the extent not reimbursed by Borrower hereunder and
without limiting the obligations of Borrower hereunder)
ratably in accordance with the aggregate principal amount of
the Revolving Credit Advances held by Lenders (or, if no
Revolving Credit Advances are at the time outstanding,
ratably in accordance with their respective Revolving Credit
Commitments), for any and all Claims of any kind and nature
whatsoever that may be imposed on, incurred by or asserted
against Agent (including by any Lender) arising out of or by
reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Loan Document or
any other documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses that
Borrower is obligated to pay hereunder) or the enforcement of
any of the terms hereof or thereof or of any such other
documents; provided, however, that no Lender shall be liable
for any of the foregoing to the extent they arise solely from
the gross negligence or willful misconduct of the party to be
indemnified as determined by a final non-appealable judgment
of a court of competent jurisdiction.
9.6. Non-Reliance on Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance
on Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of Borrower and its Subsidiaries and decision to
enter into this Agreement and that it will, independently and
without reliance upon Agent or any other Lender, and based on
such documents and information as it shall deem appropriate
70
at the time, continue to make its own analysis and decisions
in taking or not taking action under this Agreement or any of
the other Loan Documents. Agent shall not be required to
keep itself informed as to the performance or observance by
any Loan Party of this Agreement or any of the other Loan
Documents or any other document referred to or provided for
herein or therein or to inspect the properties or books of
Borrower or any of its Subsidiaries. Agent will use
reasonable efforts to provide Lenders with any information
received by Agent from Borrower which is required to be
provided to Lenders hereunder, with any notice of a Default
received by Agent from Borrower and with any notice of a
Default delivered by Agent to Borrower; provided, however,
that Agent shall not be liable to any Lender for any failure
to do so, except to the extent that such failure is
attributable solely to Agent's gross negligence or willful
misconduct as determined by a final non-appealable judgment
of a court of competent jurisdiction. Agent shall not have
any duty or responsibility to provide any Lender with any
other credit or other information concerning the affairs,
financial condition or business of Borrower or any of its
Subsidiaries (or any of their affiliates) that may come into
the possession of Agent or any of its affiliates nor to
update or correct any information previously given which
becomes incorrect or which Agent learns is incorrect.
9.7. Failure to Act. Except for action expressly
required of Agent hereunder and under the other Loan Docu-
ments, Agent shall in all cases be fully justified in failing
or refusing to act hereunder and thereunder unless it shall
receive further assurances to its satisfaction from Lenders
of their indemnification obligations under Section 9.5
against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any
such action.
9.8. Resignation of Agent. Subject to the appointment
and acceptance of a successor Agent as provided below, Agent
may resign at any time by giving notice thereof to Lenders
and Borrower. Upon any such resignation Required Lenders
shall have the right to appoint a successor Agent, which (as
long as no Event of Default has occurred and is continuing)
shall be subject to the prior approval of Borrower (which
approval shall not be unreasonably denied or delayed). If no
successor Agent shall have been so appointed by Required
Lenders and shall have accepted such appointment within 30
days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of
Lenders, appoint a successor Agent, that shall be a financial
institution with a combined capital and surplus or net worth
of at least $200,000,000, which (as long as no Event of
Default has occurred and is continuing) shall be subject to
the prior approval of Borrower (which approval shall not be
unreasonably denied or delayed). Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged
71
from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the
provisions of this Section 9 shall continue in effect for its
benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Agent.
9.9. Consents under Loan Documents. Except as otherwise
provided in Section 11.1 with respect to this Agreement,
Agent may, with the prior consent of Required Lenders (but
not otherwise), consent to any modification, supplement or
waiver under any of the Loan Documents; provided, however,
that, without the prior consent of each Lender, Agent shall
not (except as provided herein or in the Collateral
Documents) release any Collateral or otherwise terminate any
Lien under any Collateral Document, or agree to additional
obligations being secured by such Collateral, except that no
such consent shall be required, and Agent is hereby
authorized, to release any Lien covering Collateral (i) which
is the subject of a disposition permitted hereunder,
(ii) which secures Indebtedness to the extent permitted under
Section 6.3, (iii) to which Required Lenders have consented
(except as otherwise provided in Section 11.1) or (iv) the
value of which does not exceed $5,000,000 in any Fiscal Year.
9.10. Collateral Matters.
(a) Except as otherwise expressly provided for in
this Agreement, Agent shall have no obligation whatsoever to
any Lender or any other Person to investigate, confirm or
assure that the Collateral exists or is owned by any Loan
Party or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet
the eligibility criteria applicable in respect of the
Borrowing Base, or whether any particular reserves are
appropriate, or that the Liens granted to Agent herein or
pursuant hereto have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or
in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent
in this Agreement or in any of the other Loan Documents, it
being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its
sole discretion, given Agent's own interest in the Collateral
as a Lender and that Agent shall have no duty or liability
whatsoever to any other Lender, other than liability for its
own gross negligence or willful misconduct as determined by a
final judgment of a court of competent jurisdiction.
(b) Each Lender hereby appoints each other Lender
as agent for the purpose of perfecting Lenders' security
interest in assets which, in accordance with Article 9 of the
Code can be perfected only by possession. Should any Lender
(other than Agent) obtain possession of any such Collateral,
such Lender shall notify Agent thereof and, promptly upon
Agent's request therefor, shall deliver such Collateral to
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Agent or in accordance with Agent's instructions.
10. SUCCESSORS AND ASSIGNS
10.1. Successors and Assigns. This Agreement and the
other Loan Documents shall be binding on and shall inure to
the benefit of Borrower, Agent, Lenders, and their respective
successors and assigns, including a debtor in possession
acting on behalf of any such Person, except as otherwise
provided herein or therein. Borrower may not assign,
delegate, transfer, hypothecate or otherwise convey its
rights, benefits, obligations or duties hereunder or under
any of the Loan Documents without the prior express written
consent of Agent and all Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by
Borrower without such prior express written consent shall be
void. The terms and provisions of this Agreement and the
other Loan Documents are for the purpose of defining the
relative rights and obligations of Borrower, Agent and
Lenders with respect to the transactions contemplated hereby
and there shall be no third party beneficiaries of any of the
terms and provisions of this Agreement or any of the other
Loan Documents.
10.2. Assignments and Participations.
(a) Each Lender may assign and grant
participations in all or a portion of its rights and
obligations under this Agreement (including, without
limitation, all or a part of its Revolving Credit Advances,
its Revolving Credit Commitment and its Revolving Credit
Note) to an Affiliate or to any other Person; provided,
however, that any such disposition (other than a
participation pursuant to Section 10.2(c), or a disposition
of any type to another Lender or an Affiliate of a Lender)
shall be subject to the consent of Agent and, if no Event of
Default shall have occurred and be continuing, the consent of
Borrower, which consent of Borrower shall not be unreasonably
withheld, denied or delayed.
(b) In the case of an assignment by a Lender under
this Section 10.2, the assignee shall have, to the extent of
such assignment, the same rights, benefits and obligations as
it would if it were a Lender hereunder; provided, however,
that (i) any such partial assignment shall be at least
(x) $7,500,000 in the case of the initial partial assignment
in the event such assignee is not a Lender and (y) in
multiples of $1,000,000 in the event such assignee is a
Lender; and (ii) each such assignment shall be of a constant,
and not a varying, percentage of the assigning Lender's
rights and obligations under this Agreement and the
assignment shall cover the same percentage of the assigning
Lender's Revolving Credit Advances, Revolving Credit
Commitment and Letter of Credit Obligations; and, provided,
further, that no Lender shall hold a Revolving Credit
Commitment of less than $7,500,000 after giving effect to any
such assignment. Upon execution by the assignor and the
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assignee of an instrument pursuant to which the assignee
assumes such rights and obligations, payment by such assignee
to such assignor of an amount equal to the purchase price
agreed between such assignor and such assignee and delivery
to Agent and Borrower of an executed copy of such instrument
together with payment to Agent of a processing fee of $3,500,
such assignee shall have, to the extent of such assignment
(unless otherwise provided therein), the same rights and
benefits as it would have if it were a Lender hereunder and
the assignor shall be, to the extent of such assignment
(unless otherwise provided therein) released from its
obligations under this Agreement. Borrower hereby
acknowledges and agrees that any assignment will give rise to
a direct obligation of Borrower to the assignee and that the
assignee shall be considered to be a "Lender." In all
instances, each Lender's liability to make Revolving Credit
Advances shall be several and not joint and shall be limited
to such Lender's pro rata share thereof. Upon any such
assignment, Borrower, at its own expense, shall execute and
deliver to Agent in exchange for the surrendered Revolving
Credit Note of the assignor Lender a new Revolving Credit
Note to the order of the assignee Lender in an amount equal
to the Revolving Credit Commitment assumed by such assignee
Lender and if the assignor Lender has retained a Revolving
Credit Commitment hereunder a new Revolving Credit Note to
the order of the assignor Lender in an amount equal to such
retained Revolving Credit Commitment. Such new Revolving
Credit Notes shall be dated the Closing Date and shall other-
wise be in the form of the Revolving Credit Note replaced
thereby. The Revolving Credit Notes surrendered to Agent
shall be returned by Agent to Borrower marked "cancelled".
(c) Subject to Section 10.2(a), each Lender may
sell participations in all or any part of its Revolving
Credit Advances and its Revolving Credit Commitment; provided
that (a) all amounts payable by Borrower hereunder shall be
determined as if such Lender had not sold such participation
and the participating Lender shall remain a "Lender" for all
purposes under this Agreement, (b) any such grant of a
participation will be made in compliance with all applicable
state or federal laws, rules, and regulations, (c) any such
participation shall be divided pro rata among the
participating Lender's share of the Revolving Credit Loan and
the Letter of Credit Obligations, and (d) such Lender shall
not grant any participation under which the participant shall
have rights to approve any amendment to or waiver of this
Agreement or the Loan Documents, except to the extent such
amendment or waiver would (i) extend the maturity date for
payment of the Revolving Credit Loan in which such
participant is participating; (ii) reduce the interest rate
or the amount of principal or Fees applicable to the
Revolving Credit Loan in which such participant is
participating, other than as a result of waiving the
applicability of any post-default increase in interest rates
or Fees; or (iii) release all or substantially all of the
Collateral, except as expressly provided herein. In those
cases in which a Lender grants rights to its participants to
approve any amendment to or waiver of this Agreement or the
74
other Loan Documents respecting the matters described in the
foregoing clauses (i) through (iii), and any such participant
does not consent to any such amendment, such Lender shall
have the right to repurchase the participation of such
participant at a repurchase price equal to the face amount of
such participation. In the case of any participation, the
participant shall not have any rights under this Agreement or
any of the other Loan Documents entered into in connection
herewith (the participant's right against such Lender in
respect of such participation to be those set forth in the
participation or other agreement executed by such Lender and
the participant relating thereto) and all amounts payable to
any Lender hereunder shall be determined as if such Lender
had not sold such participation.
(d) Except as otherwise provided in this Section
10.2, no Lender shall, as between Borrower and that Lender,
be relieved of any of its obligations hereunder as a result
of any sale, assignment, transfer or negotiation of, or
granting of participation in, all or any part of Revolving
Credit Advances or other Obligations owed to such Lender.
Any Lender permitted to sell assignments and participations
under this Section 10.2 may furnish any information
concerning Borrower and its Subsidiaries in the possession of
that Lender from time to time to assignees and participants
(including prospective assignees and participants).
(e) Borrower shall assist any Lender permitted to
sell assignments or participations under this Section 10.2 in
whatever manner reasonably necessary in order to enable or
effect any such assignment or participation, including (but
not limited to) the execution and delivery of any and all
agreements, notes and other documents and instruments as
shall be requested and the preparation and delivery of
informational materials, appraisals or other documents for,
and the participation of relevant management in meetings
with, potential assignees or participants. Borrower shall
certify, to the extent it is reasonably able to, the
correctness, completeness and accuracy of all descriptions of
Borrower and its affairs contained in any selling materials
and all information provided by it and included in such materials.
11. MISCELLANEOUS
11.1. Complete Agreement; Modification of Agreement.
The Loan Documents, the Fee Letter and the Side Letter
constitute the complete agreement between the parties with
respect to the subject matter thereof and supersede all prior
agreements, commitments, understandings or inducements (oral
or written, expressed or implied). Neither this Agreement
nor any other Loan Document nor any terms hereof or thereof
may be changed, waived, discharged or terminated unless such
change, waiver, discharge or termination is in writing signed
by Required Lenders; provided, however, that no such change,
waiver, discharge or termination shall, without the consent
of each affected Lender and Agent, (i) extend the scheduled
final maturity of any Revolving Credit Advance, or any
75
portion thereof, or reduce the rate or extend the time of
payment of interest thereon or fees (other than as a result
of waiving the applicability of any post-default increase in
interest rates or Fees) or reduce the principal amount
thereof, or increase the advance rate percentages contained
in the term "Borrowing Base", or increase the Revolving
Credit Commitment of such Lender over the amount thereof then
in effect (it being understood that a waiver of any Default
shall not constitute a change in the terms of any Revolving
Credit Commitment of any Lender), (ii) release all or
substantially all of the Collateral (except as expressly
permitted by the Loan Documents), (iii) amend, modify or
waive any provision of this Section, or Section 1.9, 1.15,
9.5, 11.2 or 11.7, (iv) reduce any percentage specified in,
or otherwise modify, the definition of Required Lenders or
(v) consent to the assignment or transfer by Borrower of any
of its rights and obligations under this Agreement. No
provision of Section 9 may be amended without the prior
written consent of Agent.
11.2. Fees and Expenses.
(a) Borrower shall pay on demand all reasonable
costs and expenses (including, without limitation, reasonable
fees of counsel) of Agent in connection with the preparation,
negotiation, approval, execution, delivery, modification,
amendment, waiver and enforcement (whether through
negotiations, legal proceedings or otherwise) of the Loan
Documents, and commitments relating thereto, and the other
documents to be delivered hereunder or thereunder and the
transactions contemplated hereby and thereby and the
fulfillment or attempted fulfillment of conditions precedent
hereunder, including, without limitation: (i) wire transfer
fees and other costs of forwarding to Borrower or any other
Person on behalf of Borrower by Agent and each Lender of the
proceeds of Revolving Credit Advances, to the extent such
fees and costs are typical for such transactions; (ii) any
amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or advice in connection
with the administration of the advances made pursuant hereto
or its rights hereunder or thereunder; (iii) any litigation,
contest, dispute, suit, proceeding or action (whether
instituted by Agent, any Lender, Borrower or any other
Person) in any way relating to the Collateral, any of the
Loan Documents or any other agreements to be executed or
delivered in connection therewith or herewith, whether as
party, witness, or otherwise, including any litigation,
contest, dispute, suit, case, proceeding or action, and any
appeal or review thereof, in connection with a case commenced
by or against Borrower or any other Person that may be
obligated to Agent and Lenders by virtue of the Loan
Documents; (iv) any attempt to enforce any rights of Agent or
Lenders against Borrower or any other Person that may be
obligated to Agent or Lenders by virtue of any of the Loan
Documents; or (v) after the occurrence and during the
continuance of any Default, any effort to (A) evaluate,
observe, assess Borrower or its affairs, or (B) verify,
protect, evaluate, assess, appraise, collect, sell, liquidate
76
or otherwise dispose of the Collateral.
(b) Borrower shall pay on demand all reasonable
costs and expenses (including, without limitation, reasonable
fees of counsel) of (i) Agent in connection with any Default,
(ii) Agent and Lenders in connection with any enforcement or
collection proceedings resulting therefrom or (iii) Agent in
connection with any amendment, modification or waiver of, or
consent with respect to, any of the Loan Documents in
connection with any Default.
(c) Without limiting the generality of clauses
(a) and (b) above, Borrower's obligation to reimburse Agent
and/or any Lender for costs and expenses shall include the
reasonable fees and expenses of counsel (and local, foreign
or special counsel, advisors, consultants and auditors
retained by such counsel), accountants, environmental
advisors, appraisers, investment bankers, management and
other consultants and paralegals; court costs and expenses;
photocopying and duplicating expenses; court reporter fees,
costs and expenses; long distance telephone charges; air
express charges; telegram charges; secretarial overtime
charges; expenses for travel, lodging and food; and all other
out-of-pocket costs and expenses of every type and nature
paid or incurred in connection with the performance of such
legal or other advisory services.
(d) Agent shall be entitled to order and receive,
at Borrower's expense, (i) one appraisal of Borrower's
Equipment and machinery each calendar year and (ii) a new
appraisal with respect to any new Equipment or machinery
prior to the inclusion of such Equipment or machinery as
Eligible Equipment; provided, however, that if an Event of
Default shall have occurred and be continuing, Agent shall be
entitled to order and receive more frequent appraisals of
Borrower's Equipment and machinery at Borrower's expense.
11.3. No Waiver. No failure on the part of Agent or
Lenders, at any time or times, to require strict performance
by any Loan Party, of any provision of this Agreement and any
of the other Loan Documents shall waive, affect or diminish
any right of Agent or Lenders thereafter to demand strict
compliance and performance therewith. Any suspension or
waiver of a Default shall not suspend, waive or affect any
other Default whether the same is prior or subsequent thereto
and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and represen-
tations of any Loan Party contained in this Agreement or any
of the other Loan Documents and no Default by any Loan Party
shall be deemed to have been suspended or waived by Lenders,
unless such waiver or suspension is by an instrument in
writing signed by an officer of or other authorized employee
of Agent and Required Lenders or all Lenders if required
hereunder and directed to Borrower specifying such suspension
or waiver.
11.4. Remedies. The rights and remedies of Agent and
Lenders under this Agreement shall be cumulative and non-
77
exclusive of any other rights and remedies which Agent or any
Lender may have under any other agreement, including, without
limitation, the Loan Documents, by operation of law or
otherwise. Recourse to the Collateral shall not be required.
11.5. Severability. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
11.6. Conflict of Terms. Except as otherwise provided
in this Agreement or any of the other Loan Documents by
specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of
the other Loan Documents, the provisions contained in this
Agreement shall govern and control.
11.7. Right of Set-off. Subject to Section 1.1(f),
upon the occurrence and during the continuance of any Event
of Default, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for
the credit or the account of Borrower against any and all of
the Obligations now or hereafter existing irrespective of
whether or not such Lender shall have made any demand under
this Agreement or any other Loan Document and although such
Obligations may be unmatured. Each Lender agrees promptly to
notify Agent and Borrower after any such set-off and
application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender
under this Section are in addition to the other rights and
remedies (including, without limitation, other rights of set-
off) which such Lender may have.
11.8. Authorized Signature. Until Agent shall be
notified by Borrower to the contrary, the signature upon any
document or instrument delivered pursuant hereto and believed
by Agent or any of Agent's officers, agents, or employees to
be that of an officer or duly authorized representative of
Borrower listed on Schedule 11.8 shall bind Borrower and be
deemed to be the act of Borrower affixed pursuant to and in
accordance with resolutions duly adopted by Borrower's Board
of Directors, and Agent and each Lender shall be entitled to
assume the authority of each signature and authority of the
person whose signature it is or appears to be unless the
person acting in reliance of such signature shall have actual
knowledge of the fact that such signature is false or the
person whose signature or purported signature is presented is
without authority.
78
11.9. GOVERNING LAW. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN
ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORM ANCE, THIS AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA
WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF. BORROWER HEREBY CONSENTS AND AGREES THAT
THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK CITY
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES PERTAINING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, HOWEVER, THAT LENDER AND BORROWER
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
NEW YORK CITY; AND, PROVIDED, FURTHER, THAT NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE AGENT OR ANY LENDER FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION
TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF AGENT OR ANY LENDER. BORROWER
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND BORROWER HEREBY WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING
OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH
ON SCHEDULE 11.10 AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT
IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
11.10. Notices. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other
communication shall or may be given to or served upon any of
the parties by any other party, or whenever any of the
parties desires to give or serve upon any other party any
communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be deemed
to have been validly served, given or delivered (i) upon the
earlier of actual receipt and three (3) days after deposit in
the United States Mail, registered or certified mail, return
79
receipt requested, with proper postage prepaid, (ii) upon
transmission, when sent by telecopy or other similar
facsimile transmission (with such telecopy or facsimile
promptly confirmed by delivery of a copy by personal delivery
or United States Mail as otherwise provided in this Section
11.10, (iii) one (1) Business Day after deposit with a
reputable overnight courier with all charges prepaid or
(iv) when delivered, if hand-delivered by messenger, all of
which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated below or to such
other address (or facsimile number) as may be substituted by
notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party
entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to any Person
(other than Borrower, Agent or any Lender) designated below
to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
(a) If to Agent, as a Lender or as Agent, at:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Account Manager - Figgie
International Inc.
Telecopy No.: (000) 000-0000
With copies to:
GE Capital Commercial Finance, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Commercial Finance
- Legal Department
Telecopy No.: (000) 000-0000
and
Weil, Gotshal & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) If to another Lender, at its address set forth
under its signature below or in the instrument of assignment
delivered to Agent at the time it becomes a Lender.
(c) If to Borrower, at:
Figgie International Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Chief Financial Officer
Telecopy No.: (000) 000-0000
80
With copies to:
Figgie International Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
and
Xxxxxx, Halter & Xxxxxxxx
1400 XxXxxxxx Investment Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
11.11. Section Titles. The Section titles and Table of
Contents contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are
not a part of this Agreement.
11.12. Counterparts. This Agreement may be executed in
any number of separate counterparts, each of which shall,
collectively and separately, constitute one agreement.
11.13. Time of the Essence. Time is of the essence of
this Agreement and each of the other Loan Documents.
11.14. WAIVER OF JURY TRIAL. BECAUSE DISPUTES
ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND
THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO
APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE
THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO, THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
11.15. Press Releases; Publicity. Borrower shall not
and shall not permit any of its Affiliates to issue any press
release or other public disclosure using the name of GE
Capital or any of its Affiliates or referring to this
Agreement or any of the other Loan Documents without the
prior written consent of GE Capital unless Borrower or any of
its Affiliates is required to do so under applicable law and
then, in any event, Borrower or such Affiliate will consult
with GE Capital before issuing such press release or other
public disclosure. Agent or any Lender may publish a
tombstone or similar advertising material relating to the
financing transaction contemplated by this Agreement with the
81
prior written consent of Borrower, which consent shall not be
unreasonably withheld or delayed.
IN WITNESS WHEREOF, this Agreement has been duly
executed as of the date first written above.
FIGGIE INTERNATIONAL INC.
By________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as AGENT
By_________________________
Name:
Title:
Lenders:
Revolving Credit Commitment GENERAL ELECTRIC CAPITAL
$75,000,000 CORPORATION
By ________________________
Name:
Title:
82
ANNEX A
to
CREDIT AGREEMENT
Dated as of December 19, 1995
DEFINITIONS
In addition to the defined terms appearing below, capitalized
terms used in this Agreement shall have (unless otherwise
provided elsewhere in this Agreement) the following
respective meanings when used in this Agreement
"Account Debtor" shall mean any Person who may
become obligated to Borrower under, with respect to, or on
account of, an Account, Chattel Paper or General Intangibles.
"Accounts" shall mean all "accounts," as such term
is defined in the Code, now owned or hereafter acquired by
Borrower and, in any event, including, without limitation,
(a) all accounts receivable, other receivables, book debts
and other forms of obligations (other than forms of
obligations evidenced by chattel paper, documents or
instruments) now owned or hereafter received or acquired by
or belonging or owing to Borrower, whether arising out of
goods sold or services rendered by it or from any other
transaction (including, without limitation, any such
obligations which may be characterized as an account or
contract right under the Code), (b) all of Borrower's rights
in, to and under all purchase orders or receipts now owned or
hereafter acquired by it for goods or services, (c) all of
Borrower's rights to any goods represented by any of the
foregoing (including, without limitation, unpaid sellers'
rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed
goods), (d) all monies due or to become due to Borrower under
all purchase orders and contracts for the sale or lease of
goods or the performance of services or both by Borrower or
in connection with any other transaction (whether or not yet
earned by performance on the part of Borrower) now or
hereafter in existence, including, without limitation, the
right to receive the proceeds of said purchase orders and
contracts, and (e) all collateral security and guarantees of
any kind, now or hereafter in existence, given by any Person
with respect to any of the foregoing.
"Adjustment Certificate" shall have the meaning
assigned thereto in Section 1.4(a).
"Advance" shall mean a Revolving Credit Advance.
"Advance Date" shall have the meaning assigned to
it in Section 1.11.
"Affiliate" shall mean, with respect to any Person,
83
(i) each Person that, directly or indirectly, owns or
controls, whether beneficially, or as a trustee, guardian or
other fiduciary, five percent (5%) or more of the Stock
having ordinary voting power in the election of directors of
such Person, (ii) each Person that controls, is controlled by
or is under common control with such Person or any Affiliate
of such Person or (iii) each of such Person's officers,
directors, joint ventures and partners. For the purpose of
this definition, "control" of a Person shall mean the
possession, directly or indirectly, of the power to direct or
cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or
otherwise.
"Agent" has the meaning assigned to it in the first
paragraph of this Agreement.
"Aggregate Purchase Price" shall mean the amount of
consideration including, without limitation, cash, Cash
Equivalents, notes, Stock, other securities and the
assumption of liabilities (valued, if not in a quantifiable
amount, at the maximum amount reasonably ascertainable by
Borrower), paid by Borrower in connection with an acquisition
permitted under Section 6.1; provided, however, that any such
notes, Stock or other securities shall be valued at Fair
Market Value.
"Agreement" shall mean this Credit Agreement to
which this Annex A is attached and of which it forms a part
including all Annexes, Schedules, and Exhibits attached or
otherwise identified thereto, restatements and modifications
and supplements hereto and any appendices, attachments,
exhibits or schedules to any of the foregoing, and shall
refer to this Agreement as the same may be in effect at the
time such reference becomes operative; provided, however,
that any reference to the Schedules to this Agreement shall
be deemed a reference to the Schedules as in effect on the
Closing Date or in a written amendment thereto executed by
Borrower and Agent.
"Applicable Margin" shall mean (i) with respect to
Index Rate Advances, 0% per annum and (ii) with respect to
LIBO Rate Advances, 2.5% per annum, as such Applicable Margin
for LIBO Rate Advances may be adjusted pursuant to Section
1.4.
"Blocked Accounts" shall have the meaning assigned
thereto in Annex B.
"Blocked Account Agreements" shall have the meaning
assigned to it in Annex B.
"Borrower" shall mean Figgie International Inc., a
Delaware corporation.
"Borrower Pledge Agreement" shall mean the Pledge
Agreement, substantially in the form of Exhibit E, made by
Borrower in favor of Agent, as from time to time amended,
84
supplemented or modified.
"Borrower Security Agreement" shall mean the
Security Agreement, substantially in the form of Exhibit D,
between Agent and Borrower, as from time to time amended,
supplemented or modified.
"Borrowing Availability" shall mean, at any time,
(a) with respect to the Revolving Credit Loan, the lesser of
(i) the Maximum Revolving Credit Commitment less the
outstanding Letter of Credit Obligations and (ii) the
Borrowing Base, and (b) with respect to Letter of Credit
Obligations, an amount not to exceed the lesser of
(i) $60,000,000, as such amount may be reduced pursuant to
Section 1.2(d), and (ii) the Maximum Revolving Credit
Commitment less the outstanding Revolving Credit Loan,
provided that the Borrowing Base less the outstanding
Revolving Credit Loan shall not be a negative number.
"Borrowing Base" shall mean, at any time, an amount
determined by Agent to be equal to the sum at such time of:
(a) up to eighty-five percent (85%) of Eligible
Accounts;
(b) up to sixty percent (60%) of Eligible
Inventory valued on a first-in, first-out basis (at the lower
of cost or market); and
(c) up to seventy percent (70%) of Eligible
Equipment; provided, however, that the amount contributed
pursuant to this clause (c) shall not exceed $20,000,000;
less (i) the Letter of Credit Reserve and (ii) any other
reserves as Agent may determine from time to time.
"Borrowing Base Certificate" shall mean a certifi-
cate in the form attached hereto as Exhibit B-1.
"Business Day" shall mean any day that is not a
Saturday, a Sunday or a day on which banks are required or
permitted to be closed in New York City and, if the
applicable Business Day relates to a LIBO Rate Advance, a day
on which dealings are also carried on in the London interbank
market.
"CAFIG Mortgage" shall mean the Trust Indenture and
Security Agreement, dated as of September 15, 1989, made by
CAFIG Inc. in favor of U.S. Trust Company of California,
N.A., as in effect on the date hereof.
"Capital Expenditures" shall mean all payments or
accruals for any fixed assets or improvements or for
replacements, substitutions or additions thereto and that are
required to be capitalized under GAAP; provided, however,
that "Capital Expenditures" shall not mean or include
payments or accruals for purchases of assets leased under the
GE Capital Equipment Lease Agreements listed in Schedule 6.12
85
to the extent (i) purchased for resale or (ii) constituting
miscellaneous tooling and fixtures purchased in an aggregate
amount up to $1,000,000.
"Capital Lease" shall mean, with respect to any
Person, any lease of any property (whether real, personal or
mixed) by such Person as lessee that, in accordance with
GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or
otherwise be disclosed as such in a note to such balance
sheet, other than, in the case of Borrower, any such lease
under which Borrower is the lessor.
"Capital Lease Obligation" shall mean, with respect
to any Capital Lease, the amount of the obligation of the
lessee thereunder that, in accordance with GAAP, would appear
on a balance sheet of such lessee in respect of such Capital
Lease or otherwise be disclosed in a note to such balance
sheet.
"Cash Collateral Account" shall have the meaning
assigned thereto in Annex F.
"Cash Equivalents" shall mean, (i) securities with
maturities of one year or less from the date of acquisition
issued or fully guaranteed or insured by the United States
government or any agency thereof and backed by the full faith
and credit of the United States, (ii) certificates of
deposit, eurodollar time deposits, overnight bank deposits
and bankers' acceptances of any domestic commercial bank
having capital and surplus in excess of $500,000,000 having
maturities of 90 days or less from the date of acquisition,
and (iii) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Corporation or P-1 by Xxxxx'x Investors
Services, Inc., or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named
rating agencies cease publishing ratings of investments.
"Change of Control" shall mean: (i)(x) any Person
or any Persons acting together that would constitute a
"group" (for purposes of Section 13(d) of the Exchange Act,
or any successor provision thereto) (a "Group"), together
with any Affiliates thereof, shall beneficially own (as
defined in Rule 13d-3 under the Exchange Act, or any
successor provision thereto) 50% or more of the Voting Stock
of Borrower; or (y) during any period of two consecutive
years, individuals who at the beginning of such period
constitute Borrower's Board of Directors (together with any
new Director whose election by Borrower's Board of Directors
or whose nomination for election by Borrower's stockholders
was approved by a vote of at least two-thirds of the
Directors then still in office who either were Directors at
the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason
to constitute at least two-thirds of the Directors then in
office; or (ii) the beneficial ownership (as defined in Rule
13d-3 under the Exchange Act, or any successor provision
thereto) by Xxxxxx Xxxxxx or any Group which includes Xxxxxx
86
Figgie at any time of more than 30% of the Voting Stock of
Borrower.
"Charges" shall mean all federal, state, county,
city, municipal, local, foreign or other governmental taxes
(including, without limitation, taxes owed to PBGC at the
time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the
Collateral, (ii) the Obligations, (iii) the employees,
payroll, income or gross receipts of any Loan Party, (iv) any
Loan Party's ownership or use of any of its assets, or
(v) any other aspect of any Loan Party's business.
"Chattel Paper" shall mean any "chattel paper," as
such term is defined in the Code, now owned or hereafter
acquired by Borrower, wherever located.
"CIT" shall mean The CIT Group/Commercial Services,
Inc.
"CIT Facility" shall mean the Revolving Credit
Agreement, dated as of July 8, 1995, between CIT and
Borrower, as amended.
"Claim" shall have the meaning assigned to it in
Section 1.15.
"Closing Date" shall mean the Business Day on which
the conditions precedent set forth in Section 2 have been
satisfied or waived and either the initial Revolving Credit
Advance has been made or the initial Letter of Credit
Obligation has been incurred.
"Code" shall mean the Uniform Commercial Code as
the same may, from time to time, be in effect in the State of
New York; provided, however, in the event that, by reason of
mandatory provisions of law, any or all of the attachment,
perfection or priority of Agent's security interest in any
Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York,
the term "Code" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provi-
sions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such
provisions.
"Collateral" shall mean the property covered by the
Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a
security interest or Lien in favor of Agent or Lenders to
secure the Obligations.
"Collateral Documents" shall mean the Borrower
Security Agreement, the Blocked Account Agreements, the
Borrower Pledge Agreement and, if and when entered into after
the date hereof, the Subsidiary Guaranties, the Subsidiary
Security Agreements and the Mortgages.
87
"Collection Account" shall mean that certain
account of Agent, account number 00-000-000 in the name of
GECC/CAF Depository at Bankers Trust Company, 00 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, XXX number 000-000-000.
"Commitment Termination Date" shall mean the
earliest of (i) January 1, 1999, (ii) the date of termination
of the Maximum Revolving Credit Commitment pursuant to
Section 8.2, and (iii) the date of termination of the Maximum
Revolving Credit Commitment in accordance with the provisions
of Section 1.2(d).
"Contracts" shall mean all the contracts, under-
takings, or agreements (other than rights evidenced by
Chattel Paper, Documents or Instruments) in or under which
Borrower may now or hereafter have any right, title or
interest, including, any agreement relating to the terms of
payment or the terms of performance of any Account.
"Copyrights" shall mean any U.S. copyright to which
Borrower now or hereafter has title, as well as any applica-
tion for a U.S. copyright hereafter made by Borrower.
"CP Rate" shall mean, for any day, the published
rate for 90-day dealer placed commercial paper (sold through
dealers by major corporations) which normally is published in
the "Money Rates" section of The Wall Street Journal for such
day or, in the event such report shall not so appear, in such
other nationally recognized publication as Agent may, from
time to time, specify to Borrower. Each change in any
interest rate provided herein based upon the CP Rate shall
take effect at the opening of business of the first day of
the calendar month immediately succeeding such published
change in the CP Rate.
"Current Assets" shall mean, with respect to
Borrower at any date, all assets of Borrower which are or
should be classified as current on a consolidated balance
sheet of Borrower and its Subsidiaries as of such date
prepared in accordance with GAAP.
"Current Liabilities" shall mean, with respect to
Borrower at any date, all liabilities (including book
overdrafts) of Borrower which are or should be classified as
current on a consolidated balance sheet of Borrower and its
Subsidiaries as of such date prepared in accordance with
GAAP, but excluding the Revolving Credit Advances.
"Default" shall mean any Event of Default or any
event which, with the passage of time or notice or both,
would, unless cured or waived, become an Event of Default.
"Default Rate" shall mean a rate per annum equal to
2% plus the Index Rate or the LIBO Rate (whichever is then
applicable) as in effect from time to time plus the
Applicable Margin.
"Deferred Divestiture Proceeds" shall have the
88
meaning assigned thereto in Section 6.2(v).
"Deferred Taxes" shall mean, with respect to any
Person at any date, the amount of deferred taxes of such
Person as shown on the balance sheet of such Person prepared
in accordance with GAAP of such date.
"Disbursement Account" shall have the meaning
assigned to it on Annex B.
"Documents" shall mean any "documents," as such
term is defined in the Code, now owned or hereafter acquired
by Borrower, wherever located, and in any event any bills of
lading, dock warrants, dock receipts, warehouse receipts, or
other documents of title.
"Dollars" and "$" shall mean lawful money of the
United States of America.
"DOL" shall mean the United States Department of
Labor or any successor thereto.
"Domestic Subsidiary" shall mean any Subsidiary of
Borrower which is not a Foreign Subsidiary.
"Domestic Subsidiary Basket" shall have the meaning
assigned thereto in Section 6.4.
"EBITDA" shall mean, for any period, Net Income,
plus Interest Expense, tax expense, amortization expense,
depreciation expense and extraordinary losses and other non-
cash items and minus extraordinary gains, in each case
determined in accordance with GAAP and to the extent included
in the determination of Net Income; provided, however, that
any gains or losses on any assets of Borrower held for sale
and listed on Schedule 6.8 shall be treated as extraordinary
gains or losses.
"Eligible Accounts" shall mean such Accounts of
Borrower which are not ineligible as the basis for Revolving
Credit Advances based on the criteria set forth below. In
determining whether an Account constitutes an Eligible
Account, Agent does not intend to include any Account:
(a) which does not arise from the sale of goods or
services by Borrower in the ordinary course of Borrower's
business;
(b) upon which (i) Borrower's right to receive
payment is not absolute or is contingent upon the fulfillment
of any condition whatever or (ii) Borrower is not able to
bring suit or otherwise enforce its remedies against the
Account Debtor through judicial process;
(c) against which, or against any contract or
agreement pursuant to which such account arises, is asserted
or may be asserted any defense, counterclaim or set-off,
whether well-founded or otherwise, but only to the extent of
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the amount of such defense, counterclaim or set-off;
(d) that is not a true and correct statement of a
bona fide indebtedness incurred in the amount of the Account
for merchandise sold or services rendered and accepted by the
Account Debtor obligated upon such Account;
(e) with respect to which an invoice, acceptable
to Agent in form and substance to ensure compliance with the
terms of the Loan Documents, has not been sent to Account
Debtor;
(f) that is not owned by Borrower or is subject to
any right, claim, or interest of another other than the Lien
in favor of Agent and Lenders;
(g) that arises from a sale to or performance of
services for an employee, Affiliate, parent or Subsidiary of
Borrower, or an entity which has common officers or directors
with Borrower;
(h) that is the obligation of an Account Debtor
that is the federal government or a political subdivision
thereof unless Borrower has complied with the Federal Assign-
ment of Claims Acts of 1940, and any amendments thereto, with
respect to such obligation; provided, however, that Agent may
in its discretion permit any such Accounts of the federal
government or a political subdivision thereof to be included
as Eligible Accounts;
(i) that is the obligation of an Account Debtor
located in a foreign country (other than Canada) unless the
sale of goods giving rise to the Account is on a letter of
credit or other credit support satisfactory to Agent and
Agent's security interest in or assignment of such Account
and letter of credit or other credit support is duly and
properly created and/or perfected to Agent's satisfaction; or
the sale represented by such Account is denominated in other
than Dollars or is payable outside the United States;
(j) that is the obligation of an Account Debtor to
whom Borrower is or may become liable for goods sold or
services rendered by the Account Debtor to Borrower but only
to the extent of the amount of such liability;
(k) that arises with respect to goods which are
delivered on a cash-on-delivery basis or placed on consign-
ment, guaranteed sale or other terms by reason of which the
payment by the Account Debtor may be conditional;
(l) that is in default; provided, however, that an
Account shall be deemed in default upon the occurrence of any
of the following:
(i) the Account is not paid within ninety (90)
days of invoice thereof;
(ii) the sale represented by such Account is
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subject to any material claim or dispute by the Person
to whom or to which it was made, but only to the extent
of the amount of such claim or dispute;
(iii) if any Account Debtor obligated upon such
Account suspends business, becomes insolvent, makes a
general assignment for the benefit of creditors, or
fails to pay its debts generally as they come due; or
(iv) if any petition is filed by or against any
Account Debtor obligated upon such Account under any
bankruptcy law or any other national, state or
provincial receivership, insolvency relief or other law
or laws for the relief of debtors;
(m) which is the obligation of an Account Debtor
as to which fifty percent (50%) or more of the Dollar value
of the Accounts of such Account Debtor have become, or have
been determined by Agent to be ineligible;
(n) the sale represented by such Account is on
terms longer than ninety (90) days from the date of invoice;
(o) which arises from any xxxx-and-hold or other
sale of goods which remain in Borrower's possession or under
Borrower's control;
(p) as to which the interest of Agent and Lenders
therein is not a first priority perfected security interest;
(q) that fails to meet or violates any of
Borrower's representations, warranties or covenants contained
in this Agreement or any other Loan Document;
(r) with respect to which the Account Debtor is
located in (i) Alabama or New Jersey, unless Borrower has
qualified to do business in such state or filed and
maintained effective a Notice of Business Activities Report
(or similar report) with the appropriate office or agency in
such state for the then current year or (ii) any other state
which requires the filing of a similar notice or report,
unless Borrower has qualified to do business in such state or
filed and maintained effective such notice or report with the
appropriate office or agency in such state for the then
current year;
(s) if the Accounts of the related Account Debtor
exceed 10% of the aggregate amount of all Accounts, but only
Accounts of such Account Debtor in excess of such ten percent
(10%) amount; or
(t) that is not otherwise acceptable in the
reasonable judgment of Agent, based upon such credit and
collateral considerations as Agent may deem appropriate from
time to time.
"Eligible Equipment" shall mean the orderly
liquidation value (as determined from time to time, but no
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more frequently than one time per calendar year so long as no
Event of Default shall have occurred and be continuing,
pursuant to an appraisal acceptable to Agent) of Borrower's
machinery and Equipment listed on Schedule 11.9; provided,
however, that such schedule shall be updated from time to
time by Borrower at Agent's request, subject to compliance
with Section 11.2. In determining whether Equipment
constitutes Eligible Equipment, Agent does not intend to
include Equipment which:
(a) is not owned by Borrower free and clear of all
Liens and rights of others, except the Liens in favor of
Agent and Lenders;
(b) is not located on premises owned or operated
by Borrower referenced on Schedule 3.6;
(c) is in the possession or control of a bailee,
warehouseman, processor, converter or other Person other than
Borrower, unless Agent is in possession of such agreements,
instruments and documents as Agent may require (each in form
and content acceptable to Agent and duly executed, as appro-
priate by the bailee, warehouseman, processor, converter or
other Person in possession or control of such Equipment, as
applicable) including but not limited to warehouse receipts
in Agent's name covering such Equipment except to the extent
that Agent has established a reserve with respect to such
Equipment;
(d) is Equipment held on or at leased premises
where the landlord thereof has not executed a consent and
waiver in form and substance satisfactory to Agent except to
the extent that Agent has established a reserve with respect
to such Equipment; or
(e) is Equipment which in any way fails to meet or
violates any warranty, representation or covenant contained
in this Agreement or any other Loan Document.
"Eligible Inventory" shall mean such Inventory of
Borrower which is not ineligible as the basis for Revolving
Credit Advances based on the criteria set forth below. In
determining whether Inventory less accounting reserves
constitutes Eligible Inventory, Agent does not intend to
include Inventory which:
(a) is not owned by Borrower free and clear of all
Liens and rights of others, except the Liens in favor of
Agent and Lenders;
(b) is not located on premises owned or operated
by Borrower referenced on Schedule 3.6;
(c) is in transit;
(d) is held on or at leased premises where the
landlord thereof has not executed a consent and waiver in
form and substance satisfactory to Agent except to the extent
92
that Agent has established a reserve with respect to such
Inventory ;
(e) is in the possession or control of a bailee,
warehouseman, processor, converter or other Person other than
Borrower, unless Agent is in possession of such agreements,
instruments and documents as Agent may require (each in form
and content acceptable to Agent and duly executed, as appro-
priate by the bailee, warehouseman, processor, converter or
other Person in possession or control of such Inventory, as
applicable) including but not limited to warehouse receipts
in Agent's name covering such Inventory except to the extent
that Agent has established a reserve with respect to such
Inventory;
(f) is covered by a negotiable document of title
unless such document and evidence of acceptable insurance
covering such Inventory has been delivered to Agent;
(g) in Agent's judgment, is obsolete, unsalable,
shopworn, damaged, unfit for further processing, or is of
substandard quality;
(h) consists of display items, packing and
shipping materials or goods which have been returned by the
buyer;
(i) consists of discontinued or slow-moving items;
(j) is placed by Borrower on consignment or held
by Borrower on consignment from another Person;
(k) is not a type held for sale in the ordinary
course of Borrower's business;
(l) is Inventory produced in violation of the Fair
Labor Standards Act and subject to the "hot goods" provisions
contained in Title 29 U.S.C. Section 215 or any successor statute
or section;
(m) is Inventory bearing a service xxxx, trademark
or name of any Person other than Borrower or Figgie
Licensing, or with respect to which the use by Borrower or
the manufacture or sale thereof by Borrower is subject to any
licensing, patent, royalty, trademark, trade name or
copyright agreement with any other Person, except for
Inventory manufactured for and intended to be sold under a
supply contract to the owner of such trademark, service xxxx,
etc.; provided, however, that with respect to any Inventory
bearing a service xxxx, trademark or name of Figgie
Licensing, such Inventory shall only be deemed Eligible
Inventory to the extent that Agent shall have been granted a
valid first priority perfected security interest in
Borrower's rights under the License Agreements;
(n) is Inventory which in any way fails to meet or
violates any warranty, representation or covenant contained
in this Agreement or any other Loan Document;
93
(o) which consists of work-in-process; or
(p) is not otherwise acceptable in the reasonable
judgment of Agent, based upon such credit and collateral
considerations as Agent may deem appropriate from time to
time.
"Environmental Laws" shall mean all federal, state
and local laws, statutes, ordinances, orders and regulations,
now or hereafter in effect, and in each case as amended or
supplemented from time to time, and any applicable judicial
or administrative interpretation thereof relating to the
regulation and protection of human health, safety, the
environment and natural resources (including, without
limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include,
but are not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended
(42 U.S.C. Sections 9601 et seq.) ("CERCLA"); the Hazardous
Material Transportation Act, as amended (49 U.S.C. Sections 1801 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide
Act, as amended (7 U.S.C. Sections 136 et seq.); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901
et seq.) ("RCRA"); the Toxic Substance Control Act, as
amended (15 U.S.C. Sections 2601 et seq.); the Clean Air Act, as
amended (42 U.S.C. Sections 740 et seq.); the Federal Water
Pollution Control Act, as amended (33 U.S.C. Sections 1251 et
seq.); the Occupational Safety and Health Act, as amended (29
U.S.C. Sections 651 et seq.) ("OSHA"); and the Safe Drinking Water
Act, as amended (42 U.S.C. Sections 300(f) et seq.), and any and
all regulations promulgated thereunder, and all analogous
state and local counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Environmental Liabilities and Costs" shall mean
all liabilities, obligations, responsibilities, remedial
actions, removal costs, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses
(including, without limitation, all reasonable fees,
disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred
as a result of any claim, suit, action or demand by any
person or entity, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute
or common law (including, without limitation, any thereof
arising under any Environmental Law, permit, order or
agreement with any Governmental Authority) and which relate
to any health or safety condition regulated under any
Environmental Law or in connection with any other
environmental matter or Release, threatened Release, or the
presence of a Hazardous Material.
"Equipment" shall mean any "equipment" as such term
is defined in the Code, and, in any event, shall include, but
shall not be limited to, all machinery, equipment, furnish-
ings and vehicles and any and all additions, accessions,
94
substitutions and replacements of any of the foregoing,
wherever located, together with all attachments, components,
parts, equipment and accessories installed thereon or affixed
thereto, but shall not include any fixtures as such term is
defined in the Code.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974 (or any successor legislation thereto),
as amended from time to time, and any regulations promulgated
thereunder.
"ERISA Affiliate" shall mean, with respect to
Borrower, any trade or business (whether or not incorporated)
under common control with Borrower or any Loan Party and
which, together with Borrower or any Loan Party, are treated
as a single employer within the meaning of Section 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to Borrower,
any Subsidiary thereof or any ERISA Affiliate, (i) a Report-
able Event with respect to a Title IV Plan or a Multiemployer
Plan; (ii) the withdrawal of Borrower, any Subsidiary thereof
or any ERISA Affiliate from a Title IV Plan subject to
Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of
ERISA; (iii) the complete or partial withdrawal of Borrower,
any Subsidiary thereof or any ERISA Affiliate from any
Multiemployer Plan; (iv) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan
amendment as a termination under Section 4041 of ERISA;
(v) the institution of proceeding to terminate a Title IV
Plan or Multiemployer Plan by the PBGC; (vi) the failure to
make required contributions to a Qualified Plan; or (vii) any
other event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or the
imposition of any liability under Title IV of ERISA, other
than PBGC premiums due but not delinquent under Section 4007
of ERISA.
"Event of Default" shall have the meaning assigned
to it in Section 8.1.
"Excess Cash Flow" of Borrower for any period shall
mean 60% of the sum of EBITDA for such period minus (i) cash
Interest Expense for such period, minus (ii) cash Income Tax
Expense for such period, minus (iii) Capital Expenditures of
Borrower and its Subsidiaries for such period, minus
(iv) scheduled payments of Indebtedness of Borrower and its
Subsidiaries for such period, minus (v) Investments in Joint
Venture Subsidiaries made pursuant to Section 6.2(vii),
Section 6.4(iv) or Section 6.6(iv) during such period, minus
(vi) any Restricted Payments paid in cash pursuant to Section
6.14(b) or 6.14(c) during such period.
"Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
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"Existing Domestic Loans" shall have the meaning
assigned thereto in Section 6.4.
"Existing Foreign Loans" shall have the meaning
assigned thereto in Section 6.4.
"Fair Market Value" shall mean (i) with respect to
any asset (other than a marketable security) at any date, the
value of the consideration obtainable in a sale of such asset
at such date assuming a sale by a willing seller to a willing
purchaser dealing at arm's length and arranged in an orderly
manner over a reasonable period of time having regard to the
nature and characteristics of such asset, as reasonably
determined by the Chief Financial Officer of Borrower, or, if
such asset shall have been the subject of a relatively
contemporaneous appraisal by an independent third party
appraiser, the basic assumptions underlying which have not
materially changed since its date, as set forth in such
appraisal, and (ii) with respect to any marketable security
at any date, the closing sale price of such security on the
Business Day (on which any national securities exchange is
open for the normal transaction of business) next preceding
such date, as appearing in any published list of any national
securities exchange or in the National Market List of the
National Association of Securities Dealers, Inc. or, if there
is no such closing sale price of such security, the final
price for the purchase of such security at face value quoted
on such Business Day by a financial institution of recognized
standing which regularly deals in securities of such type.
"Federal Funds Rate" shall mean, for any date, a
fluctuating interest rate per annum equal for such day to the
weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New
York, or if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day
on such transactions received by Agent from three Federal
funds brokers of recognized standing selected by it.
"Fee Letter" shall mean the Fee Letter, dated
November 3, 1995, between Agent and Borrower.
"Fees" shall mean the fees due to Agent and Lenders
as set forth in Section 1.6 or otherwise pursuant to the Loan
Documents.
"Figgie Licensing" shall mean Figgie Licensing
Corp., a Delaware corporation and a wholly-owned Subsidiary
of Borrower.
"Figgie Properties" shall mean Figgie Properties
Inc., a Delaware corporation and a wholly-owned Subsidiary of
Borrower.
"Figgie Real Estate" shall mean Xxxxxx
00
Xxxxxxxxxxxxx Xxxx Xxxxxx Inc., a Delaware corporation and a
wholly-owned Subsidiary of Borrower.
"Financials" shall mean the financial statements
referred to in Section 3.4.
"Fiscal Month" shall mean any of the monthly
accounting periods of Borrower.
"Fiscal Quarter" shall mean the three month periods
ending on March 31, June 30, September 30 or December 31.
"Fiscal Year" shall mean the 12-month period of
Borrower and its Subsidiaries ending December 31 of each
year.
"Fixed Charge Coverage Ratio" shall mean, for any
period, the ratio of the following for Borrower and its
Subsidiaries determined on a consolidated basis in accordance
with GAAP: (i) EBITDA for such period less Capital
Expenditures for such period which are not financed through
operating leases to (ii) the sum of (a) Interest Expense plus
(b) scheduled principal payments of Indebtedness (including
Capital Leases but excluding the principal amount of the
Revolving Credit Loan) during such period plus (c) taxes to
the extent accrued of otherwise payable with respect to such
period plus (d) Restricted Payments paid in cash pursuant to
Section 6.14(c) during such period.
"Foreign Plans" shall mean any employee benefit
plan maintained, sponsored or contributed to by Borrower or
any Loan Party that (i) is not required to be maintained by
statute, (ii) is excluded from coverage under Section 4(b)(4)
of ERISA and (iii) covers personnel working outside the
United States.
"Foreign Subsidiary" shall mean any Subsidiary of
Borrower which (i) is organized or incorporated under the
laws of any jurisdiction other than the laws of the United
States of America or of any state thereof or (ii) shall not
conduct any significant portion of its business in the United
States of America.
"Foreign Subsidiary Basket" shall have the meaning
assigned thereto in Section 6.4.
"Funding Arrangements" shall have the meaning
assigned thereto in Section 1.15(c).
"GAAP" shall mean generally accepted accounting
principles in the United States of America as in effect from
time to time as set forth in the opinions and pronouncements
of the Accounting Principles Board and the American Institute
of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board,
which are applicable to the circumstances as of the date of
determination except that, for purposes of Sections 6.10 and
6.14, GAAP shall be determined on the basis of such
97
principles in effect on December 31, 1994 and consistent with
those used in the preparation of the audited financial
statements referred to in Section 3.4.
"GE Capital" shall mean General Electric Capital
Corporation, a New York corporation having an office at 000
Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000-0000.
"General Intangibles" shall mean any "general
intangibles," as such term is defined in the Code, now owned
or hereafter acquired by Borrower and, in any event, includ-
ing, without limitation, all right, title and interest which
Borrower may now or hereafter have in or under any Contract,
all customer lists, Intellectual Property, interests in
partnerships, joint ventures and other business associations,
permits, proprietary or confidential information, inventions
(whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how,
software, data bases, data, skill, expertise, experience,
processes, models, drawings, materials and records, goodwill
(including, without limitation, the goodwill associated with
any Intellectual Property), all rights and claims in or under
insurance policies, (including, without limitation, insurance
for fire, damage, loss, and casualty, whether covering
personal property, real property, tangible rights or
intangible rights, all liability, life, key man, and business
interruption insurance, and all unearned premiums),
uncertificated securities, choses in action, and other bank
accounts, rights to receive tax refunds and other payments
and rights of indemnification.
"Goods" shall mean all "goods" as such term is
defined in the Code, now owned or hereafter acquired by
Borrower, wherever located, including, without limitation,
movables, Equipment, Inventory, or other tangible personal
property.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof,
and any agency, department or other entity exercising execu-
tive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any
Person, any obligation of such Person guaranteeing any
indebtedness, lease, dividend, or other obligation ("primary
obligations") of any other Person (the "primary obligor") in
any manner including, without limitation, any obligation or
arrangement of such Person (i) to purchase or repurchase any
such primary obligation, (ii) to advance or supply funds
(a) for the purchase or payment of any such primary
obligation or (b) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the
primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or
98
(iv) to indemnify the owner of such primary obligation
against loss in respect thereof.
"Hazardous Material" shall mean a Hazardous
Substance and/or a Hazardous Waste.
"Hazardous Substance" shall mean any element,
material, compound, mixture, solution, chemical, substance,
or pollutant within the definition of "hazardous substance"
under Section 101(14) of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 USC Section 9601(14);
petroleum or any fraction, byproduct or distillation product
thereof; friable asbestos, polychlorinated biphenyls, or any
radioactive substances; and any material regulated as a
hazardous substance by any jurisdiction in which any Loan
Party owns or operates or has owned or operated a facility.
"Hazardous Waste" shall mean any element,
pollutant, contaminant or discarded material (including any
radioactive material) within the definition of Section 103(6)
of the Resource Conservation and Recovery Act, 42 USCA
Section 6903(6); and any material regulated as a hazardous waste by
any jurisdiction in which any Loan Party owns or operates or
has owned or operated a facility, or to which any Loan Party
sends material for treatment, storage or disposal as waste.
"Income Tax Expense" of Borrower shall mean for any
period the consolidated provision for federal, state, local,
provincial and foreign income taxes of Borrower and its
Subsidiaries for such period calculated on a consolidated
basis in accordance with GAAP.
"Indebtedness" of any Person shall mean (i) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (including,
without limitation, reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured, but not including
obligations to trade creditors or service providers incurred
in the ordinary course of business), (ii) all obligations
evidenced by notes, bonds, debentures or similar instruments,
(iii) all indebtedness created or arising under any
conditional sale or other title retention agreements 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), (iv) all Capital Lease
Obligations, (v) all Guaranteed Indebtedness, (vi) all fixed
or contingent obligations of such Person under interest rate,
commodity or foreign currency exchange, swap, collar, cap,
futures, purchase, option, synthetic cap, price hedging or
other derivatives agreements, (vii) all Indebtedness referred
to in clause (i), (ii), (iii), (iv), (v) or (vi) above
secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including, without limitation,
accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the
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payment of such Indebtedness, (viii) the Obligations, and
(ix) all liabilities under Title IV of ERISA.
"Indemnified Person" shall have the meaning
assigned to it in Section 1.15.
"Index Rate Advance" shall mean a Revolving Credit
Advance which bears interest at a rate based upon the Index
Rate.
"Index Rate" shall mean, for any day, a floating
rate equal to the greatest of (i) the highest prime or base
rate of interest publicly announced from time to time by
Bankers Trust Company, Chemical Bank, Citibank, N.A., Xxxxxx
Guaranty Trust Company of New York or The Chase Manhattan
Bank, N.A. (whether or not such rate is actually charged by
such bank) as in effect for such day; (ii) the CP Rate; and
(iii) the Federal Funds Rate in effect on such day plus 0.5%.
Each change in any interest rate provided for herein based
upon the Index Rate shall take effect at the time of such
change in the Index Rate.
"Instruments" shall mean any "instrument," as such
term is defined in the Code, now owned or hereafter acquired
by Borrower, wherever located and in any event all
certificated securities, certificate of deposit and all notes
and other, without limitation, evidences of indebtedness,
other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean, collectively,
all Trademarks, all Patents, all Copyrights and all Licenses
now held or hereafter acquired by Borrower, together with all
franchises, tax refund claims, rights of indemnification,
payments under insurance, indemnities, warranties and
guarantees payable with respect to the foregoing.
"Intercompany Notes" shall have the meaning
assigned thereto in Section 6.3.
"Interest Coverage Ratio" shall mean, with respect
to any period, the ratio of (i) EBITDA for such period to
(ii) Interest Expense for such period.
Interest Expense" shall mean, for any period, the
amount which would, in conformity with GAAP, be set forth
opposite the caption "interest expense" or any like caption
on a consolidated income statement of Borrower and its
Subsidiaries for such period.
"Interest Period" shall mean for any LIBO Rate
Advance, the period commencing and ending on such dates as
are selected by Borrower pursuant to the provisions set forth
below. The duration of each Interest Period shall be one,
two or three months as Borrower may, upon notice received by
Agent not later than 11:00 a.m. (New York City time) on the
second Business day prior to the first day of such Interest
Period, select; provided, however, that: (i) Borrower may
100
not select any Interest Period which ends after the
Termination Date; and (ii) 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; and,
provided, further, that Borrower may only select Interest
Periods of one month in duration during the 120 day period
immediately following the Closing Date.
"Interstate Electronics" shall mean Interstate
Electronics Corp., a California corporation and a wholly-
owned Subsidiary of Borrower.
"Inventory" shall mean any "inventory," as such
term is defined in the Code, now or hereafter owned or
acquired by, Borrower, wherever located, and, in any event,
including, without limitation, inventory, merchandise, goods
and other personal property which are held by or on behalf of
Borrower for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw
materials, work in process or materials used or consumed or
to be used or consumed in Borrower's business or in the
processing, production, packaging, promotion, delivery or
shipping of the same, including, without limitation, other
supplies, and all accessions and additions thereto and all
documents of title covering any of the foregoing.
"Investment" shall mean, for any Person (a) the
acquisition (whether for cash, property, services or
securities or otherwise) of capital stock, bonds, notes,
debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any
such acquisition; (b) the making of any deposit with, or
advance, loan or other extension of credit to, any other
Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent
or otherwise, to resell such property to such Person); and
(c) the entering into of any Guaranteed Indebtedness of, or
other contingent obligation with respect to, Indebtedness or
other liability of any other Person and (without duplication)
any amount committed to be advanced, lent or extended to such
Person.
"IRC" shall mean the Internal Revenue Code of 1986,
as amended, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or
any successor thereto.
"Issuing Bank" shall mean a Lender acceptable to
GE Capital which shall act hereunder as issuer of Letters of
Credit and, provided that no Event of Default shall have
occurred and be continuing, approved by Borrower, which
approval shall not be unreasonably withheld, denied or
delayed.
"Joint Venture Subsidiary" shall mean any
corporation, association or other business entity, other than
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any Subsidiary of Borrower in existence on the date hereof,
(a) which would be a Subsidiary of Borrower but for its
designation as a Joint Venture Subsidiary by a Responsible
Officer at or before the time of determination as provided
below and evidenced by a certificate of such Responsible
Officer delivered to Agent and (b) in which any Person (other
than Borrower or any of its Affiliates) has, in the
determination of a Responsible Officer evidenced by a
certificate of such Responsible Officer delivered to Agent, a
significant joint or shared equity interest with Borrower or
any of its Subsidiaries and which is created in connection
with the purchase of properties and assets used in the
business of Borrower. A Responsible Officer of Borrower may
designate any Subsidiary of Borrower (including any newly
acquired or newly formed Subsidiary) which satisfies the
requirements of clause (b) above to be a Joint Venture
Subsidiary; provided, however, that (i) immediately after
giving pro forma effect to such designation there would not
exist any Default or Event of Default, (ii) no Joint Venture
Subsidiary shall be a general partner of a limited
partnership or a partner of a general partnership, and
(iii) any Joint Venture Subsidiary shall be an Unrestricted
Subsidiary.
"Key Employees Stock Option Plan" shall mean the
October 20, 1994 Figgie International Inc. Key Employees
Stock Option Plan, as in effect on the date hereof.
"Leases" shall mean all of those leasehold estates
in real property now owned or hereafter acquired by a Loan
Party, as lessee.
"Lender" and "Lenders" shall have the meaning
provided in the first paragraph of this Agreement.
"Letter of Credit Fee" shall have the meaning
assigned thereto in Section 1.6.
"Letter of Credit Obligations" shall mean all
outstanding obligations incurred by Agent or the Issuing
Bank, as the case may be, at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due,
in connection with the issuance or guaranty by Agent, the
Issuing Bank or another Person, of Letters of Credit. The
amount of such Letter of Credit Obligations at any time shall
equal the maximum amount which may be payable by Agent or the
Issuing Bank thereupon or pursuant thereto at such time.
"Letter of Credit Reserve" shall mean 50% of the
amount of all Letter of Credit Obligations guaranteed by GE
Capital or issued by the Issuing Bank, as the case may be;
provided, however, that if the Senior Notes have not been
refinanced on or prior to December 31, 1997 on terms
satisfactory to Required Lenders, the Letter of Credit
Reserve shall be increased, commencing January 1, 1998, to
80% of the amount of all Letter of Credit Obligations
guaranteed by GE Capital or issued by the Issuing Bank, as
the case may be.
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"Letters of Credit" shall mean commercial or
standby letters of credit issued at the request and for the
account of Borrower for which Agent or the Issuing Bank, as
the case may be, has incurred Letter of Credit Obligations.
"LIBO Rate" shall mean, for any Interest Period,
the rate obtained by dividing (i) the average of the four
rates reported from time to time by Telerate News Service on
page 3750 thereof (or such other number of rates as such
service may from time to time report), at which foreign
branches of major United States banks offer United States
dollar deposits to other banks for such Interest Period in
the London interbank market at approximately 11:00 a.m.,
London time, on the second full Business Day next preceding
such Interest Period by (ii) a percentage equal to 100% minus
the weighted average of the maximum rates of all reserve
requirements (including, without limitation, any marginal
emergency, supplemental or special or other reserves)
applicable during such Interest Period to any member bank of
the Federal Reserve System in respect of eurocurrency or
eurodollar funding or liabilities. If such interest rates
shall cease to be available from Telerate News Service, the
LIBO Rate shall be determined from such financial reporting
service or other information selected by Agent and reasonably
acceptable to Borrower.
"LIBO Rate Advance" shall mean a Revolving Credit
Advance which bears interest at a rate based on the LIBO
Rate.
"License" shall mean any Patent License, Trademark
License or other license of rights or interests now held or
hereafter acquired by Borrower.
"License Agreements" shall mean the license
agreements listed on Schedule 3.16 to this Agreement pursuant
to which Figgie Licensing has granted to Borrower an
exclusive license to use certain trademarks.
"Lien" shall mean any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, lien,
charge, claim, security interest, easement or encumbrance, or
preference, priority or other security agreement or preferen-
tial arrangement of any kind or nature whatsoever (including,
without limitation, any lease or title retention agreement,
any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agree-
ment to give, any financing statement perfecting a security
interest under the Code or comparable law of any jurisdic-
tion).
"Loan Documents" shall mean this Agreement, the
Revolving Credit Notes and the Collateral Documents.
"Loan Party" means each of Borrower and each
Subsidiary of Borrower.
"Lock Boxes" shall have the meaning assigned to it
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on Annex B.
"Margin Stock" shall have the meaning specified in
Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Material Adverse Effect" shall mean a material
adverse effect on (i) the business, assets, operations,
prospects, or financial or other condition of Borrower or
Borrower and its Subsidiaries taken as a whole,
(ii) Borrower's ability to pay or Borrower's or any Material
Subsidiary's ability to perform their respective obligations
under the Loan Documents in accordance with the terms
thereof, (iii) the Collateral or Agent's Lien on the
Collateral or the priority of any such Lien or (iv) the
rights and remedies of Agent and Lenders under this Agreement
and the other Loan Documents.
"Material Contracts" shall mean each contract to
which Borrower or any of its Material Subsidiaries is now or
hereafter a party involving aggregate consideration payable
to or by Borrower or any of its Material Subsidiaries,
contingent or otherwise, in excess of $5,000,000.
"Material Subsidiary" shall mean each of Interstate
Electronics, Figgie Real Estate, Figgie Licensing, Figgie
Properties and any Subsidiary of Borrower formed after the
date hereof which has a Net Worth in excess of $5,000,000;
provided, however, that any Subsidiary of Borrower which
becomes a party to a Loan Document after the date hereof
shall be deemed to be a Material Subsidiary.
"Maximum Lawful Rate" shall have the meaning
assigned to it in Section 1.4(d).
"Maximum Revolving Credit Commitment" shall mean an
amount equal to $75,000,000 on the Closing Date, as such
amount may be adjusted, if at all, from time to time in
accordance with this Agreement.
"Mortgages" shall mean the mortgages, deeds of
trust or other similar real estate security documents made by
Borrower or an Unrestricted Subsidiary in favor of Agent, in
form and substance acceptable to Agent, as from time to time
amended, supplemented or modified.
"Multiemployer Plan" shall mean a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA, and to which
Borrower or any ERISA Affiliate is making, is obligated to
make, has made or been obligated to make, contributions on
behalf of participants who are or were employed by any of
them.
"Net Income" shall mean, for Borrower for any
period, the aggregate of net income (or loss) of Borrower and
its Subsidiaries for such period, determined on a
consolidated basis in conformity with GAAP.
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"Net Proceeds" shall mean the net cash amount
realized from any asset sale after deducting (i) all
reasonable costs and expenses payable (or for which reserves
are established in accordance with GAAP) in connection
therewith, including, without limitation, reasonable
attorneys fees and taxes with respect to such sale and
repayment of any Indebtedness permitted hereunder which by
its terms is required to be repaid in connection with the
sale of such assets (but without deducting therefrom (x) any
such amounts paid in cash to any Affiliate of Borrower in a
transaction which is not arm's length or (y) any amounts
repaid in cash to Borrower from cash realized from such sale
in repayment of loans or advances made by Borrower to the
Subsidiary of Borrower selling such asset which are
outstanding as of the date hereof and listed on Schedule
6.4), and (ii) without duplication, the amount of any escrow
funds, letters of credit, deposits and/or similar escrow
arrangements or credit support established or obtained by
Borrower in connection with any such asset sale.
"Net Worth" shall mean, with respect to any Person,
at any date, the total assets minus the total liabilities, in
each case, of such Person and its Subsidiaries, on a
consolidated basis, at such date determined in accordance
with GAAP.
"Non-Funding Lender" shall have the meaning
assigned to it in Section 1.1(f).
"Non-use Fee" shall have the meaning assigned to it
on Section 1.6.
"Notice of Conversion" shall have the meaning
assigned to it in Section 1.1(g).
"Notice of Revolving Credit Advance" shall have the
meaning assigned to it in Section 1.1(c).
"Obligations" shall mean all loans, advances,
debts, liabilities and obligations for the performance of
covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or
contingent, or amounts are liquidated or determinable) owing
by Borrower or any other Loan Party to Agent or any Lender,
and all covenants and duties regarding such amounts, of any
kind or nature, present or future, whether or not evidenced
by any note, agreement or other instrument, arising under any
of the Loan Documents. This term includes, without
limitation, all principal, interest (including, without
limitation, interest which accrues after the commencement of
any case or proceeding referred to in Section 8.1(g) or (h)),
all Fees, Charges, expenses, attorneys' fees and any other
sum chargeable to Borrower under any of the Loan Documents.
"Override Agreement" shall mean the Override
Agreement, dated as of June 30, 1994, as heretofore amended,
between Borrower and the lenders named therein.
105
"Other Lender" shall have the meaning assigned to
it in Section 1.1(f).
"Other Taxes" shall have the meaning assigned to it
in Section 1.17(b).
"Patent License" shall mean rights under any
written agreement now owned or hereafter acquired by Borrower
granting any right with respect to any invention on which a
Patent is in existence.
"Patents" shall mean all of the following in which
Borrower now holds or hereafter acquires any interest:
(i) all letters patent of the United States or any other
country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any
other country, including registrations, recordings and
applications in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any
State or Territory thereof, or any other country, and
(ii) all reissues, divisions, continuations, continuations-
in-part or extensions thereof.
"Payor" shall have the meaning assigned to it in
Section 1.11.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation or any successor thereto.
"Pension Plan" shall mean an employee pension
benefit plan, as defined in Section 3(2) of ERISA (other than
a Multiemployer Plan), which is not an individual account
plan, as defined in Section 3(34) of ERISA, and which
Borrower or, if a Title IV Plan, any Subsidiary of Borrower
or any ERISA Affiliate maintains, contributes to or has an
obligation to contribute to on behalf of participants who are
or were employed by any of them.
"Permitted Encumbrances" shall mean the following
encumbrances: (i) Liens for taxes or assessments or other
governmental Charges or levies, either not yet due and
payable or to the extent that nonpayment thereof is permitted
by the terms of Section 5.2; (ii) pledges or deposits
securing obligations under workers' compensation,
unemployment insurance, social security or public liability
laws or similar legislation; (iii) pledges, progress payments
or deposits securing bids, tenders, contracts (other than
contracts for the payment of money) or leases to which
Borrower is a party as lessee made in the ordinary course of
business; (iv) deposits securing public or statutory
obligations of Borrower; (v) inchoate and unperfected
workers', mechanics', suppliers' or similar liens arising in
the ordinary course of business; (vi) carriers',
warehousemen's or other similar possessory liens arising in
the ordinary course of business and securing indebtedness not
yet due and payable in an outstanding aggregate amount not in
excess of $1,000,000 at any time; (vii) deposits securing, or
in lieu of, surety, appeal or customs bonds in proceedings to
106
which Borrower is a party; (viii) any attachment or judgment
lien securing a judgment not exceeding $500,000, unless the
judgment it secures shall not, within 30 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall not have been discharged within 30
days after the expiration of any such stay; and (ix) zoning
restrictions, easements, licenses, or other restrictions on
the use of real property or other minor irregularities in
title (including leasehold title) thereto, so long as the
same do not materially impair the use, value, or
marketability of such real property, leases or leasehold
estates.
"Person" shall mean any individual, sole
proprietorship, partnership, limited liability company, joint
venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity
or government (whether federal, state, county, city,
municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department
thereof).
"Plan" shall mean, with respect to Borrower or any
ERISA Affiliate, at any time, an employee benefit plan, as
defined in Section 3(3) of ERISA other than a Foreign Plan,
which Borrower maintains, contributes to or has an obligation
to contribute to on behalf of participants who are or were
employed by any of them.
"Proceeds" shall mean "proceeds," as such term is
defined in the Code and, in any event, shall include, with
respect to any Person, (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to such
Person from time to time with respect to any of its property
or assets, (ii) any and all payments (in any form whatsoever)
made or due and payable to such Person from time to time in
connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of such Person's
property or assets by any governmental body, authority,
bureau or agency (or any person acting under color of
governmental authority), (iii) any claim of such Person
against third parties (a) for past, present or future
infringement of any Patent or Patent License or (b) for past,
present or future infringement or dilution of any Trademark
or Trademark License or for injury to the goodwill associated
with any Trademark, Trademark registration or Trademark
licensed under any Trademark License, (iv) any recoveries by
such Person against third parties with respect to any
litigation or dispute concerning any of such Person's
property or assets, and (v) any and all other amounts from
time to time paid or payable under or in connection with any
of such Person's property or assets, upon disposition or
otherwise.
"Projections" shall mean the projections referred
to in Section 3.4.
"Property" shall have the meaning assigned to it in
107
Section 5.5.
"Qualified Plan" shall mean an employee pension
benefit plan, as defined in Section 3(2) of ERISA, which is
intended to be tax-qualified under Section 401(a) of the IRC,
and which Borrower, and Subsidiary thereof or any ERISA
Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were
employed by any of them.
"Regulatory Change" shall mean, with respect to any
Lender, any change after the date of this Agreement in
Federal, state or foreign law or regulations (including,
without limitation, Regulation D of the Federal Reserve
Board) or the adoption or making after such date of any
interpretation, directive or request applying to a class of
lenders including such Lender of or under any Federal, state
or foreign law or regulations (whether or not having the
force of law and whether or not failure to comply therewith
would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration
thereof.
"Release" shall mean, as to any Person, any release
or any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching,
dumping, disposing or migration of a Hazardous Material into
the indoor or outdoor environment by such Person (or by a
person under such Person's direction or control), including
the movement of a Hazardous Material through or in the air,
soil, surface water, ground water or property; but shall
exclude any release, discharge, emission or disposal in
material compliance with a then effective permit or order of
a Governmental Authority.
"Repayment/Acquisition Basket" shall mean the sum
of (i) $10,000,000 plus the Net Proceeds of any asset sales
permitted under Section 6.8 consummated by Borrower after the
Closing Date (other than ordinary course sales of Inventory
and the sale of obsolete or surplus assets by Borrower's
continuing operations), (ii) any cash or Cash Equivalents
received by Borrower as a result of the conversion of
Deferred Divestiture Proceeds into cash or Cash Equivalents,
(iii) with respect to any acquisition permitted under Section
6.1, the capital Stock of Borrower issued as consideration in
such acquisition, provided that any such capital Stock shall
be valued at Fair Market Value, (iv) cash and Cash
Equivalents received by Borrower from any Subsidiary of
Borrower which constitute (A) proceeds of an asset sale
permitted under Section 6.8, (B) cash or Cash Equivalents
received by such Subsidiary as a result of the conversion of
Deferred Divestiture Proceeds, or (C) to the extent and up to
the amount of any prior deductions under clause (a) below,
cash or Cash Equivalents received by Borrower from any
Subsidiary of Borrower, and are in the case of clause (A) or
(B) in the form of (x) advances or loans permitted hereunder
as to which the payment of principal of (and premium, if any)
and interest and other payment obligations in respect of such
108
Indebtedness shall be subordinate to the prior payment in
full of the Obligations and shall not occur prior to the
Termination Date or (y) Restricted Payments permitted under
Section 6.14, and (v) the cumulative amount of Excess Cash
Flow (excluding any amounts less than zero) for the four
Fiscal Quarter period ending December 31, 1996 and for each
Fiscal Quarter thereafter ending prior to any acquisition
pursuant to Section 6.1 or any repayment, prepayment,
redemption, retirement, defeasance or open market purchase of
Indebtedness pursuant to Section 6.13(iii), less (a) the
amount of any repayments, prepayments, redemptions,
retirements, defeasances or open market purchases of
Indebtedness pursuant to Section 6.13(iii), less (b) the
Aggregate Purchase Price (after deducting the Fair Market
Value of the Stock portion thereof) of any acquisitions
pursuant to Section 6.1 and less (c) to the extent the Net
Proceeds from any such asset sale shall have been added to
the Repayment/Acquisition Basket pursuant to clause (i)
above, the amount of any subsequent purchase price adjustment
which reduces the related Aggregate Purchase Price by an
amount in excess of any amounts set aside in escrow or
otherwise in connection with such asset sale.
"Reportable Event" shall mean any of the events
described in Section 4043(b)(1), (2), (3), (5), (6), (8) or
(9) of ERISA with respect to which the PBGC has not waived
its requirement that the PBGC be given notice of the event.
"Required Lenders" shall mean, at any time, Lenders
holding at least 66-2/3% of the aggregate of (i) the
Revolving Credit Commitments of all Lenders at such time and
(ii) the principal amount of the Revolving Credit Advances
and Letter of Credit Obligations outstanding at such time.
"Required Payment" shall have the meaning assigned
to it in Section 1.11.
"Responsible Officer" shall mean any Senior Officer
and any other officer of Borrower with responsibility for the
administration of the relevant provision of this Agreement.
"Restricted Payment" shall mean, with respect to
any Person, (i) the declaration or payment of any dividend or
the occurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect
of such Person's Stock, (ii) any payment on account of the
purchase, redemption, defeasance or other retirement of such
Person's Stock or any other payment or distribution made in
respect thereof, either directly or indirectly, (iii) any
payment of a claim for the rescission of the purchase or sale
of, or for material damages arising from the purchase or sale
of any shares of the Stock of Borrower or of a claim for
reimbursement, indemnification or contribution arising out of
or related to any such claim for damages or rescission, or
(iv) any payment, loan, contribution, or other transfer of
funds or other property to any Stockholder of such Person;
provided, however, that "Restricted Payment" shall not
include any dividend in respect of Borrower's Stock which is
109
paid in Stock of Borrower.
"Restricted Stock Plan" shall mean Borrower's 1993
Restricted Stock Purchase Plan for Employees, as in effect on
the date hereof.
"Restricted Subsidiary" shall have the meaning
assigned thereto in the Senior Note Indenture.
"Retiree Welfare Plan" shall refer to any Welfare
Plan providing for continuing coverage or benefits for any
participant or any beneficiary of a participant after such
participant's termination of employment, other than continua-
tion coverage provided pursuant to Section 4980B of the IRC.
"Revolving Credit Advance" shall have the meaning
assigned to it in Section 1.1(a).
"Revolving Credit Commitment" shall mean, as to
each Lender, the commitment of such Lender to make Revolving
Credit Advances to Borrower or incur Letter of Credit
Obligations pursuant to Section 1.1 in the aggregate
principal amount outstanding not to exceed the amount set
forth opposite such Lender's name on the signature page
hereto, as such amount may be reduced or modified pursuant to
this Agreement (including by assignment to another Lender).
"Revolving Credit Loan" shall mean the aggregate
amount of Revolving Credit Advances of all Lenders
outstanding at any time.
"Revolving Credit Notes" shall mean the promissory
notes provided for by Section 1.1(d) and all promissory notes
delivered in substitution or exchange therefor, in each case
as the same shall be modified and supplemented and in effect
from time to time.
"Schedule of Closing Documents" shall mean the
schedule attached hereto as Annex C, including all
appendices, exhibits or schedules thereto, listing certain
documents and information to be delivered in connection with
the Loan Documents and the transactions contemplated
thereunder.
"Xxxxx Aviation" shall mean the Xxxxx Aviation
Division of Borrower.
"Senior Officer" shall mean the Chief Executive
Officer, Chief Financial Officer, Controller or Treasurer of
Borrower.
"Senior Note Indenture" shall mean the Indenture,
dated as of October 1, 1989, between Borrower and Continental
Bank, National Association, as Trustee, as in effect on the
date hereof, relating to the Senior Notes.
"Senior Notes" shall mean Borrower's 9-7/8% Senior
Notes due October 1, 1999 issued pursuant to the Senior Note
110
Indenture.
"Side Letter" shall have the meaning assigned
thereto in Section 6.8.
"Significant Subsidiary" shall mean any Subsidiary
of Borrower which is a "significant subsidiary" of Borrower
within the meaning of Rule 1-02(w) of Regulation S-X
promulgated under the Exchange Act and any successor
provision thereto.
"Snorkel Division" shall mean the Snorkel Division
of Borrower.
"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 as such debts and liabilities 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 Persons'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.
"Stock" shall mean all shares, options, warrants,
general or limited partnership interests, participation or
other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or
equivalent entity whether voting or nonvoting, including,
without limitation, common stock, preferred stock, or any
other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended).
"Stockholder" shall mean each holder of Stock of
Borrower.
"Subject Property" shall mean all real property
owned, leased or operated by Borrower or any Material
Subsidiary.
"Subordinated Debentures" shall mean Borrower's 10
3/8% Subordinated Debentures due April 1, 1998 issued
pursuant to the Subordinated Indenture.
"Subordinated Indenture" shall mean the Indenture,
111
dated as of April 1, 1978, between Borrower and Marine
Midland Bank, as Trustee, relating to the Subordinated
Debentures, as amended by a First Supplemental Indenture,
dated as of July 18, 1983, and a Second Supplemental
Indenture, dated as of December 31, 1986, as in effect on the
date hereof.
"Subsidiary" shall mean, with respect to any
Person, (i) any corporation of which an aggregate of 50% or
more of the outstanding Stock having ordinary voting power to
elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, Stock of
any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any
such Person has the right to vote or designate the vote of
50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise and (ii) any partnership or
limited liability company in which such Person and/or one or
more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or
capital contribution) of 50% or more or of which any such
Person is a general partner or may exercise the powers of a
general partner; provided, however, that a Joint Venture
Subsidiary shall not be deemed to be a Subsidiary for
purposes of this Agreement.
"Subsidiary Guarantors" shall mean any Subsidiary
of Borrower which executes and delivers a Subsidiary
Guaranty.
"Subsidiary Guaranties" shall mean the Guaranties,
in form satisfactory to Agent, executed by the Subsidiary
Guarantors in favor of Agent and Lenders, as from time to
time amended, supplemented or modified.
"Subsidiary Security Agreements" shall mean the
Security Agreements, in form satisfactory to Agent, executed
by the Subsidiary Guarantors in favor of Agent, as from time
to time amended, supplemented or modified.
"Tangible Net Worth" of Borrower shall mean, at any
date, the Net Worth of Borrower at such date, excluding,
however, from the determination of the total assets of
Borrower at such date, (i) all goodwill, capitalized
organizational expenses, capitalized research and development
expenses, trademarks, trade names, copyrights, patents,
patent applications, licenses and rights in any thereof, and
other intangibles items, (ii) all unamortized debt discount
and expense, (iii) treasury Stock, and (iv) any write-up in
the book value of any asset resulting from a revaluation
thereof.
"Xxxxxx Division" shall mean the Xxxxxx
Environmental Division of Borrower.
112
"Taxes" shall mean taxes, levies, imposts, deduc-
tions, Charges or withholdings, and all liabilities with
respect thereto, excluding franchise taxes and taxes imposed
on or measured by the net income of any Lender by the United
States, the jurisdiction under the laws of which such Lender
is organized or the jurisdiction in which such Lender's
applicable lending office is located or, in each case, any
political subdivision thereof.
"Termination Date" shall mean the date on which
(i) the Maximum Revolving Credit Commitment has been
terminated in full, and Lenders shall have no further
obligation to make any credit extensions or financial
accommodations hereunder and Borrower shall have no further
right to require GE Capital or the Issuing Bank, as the case
may be, to incur Letter of Credit Obligations and (ii) all
Obligations have been indefeasibly paid in full, and Borrower
shall have funded the amounts required, if any, under the
Loan Documents into the Cash Collateral Account in respect of
Letter of Credit Obligations, if any, then outstanding.
"Termination Fee" shall have the meaning provided
in Section 1.6.
"Title IV Plan" shall mean a Pension Plan, other
than a Multiemployer Plan, which is covered by Title IV of
ERISA.
"Trademark License" shall mean rights under any
written agreement now owned or hereafter acquired by Borrower
granting any right to use any Trademark or Trademark
registration.
"Trademarks" shall mean all of the following now
owned or hereafter acquired by Borrower: (i) all common law
and statutory trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which
any of the foregoing have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith,
including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar
office or agency of the United States, any State or Territory
thereof, or any other country or any political subdivision
thereof, (ii) all reissues, extensions or renewals thereof,
and (iii) all licenses thereunder and together with the
goodwill associated with and symbolized by such trademark.
"Type" shall refer to whether a Revolving Credit
Advance is a Index Rate Advance or a LIBO Rate Advance, each
of which constitutes a "Type".
"Unfunded Pension Liability" shall mean, at any
time, the aggregate amount, if any, of the sum of (i) the
amount by which the present value of all accrued benefits
under each Title IV Plan exceeds the fair market value of all
113
assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the
most recent valuation date for each such Title IV Plan using
the actuarial assumptions in effect under such Title IV Plan,
and (ii) for a period of five (5) years following a trans-
action reasonably likely to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be
avoided by Borrower or any ERISA Affiliate as a result of
such transaction.
"Unrestricted Subsidiary" shall have the meaning
assigned thereto in the Senior Note Indenture.
"Voting Stock" of any Person shall mean capital
Stock of such Person which ordinarily has voting power for
the election of directors (or persons performing similar
functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power
by reason of any contingency.
"Weekly Settlement Date" shall have the meaning
assigned to it in Section 1.13(c).
"Welfare Plans" shall mean any welfare plan, as
defined in Section 3(1) of ERISA, which is maintained or
contributed to by Borrower or any ERISA Affiliate.
"Withdrawal Liability" shall mean, at any time, the
aggregate amount of the liabilities, if any, pursuant to
Section 4201 of ERISA, and any increase in contributions
pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the
meaning customarily given such term in accordance with GAAP,
and all financial computations hereunder shall be computed,
unless otherwise specifically provided herein, in accordance
with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase "in
accordance with GAAP" shall in no way be construed to limit
the foregoing. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have
the meanings provided for by the Code as in effect in the
State of New York to the extent the same are used or defined
therein. The words "herein," "hereof" and "hereunder" or
other words of similar import refer to the Agreement as a
whole, including the Annexes, Exhibits and Schedules hereto,
as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection
or clause contained in this Agreement.
Wherever from the context it appears appropriate,
each term stated in either the singular or plural shall
include the singular and the plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
114
Whenever any provision in any Loan Document refers
to the "knowledge" of any Person, such provision is intended
to mean that such Person has actual knowledge or awareness of
a particular fact or circumstance, or that such Person, if it
had exercised reasonable diligence, should have known or been
aware of such fact or circumstance.
115
ANNEX B
to
CREDIT AGREEMENT
Dated as of December 19, 1995
CASH MANAGEMENT SYSTEM
Borrower agrees to establish and maintain, until
the Termination Date, the cash management system described
below:
(q) Borrower shall not maintain with respect to
the Snorkel Division, Xxxxx Aviation or the Xxxxxx Division,
any deposit, checking, operating or other bank accounts for
the collection of any cash, checks, notes, drafts or other
similar items of payment relating to or constituting payments
made in respect of any and all Collateral, including, without
limitation, Accounts, except for those accounts identified on
Schedule 3.19 or those accounts created after the date hereof
for which a Blocked Account Agreement (as defined below)
executed by Borrower and the related bank has been delivered
to Agent.
(r) Commencing on the Closing Date and for so long
as any Obligations are outstanding, Borrower shall deposit
or, if directed by Agent, cause to be deposited directly, in
either case on the date of receipt thereof, all cash, checks,
notes, drafts or other similar items of payment relating to
or constituting payments made in respect of any and all
Collateral into lock boxes in Borrower's or Agent's name
(collectively, the "Lock Boxes") maintained at the banks set
forth on Attachment I hereto (each, a "Blocked Account Bank")
and such other banks which have entered into a Blocked
Account Agreement after the date hereto and are added to such
Attachment I hereto by amendment thereto.
(s) On or before the Closing Date, each Blocked
Account Bank set forth on Attachment I hereto shall have
entered into tri-party blocked or restricted account
agreements (the "Blocked Account Agreements") with Agent and
the Borrower, in form and substance acceptable to Agent.
Each such Blocked Account Agreement shall provide, among
other things, that (i) all monies, instruments and other
property of Borrower received in each Lock Box shall be
deposited into the respective Blocked Account designated in
the Blocked Account Agreement, (ii) the Blocked Account Bank
has no rights of set-off or recoupment or any other claim
against the Lock Box or the Blocked Account other than for
payment of its customary service fees, items deposited or
credited to the Blocked Account which may be returned or
otherwise not collected and other charges directly related to
the administration of such accounts, and (iii) that upon the
occurrence and during the continuance of an Event of Default
and the giving of notice (the "Redirection Notice") by Agent
116
to the Blocked Account Bank, such bank will sweep on a daily
basis all amounts received in the Blocked Accounts maintained
by it to the Collection Account, until such bank receives
notice (the "Stop Notice") from Agent to cease such daily
sweeps. Borrower shall have access to the funds in the
Blocked Accounts, subject to paragraph (f) below.
(t) On the Closing Date, the lock box and blocked
account arrangements shall immediately become operative at
the respective Blocked Account Banks.
(u) So long as no Default has occurred and is
continuing, Borrower may amend Attachment I hereto to add or
replace a Blocked Account; provided, however, that (i) Agent
shall have consented to the closure and/or opening of such
account with the relevant bank, and (ii) at the time of the
opening of such account, Borrower and such bank shall have
executed and delivered to Agent a Blocked Account Agreement,
in form and substance satisfactory to Agent. Borrower shall
close any of its accounts (and establish replacement accounts
in accordance with the foregoing sentence) within thirty days
of notice from Agent that the bank holding such accounts is
no longer acceptable to Agent. The Blocked Accounts shall be
cash collateral accounts, and all cash, checks and other
similar items of payment in such accounts, together with all
such items contained in the Lock Boxes, shall secure payment
of the Obligations, and Agent shall have a first priority
perfected Lien in such items for the ratable benefit of
Lenders, GE Capital and the Issuing Bank pursuant to the
Security Agreement.
(v) Upon the occurrence and during the continuance
of an Event of Default, (i) amounts outstanding under the
Revolving Credit Loan shall be reduced through daily sweeps,
via wire transfer, of all funds on deposit in the Blocked
Accounts into the Collection Account, as provided in this
Annex B; (ii) all amounts deposited in the Collection Account
shall be deemed received by Lenders in accordance with
Section 1.8 and shall be applied (and allocated) by Lenders
in accordance with Section 1.10; provided, however, that in
no event shall any amount be so applied unless and until such
amount shall have been credited in immediately available
funds to the Collection Account; and (iii) Borrower shall
have no right to gain access to any of the funds in any
Blocked Account until the Blocked Account Bank at which the
Blocked Account is maintained receives the Stop Notice from
Agent. Prior to the issuance of a Redirection Notice, and
following the issuance of a Stop Notice, Borrower shall have
access to all funds in the Blocked Account maintained by such
Blocked Account Bank.
(w) Borrower hereby constitutes and appoints
irrevocably Agent its true and lawful attorney, with full
power of substitution, without limitation, to, after the
occurrence and during the continuance of an Event of Default,
demand, collect, receive and xxx for all amounts which may
become due or payable under the Blocked Accounts and to
execute all withdrawal receipts or other orders for Borrower,
117
in its own name or in Borrower's name or otherwise, which
Agent deems necessary or appropriate to protect and preserve
its right, title and interest in such accounts.
(x) Upon request of Agent, Borrower shall forward
to Agent, on a daily basis, evidence of the deposit of all
items of payment received by Borrower into the Blocked
Accounts and copies of all such checks and other items,
together with a statement showing the application of those
items relating to payments on Accounts to outstanding
Accounts and a collection report with regard thereto in form
and substance satisfactory to Agent.
118
ATTACHMENT I TO ANNEX B
LIST OF LOCK BOXES, BLOCKED ACCOUNTS AND
BLOCKED ACCOUNT BANKS.
Branch Lock Box
Bank Address Address Lock Box Division
Bank of America Xxxxx
Illinois Aviation
Snorkel
Division
Xxxxxx
Division
Mellon Bank Snorkel
Division
119
ANNEX C
to
CREDIT AGREEMENT
Dated as of December 19, 1995
SCHEDULE OF CLOSING DOCUMENTS
The obligation of Agent and Lenders to make the initial
Revolving Credit Advance and/or incur the initial Letter of Credit
Obligation is subject to satisfaction of the condition precedent that
Agent and Lenders shall have received the following, each, unless
otherwise specified below, dated the Closing Date, in form and
substance satisfactory to Agent, Lenders and their counsel, unless
otherwise specified below:
I. PRINCIPAL LOAN DOCUMENTS.
(a) Credit Agreement. The Credit Agreement duly executed by
Borrower.
(b) Revolving Credit Notes. A duly executed Revolving
Credit Note to the order of each Lender.
(c) Borrowing Base Certificate. An original Borrowing Base
Certificate, duly executed by the Chief Executive Officer, Chief
Financial Officer or Treasurer of Borrower.
(d) Notice of Revolving Credit Advance. An original Notice
of Revolving Credit Advance, duly executed by the Chief Executive
Officer, Chief Financial Officer or Treasurer of Borrower.
II. COLLATERAL DOCUMENTS.
(e) Borrower Security Agreement. The Borrower Security
Agreement duly executed by Borrower, together with delivery to Agent
and Lenders of:
i) Acknowledgement copies of proper Financing Statements
(Form UCC-1) (the "Financing Statements") duly filed under the
Uniform Commercial Code, or chattel mortgages duly filed under
other applicable law, of all jurisdictions as may be necessary or,
in the opinion of Agent or any Lender, desirable to perfect the
Lien created by the Borrower Security Agreement;
ii) Certified copies of Requests for Information (Form
UCC-11), or other evidence satisfactory to Agent, listing the
Financing Statements or chattel mortgages referred to in paragraph
(i) above and all other effective financing statements or chattel
mortgages which name Borrower (under its present name, any
previous name or any trade or doing business name) as debtor and
which are filed in the jurisdictions referred to in said paragraph
(i) above, together with copies of such other financing statements
(none of which shall cover the Collateral purported to be covered
120
by the Borrower Security Agreement);
iii) Agreement relating to the granting of a security
interest in Patents, Trademarks and Copyrights in a form suitable
for filing with the appropriate Federal filing office;
iv) Evidence of the completion of all other recordings and
filings as may be necessary or, in the opinion of and at the
request of Agent or any Lender, desirable to perfect the Lien
created by the Borrower Security Agreement; and
v) Evidence that the insurance required by the terms of the
Borrower Security Agreement and this Agreement is in full force
and effect.
(f) Borrower Pledge Agreement. The Borrower Pledge
Agreement duly executed by Borrower, together with:
i) certificates representing the Pledged Shares (as defined
in the Borrower Pledge Agreement) and undated stock powers for
such certificates executed in blank; and
ii) evidence that all action reasonably requested by Agent
to perfect and protect the Lien created by the Pledge Agreement
has been taken.
III. THIRD PARTY AGREEMENTS.
(g) Cash Management System. Duly executed Blocked Account
Agreements as contemplated by Annex B.
(h) Subordinated Indenture. A copy of the Subordinated
Indenture certified as a correct and complete copy by the Chief
Financial Officer or Treasurer of Borrower.
(i) Senior Indenture. A copy of the Senior Indenture
certified as a correct and complete copy by the Chief Financial Officer
or Treasurer of Borrower.
(j) Release Letters. Letters evidencing the discharge and
release of all obligations, security interests and liens under (i) the
Override Agreement, duly executed by The First National Bank of Boston,
as agent for the lenders named in the Override Agreement, and each of
such lenders individually; and (ii) the CIT Facility, duly executed by
CIT.
IV. DOCUMENTS DELIVERED BY BORROWER.
(k) Board Resolutions and Incumbency Certificates. A
certificate of the Secretary or an Assistant Secretary of Borrower
certifying (A) the resolutions adopted by the Board of Directors of
Borrower approving each Loan Document to which Borrower is a party and
the transactions contemplated hereby and thereby, (B) all documents
evidencing other necessary corporate action by Borrower and required
governmental and third party approvals with respect to each such Loan
Document, and (C) the names and true signatures of the authorized
officers of Borrower.
121
(l) Articles of Incorporation; By-Laws and Good Standing
Certificates. Each of the following documents:
i) the certificate of incorporation or the foreign
equivalent thereof of Borrower and each of the Material
Subsidiaries as in effect on the Closing Date, certified by the
Secretary of State or other appropriate authority of the State or
country of its incorporation as of a recent date, together with a
bring-down certificate or the foreign equivalent thereof from such
Secretary of State or other appropriate authority in the form of a
telex or telecopy dated the Closing Date, and the by-laws or the
foreign equivalent thereof of Borrower and each of the Material
Subsidiaries as in effect on the Closing Date, certified by the
Secretary, Assistant Secretary or other appropriate officer or
director of Borrower and each of the Material Subsidiaries; and
ii) a good standing certificate or the foreign equivalent
thereof for Borrower and each of the Material Subsidiaries from
the Secretary of State or other appropriate authority of the State
or country of its incorporation as of a recent date, together with
a bring-down certificate in the form of a telex or telecopy dated
the Closing Date.
(m) Solvency. A certificate in form and substance
satisfactory to Agent, signed by the Chief Financial Officer of
Borrower, certifying as to the Solvency of Borrower and Borrower and
its Subsidiaries taken as a whole, both immediately before entering
into the Loan Documents and after giving effect to the entering into of
the Loan Documents, the initial Revolving Credit Advances and/or the
initial Letter of Obligations hereunder and the other transactions
contemplated hereby.
(n) Financial Statements. Copies of the financial
statements described in Section 3.4.
(o) Projections. Copies of the Projections described in
Section 3.4 in form and substance satisfactory to Agent.
(p) Environmental Audits. Copies of all existing
environmental reviews and audits, as well as other information per-
taining to actual or potential environmental claims, and, to the extent
required by Agent, an environmental review and audit report, prepared
at Borrower's expense, with results satisfactory to Agent from an
independent firm acceptable to Agent.
(q) Appraisal. A copy of an independent appraisal of
Borrower's machinery and Equipment with a value and from an appraisal
firm acceptable to Agent.
(r) Restricted Stock Plan. A copy of the Borrower's
Restricted Stock Plan certified as a correct and complete copy by the
Chief Financial Officer or Treasurer of Borrower.
(s) Stock Option Plan. A copy of the Borrower's Stock
Option Plan for Key Employees certified as a correct and complete copy
by the Chief Financial Officer or Treasurer or Borrower.
122
V. LEGAL OPINIONS.
(t) Legal Opinions. (i) An opinion of Xxxxxx, Halter &
Xxxxxxxx, counsel to the Loan Parties, in form and substance
satisfactory to Agent and Lenders; (ii) an opinion of X.X. Xxxxxxx,
General Counsel of Borrower, in form and substance satisfactory to
Agent and Lenders; (iii) an opinion of LeBoeuf, Lamb, Xxxxxx & XxxXxx,
special New York counsel to Borrower, in form and substance
satisfactory to Agent and Lenders (which shall include an opinion as to
enforceability of the Loan Documents under New York law); (iv) an
opinion of Parker, Poe, Xxxxx & Xxxxxxxxx, special North Carolina
counsel to Borrower; (v) an opinion of Xxxxxxx, Mag & Fizzell, special
Missouri counsel to Borrower and (vi) an opinion of Xxxxxxx, Mag &
Fizzell, Special Kansas counsel to Borrower, in form and substance
satisfactory to Agent and Lenders and its special counsel to reflect
the laws of the respective states as to validity and perfection of
Liens and other matters, and such other matters incident to the
transactions contemplated hereby as Agent or any Lender may reasonably
require.
VI. Accountants' Letter.
(u) A copy of the accountants' letter referred to in Section
4.2.
123
ANNEX D
to
CREDIT AGREEMENT
Dated as of December 19, 1995
FINANCIAL STATEMENTS, PROJECTIONS AND NOTICES
(a) Upon request of Agent, but in no event less frequently
than the fifteenth (15th) day of each Fiscal Month, a Borrowing Base
Certificate as of the last day of the preceding Fiscal Month.
(b) Upon request of Agent, but in no event less frequently
than the fifteenth (15th) day of each Fiscal Month, (i) an Accounts
aging report by Account Debtor, and (ii) a reconciliation of such
Accounts aging reports to Borrower's general ledger for the previous
Fiscal Month, in each case accompanied by such supporting detail and
documentation as Agent may request.
(c) Within 30 days after the end of each Fiscal Month (other
than the last Fiscal Month of any Fiscal Quarter) such financial and
other information as Agent may request, which financial and other
information shall be certified by the Chief Financial Officer,
Treasurer or Assistant Treasurer of Borrower (each, a "Financial
Officer"), and shall include, without limitation: (i) for Borrower and
its Subsidiaries, internally-prepared consolidated and consolidating
(including by division) statements of operations for such Fiscal Month
and that portion of the current Fiscal Year ending as of the close of
such Fiscal Month and consolidated and consolidating balance sheets for
each division of Borrower as at the end of such Fiscal Month (it being
understood that a consolidated balance sheet for Borrower will not be
prepared at the end of each such Fiscal Month) each of which should
provide comparisons to the prior Fiscal Year's equivalent period and
the current Fiscal Year's budget; (ii) internally-prepared statements
of operations for each of Borrower's divisions, which statements shall
show revenues, gross profit, operating expenses, depreciation,
amortization and Capital Expenditures for each such division for such
Fiscal Month and that portion of the current Fiscal Year ending as of
the close of such Fiscal Month and shall provide comparisons to the
prior Fiscal Year's equivalent period and the current Fiscal Year's
budget; and (iii) a certificate of a Financial Officer that all such
financial statements are complete and correct and present fairly in
accordance with GAAP (subject to normal year-end adjustments) the
consolidated financial position and the consolidated results of
operations of each of Borrower's divisions as at the end of such Fiscal
Month and for the period then ended, and that there was no Default in
existence as of such time.
(d) Within 45 days after the end of each Fiscal Quarter
(excluding the fourth Fiscal Quarter of each Fiscal Year) such
financial and other information as Agent may request, which financial
and other information shall be certified by a Financial Officer, and
shall include, without limitation: (i) for Borrower and its
Subsidiaries, internally-prepared consolidated and consolidating
statements of operations and cash flows for such Fiscal Quarter and
that portion of the current Fiscal Year ending as of the close of such
124
Fiscal Quarter, each of which should provide comparisons to the prior
Fiscal Year's equivalent period and the current Fiscal Year's budget;
(ii) internally-prepared income statements for each of the divisions of
Borrower, which statements shall show, after elimination of all inter-
company transactions, revenues, gross profit, operating expenses,
depreciation, amortization and capital expenditures for each such
division for such Fiscal Quarter and that portion of the current Fiscal
Year ending as of the close of such Fiscal Quarter and shall provide
comparisons to the prior Fiscal Year's equivalent period and the
current Fiscal Year's budget; (iii) a report of a Financial Officer
setting forth management's discussion and analysis of all current
income statement, balance sheet and cash flow financial trends; (iv) a
statement in reasonable detail showing the calculations used in
determining (x) Borrower's compliance with the financial covenants set
forth in Section 6.10 and (y) the Interest Coverage Ratio referred to
in Sections 1.4 and 1.6; and (v) a certificate of a Financial Officer
that all such financial statements are complete and correct and present
fairly in accordance with GAAP (subject to normal year-end adjustments)
the consolidated financial position, the consolidated results of
operations and the consolidated statements of cash flows of Borrower
and its Subsidiaries as at the end of such Fiscal Quarter and for the
period then ended, and that there was no Default in existence as of
such time.
(e) Within 45 days after the end of each Fiscal Quarter
(including the fourth Fiscal Quarter of each Fiscal Year), a
certificate of a Financial Officer setting forth a statement in
reasonable detail of Borrower's compliance with (and a calculation of
the availability under) (i) Section 1.4(a) (applicable margin), (ii)
Section 1.6(c) (letter of credit fee), (iii) Section 6.2(v)
(Investments relating to divestitures); (iv) Section 6.2 (vi)
(guarantees, etc.),(v) Section 6.3(iii) (Capital Lease Obligations and
Indebtedness secured by purchase money Liens), (vi) Section 6.3(vi)
(other Indebtedness), (vii) Section 6.4(iv) (loans to Joint Venture
Subsidiaries), (viii) Section 6.13(iii) (calculation of the Repayment/
Acquisition Basket, including a calculation of Excess Cash Flow), and
(ix) Section 6.14 (stock repurchases and dividends), together with any
additional reports of a similar type as are reasonably requested by
Agent.
(f) Within 90 days after the close of each Fiscal Year,
copies of the annual audited financial statements of Borrower and its
Subsidiaries determined on a consolidated basis, consisting of a
balance sheet and statement of operations, retained earnings and cash
flow, setting forth in comparative form the figures for the previous
Fiscal Year, which financial statements shall be prepared in accordance
with GAAP, certified without qualification by Xxxxxx Xxxxxxxx LLC, one
of the other six largest firms of independent certified public
accountants of recognized national standing or another firm of
independent certified public accountants selected by Borrower and
acceptable to Agent, and accompanied by (i) a statement in reasonable
detail showing the calculations used in determining Borrower's
compliance with the financial covenants set forth in Section 6.10,
(ii) a report from such accountants to the effect that in connection
with their audit examination, nothing has come to their attention to
cause them to believe that a Default has occurred, (iii) a report of a
Financial Officer setting forth management's discussion and analysis of
all current income statement, balance sheet and cash flow financial
125
trends, and (iv) a certification of a Financial Officer that all such
financial statements are complete and correct and present fairly in
accordance with GAAP the financial position, the results of operations
and the cash flows of Borrower as at the end of such Fiscal Year and
for the period then ended and that there was no Default in existence as
of such time.
(g) Within 90 days after the close of each Fiscal Year,
copies of the annual unaudited financial statements of Borrower and its
Subsidiaries determined on a consolidating (including by division)
basis, consisting of a balance sheet and statement of operations,
retained earnings and cash flows, setting forth in comparative form the
figures for the previous Fiscal Year, along with a certificate of a
Financial Officer that all such financial statements are complete and
correct and present fairly in accordance with GAAP (subject to normal
year-end adjustments) the consolidating financial position, the
consolidating results of operations and the consolidating statements of
cash flows of Borrower and its Subsidiaries as at the end of such
Fiscal Year.
(h) Not later than 31 days after the end of each Fiscal
Year, a final operating plan which shall include a monthly budget
(including a Capital Expenditure budget) for Borrower and its
Subsidiaries for the following Fiscal Year (similar in form and content
to the Projections and shall integrate plans for personnel, Capital
Expenditures, corporate overhead expenses and facilities) approved by
Borrower's board of directors or a committee thereof and, in each case,
which includes the following:
i) projected balance sheets of Borrower and its
Subsidiaries for such Fiscal Year, on a quarterly basis;
ii) projected cash flow statements and forecasted Borrowing
Availability of Borrower and its Subsidiaries, including summary
details of cash disbursements, (including Capital Expenditures)
for such Fiscal Year, on a quarterly basis;
iii) projected statements of operations of Borrower and its
Subsidiaries for such Fiscal Year, on a monthly basis;
iv) projected annual balance sheet, cash flow statements,
and statements of operations of Borrower and its Subsidiaries on a
consolidated and consolidating basis for such Fiscal Year;
together with a description of major assumptions used in generating
such balance sheets, cash flows and income statements, and operating
plan, and other appropriate supporting details as requested by Agent.
(i) As soon as practicable, but in any event within two (2)
Business Days after Borrower becomes aware of the existence of any
Default, telephonic or telegraphic notice specifying the nature of such
Default or development or information, including the anticipated effect
thereof, which notice shall be promptly confirmed in writing within
five (5) days.
(j) Upon Agent's request, copies of all federal, state,
local and foreign tax returns, information returns and reports in
respect of income, franchise or other taxes on or measured by income
126
(excluding sales, use or like taxes) filed by Borrower or any
Subsidiary thereof.
(k) Promptly upon their becoming available, copies of all
registration statements and regular periodic reports which Borrower or
any Subsidiary thereof shall have filed with the Securities and
Exchange Commission (or any governmental agency substituted therefor)
or any national securities exchange.
(l) Promptly upon the mailing thereof to the stockholders of
Borrower generally, copies of all financial statements, reports and
proxy statements so mailed.
(m) As soon as possible, and in any event within ten days
after Borrower knows or has reason to believe that any of the events or
conditions specified below with respect to any Plan or Multiemployer
Plan has occurred or exists, a statement signed by a Financial Officer
setting forth details respecting such event or condition and the
action, if any, that Borrower, any Subsidiary thereof or any ERISA
Affiliate proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to PBGC by
Borrower, any Subsidiary thereof or any ERISA Affiliate with respect to
such event or condition):
i) any ERISA Event and any Reportable Event (provided that
a failure to meet the minimum funding standard of Section 412 of
the IRC or Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any waivers in accordance with
Section 412(d) of the IRC) which results in an increase in the
liabilities of any Loan Party in excess of $500,000;
ii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan;
iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by Borrower, any
Subsidiary thereof or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by PBGC with
respect to such Multiemployer Plan;
iv) the receipt by Borrower, any Subsidiary thereof or any
ERISA Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of
ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA;
v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against Borrower, any Subsidiary thereof or any
ERISA Affiliate to enforce Section 515 of ERISA, which proceeding
is not dismissed within 30 days;
vi) the amendment of a Title IV Plan which results in an
increase in unfunded vested liabilities under the Plan or the
adoption of any new Title IV Plan with unfunded vested
liabilities, or the amendment to a, or adoption of a new, Welfare
Plan, which Borrower, any Loan Party or any ERISA Affiliate
maintains, contributes or has an obligation to contribute to, and
127
which results in an increase in benefits for retirees or new
benefits for retirees;
vii) any Loan Party becomes subject to the tax on prohibited
transactions imposed by Section 4975 of the IRC (such statement
shall be transmitted together with a copy of Form 5330);
viii) any condition in a Qualified Plan which could cause the
loss of tax qualification of such Plan or require a voluntary
compliance resolution (VCR) or closing agreement program (XXXX)
filing with the IRS in order to maintain the tax qualification of
such Plan; and
ix) any claim, action or lawsuit asserted or instituted, or
to the knowledge of Borrower or an ERISA Affiliate threatened,
against (x) any Plan or its assets, (y) any fiduciary with respect
to any Plan or (z) any Loan Party or any ERISA Affiliate with
respect to any Plan, if the adverse result of such claims, actions
or lawsuits, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
(n) Promptly (and in any event within 15 days) after
Borrower knows of the commencement of or the threat of any strike, work
stoppage, lockout or other labor dispute which is likely to have a
Material Adverse Effect, a Certificate of a Financial Officer of the
Borrower describing the nature of the status of such matter in
reasonable detail.
(o) Promptly (and in any event within 10 days) after
Borrower enters into any licensing agreements with Figgie Licensing (in
addition to those entered into prior to the Closing Date), written
notice to Agent, together with a copy of such licensing agreement or
agreements.
(p) Within 30 days after the Closing Date, a schedule of
indemnity obligations of Borrower under the contracts listed on
Schedule 3.7, certified to be true, correct and complete by the Chief
Financial Officer or Treasurer of Borrower.
(q) Such other reports and information respecting Borrower's
business, financial condition or prospects as Agent may, from time to
time, reasonably request.
128
ANNEX E
to
CREDIT AGREEMENT
Dated as of December 19, 1995
INSURANCE REQUIREMENTS
I. Coverage Requirements. The insurance policies maintained by
Borrower provide for, without limitation, the following insurance
coverage:
(a) "All Risk" physical damage insurance on all of
Borrower's tangible real and personal property and assets, wherever
located, including without limitation, Inventory located at premises
not owned or leased by Borrower and covers, without limitation, fire
and extended coverage, boiler and machinery coverage, flood,
earthquake, liquids, theft, burglary, explosion, collapse, and all
other hazards and risks ordinarily insured against by owners or users
of such properties in similar businesses. All policies of insurance on
such real and personal property contain an endorsement, in form and
substance acceptable to Agent, showing loss payable to Agent (Form 438
BFU or its equivalent) and extra expense and business interruption
endorsements. Such endorsement, or an independent instrument furnished
to Agent, provides that the insurance companies will give Agent at
least thirty (30) days prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no act or
default of Borrower or any other Person shall affect the right of Agent
to recover under such policy or policies of insurance in case of loss
or damage;
(b) Comprehensive general liability insurance on an
"occurrence basis" against claims for personal injury, bodily injury
and property damage with a minimum limit of $1,000,000 per occurrence
and $2,000,000 in the aggregate. Such coverage includes, without
limitation, premises/operations, broad form contractual liability,
independent contractors, broad form property coverage, products and
completed operations liability;
(c) Statutory limits of, worker's compensation insurance
which includes employee's occupational disease and employer's
liability in the amount of $500,000 for each accident or occurrence;
(d) Automobile liability insurance for all owned, non-owned
or hired automobiles against claims for personal injury, bodily injury
and property damage with a minimum combined single limit of $1,000,000
per occurrence;
(e) Umbrella insurance of $50,000,000 per occurrence and
$50,000,000 in the aggregate;
(f) Aircraft products liability insurance in an amount not
less than $100,000,000;
(g) Crime insurance with respect to employee dishonesty in
an amount not less than $1,000,000;
129
(h) Fiduciary liability insurance with respect to defined
benefit and group welfare plans in an amount not less than $15,000,000;
and
(i) Directors and Officers liability insurance in an amount
not less than $10,000,000.
All of such policies (i) shall have deductibles customary for
businesses engaged in the industries in which Borrower is engaged;
(ii) shall provide that Agent will be notified by written notice at
least thirty (30) days prior to such policy's cancellation, non-renewal
or material amendment; (iii) are in full force and effect; (iv) are in
form and with insurers recognized as adequate by Agent (insurers with
an A.M. Best rating lower than "A-" will not be considered adequate);
and (v) provide coverage of such risks and for such amounts as is
customarily maintained for businesses of the scope and size of
Borrower's and as otherwise acceptable to Agent. Borrower has
delivered to Agent a certificate of insurance that evidences the
existence of each policy of insurance.
130
ANNEX F
to
CREDIT AGREEMENT
Dated as of December 19, 1995
LETTERS OF CREDIT
1. Subject to the terms and conditions of this Agreement,
Agent or the Issuing Bank, as the case may be, agrees to incur from
time to time upon written request of Borrower, Letter of Credit
Obligations for Borrower's account by causing to be issued (by a bank
selected by or otherwise acceptable to Agent in its discretion) for the
account of Borrower and guaranteed by Agent, Letters of Credit, in the
case of Agent, or by issuing Letters of Credit for the account of
Borrower in the case of the Issuing Bank; provided, however, that the
aggregate amount of all Letter of Credit Obligations at any one time
outstanding whether or not then due and payable shall not exceed the
Borrowing Availability; and, provided, further, that (a) no such Letter
of Credit shall have an expiry date which is more than one year
following the date of issuance thereof and (b) no such Letter of Credit
shall have an expiry date which is later than the Commitment
Termination Date. The terms of each Letter of Credit shall be
acceptable in all respects to Agent or the Issuing Bank, as the case
may be, in its sole discretion. Borrower shall, as a condition
precedent to the issuance of any Letter of Credit, execute and deliver
such applications and other agreements as the issuer thereof may
require. The terms of each Letter of Credit shall be governed by such
Letter of Credit and any such applications or other agreements relating
thereto.
2. In the event that Agent or the Issuing Bank, as the case
may be, shall make any payment under or in respect of any Letter of
Credit Obligation such payment shall be deemed to constitute a
Revolving Credit Advance under Section 1.1(a). Such Revolving Credit
Advance shall be made notwithstanding Borrower's failure to satisfy the
conditions set forth in Section 2 and each Lender shall be obligated to
pay its pro rata share thereof in accordance with this Agreement. The
failure of any Lender to make available to Agent or the Issuing Bank,
as the case may be, for Agent's or the Issuing Bank's own account its
pro rata share of any such Revolving Credit Advance or payment by Agent
or the Issuing Bank, as the case may be, under or in respect of a
Letter of Credit shall not relieve any other Lender of its obligation
hereunder to make available to Agent or the Issuing Bank, as the case
may be, for Agent's or the Issuing Bank's own account its pro rata
share thereof, but no Lender shall be responsible for the failure of
any other Lender to make available such other Lender's pro rata share
of any such payment.
3. If for any reason (including the existence of a
Default), Borrower shall fail to incur or it shall be illegal or
unlawful for Borrower to incur or be required to incur Revolving Credit
Advances as contemplated by paragraph (2) above, then (a) immediately
and without further action whatsoever, each Lender shall be deemed to
have irrevocably and unconditionally purchased from Agent or the
Issuing Bank, as the case may be, an undivided interest and
131
participation in such Lender's pro rata share (based on the Revolving
Credit Commitments) of the Letter of Credit Obligations in respect of
all Letters of Credit then outstanding and (b) thereafter, immediately
upon issuance of any Letter of Credit, each Lender shall be deemed to
have irrevocably and unconditionally purchased from Agent or the
Issuing Bank, as the case may be, an undivided interest and
participation in such Lender's pro rata share (based on the Revolving
Credit Commitments) of the Letter of Credit Obligations with respect to
such Letter of Credit on the date of such issuance. Each Lender shall
fund its participation in all payments or disbursements made under the
Letters of Credit in the same manner as provided in this Agreement with
respect to Revolving Credit Advances.
4. The obligations of Borrower and Lenders to make payments
to Agent or the Issuing Bank, as the case may be, for Agent's or the
Issuing Bank's own account with respect to Letters of Credit shall be
irrevocable and not subject to any qualification or exception
whatsoever and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including,
without limitation, any of the following circumstances:
(a) any lack of validity or enforceability of this
Agreement, any Letter of Credit or any of the Loan Documents;
(b) the existence of any claim, set-off, defense or
other right which Borrower or any other Person may have at any time
against a beneficiary named in a Letter of Credit, any transferee of
any Letter of Credit (or any Person for whom any such transferee may be
acting), Agent, the Issuing Bank, any Lender, or any other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including, without limitation, any underlying transaction between
Borrower and the beneficiary named in any Letter of Credit);
(c) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(d) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(e) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document which does not
comply in any immaterial respect with the terms of such Letter of
Credit;
(f) payment by the Issuing Bank under a Letter of
Credit pursuant to a court order or the direction of any Governmental
Authority without regard to the Issuing Bank's evaluation of drafts or
documents presented;
(g) any other circumstance or event whatsoever whether
or not similar to any of the foregoing; or
(h) the occurrence of any Default or Event of Default.
132
5. In the event that any Letter of Credit Obligation,
whether or not then due and payable, shall for any reason be
outstanding on the Commitment Termination Date, Borrower will pay to
Agent or the Issuing Bank, as the case may be, cash in an amount equal
to 105% of the then outstanding Letter of Credit Obligations. Such
cash shall be held by Agent in a cash collateral account (the "Cash
Collateral Account") maintained in a bank designated by Agent. The
Cash Collateral Account shall be in the name of Agent (as a cash
collateral account), and shall be under the sole dominion and control
of Agent and subject to the terms of this Annex F. Borrower hereby
pledges, and grants to Agent for the ratable benefit of Lenders a
security interest in, all such funds held in the Cash Collateral
Account from time to time and all proceeds thereof, as security for the
payment of all amounts due in respect of the Letter of Credit
Obligations, whether or not then due, and the other Obligations. This
Agreement shall constitute a security agreement under applicable law.
6. From time to time after funds are deposited in the Cash
Collateral Account, Agent may apply such funds then held in the Cash
Collateral Account to the payment of any amounts, in such order as
Agent may elect, as shall be or shall become due and payable by
Borrower to Agent or the Issuing Bank, as the case may be, and/or
Lenders with respect to any Letter of Credit Obligations or any other
Obligations.
7. Neither Borrower nor any Person claiming on behalf of or
through Borrower shall have any right to withdraw any of the funds held
in the Cash Collateral Account, except that upon the termination of all
Letter of Credit Obligations and the payment of all amounts payable by
Borrower to Agent or the Issuing Bank, as the case may be, and/or
Lenders in respect thereof, any funds remaining in the Cash Collateral
Account in excess of the then remaining Letter of Credit Obligations
shall be returned to Borrower.
8. Agent shall have the right (but shall not have any
obligation) to invest the funds in the Cash Collateral Account or
deposit such funds in an interest bearing account, provided that, if
Agent shall invest such funds or deposit such funds in an interest
bearing account, the interest and earnings thereon, if any, shall
become part of the Cash Collateral Account and shall be held by Agent
as additional security for the Letter of Credit Obligations.
9. After GE Capital has completed its syndication of the
Revolving Credit Loan, GE Capital shall provide Borrower with the names
of Lenders which are willing to act as Issuing Bank hereunder. Upon
Borrower's selection of an Issuing Bank approved by Agent, the Issuing
Bank shall issue Letters of Credit hereunder in accordance with the
terms hereof and GE Capital shall only be obligated to incur Letter of
Credit Obligations on behalf of Borrower in the event that Borrower
provides GE Capital with a valid commercial reason, as determined by GE
Capital in its reasonable judgment, for not being able to use the
Issuing Bank for such Letter of Credit Obligation. In the event that
Borrower requests that the Issuing Bank issue a Letter of Credit
hereunder, the Issuing Bank shall notify Agent of the terms thereof and
the issuance of such Letter of Credit shall be subject to Agent's
determination that such Letter of Credit is being issued in accordance
with the terms of this Agreement.
133
WAIVER AND AMENDMENT NO.1
WAIVER and AMENDMENT No. 1 (this "Waiver and
Amendment"), dated as of January 30, 1996, between General
Electric Capital Corporation ("GE Capital"), as lender (the
"Lender") under the Credit Agreement referred to below and
Figgie International Inc. (the "Borrower").
W I T N E S S E T H :
WHEREAS, the Borrower and GE Capital, as Lender
and as agent (in such latter capacity, the "Agent") have
entered into a Credit Agreement, dated as of December 19,
1995 (the "Credit Agreement"; the terms defined in the
Credit Agreement being used herein as therein defined,
unless otherwise defined herein);
WHEREAS, the CAFIG Mortgage presently secures two
mortgage notes, a 10.52% note in the outstanding principal
amount of approximately $16.1 million held by Teachers
Insurance and Annuity Association of America (the "Teachers
Note") and a 10.52% note in the outstanding principal amount
of approximately $2.8 million held by American United Life
Insurance Company (the "American Note");
WHEREAS, the Teachers Note and the American Note
are secured under the CAFIG Mortgage by certain real
property located in Anaheim, Orange County, California and
related improvements, fixtures, insurance and other proceeds
as and to the extent provided in the CAFIG Mortgage (the
"Property");
WHEREAS, the Borrower wishes to cause its
Subsidiary, CAFIG Inc., to prepay the Teachers Note (the
"Purchase") by making an advance to CAFIG Inc. as necessary
to prepay the Teachers Note (the "Advance");
WHEREAS, following the Advance and the Purchase,
and on or prior to September 30, 1996, the Borrower wishes
to cause CAFIG Inc. (i) to refinance the outstanding
American Note and the Purchase in an aggregate amount not to
exceed $18,927,000 which shall be secured by the Property
(the "Refinancing") and (ii) to repay the Advance (the
"Repayment"); and
WHEREAS, the Required Lenders are willing to waive
Sections 6.3, 6.4, 6.7, 6.10 and 6.13 of the Credit
Agreement and amend the calculation of the
Repayment/Acquisition Basket under the Credit Agreement to
permit the Advance, the Purchase, the Refinancing and the
Repayment in the manner on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises
and mutual covenants contained herein, the parties hereto
hereby agree as follows:
134
SECTION 1. Waiver of Section 6.3 of the Credit
Agreement (Indebtedness). Notwithstanding the provisions of
Section 6.3 of the Credit Agreement, the Required Lenders
waive any Default or Event of Default resulting solely from
the failure of the Borrower to comply with the provisions of
such Section solely as a result of the Refinancing;
provided, however, that, subject to the maximum permitted
principal amount provided for above, the Refinancing shall
be on terms no less favorable to Borrower, Agent or any
Lender, as determined by Agent, than the terms of the
American Note and the CAFIG Mortgage being refinanced
including, without limitation, with respect to maturity,
amortization, interest rate, premiums, fees, covenants,
events of default and remedies; and, provided, further, that
the Refinancing shall close on or prior to September 30,
1996.
SECTION 2. Waiver of Section 6.4 of the Credit
Agreement (Affiliate Loans). Notwithstanding the provisions
of Section 6.4 of the Credit Agreement, the Required Lenders
waive any Default or Event of Default resulting solely from
the failure of the Borrower to comply with the provisions of
such Section solely as a result of the Advance or the
Repayment. Borrower and the Required Lenders understand and
agree that the Advance will be in addition to any loans or
advances otherwise permitted by Section 6.4 of the Credit
Agreement under the Domestic Subsidiary Basket.
SECTION 3. Waiver of Section 6.7 of the Credit
Agreement (Liens). Notwithstanding the provisions of
Section 6.7 of the Credit Agreement, the Required Lenders
waive any Default or Event of Default resulting solely from
the failure of the Borrower to comply with the provisions of
such Section solely as a result of the granting of any Liens
on the Property in connection with the Refinancing;
provided, however, that the Refinancing shall close on or
prior to September 30, 1996.
SECTION 4. Waiver of Section 6.10(e) of the
Credit Agreement (Current Ratio). Notwithstanding the
provisions of Section 6.10(e) of the Credit Agreement, the
Required Lenders waive any Default or Event of Default
resulting solely from the failure of the Borrower to comply
with the provisions of such Section for the Fiscal Quarters
ending March 31, 1996, June 30, 1996 and September 30, 1996
solely as a result of the Advance and the Purchase;
provided, however, that the Borrower shall maintain, as at
the end of each such Fiscal Quarter, a ratio of Current
Assets to Current Liabilities of not less than 1.5 to 1.0
for each such Fiscal Quarter.
SECTION 5. Waiver of Section 6.13 of the Credit
Agreement (Cancellation of Indebtedness). Notwithstanding
the provisions of Section 6.13 of the Credit Agreement, the
Required Lenders waive any Default or Event of Default
resulting solely from the failure of the Borrower to comply
with the provisions of such Section solely as a result of
the Purchase or the Repayment. Borrower and the Required
135
Lenders understand and agree that availability under the
Repayment/Acquisition Basket as of the date of the Purchase
will be exceeded as a result of the Purchase.
SECTION 6. Amendments to Annex A to the Credit
Agreement. Annex A to the Credit Agreement is hereby
amended by (i) adding a new clause (vi) to the definition of
"Repayment/Acquisition Basket" immediately following clause
(v) thereof which shall read as follows:
"(vi) cash and Cash Equivalents received by the
Borrower directly from CAFIG Inc., a Subsidiary of
Borrower, as a result of the Refinancing of the
Teachers Note and the resultant Repayment,
provided, however, that the Refinancing shall
close on or prior to September 30, 1996,"
; and (ii) adding the following new definitions in the
proper alphabetical order:
"Advance" shall mean the advance made by Borrower
to its Subsidiary CAFIG Inc. as necessary to enable
CAFIG Inc. to prepay the Teachers Note.
"American Note" shall mean the 10.52% note in the
outstanding principal amount of approximately $2.8
million held by American United Life Insurance Company.
"CAFIG Mortgage" shall mean the Mortgage securing
the American Note and the Teachers Note.
"Property" shall mean that certain real property
owned by CAFIG Inc. and located in Anaheim, Orange
County, California and the related improvements,
fixtures, insurance and other proceeds, as and to the
extent constituting collateral under the CAFIG
Mortgage.
"Purchase" shall mean the prepayment by CAFIG Inc.
of the Teachers Note.
"Refinancing" shall mean the refinancing of the
outstanding American Note and the Purchase in an
aggregate amount not to exceed $18,927,000 which shall
be secured by the Property.
"Repayment" shall mean the repayment by CAFIG Inc.
of the Advance.
"Teachers Note" shall mean the 10.52% note in the
outstanding principal amount of approximately $16.1
million held by Teachers Insurance and Annuity
Association of America.
SECTION 7. Conditions to Effectiveness of Waiver.
This Waiver and Amendment shall become effective upon
satisfaction of the following conditions:
136
(a) Agent shall have received counterparts of
this Waiver and Amendment duly executed by the parties
hereto;
(b) Each Loan Party's representations and
warranties contained in any of the Loan Documents shall be
true and correct on and as of the date hereof both before
and after giving effect to the transactions contemplated by
this Waiver and Amendment, except to the extent that any
such representation or warranty expressly relates to an
earlier date and except for changes therein permitted or
contemplated by the Credit Agreement; and
(c) Agent shall have received a certificate of a
Responsible Officer as to the calculation of the
Repayment/Acquisition Basket both immediately prior to and
after giving effect to the Purchase, which certificate shall
be in form and substance satisfactory to the Agent.
SECTION 8. Reference to and Effect on the Loan
Documents. (a) Upon the effectiveness of Sections 1
through 6 hereof, on and after the date hereof, each
reference in the Credit Agreement to "this Agreement,"
"hereunder," "hereof," "herein," or words of like import,
and each reference in the other Loan Documents to the Credit
Agreement, shall mean and be a reference to the Credit
Agreement as modified hereby.
(b) Except as specifically amended herein,
the Credit Agreement shall remain in full force and effect
and is hereby ratified and confirmed.
(c) The execution, delivery and effective-
ness of this Waiver and Amendment shall not, except as
expressly provided herein, operate as a waiver or
modification of any right, power, or remedy of the Agent or
the Lenders under any of the Loan Documents, nor constitute
a waiver or modification of any provision of any of the Loan
Documents.
SECTION 9. Execution in Counterparts. This
Waiver and Amendment may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which, when so executed and delivered,
shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
SECTION 10. Governing Law. This Waiver and
Amendment shall be governed by and construed in accordance
with the laws of the State of New York without regard to the
conflict of law principles thereof.
137
IN WITNESS WHEREOF, the parties hereto have caused
this Waiver and Amendment to be executed by their
representative officers thereunto duly authorized as of the
date first written above.
GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender
and as Agent
By:
Title:
FIGGIE INTERNATIONAL INC.
By:
Title:
138
AMENDMENT NO.2
AMENDMENT NO. 2 (this "Amendment"), dated as of
February 19, 1996, between General Electric Capital
Corporation ("GE Capital"), as lender (the "Lender") and
agent (the "Agent") under the Credit Agreement referred to
below and Figgie International Inc. (the "Borrower").
W I T N E S S E T H :
WHEREAS, the Borrower and GE Capital, as Lender
and as Agent have entered into a Credit Agreement, dated as
of December 19, 1995 (as heretofore amended, the "Credit
Agreement"; the terms defined in the Credit Agreement being
used herein as therein defined, unless otherwise defined
herein);
WHEREAS, the Borrower wishes to amend, inter alia,
the minimum tangible net worth covenant contained in the
Credit Agreement and the definitions of "Capital
Expenditures" and "Tangible Net Worth" contained in Annex A
to the Credit Agreement; and
WHEREAS, the Required Lenders are willing to amend
Sections 1.16(b), 6.10(d) and 10.2 and Annexes A and D of
the Credit Agreement, in each case in the manner and on the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises
and mutual covenants contained herein, the parties hereto
hereby agree as follows:
SECTION 11. Amendment of Section 1.16(b) of the
Credit Agreement (Confidentiality). Section 1.16(b) of the
Credit Agreement is hereby amended by deleting clause (i)
thereof in its entirety and substituting in lieu thereof the
following:
"(i) Agent and each Lender may disclose any
Confidential Information (w) only on a
confidential and "need-to-know" basis to Agent's
or such Lender's outside agents and consultants
(including attorneys and accountants), (x) to
directors, officers and employees of Agent or such
Lender, (y) to other employees of other Affiliates
or Subsidiaries of Agent or such Lender, but only
on a confidential and "need-to-know" basis, and
(z) to examiners, auditors and investigators
having regulatory authority over Agent or such
Lender;"
SECTION 12. Amendment of Section 6.10(d) of the
Credit Agreement (Minimum Tangible Net Worth). Section
6.10(d) of the Credit Agreement is hereby amended by
deleting such Section in its entirety and substituting in
lieu thereof the following (which amendment shall be
139
effective as of December 31, 1995):
"(d) Minimum Tangible Net Worth. Borrower
shall maintain, as at the end of each Fiscal
Quarter set forth below, Tangible Net Worth of not
less than the amount for such Fiscal Quarter:
Fiscal Quarter Minimum
Ending Tangible Net Worth
December 31, 1995 $19,000,000
March 31, 1996 22,000,000
June 30, 1996 25,000,000
September 30, 1996 28,000,000
December 31, 1996 31,000,000
March 31, 1997 36,250,000
June 30, 1997 40,750,000
September 30, 1997 45,250,000
December 31, 1997 49,750,000
March 31, 1998 56,500,000
June 30, 1998 62,500,000
September 30, 1998 68,500,000
December 31, 1998 75,500,000"
SECTION 13. Amendment of Section 10.2 of the
Credit Agreement (Assignments and Participations). Section
10.2 of the Credit Agreement is hereby amended by adding the
following clause at the end of paragraph (a) thereof:
"; and, provided, further, that any Lender may
assign or create a security interest in all or any
portion of its rights under this Agreement or its
Revolving Credit Note in favor of any Federal
Reserve Bank in accordance with Regulation A of
the Board of Governors of the Federal Reserve
System (or any successor regulation)."
SECTION 14. Amendments of Annex A to the Credit
Agreement (Definitions). Annex A to the Credit Agreement is
hereby amended by (i) deleting the definition of the term
"Capital Expenditures" contained therein and substituting in
lieu thereof the following:
"Capital Expenditures" shall mean all payments or
accruals for any fixed assets or improvements or for
replacements, substitutions or additions thereto and
that are required to be capitalized under GAAP;
provided, however, that "Capital Expenditures" shall
not mean or include payments or accruals for purchases
of assets leased under those lease agreements listed in
Schedule 6.3 to the extent (i) purchased for resale,
(ii) constituting equipment, tooling and fixtures
purchased (x) for cash in an aggregate amount up to
$1,000,000 (or any amount in excess of $1,000,000 to
the extent there is availability under the
Repayment/Acquisition Basket and Borrower shall have
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delivered to Agent not less than three (3) Business
Days in advance of any such purchase a certificate of a
Responsible Officer as to the calculation of the
Repayment/Acquisition Basket immediately prior to and
after giving effect to such purchase), (y) utilizing
any lease prepayment credit due from the related lessor
to Borrower, or (z) any combination of clauses (x) and
(y), or (iii) purchased with cash in an aggregate
amount not to exceed $1,718,548 in connection with
Borrower's exercise of its early termination and
purchase option on January 22, 1996 under the Equipment
Lease Agreement, dated as of June 15, 1993, between
Borrower and GE Capital.
; (ii) deleting the definition of the term "Tangible Net
Worth" contained therein and substituting in lieu thereof
the following (which amendment shall be effective as of
December 31, 1995):
"Tangible Net Worth" of Borrower shall mean, at
any date, the Net Worth of Borrower at such date,
excluding, however, from the determination of the total
assets of Borrower at such date, (i) all goodwill,
capitalized organizational expenses, capitalized
research and development expenses, trademarks, trade
names, copyrights, patents, patent applications,
licenses and rights in any thereof, (ii) the
unamortized portion of items aggregating $4,619,000 and
designated as "Other" and constituting a component of
Borrower's "Other Assets" as shown on the executive
summary of Borrower's consolidated balance sheet for
the Fiscal Year ended December 31, 1995, a copy of
which has previously been delivered to Agent, plus the
unamortized portion of any additions thereto, (iii) all
unamortized debt discount and expense, (iv) treasury
Stock, and (v) any write-up in the book value of any
asset resulting from a revaluation thereof.
; and (iii) adding the following new definition in the
proper alphabetical order:
"Second Amendment" shall mean Amendment No. 2 to
this Agreement, dated as of February 19, 1996, among
Lenders, Agent and Borrower.
SECTION 15. Amendment of Annex D to the Credit
Agreement (Financial Statements, Projections and Notices).
Annex D to the Credit Agreement is hereby amended by adding
the following language at the end of clause (ii) of
paragraph (f) thereof:
", provided, however, that (x) nothing contained
in this clause (ii) shall require such accountants
to undertake in connection with such report any
procedures to determine whether a Default has
occurred, other than those procedures normally
undertaken by such accountants in connection with
their annual audit examination of Borrower, and
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(y) Borrower shall cause such accountants to
deliver to Agent within 90 days after the close of
each Fiscal year a reliance letter addressed to
Agent and Lenders with respect to each such
report, and such reliance letter shall be
satisfactory in form and substance to Agent,"
SECTION 16. Conditions to Effectiveness of
Waiver. This Amendment shall become effective upon
satisfaction of the following conditions:
(a) Agent shall have received counterparts
of this Amendment duly executed by the parties hereto;
(b) Each Loan Party's representations and
warranties contained in the Loan Documents shall be true and
correct on and as of the date hereof both before and after
giving effect to the transactions contemplated by this
Amendment, except to the extent that any such representation
or warranty expressly relates to an earlier date and except
for changes therein permitted or contemplated by the Credit
Agreement; and
(c) Agent shall have received a reliance
letter from Xxxxxx Xxxxxxxx LLP, which letter shall be in
form and substance satisfactory to Agent.
SECTION 17. Reference to and Effect on the Loan
Documents. (a) Upon the effectiveness of this Amendment,
on and after the date hereof, each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof,"
"herein," or words of like import, and each reference in the
other Loan Documents to the Credit Agreement, shall mean and
be a reference to the Credit Agreement as modified hereby.
(b) Except as specifically amended herein,
the Credit Agreement shall remain in full force and effect
and is hereby ratified and confirmed.
(c) The execution, delivery and effective-
ness of this Amendment shall not, except as expressly
provided herein, operate as a modification of any right,
power, or remedy of the Agent or the Lenders under any of
the Loan Documents, nor constitute a modification of any
provision of any of the Loan Documents.
SECTION 18. Execution in Counterparts. This
Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each
of which, when so executed and delivered, shall be deemed to
be an original and all of which taken together shall
constitute but one and the same instrument.
SECTION 19. Governing Law. This Amendment shall
be governed by and construed in accordance with the laws of
the State of New York without regard to the conflict of laws
principles thereof.
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IN WITNESS WHEREOF, the parties hereto have caused
this Amendment No. 2 to be executed by their representative
officers thereunto duly authorized as of the date first
written above.
GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender
and as Agent
By:
Title:
FIGGIE INTERNATIONAL INC.
By:
Title:
