EXECUTION COPY
CREDIT AGREEMENT
This CREDIT AGREEMENT dated as of October 31, 1997 (as
amended, supplemented or modified from time to time, the "Agreement") is
entered into among STELLEX INDUSTRIES, INC., a Delaware corporation ("Stellex"),
KII HOLDING CORP., a Delaware corporation ("Holding"), TSMD ACQUISITION CORP., a
Delaware corporation ("TSMD Acquisition"), KII ACQUISITION CORP., a Delaware
corporation ("KII Acquisition"), STELLEX MICROWAVE SYSTEMS, INC., a California
corporation ("MICROWAVE"), STELLEX AEROSPACE, a California corporation, PARAGON
PRECISION PRODUCTS, a California corporation, XXXXX MACHINING INTERNATIONAL, a
California corporation, SCANNING ELECTRON ANALYSIS LABORATORIES, INC., a
California corporation, and GENERAL INSPECTION LABORATORIES, INC., a California
corporation (collectively, the "Borrowers", and individually, a "Borrower"), the
financial institutions from time to time parties hereto, whether by execution of
this Agreement or an Assignment and Acceptance (the "Lenders"), SOCIETE GENERALE
("SocGen"), in its capacity as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"), and FIRST UNION COMMERCIAL CORPORATION
("First Union"), in its capacity as syndication agent for the Lenders (in such
capacity, the "Syndication Agent") and in its capacity as collateral agent for
the Lenders (in such capacity, the "Collateral Agent").
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. The following terms used in this
Agreement shall have the following meanings, applicable both to the singular and
the plural forms of the terms defined:
"Accommodation Obligation" means any Contractual Obligation,
contingent or otherwise, of any Person with respect to any Indebtedness,
obligation or liability of another, if the primary purpose or intent thereof by
the Person incurring the Accommodation Obligation is to provide assurance to the
obligee of such Indebtedness, obligation or liability of another Person that
such Indebtedness, obligation or liability will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders
thereof will be protected (in whole or in part) against loss in respect thereof
including, without limitation, direct and indirect guarantees, endorsements
(except for collection or deposit in the ordinary course of business), notes
co-made or discounted, recourse agreements, take-or-pay agreements, keep-well
agreements, agreements to purchase or repurchase such Indebtedness, obligation
or liability or any security therefor or to provide funds for the payment or
discharge thereof, agreements to maintain solvency, assets, level of
income, or other financial condition, and agreements to make payment other than
for value received.
"Acquisitions" means, collectively, the Xxxxxxxx
Acquisition and the Xxxxxxx-Xxxxxxx Acquisition.
"Acquisition Agreements" means, collectively, the
Xxxxxxxx Acquisition Agreement and the Xxxxxxx-Xxxxxxx
Acquisition Agreement.
"Acquisition Documents" means, collectively, the
Xxxxxxxx Acquisition Documents and the Xxxxxxx-Xxxxxxx
Acquisition Documents.
"Administrative Agent" has the meaning ascribed to such
term in the preamble hereto.
"Administrative Agent's Account" means SocGen's account,
account number 0000000 (re: Stellex), maintained at the office of Societe
Generale, New York, New York, ABA #000000000, or such other account as the
Administrative Agent may from time to time specify in writing to the Borrowers
and the Lenders.
"Aerospace" means Stellex Aerospace, a California
corporation (formerly known as Xxxxxxxx Industries Inc.).
"Affiliate" means, as applied to any specified Person, any
other Person that directly or indirectly controls, is controlled by, or is under
common control with, such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as applied to any specified
Person, means the possession, directly or indirectly, of the power to vote ten
percent (10%) or more of the Securities having voting power for the election of
directors of such specified Person or otherwise to direct or cause the direction
of the management and policies of such specified Person, whether through the
ownership of voting Securities or by contract or otherwise.
"Agents" means, collectively, the Administrative Agent,
the Collateral Agent and the Syndication Agent.
"Agreement" has the meaning ascribed to such term in
the preamble hereto.
"Applicable Revolving Loan Base Rate Margin" means initially a
rate equal to 1.00% per annum during the period from the Closing Date until the
first day of the third fiscal quarter of 1998. Thereafter, such rate will
fluctuate quarterly on the first day of each fiscal quarter, commencing with the
third fiscal quarter of 1998, based upon the Leverage Ratio for the preceding
twelve-month period, calculated as of the last day of such preceding
twelve-month period, as set forth below:
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If the Leverage Applicable Revolving Loan
Ratio is: Base Rate Margin
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Equal to or greater
than 5.0 1.000%
Less than 5.0 but equal to
or greater than 4.5 0.875%
Less than 4.5 but equal to
or greater than 4.0 0.750%
Less than 4.0 but equal to
or greater than 3.5 0.625%
Less than 3.5 but equal to
or greater than 3.0 0.500%
Less than 3.0 0.375%
"Applicable Term Loan Base Rate Margin" means initially a rate
equal to 1.25% per annum during the period from the Closing Date until the first
day of the third fiscal quarter of 1998. Thereafter, such rate will fluctuate
quarterly on the first day of each fiscal quarter, commencing with the third
fiscal quarter of 1998, based upon the Leverage Ratio for the preceding
twelve-month period, calculated as of the last day of such preceding
twelve-month period, as set forth below:
If the Leverage Applicable Term Loan
Ratio is: Base Rate Margin
--------------- --------------------
Equal to or greater
than 5.0 1.250%
Less than 5.0 but equal to
or greater than 4.5 1.250%
Less than 4.5 but equal to
or greater than 4.0 1.150%
Less than 4.0 but equal to
or greater than 3.5 1.000%
Less than 3.5 but equal to
or greater than 3.0 0.750%
Less than 3.0 0.625%
"Applicable Revolving Loan Eurodollar Rate Margin" means
initially a rate equal to 2.00% per annum during the period from the Closing
Date until the first day of the third fiscal quarter of 1998. Thereafter, such
rate will fluctuate quarterly on the first day of each fiscal quarter,
commencing with the third fiscal quarter of 1998, based upon the Leverage Ratio
for the preceding twelve-month period, calculated as of the last day of such
preceding twelve-month period, as set forth below:
If the Leverage Applicable Revolving Loan
Ratio is: Eurodollar Rate Margin
--------------- -------------------------
Equal to or greater
than 5.0 2.000%
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Less than 5.0 but equal to
or greater than 4.5 1.875%
Less than 4.5 but equal to
or greater than 4.0 1.750%
Less than 4.0 but equal to
or greater than 3.5 1.625%
Less than 3.5 but equal to
or greater than 3.0 1.500%
Less than 3.0 1.375%
"Applicable Term Loan Eurodollar Rate Margin" means initially
a rate equal to 2.25% per annum during the period from the Closing Date until
the first day of the third fiscal quarter of 1998. Thereafter, such rate will
fluctuate quarterly on the first day of each fiscal quarter, commencing with the
third fiscal quarter of 1998, based upon the Leverage Ratio for the preceding
twelve-month period, calculated as of the last day of such preceding
twelve-month period, as set forth below:
If the Leverage Applicable Term Loan
Ratio is: Eurodollar Rate Margin
--------------- ----------------------
Equal to or greater
than 5.0 2.250%
Less than 5.0 but equal to
or greater than 4.5 2.250%
Less than 4.5 but equal to
or greater than 4.0 2.150%
Less than 4.0 but equal to
or greater than 3.5 2.000%
Less than 3.5 but equal to
or greater than 3.0 1.750%
Less than 3.0 1.625%
"Applicable Lending Office" means, with respect to a
particular Lender, its Eurodollar Lending Office in respect of provisions
relating to Eurodollar Rate Loans and its Domestic Lending Office in respect of
provisions relating to Base Rate Loans.
"Asset Sale" means any sale, conveyance, transfer, lease or
other disposition of property of any Loan Party.
"Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto and made a part hereof
(with blanks appropriately completed) delivered to the Administrative Agent in
connection with an assignment of a Lender's interest under this Agreement in
accordance with the provisions of Section 13.01.
"Availability" means, at any particular time, the amount by
which the Maximum Revolving Credit Amount at such time exceeds the Revolving
Credit Obligations at such time.
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"Base Rate" means, on any date, a fluctuating interest rate
per annum (rounded upward, if necessary, to the next highest 1/16 of 1%) equal
to the higher of:
(a) the rate of interest then most recently established by
SocGen in New York, New York as its base rate for Dollars loaned in the
United States, in effect on such date; and
(b) the Federal Funds Rate in effect on such date
plus 1/2 of 1%.
The Base Rate is not necessarily intended to be the lowest rate of interest
determined by SocGen in connection with extensions of credit.
"Base Rate Loans" means all Loans which bear interest at a
rate determined by reference to the Base Rate as provided in Section 4.01(a).
"Benefit Plan" means a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) which is subject to
Title IV of ERISA or Section 412 of the Code in respect of which any Loan Party
or any ERISA Affiliate is, or within the immediately preceding six (6) years
was, an "employer" as defined in Section 3(5) of ERISA.
"Board of Directors" means the board of directors or
equivalent governing body of a Person (or the general partner of such Person, as
the case may be,) or any committee thereof duly authorized to act on behalf of
such board of directors or equivalent governing body.
"Borrowers" has the meaning ascribed to such term in
the preamble hereto.
"Borrowing" means a borrowing consisting of Loans of the same
Type made on the same day by the Lenders.
"Borrowing Base" means, as of any date of determination, an
amount equal to the sum of (a) eighty-five percent (85%) of Eligible Receivables
less such reserves as the Administrative Agent reasonably deems appropriate plus
(B) fifty percent (50%) of Eligible Inventory less such reserves as the
Administrative Agent reasonably deems appropriate.
"Borrowing Base Certificate" means a certificate,
substantially in the form of Exhibit B attached hereto and made a part hereof.
"Business" means the businesses of Stellex and its
Subsidiaries on the date hereof and any business located in the
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United States or Canada related, ancillary or complementary thereto, or which is
an extension thereof.
"Business Day" means a day, in the applicable local time,
which is not a Saturday or Sunday or a legal holiday and on which banks are not
required or permitted by law or other governmental action to close (i) in New
York, New York or Los Angeles, California and (ii) in the case of Eurodollar
Rate Loans, in London, England.
"Capital Expenditures" means, for any period, the aggregate of
all expenditures (whether paid in cash or other assets or accrued as a liability
(but without duplication)) during such period that, in conformity with GAAP, are
required to be included in or reflected by a Loan Party's fixed asset account as
reflected in its balance sheets; provided, however, that Capital Expenditures
shall include, whether or not such a designation would be in conformity with
GAAP, (A) that portion of Capital Leases which is capitalized on the balance
sheet of such Loan Party and (B) expenditures for Equipment which is purchased
simultaneously with the trade-in of existing Equipment owned by such Loan Party
to the extent that the gross purchase price of the purchased Equipment exceeds
the book value of the Equipment being traded in at such time; provided, further,
that Capital Expenditures shall exclude, whether or not such a designation would
be in conformity with GAAP, (i) any expenditures made with the proceeds, damages
or awards under any policy of insurance with respect to any casualty or other
damage or defect or the proceeds of any taking by reason of any public
improvement or condemnation proceeding or transfer and (ii) any Permitted
Acquisition relating to an acquisition of assets.
"Capital Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"Capital Stock" means, with respect to any Person, any capital
stock of such Person, regardless of class or designation, and all warrants,
options, purchase rights, conversion or exchange rights, voting rights, calls or
claims of any character with respect thereto.
"Cash Capital Expenditures" means, for any period, that
portion of Capital Expenditures which is paid in cash.
"Cash Collateral Account" means the account opened and
maintained at First Union National Bank which account shall be governed by the
terms of the Cash Collateral Pledge Agreement and shall be under the sole
dominion and control of the Collateral Agent.
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"Cash Collateral Pledge Agreement" means the Cash Collateral
Pledge and Assignment Agreement, substantially in the form of Exhibit K attached
hereto and made a part hereof, made by the Borrowers in favor of the Collateral
Agent for the benefit of the Agents and the Lenders, as such Pledge Agreement
may be amended, supplemented or otherwise modified from time to time.
"Cash Equivalents" means (i) marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by an agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one (1) year after the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within ninety (90) days after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Services, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Xxxxx'x Investors Services, Inc. shall be rating such
obligations, then from such other nationally recognized rating services
reasonably acceptable to the Administrative Agent) and not listed in Credit
Watch published by Standard & Poor's Corporation; (iii) commercial paper, other
than commercial paper issued by any Loan Party or any of its Affiliates,
maturing no more than ninety (90) days after the date of creation thereof and,
at the time of acquisition, having a rating of at least A-1 or P-1 from either
Standard & Poor's Corporation or Moody's Investor's Service, Inc. (or, if at any
time neither Standard & Poor's Corporation nor Xxxxx'x Investors Service, Inc.
shall be rating such obligations, then the highest rating from such other
nationally recognized rating services reasonably acceptable to the
Administrative Agent); (iv) domestic and Eurodollar certificates of deposit or
time deposits or bankers' acceptances maturing within ninety (90) days after the
date of acquisition thereof issued by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia or Canada having combined capital and surplus of not less than
$250,000,000; (v) repurchase obligations of the type referred to in clauses (i)
through (iv) above; and (vi) money market and mutual funds substantially all of
whose assets are comprised of securities of the types described in clauses (i)
through (v) above.
"Cash Interest Expense" means, for any Financial Covenant
Period, total interest expense, whether paid or accrued (including the interest
component of Capital Leases, but excluding amortization of deferred financing
costs and interest paid on the Put/Call Promissory Notes) of Stellex and its
Subsidiaries on a consolidated basis, as determined in conformity with GAAP.
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"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq., any
amendments thereto, any successor statutes, and any regulations promulgated
thereunder.
"Change of Control" means the occurrence of one or more
of the following events:
(a) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that
any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act), other than one or more Permitted Holders, is
or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act), directly or indirectly, of more
than 35% of the total voting power of the Voting Securities of Stellex;
(b) the Permitted Holders "beneficially own" (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act), directly or
indirectly, in the aggregate less than 51% of the total voting power of
the Voting Securities of Stellex or do not have the right or ability by
voting power, contract or otherwise to elect or designate for election
a majority of the Board of Directors of Stellex; or
(c) the first day on which a majority of the members
of the Board of Directors of Stellex are not Continuing
Directors.
"Chief Financial Officer" means the chief financial officer or
vice president of finance of Stellex.
"Claim" means any claim or demand, by any Person, of
whatsoever kind or nature for any alleged Liabilities and Costs, whether based
in contract, tort, implied or express warranty, strict liability, criminal or
civil statute, Permit, ordinance or regulation, common law or otherwise.
"Closing Date" means the date on which all of the conditions
precedent in Sections 5.01 and 5.02 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute and any regulations or guidelines
promulgated thereunder.
"Collateral" means all property and interests in property now
owned or hereafter acquired by any Loan Party in or upon which a Lien is granted
under any of the Loan Documents.
"Collateral Agent" has the meaning ascribed to such
term in the preamble hereto.
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"Collateral Documents" means, collectively, the Security
Agreements, the Pledge Agreements, the Intellectual Property Security Agreement
and the Cash Collateral Pledge Agreement.
"Commission" means the Securities and Exchange Commission and
any Person succeeding to the functions thereof.
"Commitment" means, with respect to any Lender, such Lender's
Revolving Loan Commitment and Term Loan Commitment, and as modified from time to
time pursuant to the terms of this Agreement or to give effect to any applicable
Assignment and Acceptance, and "Commitments" means the aggregate principal
amount of the Commitments of all the Lenders, the maximum amount of which shall
not exceed $50,000,000.
"Commitment Adjustment" means, as of any date of
determination, the amount, if any, by which the the Commitments exceed the
product of two multiplied by the EBITDA of Stellex and its Subsidiaries on a
consolidated basis for the immediately preceding Financial Covenant Period (and
if such Financial Covenant Period ends prior to December 31, 1998, such EBITDA
shall be multiplied by a fraction the numerator of which is 12 and the
denominator of which is the number of months in such Financial Covenant Period).
The amount of the Commitment Adjustment shall adjust the Term Loan Commitment,
if outstanding, and then adjust the Revolving Loan Commitment.
"Commitment Termination Date" means the day which is the
earliest of (A) October 31, 2003, (B) the termination of the Commitments
pursuant to Section 11.02(a) and (C) the date of termination in whole of the
Revolving Credit Commitments pursuant to Section 3.01(a)(ii).
"Commitment Triggering Event" means the occurrence of any
payment of principal under or with respect to the Subordinated Notes or any
repurchurse by or on behalf of Stellex of the Subordinated Notes.
"Compliance Certificate" has the meaning ascribed to
such term in Section 7.01(c).
"Contaminant" means any waste, pollutant (as that term is
defined in 42 U.S.C. Section 9601(33) or in 33 U.S.C. Section 1362(13)),
hazardous substance (as that term is defined in 42 U.S.C. Section 9601(14)),
hazardous chemical (as that term is defined by 29 CFR Section 1910.1200(c)),
toxic substance, hazardous waste (as that term is defined in 42 U.S.C. Section
6903(5)), radioactive material, petroleum, including crude oil or any
petroleum-derived substance, waste, or breakdown or decomposition product
thereof, as defined under federal, state or local laws or regulations, or any
constituent of any such substance or waste, including, but not limited to
polychlorinated biphenyls ("PCBs"), and asbestos.
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"Contractual Obligation" means, as applied to any Person, any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument to which that Person is a party or by which
it or any of its properties is bound, or to which it or any of its properties is
subject.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of Stellex who (i) was a member of such
Board of Directors on the Closing Date or (ii) was nominated by Xxxxxxx X.
Xxxxxx or Xxxxxxx X. Xxxxxx to serve on such Board of Directors.
"Contribution Agreement" means the Contribution Agreement
dated as of the date hereof among the Loan Parties, as such agreement may be
further amended, supplemented or otherwise modified from time to time.
"Current Assets" means, as at any date of determination, the
total assets of Stellex and its Subsidiaries on a consolidated basis which may
properly be classified as current assets in conformity with GAAP.
"Current Liabilities" means, as at any date of determination,
the current liabilities of Stellex and its Subsidiaries on a consolidated basis
which may properly be classified as current liabilities in conformity with GAAP.
"Customary Permitted Liens" means
(i) Liens (other than Environmental Liens and Liens in favor
of the PBGC) with respect to the payment of taxes, assessments or
governmental charges or claims, in all cases which are not yet due or
are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP;
(ii) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
Liens imposed by law created in the ordinary course of business in all
cases for amounts which are not yet due or are being contested in good
faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in
accordance with GAAP;
(iii) Liens (other than any Lien in favor of the PBGC)
incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
types of social security benefits or to secure the performance of bids,
tenders, sales, leases,
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contracts (other than for the repayment of borrowed money), surety,
appeal and performance bonds, in all cases for amounts not yet due or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate provisions
are being maintained in accordance with GAAP; and
(iv) zoning restrictions, easements, licenses, reservations,
covenants, rights-of-way, utility easements, building restrictions and
other similar charges or encumbrances on the use of Real Property
which do not materially interfere with the ordinary conduct of the
business of the Loan Parties and which do not materially adversely
affect the value of the Real Property.
"Debt" means, as applied to any Person at any time and without
duplication, all indebtedness, obligations or other liabilities of such Person
(i) for borrowed money or evidenced by debt securities, debentures, acceptances,
notes or other similar instruments (other than the Put/Call Promissory Notes),
(ii) under profit payment agreements or in respect of obligations to redeem,
repurchase or exchange any Securities of such Person or to pay dividends in
respect of any stock (other than the Put/Call Preferred Stock and management
investor agreements of the type referred to in the definition of "Management
Equity Interests" provided that such indebtedness, obligations or other
liabilities thereunder are only permitted to be paid if permitted under this
Agreement), (iii) with respect to letters of credit issued for such Person's
account (to the extent not accounted for in clause (i) above), (iv) to pay the
deferred purchase price of property or services, except accounts payable and
accrued expenses arising in the ordinary course of business, or (v) in respect
of Capital Leases.
"Default" means an event which, with the giving of notice or
the lapse of time, or both, would constitute an Event of Default.
"Default Rate" has the meaning ascribed to such term in
Section 4.01(d).
"DOL" means the United States Department of Labor and any
Person succeeding to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
"Domestic Lending Office" means, with respect to any Lender,
such Lender's office, located in the United States, specified as the "Domestic
Lending Office" under its name on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such other United
States office of
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such Lender as it may from time to time specify by written notice to the
Borrowers and the Administrative Agent.
"EBITDA" means, for any Financial Covenant Period, (i) the Net
Income, determined on a consolidated basis for Stellex and its Subsidiaries, for
such Financial Covenant Period plus the following amounts (without duplication)
for such Financial Covenant Period to the extent deducted in calculating such
Net Income: (A) depreciation and amortization expense, (B) interest expense, (C)
federal, state, local and foreign income taxes, (D) extraordinary or unusual
losses, (E) non-cash portion of nonrecurring losses and charges, (F) non-cash
management compensation expense, (G) amounts paid with respect to the "Retention
Plan Payments" as defined in the Xxxxxxx-Xxxxxxx Acquisition Agreement and (H)
any increase in cost of sales resulting from the write-up of inventory in
accordance with Accounting Principles Board Opinion No. 16 (or successor
provision); minus (ii) the amount of extraordinary gains, each item in clauses
(i) and (ii) calculated pursuant to GAAP for such period.
"Eligible Assignee" means (i) a Lender or (ii) a commercial
bank, lending institution, finance company, insurance company, other financial
institution or fund reasonably acceptable to the Administrative Agent and
Stellex (which acceptance shall not be unreasonably withheld).
"Eligible Inventory" means Inventory that is reflected on the
balance sheet of a Borrower as inventory, and unbilled receivables that are
reflected on the balance sheet of a Borrower as unbilled receivables (but only
to the extent such unbilled receivables do not exceed $1,000,000), and each
valued in accordance with GAAP, with respect to which, when scheduled on a
Borrowing Base Certificate and at all times thereafter, the Collateral Agent has
a valid and perfected first priority security interest and there is no violation
of the negative or affirmative covenants or other provisions of this Agreement
or any other Loan Document specifically applicable to Inventory. No Inventory of
a Borrower shall be Eligible Inventory if such Inventory is located, stored,
used or held at the premises of a third party unless either (i) (A) the
Administrative Agent shall have received a bailee's or similar letter from such
third party in form and substance satisfactory to the Administrative Agent and
(B) an appropriate UCC-1 financing statement shall have been executed with
respect to such location or (ii) the Administrative Agent shall have otherwise
consented in writing.
"Eligible Receivables" means those Receivables, that are
reflected on the balance sheet of a Borrower and valued in accordance with GAAP,
with respect to which, when scheduled on a Borrowing Base Certificate and at all
times thereafter, the Collateral Agent has a valid and perfected first priority
security interest (but not including compliance with the
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Assignment of Claims Act of 1940 , as amended, with respect to Receivables where
the account debtor is the United States of America or any department, agency or
instrumentality thereof) and there is no violation of the negative or
affirmative covenants or other provisions of this Agreement or any other Loan
Document specifically applicable to Receivables. No Receivable of a Borrower
shall be an Eligible Receivable if:
(i) the Receivable is a non-dated Receivable which remains due
or unpaid more than one hundred twenty (120) days after the date of
original invoice issued by such Borrower with respect to the sale
giving rise thereto; or the Receivable is a dated Receivable which
remains due or unpaid more than one hundred twenty (120) days after the
date of the original invoice issued by such Borrower with respect to
the sale giving rise thereto; or
(ii) the Receivable arises out of a sale not made in the
ordinary course of such Borrower's business or is to a Person which is
an Affiliate or Subsidiary of such Borrower or controlled by an
Affiliate or Subsidiary of such Borrower; or
(iii) that portion of the Receivable that is in dispute or is
subject to any asserted claim of setoff; or
(iv) any warranty contained in this Agreement or any Loan
Document with respect to Eligible Receivables or such Receivable has
been breached; or
(v) the account debtor has filed a petition for bankruptcy or
any other petition for relief under the Bankruptcy Code, made an
assignment for the benefit of creditors, or if any petition or other
application for relief under the Bankruptcy Code has been filed against
the account debtor, or if the account debtor has failed, suspended its
business operations, become insolvent, or suffered a receiver or a
trustee to be appointed for all or a material portion of its assets or
affairs; or
(vi) the sale is to an account debtor located outside the
continental United States, unless such sale is on letter of credit or
acceptance terms acceptable to the Administrative Agent (which letter
of credit or acceptance has been assigned to the Collateral Agent in a
manner satisfactory to the Administrative Agent); or
(vii) the sale to such customer is on guaranteed sale, sale
and return, sale on approval, consignment or any other repurchase or
return basis (other than a repurchase or return pursuant to a
warranty); or
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(viii) the goods giving rise to such Receivable have not been
shipped or delivered to the account debtor or the services giving rise
to such Receivable have not been performed by such Borrower; or
(ix) any document or agreement executed or delivered in
connection with any Receivable, or any procedure used in connection
with any such document or agreement, fails in any respect to comply
with any requirements of applicable law, and such failure would, in the
reasonable determination of the Administrative Agent, (a) have a
material adverse effect upon the collectability of such Receivable or
(b) subject payments with respect to such Receivable to any claim for
recovery thereof after receipt by the Administrative Agent or the
Lenders.
In addition to the foregoing, no Receivables owing by a particular account
debtor shall be Eligible Receivables if twenty five percent (25%) or more of the
Receivables owing from such account debtor are ineligible for any reason.
"Environmental, Health or Safety Requirement of Law" means
Requirements of Law relating to or addressing the indoor or outdoor environment,
health or safety, including but not limited to any law, regulation, or order
relating to the use, handling, or disposal of any Contaminant, any law,
regulation, or order relating to Remedial Action, and any law, regulation, or
order relating to workplace or worker safety and health.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (i) any liability under federal or state environmental laws or
regulations, or (ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"Equipment" means all of each Loan Party's present and future
owned (i) equipment and fixtures, including, without limitation, machinery,
manufacturing, distribution, selling, computer system, data processing and
office equipment, assembly systems, tools, molds, dies, fixtures, appliances,
furniture, furnishings, vehicles, vessels, aircraft, aircraft engines, and trade
fixtures, (ii) other tangible personal property, and (iii) any and all
accessions, parts and appurtenances attached to any of the foregoing or used in
connection therewith, and any substitutions therefor and replacements, products
and proceeds thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
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"ERISA Affiliate" means any (i) corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as any Loan Party, (ii) partnership, trade or business
(whether or not incorporated) which is under common control (within the meaning
of Section 414(c) of the Code) with a Loan Party and (iii) entity which is a
member of an "affiliated service group" (as defined in Section 414(m) of the
Code) with any other Loan Party.
"Eurodollar Affiliate" means, with respect to each Lender, the
Affiliate of such Lender (if any) set forth below such Lender's name under the
heading "Eurodollar Affiliate" on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such Affiliate of a
Lender as it may from time to time specify by written notice to the Borrowers
and the Administrative Agent.
"Eurodollar Interest Payment Date" means (i) with respect to
any Eurodollar Rate Loan, the last day of each Eurodollar Interest Period
applicable to such Loan and (ii) with respect to any Eurodollar Rate Loan having
a Eurodollar Interest Period in excess of three (3) calendar months, the last
day of each calendar quarter during such Eurodollar Interest Period.
"Eurodollar Interest Period" has the meaning set forth
in Section 4.02(b).
"Eurodollar Lending Office" means, with respect to any Lender,
the office or offices of such Lender (if any) set forth below such Lender's name
under the heading "Eurodollar Lending Office" on the signature pages hereof or
on the Assignment and Acceptance by which it became a Lender or such office or
offices of such Lender as it may from time to time specify by written notice to
the Borrowers and the Administrative Agent.
"Eurodollar Rate" means, with respect to any Eurodollar
Interest Period applicable to a Borrowing of Eurodollar Rate Loans, an interest
rate per annum obtained by dividing (i) the rate of interest per annum specified
by notice to the Administrative Agent by SocGen as the rate per annum at which
deposits in Dollars are offered by SocGen in London, England to major banks in
the London interbank market at approximately 11:00 a.m. (London time) on the
Interest Rate Determination Date for such Eurodollar Interest Period for a
period equal to such Eurodollar Interest Period and in an amount substantially
equal to the amount of the Eurodollar Rate Loan to be made by SocGen to be
outstanding during such Eurodollar Interest Period, by (ii) a percentage equal
to 100% minus the Eurodollar Reserve Percentage. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
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"Eurodollar Rate Loans" means those Loans outstanding which
bear interest at a rate determined by reference to the Eurodollar Rate as
provided in Section 4.01(a).
"Eurodollar Reserve Percentage" means, for any day, that
percentage which is in effect on such day, as prescribed by the Federal Reserve
Board for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York, New York with
respect to "Eurocurrency Liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurodollar Rate Loans is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of any bank to
United States residents).
"Event of Default" means any of the occurrences set forth in
Section 11.01 after the expiration of any applicable grace period and the giving
of any applicable notice, in each case as expressly provided in Section 11.01.
"Excess Cash Flow" means, for any Fiscal Year, EBITDA for such
Fiscal Year, minus cash interest paid during such Fiscal Year, minus Capital
Expenditures made during such Fiscal Year, minus principal payments made on
Funded Debt (excluding Revolving Loans) during such Fiscal Year, minus taxes
paid in cash during such Fiscal Year, plus the decrease or minus the increase in
Working Capital during such Fiscal Year.
"Excluded Proceeds" means (i) Net Cash Proceeds that are used
by a Loan Party within one year from the receipt of such Net Cash Proceeds by
such Loan Party on account of an Asset Sale to replace the asset with respect to
such Asset Sale or to consummate a Permitted Acquisition, provided that such Net
Cash Proceeds are deposited into the Cash Collateral Account upon receipt of
such Net Cash Proceeds by such Loan Party until the earlier of (A) such time as
such Loan Party replaces such asset or consummates the Permitted Acquisition or
(B) the first annual anniversary of the date such Net Cash Proceeds were
deposited into the Cash Collateral Account, (ii) Net Cash Proceeds on account of
one or more Asset Sales so long as such Net Cash Proceeds do not exceed $500,000
in the aggregate in any twelve month period, (iii) proceeds from the sales of
Inventory in the ordinary course of business, (iv) proceeds from the disposition
of Equipment if such Equipment is obsolete or no longer useful in the ordinary
course of such Loan Party's business and (v) proceeds received by a Wholly Owned
Subsidiary of a Loan Party as a result of an assignment, transfer, conveyance or
other disposition permitted pursuant to Section 9.02(v).
"Excluded Securities" means, with respect to any Loan Party,
(i) common or preferred stock issued by such Loan Party to
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a seller in connection with a Permitted Acquisition or management personnel in
connection with management compensation arrangements or a Permitted Acquisition,
(ii) Series B Preferred Stock issued by Holding having an aggregate liquidation
preference not to exceed $200,000 and (iii) any Securities issued by any
Subsidiary of Stellex to Stellex or another Subsidiary of Stellex, provided that
such Securities referred to in this clause (iii) are pledged to the Collateral
Agent, on terms and conditions, and pursuant to documentation, reasonably
satisfactory to the Administrative Agent, in a manner whereby the Collateral
Agent has a valid, perfected and first priority Lien therein.
"Farm Bureau" means Farm Bureau Life Insurance Company.
"Farm Bureau Consent" means a consent of Farm Bureau to the
Collateral Agent's Liens in the Collateral granted by Paragon Precision Products
and by Aerospace pursuant to the Loan Documents (including, without limitation,
a pledge by Aerospace of the Paragon Precision Products stock pursuant to the
Pledge Agreement executed and delivered by Aerospace), which consent shall be in
form and substance satisfactory to the Administrative Agent and shall have been
executed and delivered by Farm Bureau to the Administrative Agent.
"Farm Bureau Deed of Trust" means the Deed of Trust with
Assignment of Rents and Fixture Filing dated as of September 6, 1991 made by
Paragon Precision Products in favor of Farm Bureau, as such Deed of Trust may be
amended, supplemented and modified from time to time.
"Farm Bureau Guaranty" means the Guaranty dated as of
September 6, 1991 by and between Farm Bureau and Aerospace.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day in New York, New York, for the next
preceding Business Day) in New York, New York by the Federal Reserve Bank of New
York, or if such rate is not so published for any day which is a Business Day in
New York, New York, the average of the quotations for such day on such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by the Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any Governmental Authority succeeding to its
functions.
"Fee Letters" means, collectively, the Fee Letters between
Stellex and each of the Agents.
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"Financial Covenant Period" means: (i) with respect to the
first fiscal quarter of 1998, the period commencing on the Closing Date and
ending on the last day of such fiscal quarter; (ii) with respect to the second
fiscal quarter of 1998, the period commencing on January 1, 1998 and ending on
the last day of such fiscal quarter; (iii) with respect to the third fiscal
quarter of 1998, the period commencing on January 1, 1998 and ending on the last
day of such fiscal quarter; (iv) with respect to the fourth fiscal quarter of
1998, the period commencing on January 1, 1998 and ending on the last day of
such fiscal quarter; and (v) with respect to each fiscal quarter thereafter, the
immediately preceding four fiscal quarter period.
"Fiscal Year" means the fiscal year of Stellex and its
Subsidiaries ending on December 31 of each calendar year.
"Fixed Charge Coverage Ratio" means, for any Financial
Covenant Period, the ratio of (i) EBITDA less Cash Capital Expenditures made
during such period to (ii) Cash Interest Expense plus the regularly scheduled
installments of Funded Debt payable during such period.
"Forfeiture Proceeding" means any action, proceeding or
investigation affecting any of the Loan Parties before any court, governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or the receipt of notice by any such party that any of them is a
subject of any governmental inquiry or investigation, which may result in an
indictment of any of them or the seizure or forfeiture of any of their property.
"Funded Debt" means Debt which matures more than one year from
the date of its creation or matures within one year from such date but is
renewable or extendible, at the option of the debtor, to a date more than one
year from such date or arises under a revolving credit or similar agreement
which obligates the lender or lenders to extend credit during a period of more
than one year from such date including, without limitation, all amounts of
Funded Debt required to be paid or prepaid within one year from the date of
determination.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants Standards Board or in
such other statements by such other entity as may be in general use by
significant segments of the accounting profession as in effect on the date
hereof.
"General Intangibles" means all of each Loan Party's present
and future choses in action, causes of action and all other intangible personal
property of every kind and nature
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(other than Receivables), including without limitation general intangibles,
contracts, corporate or other business records, designs, patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, trade names, tradestyles, trade secrets, operating certificates,
operating certificate applications, goodwill, registrations, copyrights,
licenses, franchises, permits, operating authorities, agent and owner/operator
contracts, certificates of public convenience, refunds or reversions from any
employee benefit plan or pension plan, covenants not to compete, blueprints and
other drawings, customer lists, tax refunds, tax refund claims, rights and
claims against carriers and shippers, and rights to indemnification.
"Governing Documents" means, with respect to any corporation,
(i) the articles/certificate of incorporation (or the equivalent organizational
documents) of such corporation, (ii) the by-laws (or the equivalent governing
documents) of the corporation and (iii) any document setting forth the
designation, amount and/or relative rights, limitations and preferences of any
class or series of such corporation's capital stock; and, with respect to any
general partnership, (i) the partnership agreement (or the equivalent
organizational documents) of such partnership and (ii) any document setting
forth the designation, amount and/or relative rights, limitations and
preferences of any of the partnership interests; and, with respect to any
limited partnership, (i) the partnership agreement (or the equivalent
organizational documents) of such partnership, (ii) a certificate of limited
partnership (or the equivalent organizational documents) and (iii) any document
setting forth the designation, amount and/or relative rights, limitations and
preferences of any of the partnership interests.
"Government" means the United States government or any
department, instrumentality or agency thereof, or any state government or any
department, instrumentality or agency thereof.
"Governmental Authority" means any nation or government, any
federal, state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Government Contracts" means (i) written contracts between any
Borrower and the Government; and (ii) written subcontracts between any Borrower
and a prime contractor who is providing goods or services to the Government
pursuant to a written contract with the Government or its prime contractor, if
applicable (the "Prime Contract"), provided that the subcontract relates only to
goods or services being provided to the Government pursuant to the prime
contract.
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"Guarantors" means, collectively, the Borrowers and
each Subsidiary of Stellex.
"Guaranty" means the Guaranty, substantially in the form of
Exhibit J attached hereto and made a part hereof, referred to in the List of
Closing Documents set forth on Exhibit E attached hereto and made a part hereof.
"Holder" means any Person entitled to enforce any of the
Obligations, whether or not such Person holds any evidence of Indebtedness,
including, without limitation, each Agent and each Lender.
"Indebtedness" means, as applied to any Person at any time,
(a) all indebtedness, obligations or other liabilities of such Person (i) for
borrowed money or evidenced by debt securities, debentures, acceptances, notes
or other similar instruments, and any accrued interest, fees and charges
relating thereto, (ii) under profit payment agreements or in respect of
obligations to redeem, repurchase or exchange any Securities of such Person or
to pay dividends in respect of any stock, (iii) with respect to letters of
credit issued for such Person's account, (iv) to pay the deferred purchase price
of property or services, except accounts payable and accrued expenses arising in
the ordinary course of business, (v) in respect of Capital Leases or (vi) which
are Accommodation Obligations; (b) all indebtedness, obligations or other
liabilities of such Person or others secured by a Lien (other than a Customary
Permitted Lien) on any property of such Person, whether or not such
indebtedness, obligations or liabilities are assumed by such Person, all as of
such time; (c) all indebtedness, obligations or other liabilities of such Person
in respect of Interest Rate Contracts and foreign exchange contracts, net of
liabilities owed to such Person by the counterparties thereon; (d) all preferred
stock subject (upon the occurrence of any contingency or otherwise) to mandatory
redemption; and (e) all contingent Contractual Obligations with respect to any
of the foregoing.
"Indemnified Matters" has the meaning ascribed to such
term in Section 13.05.
"Indemnitees" has the meaning ascribed to such term in
Section 13.05.
"Information Package" means, with respect to each Permitted
Acquisition, an information package consisting of (i) a description of the
Business being acquired, (ii) historical financial statements (which may be
unaudited) for the respective Business for at least the two full fiscal years
most recently ended and the latest twelve-month period ended with the last day
of the fiscal quarter last ended, (iii) projections for the five years after the
respective Permitted Acquisition, (iv) an officer's certificate for the
twelve-month period ended on the
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date of the most recent delivery of quarterly financial statements pursuant to
Section 7.01(a) hereof indicating the compliance on a Pro Forma Basis with the
financial covenants contained in Schedule 5.03(B) hereof and (v) any other
information which Stellex in good faith determines should be furnished so that
the Information Package for the respective Business being acquired is, to the
best of Stellex's knowledge after reasonable investigation, true and correct in
all material respects and is not incomplete by omitting to state any fact
necessary to make the information (taken as a whole) contained therein not
misleading in any material respect.
"Intellectual Property Security Agreement" means the Patent
Security Agreement, substantially in the form of Exhibit N attached hereto and
made a part hereof, referred to in the List of Closing Documents set forth on
Exhibit E attached hereto and made a part hereof.
"Interest Coverage Ratio" means, with respect to any Financial
Covenant Period, the ratio of (i) EBITDA to (ii) Cash Interest Expense.
"Interest Rate Contracts" means interest rate exchange, swap,
collar, cap, hedging or similar agreements.
"Interest Rate Determination Date" has the meaning ascribed to
such term in Section 4.02(c).
"Inventory" means all of each Loan Party's present and future
(i) inventory, (ii) goods, merchandise and other personal property furnished or
to be furnished under any contract of service or intended for sale or lease, and
all goods consigned by such Loan Party to another Person and all other items
which have previously constituted Equipment but are then currently being held
for sale or lease in the ordinary course of such Loan Party's business, (iii)
raw materials, work-in-process and finished goods, (iv) materials and supplies
of any kind, nature or description used or consumed in such Loan Party's
business or in connection with the manufacture, production, packing, shipping,
advertising, finishing or sale of any of the property described in clauses (i)
through (iii) above, (v) goods in which such Loan Party has a joint or other
interest or right of any kind (including, without limitation, goods in which
such Loan Party has an interest or right as consignee), and (vi) goods which are
returned to or repossessed by such Loan Party; in each case whether in the
possession of such Loan Party, a bailee, a consignee, or any other Person for
sale, storage, transit, processing, use or otherwise, and any and all documents
for or relating to any of the foregoing.
"Investment" means, with respect to any Person, (i) any
purchase or other acquisition by that Person of Securities, or of a beneficial
interest in Securities, issued by any other Person,
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(ii) any purchase by that Person of all or substantially all of the assets of a
business conducted by another Person, and (iii) any direct or indirect loan,
advance (other than prepaid expenses, accounts receivable, advances to employees
and similar items made or incurred in the ordinary course of business as
presently conducted) or capital contribution by that Person to any other Person,
including all Indebtedness to such Person arising from a sale of property by
such Person other than in the ordinary course of its business. The amount of any
Investment shall be the original cost of such Investment, plus the cost of all
additions thereto less the amount of any return of capital or principal to the
extent such return is in cash with respect to such Investment without any
adjustments for increases or decreases in value or write-ups, write-downs or
write-offs with respect to such Investment.
"IRS" means the Internal Revenue Service and any Person
succeeding to the functions thereof.
"Xxxxxxxx Acquisition" means the transactions
contemplated by the Xxxxxxxx Acquisition Documents.
"Xxxxxxxx Acquisition Agreement" means the Stock Purchase
Agreement, dated as of May 23, 1997 by and among KII Acquisition as buyer,
Xxxxxxxx Industrie Holding AG, a Swiss corporation as seller, and Xxxxxxxx
Industries Inc.
"Xxxxxxxx Acquisition Documents" means, collectively, the
Xxxxxxxx Acquisition Agreement, the Seller Note, and all documents, instruments
and agreements delivered in connection therewith.
"Lender" has the meaning ascribed to such term in the
preamble hereto.
"Leverage Ratio" means, for any Financial Covenant Period, the
ratio of (i) the outstanding Funded Debt for Stellex and its Subsidiaries at the
end of such period, to (ii) EBITDA for such period, which EBITDA is multiplied
by a fraction the numerator of which is 12 and the denominator of which is the
number of months in such Financial Covenant Period.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses, damages, punitive damages, economic damages,
consequential damages, treble damages, costs and expenses (including, without
limitation, attorney, expert and consulting fees and costs of investigation,
feasibility or Remedial Action studies), fines, penalties and monetary
sanctions, interest, absolute or contingent, past, present or future.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, conditional sale agreement, deposit
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arrangement, security interest, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever in respect of any property of a Person, whether
granted voluntarily or imposed by law, and includes the interest of a lessor
under a Capital Lease or under any financing lease having substantially the same
economic effect as any of the foregoing and the filing of any financing
statement or similar notice (other than a financing statement filed by a "true"
lessor pursuant to Section 9-408 of the Uniform Commercial Code or with respect
to goods consigned to a Loan Party or inventory of a third person in the
possession of a Loan Party), naming the owner of such property as debtor, under
the Uniform Commercial Code or other comparable law of any jurisdiction.
"Loan Documents" means this Agreement, the Notes, the Fee
Letters, the Guaranties, the Contribution Agreement, the Collateral Documents,
any Interest Rate Contracts to which any Lender or any Affiliate of a Lender is
a party, any foreign exchange contracts to which any Lender or any Affiliate of
a Lender is a party, and all other instruments, agreements and written
Contractual Obligations between any Loan Party and any Agent or any Lender
delivered to either such Agent or such Lender pursuant to or in connection with
the transactions contemplated hereby.
"Loan Parties" means the Borrowers and the Guarantors.
"Loans" means the Revolving Loans and Term Loans.
"Management Agreement" means the Amended and Restated
Management Advisory Services Agreement dated November 1, 1997 among Mentmore
Holdings Corporation and the Loan Parties, as such agreement may be amended,
supplemented or modified from time to time.
"Management Equity Holder" means (i) a holder of a Put/Call
Promissory Note, (ii) the legal or beneficial owner of Put/Call Preferred Stock
or (iii) a holder of any Management Equity Interests.
"Management Equity Interests" means shares of Capital Stock of
Stellex or of a Subsidiary of Stellex, options, warrants or stock appreciation
or similar rights, in each case held, at the time of the issuance thereof, by
any then current or former officer, employee or other member of management (or
thereafter by their estates or beneficiaries under their estates) of Stellex or
of such Subsidiary pursuant to any management equity subscription agreement,
employment agreement, employee benefit plan, stockholder agreement, stock option
agreement or similar management investor agreement and which may be required to
be repurchased by Stellex or such Subsidiary, or which may be repurchased at the
option of Stellex or such Subsidiary, in each
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case pursuant to the terms of any such agreement under which such equity
interests were issued, including, without limitation, the Management
Participation Agreement.
"Management Participation Agreement" means that certain
Agreement dated as of July 1, 1997 by and among Holding, Greystoke Capital
Management Limited LDC, Xxxxxxx X. Call, Xxxxxx X. Xxxxx, Xxxxxxxx X. Xxxxx,
Xxxxxx X. Xxxxx, Xxxx Xxxxxxxxx, Xxxx Xxxxx and Xxxxx X. Xxxxx, as such
agreement may be amended, supplemented and modified from time to time.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U and Regulation G.
"Material Adverse Effect" means a material adverse effect upon
(i) the condition (financial or otherwise), operations, assets, business,
properties or performance of Stellex and its Subsidiaries, taken as a whole,
(ii) the ability of the Loan Parties to perform their respective obligations
under the Loan Documents, or (iii) the ability of the Lenders or any Agent to
enforce the Loan Documents.
"Material Contract" means any Government Contract in excess of
$1,000,000.
"Maturity Date" means October 31, 2003.
"Maximum Revolving Credit Amount" means, at any particular
time, the lesser of (i) the Revolving Loan Commitments at such time and (ii) the
Borrowing Base at such time.
"Multiemployer Plan" means an employee benefit plan as defined
in Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by either any Loan Party or any ERISA Affiliate.
"Net Cash Proceeds" means with respect to any Asset Sale or
issuance of Securities, an amount equal to the cash proceeds of such Asset Sale
or issuance, net of (i) reasonable attorneys' fees, accountants' fees,
brokerage, consultant and other customary fees, underwriting commissions and
other reasonable fees and expenses actually incurred in connection therewith,
(ii) taxes paid or reasonably estimated to be payable as a result thereof, (iii)
the amount of Indebtedness secured by a Lien on the asset being sold that has
been repaid with the proceeds of such Asset Sale and (iv) appropriate amounts
that must be set aside as reserves in accordance with GAAP.
"Net Income" means, for any period, the net earnings (or loss)
after taxes of Stellex and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP.
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"Net Worth" means the total assets of Stellex and its
Subsidiaries on a consolidated basis less total liabilities of Stellex and its
Subsidiaries on a consolidated basis (excluding liabilities with respect to the
Put/Call Promissory Notes, the Put/Call Preferred Stock and deferred
compensation arising in connection with management put/call rights), each
determined in accordance with GAAP, but without giving effect to the sale of
inventory written-up in accordance with Accounting Principles Board Opinion No.
16 (or successor provision).
"Notes" means the Revolving Loan Notes and the Term
Loan Notes.
"Notice of Borrowing" means a notice substantially in the form
of Exhibit C attached hereto and made a part hereof.
"Notice of Continuation/Conversion" means a notice
substantially in the form of Exhibit D attached hereto and made a part hereof.
"Obligations" means all Loans, advances, debts, liabilities,
obligations, covenants and duties owing by any Loan Party to any Agent, any
Lender, any Affiliate of any Agent or any Lender, or any Person entitled to
indemnification pursuant to Section 13.05 of this Agreement, of any kind or
nature, present or future, whether or not evidenced by any note, guaranty or
other instrument, whether arising under this Agreement, the Notes or any other
Loan Document, whether or not for the payment of money, whether arising by
reason of an extension of credit, loan, guaranty, indemnification, Interest Rate
Contract, foreign exchange contract or in any other manner, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however acquired. The
term includes, without limitation, all interest, charges, expenses, fees,
attorneys' fees and disbursements and any other sum chargeable to any Loan Party
under this Agreement, the Notes or any other Loan Document.
"Officer's Certificate" means, with respect to any Person, a
certificate executed on behalf of such Person by (i) the chairman or
vice-chairman of such Person's board of directors or (ii) such Person's
president, any of its vice-presidents, its chief financial officer, vice
president of finance or its treasurer.
"Other Taxes" has the meaning ascribed to such term in
Section 3.03(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
Person succeeding to the functions thereof.
-25-
"Permits" means any permit, approval, authorization license,
variance, or permission required from a Governmental Authority under an
applicable Requirement of Law.
"Permitted Acquisition" means the acquisition by Stellex or
any of its corporate Subsidiaries of (i) assets constituting a business or
operation that is within the definition of Business and constitutes a line of
business of a Person (other than a Subsidiary of Stellex) or (ii) at least 75%
of the capital stock of a Person engaged in the Business; provided that such
acquisition is made in accordance with the provisions of this Agreement and the
conditions set forth in Section 5.03 have been satisfied (whether or not
proceeds from the Term Loans are being used with respect to such acquisition).
"Permitted Disposition" means an Asset Sale where (i) Stellex
or any Subsidiary receives consideration at the time of such Asset Sale at least
equal to the fair market value of the stock and/or assets subject to such Asset
Sale, as determined by (A) the Board of Directors of Stellex with respect to an
Asset Sale the value of which does not exceed $10,000,000 or (B) a fairness
opinion by an investment banking firm or valuation firm reasonably satisfactory
to the Administrative Agent with respect to an Asset Sale the value of which
equals or exceeds $10,000,000; (ii) at least 75% of the consideration thereof
received by Stellex or such Subsidiary is in the form of cash and 100% of the
Net Cash Proceeds from such Asset Sale is applied in accordance with Section
3.01(b)(i); and (iii) the consideration thereof that is not in the form of cash
is pledged to the Collateral Agent, on terms and conditions, and pursuant to
documentation, reasonably satisfactory to the Administrative Agent, in a manner
whereby the Collateral Agent has a valid, perfected and first priority Lien
therein.
"Permitted Existing Indebtedness" means the Indebtedness
identified as such on Schedule 1.01(A).
"Permitted Existing Liens" means the Liens on assets of any
Loan Party identified as such on Schedule 1.01(B).
"Permitted Holders" means (i) Xxxxxxx X. Xxxxxx and Xxxxxxx X.
Xxxxxx, (ii) any spouse or immediate family member of any person named in clause
(i) hereof and any child or spouse of any spouse or immediate family member of
any such person, (iii) a trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding,
directly or indirectly, a controlling interest of which consist of any person
named in clause (i) hereof and/or such other Persons referred to in the
immediately preceding clause (ii) hereof, or (iv) the trustees of any trust
referred to in clause (iii) hereof.
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"Person" means any natural person, corporation, limited
partnership, general partnership, joint stock company, joint venture,
association, company, trust, bank, trust company, land trust, business trust,
limited liability company or other organization, whether or not a legal entity,
and any Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3)
of ERISA (other than a Multiemployer Plan) in respect of which any Loan Party or
any ERISA Affiliate is, or within the immediately preceding six (6) years was,
an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreements" means, collectively, the Pledge
Agreements, substantially in the form of Exhibit M attached hereto and made a
part hereof, referred to in the List of Closing Documents set forth on Exhibit E
attached hereto and made a part hereof.
"Process Agent" has the meaning ascribed to such term in
Section 13.20(a).
"Pro Forma Basis" means, with respect to any Permitted
Acquisition, the calculation of the financial covenants set forth on Schedule
5.03(b) for Stellex and its Subsidiaries on a consolidated basis for the
immediately preceding twelve month period, and otherwise determined in
accordance with this Agreement, as if such Permitted Acquisition had been
effected on the first day of such twelve month period, provided that all such
calculations shall take into account the pro forma effect of all Permitted
Acquisitions that occur during such twelve month period and all Permitted
Acquisitions that occur after such twelve month period but on or prior to the
date of determination (including any Indebtedness assumed or acquired in
connection therewith and any Indebtedness incurred to finance such Permitted
Acquisition) as if they had occurred on the first day of such twelve month
period.
"Property" means any and all Real Property or personal
property, whether tangible or intangible, plant, building, facility, structure,
underground storage tank or unit, Equipment, Inventory, General Intangible,
Receivable, securities, account, deposit, claim, right or other asset owned, by
any Loan Party, as applicable, (including any surface water thereon and
subsurface matrix (including but not limited to soil, bedrock and groundwater)
thereunder).
"Pro Rata Share" means, with respect to any Lender, the
percentage obtained by dividing (i) such Lender's Commitment (or, if after the
Commitment Termination Date, the outstanding balances of such Lender's Loans) by
(ii) the aggregate amount of all Lenders' Commitments (or, if after the
Commitment Termination Date, the outstanding balances of all Loans).
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"Put/Call Preferred Stock" means preferred stock, having terms
and conditions satisfactory to the Requisite Lenders, which may be issued by
Stellex or a Subsidiary of Stellex to the holders of any Management Equity
Interests of Stellex or such Subsidiary in exchange for such Management Equity
Interests held by such holders; provided that such preferred stock provides that
any payment made pursuant to or in connection with the provisions of such
preferred stock or of the instrument governing such preferred stock, including
pursuant to any redemption, repurchase or default provision, and payments of
dividends on such preferred stock, in each case in cash, may be made only to the
extent Restricted Junior Payments would then be permitted to be made in
accordance with Section 9.06(iii) after giving effect to all other Restricted
Junior Payment made to any other Management Equity Holder prior to or
concurrently therewith.
"Put/Call Promissory Notes" means promissory notes, having
terms and conditions satisfactory to the Requisite Lenders, which may be issued
by Stellex or a Subsidiary of Stellex to the holders of any Management Equity
Interests of Stellex or such Subsidiary in exchange for such Management Equity
Interest held by such holders; provided that (a) such promissory notes are
expressly subordinated to the Notes, (b) such notes are not secured by any Lien
on any property or assets of Stellex or any of its Subsidiaries, (c) such
promissory notes provide that any payment that is to be made pursuant to or in
connection with the provisions of such promissory notes, including, without
limitation, payments of principal or interest on such notes, in each case in
cash, may be made only to the extent Restricted Junior Payments would then be
permitted to be made in accordance with Section 9.06(iii) after giving effect to
all other Restricted Junior Payment made to any other Management Equity Holder
prior to or concurrently therewith.
"Real Property" means all of each Loan Party's present and
future right, title and interest (including, without limitation, any leasehold
estate) in (i) any plots, pieces or parcels of land, (ii) any improvements,
buildings, structures and fixtures now or hereafter located or erected thereon
or attached thereto of every nature whatsoever (the rights and interests
described in clauses (i) and (ii) above being the "Premises"), (iii) all
easements, rights of way, gores of land or any lands occupied by streets, ways,
alleys, passages, sewer rights, water courses, water rights and powers, and
public places adjoining such land, and any other interests in property
constituting appurtenances to the Premises, or which hereafter shall in any way
belong, relate or be appurtenant thereto, (iv) all hereditaments, gas, oil,
minerals (with the right to extract, sever and remove such gas, oil and
minerals, and easements, of every nature whatsoever, located in or on the
Premises and (v) all other rights and privileges thereunto belonging or apper
taining and all extensions, additions, improvements, betterments,
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renewals, substitutions and replacements to or of any of the rights and
interests described in clauses (iii) and (iv) above.
"Receivables" means all of each Loan Party's present and
future (i) accounts, (ii) contract rights, chattel paper, instruments,
documents, deposit accounts, and other rights to payment of any kind, whether or
not arising out of or in connection with the sale or lease of goods or the
rendering of services, and whether or not earned by performance, (iii) any of
the foregoing which are not evidenced by instruments or chattel paper, (iv)
intercompany receivables, and any security documents executed in connection
therewith, (v) proceeds of any letters of credit or insurance policies on which
such Loan Party is named as beneficiary, (vi) claims against third parties for
advances and other financial accommodations and any other obligations whatsoever
owing to such Loan Party, (vii) rights in and to all security agreements,
leases, guarantees, instruments, securities, documents of title and other
contracts securing, evidencing, supporting or otherwise relating to any of the
foregoing, together with all rights in any goods, merchandise or Inventory which
any of the foregoing may represent, and (viii) rights in returned and
repossessed goods, merchandise and Inventory which any of the same may
represent, including, without limitation, any right of stoppage in transit.
"Register" has the meaning ascribed to such term in
Section 13.01(c).
"Regulation G" means Regulation G of the Federal Reserve Board
as in effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board
as in effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board
as in effect from time to time.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Contaminants
through or in the air, soil, surface water or groundwater.
"Remedial Action" means any action required to (i) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
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"Replacement Event" means, with respect to any Lender, the
appointment of, or the taking of possession by, a receiver, custodian,
conservator, trustee or liquidator of such Lender, or the declaration by the
appropriate regulatory authority that such Lender is insolvent.
"Replacement Lender" means a financial institution which is an
Eligible Assignee or is otherwise reasonably acceptable to the Administrative
Agent and Stellex (which acceptance shall not be unreasonably withheld) and
which is not a Loan Party or an Affiliate of a Loan Party.
"Reportable Event" has the meaning ascribed to such term in
Section 4043 of ERISA or regulations promulgated thereunder, other than an event
which is not subject to the thirty (30) day notice requirement of such
regulations.
"Requirements of Law" means, as to any Person, any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act, the Securities Exchange Act,
Regulations G, U and X, ERISA, the Fair Labor Standards Act and any certificate
of occupancy, zoning ordinance, building, environmental or land use requirement
or any permit, approval, authorization license, variance, or permission required
from a Governmental Authority or any environmental, labor, employment,
occupational safety or health law, rule or regulation.
"Requisite Lenders" means at least two Lenders whose Pro Rata
Shares, in the aggregate, are greater than fifty-one percent (51%); provided,
however, that, in the event that the Commitments have been terminated pursuant
to the terms of this Agreement, "Requisite Lenders" means at least two Lenders
whose aggregate ratable shares (stated as a percentage) of the aggregate
outstanding amount of the Obligations are greater than fifty-one percent (51%).
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
capital stock of, partnership interest of or other equity interest of, a Loan
Party now or hereafter outstanding, except a dividend payable solely in shares
of that class of stock or in any junior class of stock to the holders of that
class, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of capital stock of, partnership interest of or other equity interest
of, a Loan Party now or hereafter outstanding, (iii) any payment or prepayment
of principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment and any claim for
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rescission with respect to, any permitted subordinated indebted ness and (iv)
any payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of capital stock of, partnership interest of or other equity
interest of, a Loan Party now or hereafter outstanding.
"Revolving Credit Obligations" means, at any particular time,
the outstanding principal amount of the Revolving Loans at such time.
"Revolving Loan" has the meaning ascribed to such term
in Section 2.01(a).
"Revolving Loan Commitment" means, with respect to any Lender,
the obligation of such Lender to make Revolving Loans pursuant to the terms and
conditions of this Agreement, and which shall not exceed the principal amount
set forth opposite such Lender's name under the heading "Revolving Loan
Commitment" on the signature pages hereof or the signature page of the
Assignment and Acceptance by which it became (or becomes) a Lender, as modified
from time to time pursuant to the terms of this Agreement or to give effect to
any applicable Assignment and Acceptance, and "Revolving Loan Commitments" means
the aggregate principal amount of the Revolving Loan Commitments of all the
Lenders, the maximum amount of which shall not at any time exceed a principal
amount of $25,000,000; provided, however, that on and after a Commitment
Triggering Event, the maximum amount of such Revolving Loan Commitments shall be
adjusted on the date that such Commitment Triggering Event shall occur and on
the forty-fifth day following the last date of each Financial Covenant Period
thereafter, by an amount equal to the Commitment Adjustment but only after such
Commitment Adjustment has adjusted any outstanding Term Loan Commitments.
"Revolving Loan Notes" has the meaning assigned thereto
in Section 2.03(a).
"Securities" means any stock, shares, voting trust
certificates, bonds, debentures, notes or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or any
certificates of interest, shares, or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire any of the foregoing, but shall not include any evidence of
the Obligations.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
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"Security Agreements" means, collectively, the Security
Agreements, substantially in the form of Exhibit L attached hereto and made a
part hereof, referred to in the List of Closing Documents set forth on Exhibit E
attached hereto and made a part hereof.
"Seller Note" means the promissory note made by Holdings in
favor of Xxxxxxxx Industrie Holding AG in the principal amount of $1,750,000,
delivered pursuant to the Xxxxxxxx Acquisition Agreement.
"SocGen" has the meaning ascribed to such term in the
preamble hereto.
"Solvent", when used with respect to any Person, means that at
the time of determination:
(i) the fair value of its assets is in excess of the
total amount of its liabilities (including, without
limitation, contingent liabilities); and
(ii) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments)
as they mature; and
(iv) it has not conducted nor proposes to conduct a business
for which its assets would constitute unreasonably small capital.
"Subordinated Note Documents" means, collectively, the
Subordinated Note Indenture and all documents, instruments and agreements
delivered in connection therewith.
"Subordinated Note Indenture" means the Indenture dated as of
October 31, 1997 between Stellex and Marine Midland Bank, as Trustee, pursuant
to which the Subordinated Notes were issued.
"Subordinated Notes" means the 9 1/2% Senior Subordinated
Notes due 2007 issued pursuant to the Subordinated Note Indenture.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned or controlled by such Person, one
or more of the other subsidiaries of such Person or any combination thereof.
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"Syndication Agent" has the meaning ascribed to such
term in the preamble hereto.
"Taxes" has the meaning ascribed to such term in
Section 3.03(a).
"Term Loan Commitment" means, with respect to any Lender, the
obligation of such Lender to make Term Loans pursuant to the terms and
conditions of this Agreement, and which shall not exceed the principal amount
set forth opposite such Lender's name under the heading "Term Loan Commitment"
on the signature pages hereof or the signature page of the Assignment and
Acceptance by which it became (or becomes) a Lender, as modified from time to
time pursuant to the terms of this Agreement or to give effect to any applicable
Assignment and Acceptance, and "Term Loan Commitments" means the aggregate
principal amount of the Term Loan Commitments of all the Lenders, the maximum
amount of which shall not at any time exceed $25,000,000; provided, however,
that on and after a Commitment Triggering Event, the maximum amount of such Term
Loan Commitments shall be adjusted on the date that such Commitment Triggering
Event shall occur and on the forty-fifth day following the last date of each
Financial Covenant Period thereafter, by an amount equal to the Commitment
Adjustment.
"Term Loan Lender" means a Lender who has a Term Loan
Commitment.
"Term Loan Notes" has the meaning assigned thereto in
Section 2.03(b).
"Term Loans" has the meaning ascribed to such term in
Section 2.02(a)(i).
"Term Loan Termination Date" means the day which is the
earliest of (A) October 31, 1999, (B) the termination of the Commitments
pursuant to Section 11.02(a) and (C) the date of termination in whole of the
Commitments pursuant to Section 3.01(a)(ii).
"Termination Event" means (i) any Reportable Event with
respect to any Benefit Plan, (ii) the withdrawal of a Loan Party or an ERISA
Affiliate from a Benefit Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, (iii) the occurrence of an
obligation arising under Section 4041 of ERISA of a Loan Party or an ERISA
Affiliate to provide affected parties with a written notice of an intent to
terminate a Benefit Plan in a distress termination described in Section 4041(c)
of ERISA, (iv) the institution by the PBGC of proceedings to terminate any
Benefit Plan, (v) any event or condition which constitutes grounds under Section
4042 of ERISA for the appointment of a Trustee to administer a Benefit
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Plan, or (vi) the partial or complete withdrawal of any Loan Party or any ERISA
Affiliate from a Multiemployer Plan.
"Transaction Documents" means, collectively, the Loan
Documents and the Acquisition Documents.
"Type" means, with respect to any Loan, its nature as a
Eurodollar Rate Loan or a Base Rate Loan.
"Uniform Commercial Code" means the Uniform Commercial Code as
enacted in the State of New York, as it may be amended from time to time.
"Unused Commitment Fee" has the meaning ascribed to
such term in Section 4.03(a).
"Voting Securities" means with respect to any Person,
Securities with respect to any class or classes of capital stock of such Person
entitling the holders thereof ordinarily to vote in the election of the members
of the board of directors of such Person.
"Xxxxxxx-Xxxxxxx Acquisition" means the transactions
contemplated by the Xxxxxxx-Xxxxxxx Acquisition Documents.
"Xxxxxxx-Xxxxxxx Acquisition Agreement" means the Stock
Purchase Agreement dated as of August 29, 1997 by and among TSMD Acquisition,
Xxxxxxx-Xxxxxxx Company and Microwave (formerly known as X-X TSMD, Inc.).
"Xxxxxxx-Xxxxxxx Acquisition Documents" means, collectively,
the Xxxxxxx-Xxxxxxx Acquisition Agreement and all documents, instruments and
agreements delivered in connection therewith.
"Wholly Owned Subsidiary" means a Subsidiary of Stellex all
the Capital Stock of which (other than directors' qualifying shares) is owned by
Stellex or another Wholly Owned Subsidiary.
"Working Capital" means, as at any date of determination, the
excess, if any, of Current Assets over Current Liabilities.
1.02. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding". Periods of days referred to in this Agreement shall be
counted in calendar days unless Business Days are expressly prescribed. Any
period determined hereunder by reference to a month or months or year or years
shall end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period,
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provided that if such period commences on the last day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar
month during which such period is to end), such period shall, unless otherwise
expressly required by the other provisions of this Agreement, end on the last
day of the calendar month.
1.03. Accounting Terms. For purposes of this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP.
1.04. Other Terms. Terms not otherwise defined herein
which are defined in, or used in, Article 9 of the Uniform
Commercial Code shall have the respective meanings assigned to
such terms in Article 9 of the Uniform Commercial Code.
1.05 Knowledge. As used in this Agreement the phrases "to the
knowledge of," "known by" or phrases of similar import, when applied to any Loan
Party, shall mean that an individual holding any of the offices identified on
Schedule 1.05 attached hereto is actually aware of, or should be aware of in the
ordinary course of business, the fact or other matter.
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. Revolving Loan Facility.
(a) Availability. Subject to the terms and conditions set
forth in this Agreement, each Lender hereby severally agrees to make revolving
loans (each individually, a "Revolving Loan" and, collectively, the "Revolving
Loans") to the Borrowers from time to time during the period from the Closing
Date to the Business Day immediately preceding the Commitment Termination Date,
in an amount not to exceed such Lender's Pro Rata Share of the Availability at
such time; provided, however, that the initial Borrowing of Revolving Loans
shall not exceed $5,000,000. Each Base Rate Loan shall be for a minimum amount
of Two Hundred Thousand Dollars ($200,000) and in integral multiples of One
Hundred Thousand Dollars ($100,000) in excess of that amount. Each Eurodollar
Rate Loan shall be for a minimum amount of Five Hundred Thousand Dollars
($500,000) and in integral multiples of One Hundred Thousand Dollars ($100,000)
in excess of that amount. All Revolving Loans comprising the same Borrowing
under this Agreement shall be made by the Lenders simultaneously and
proportionately to their then respective Pro Rata Shares, it being understood
that no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make a Revolving Loan hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of any such
failure. Subject to the provisions of this Agreement, the Borrowers may repay
any outstanding Revolving Loan made to it on any day which
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is a Business Day and any amounts so repaid may be reborrowed in accordance with
the provisions of this Section 2.01(a).
(b) Notice of Borrowing. When the Borrowers desire to borrow
under this Section 2.01, the Borrowers shall deliver to each Lender a Notice of
Borrowing, signed by them, no later than 12:00 noon (New York time) (i) on the
proposed Funding Date, in the case of a Borrowing of Base Rate Loans, and (ii)
at least two (2) Business Days in advance of the proposed Funding Date, in the
case of a Borrowing of Eurodollar Rate Loans; provided that no Borrowing of
Eurodollar Rate Loans shall be made on the Closing Date. Such Notice of
Borrowing shall specify (i) the proposed Funding Date (which shall be a Business
Day), (ii) the amount of the proposed Borrowing, (iii) whether the proposed
Borrowing will be of Base Rate Loans or Eurodollar Rate Loans, and (iv) in the
case of Eurodollar Rate Loans, the requested Eurodollar Interest Period. In lieu
of delivering such a Notice of Borrowing, the Borrowers may give the
Administrative Agent telephonic notice of any proposed Borrowing by the time
required under this Section 2.01(b) if it confirms such notice by delivery of
the Notice of Borrowing to the Administrative Agent promptly, but in no event
later than 5:00 p.m. (New York time) on the same day. Any Notice of Borrowing
(or telephonic notice in lieu thereof) given pursuant to this Section 2.01(b)
shall be irrevocable.
(c) Making of Revolving Loans. (i) Each Lender shall deposit
an amount equal to its Pro Rata Share of the amount requested by the Borrowers
to be made as Revolving Loans in the Administrative Agent's Account at its
office in New York, New York, in immediately available funds, not later than
2:00 p.m. (New York time) on any Funding Date applicable thereto. Subject to the
fulfillment of the conditions precedent set forth in Sections 5.01 and 5.02, the
Administrative Agent shall make the proceeds of such amounts received by it
available to the Borrowers at the Administrative Agent's office in New York, New
York on such Funding Date (or on the date received if later than such Funding
Date). The failure of any Lender to deposit the amount described above with the
Administrative Agent on the applicable Funding Date shall not relieve any other
Lender of its obligations hereunder to make its Revolving Loan on such Funding
Date.
(ii) Unless the Administrative Agent shall have been notified
by any Lender no later than 1:00 p.m. (New York time) on the applicable Funding
Date in respect of any Borrowing of Revolving Loans that such Lender does not
intend to fund its Revolving Loan requested to be made on such Funding Date, the
Administrative Agent may assume that such Lender has funded its Revolving Loan
and is depositing the proceeds thereof with the Administrative Agent on the
Funding Date, and the Administrative Agent in its sole discretion may, but shall
not be obligated to, disburse a corresponding amount to the Borrowers on the
Funding Date. If the Revolving Loan proceeds corresponding to that
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amount are advanced to the Borrowers by the Administrative Agent but are not in
fact deposited with the Administrative Agent by such Lender on or prior to the
applicable Funding Date, such Lender agrees to pay, and in addition the
Borrowers agree to repay, to the Administrative Agent forthwith on demand such
corresponding amount, together with interest thereon, for each day from the date
such amount is disbursed to or for the benefit of the Borrowers until the date
such amount is paid or repaid to the Administrative Agent, (A) in the case of
the Borrowers, at the interest rate applicable to such Borrowing and (B) in the
case of such Lender, at the Federal Funds Rate for the first Business Day, and
thereafter at the interest rate applicable to such Borrowing. If such Lender
shall pay to the Administrative Agent the corresponding amount, the amount so
paid shall constitute such Lender's Revolving Loan, and if both such Lender and
the Borrowers shall pay and repay such corresponding amount, the Administrative
Agent shall promptly pay to the Borrowers such corresponding amount. This
Section 2.01(c)(ii) does not relieve any Lender of its obligation to make its
Revolving Loan on any Funding Date; nor does this Section relieve the Borrowers
of their obligation to pay or repay any Lender funding its Revolving Loan
pursuant to this Section interest on such Revolving Loan from such Funding Date
until the date on which such Revolving Loan is repaid in full.
(d) Repayment of Revolving Loans. The Revolving Loan
Commitments shall terminate, and all outstanding Revolving Loans
shall be paid in full, on the Commitment Termination Date.
2.02. Term Loan Facility.
(a) Amount of Loans. Subject to the terms and conditions set
forth in this Agreement, each Lender hereby severally agrees to make term loans
(each individually, a "Term Loan" and, collectively, the "Term Loans") to the
Borrowers from time to time during the period from the Closing Date to the
Business Day immediately preceding the Term Loan Termination Date in an amount
not to exceed such Lender's Pro Rata Share of the amount by which the Term Loan
Commitments exceed the outstanding Term Loans. Each Term Loan shall be a Base
Rate Loan on the Funding Date and be for a minimum amount of Two Million Five
Hundred Thousand Dollars ($2,500,000) and in integral multiples of One Hundred
Thousand Dollars ($100,000) in excess of that amount. All Term Loans shall be
made by the Lenders simultaneously and proportionately to their then respective
Pro Rata Shares, it being understood that no Lender shall be responsible for any
failure by any other Lender to perform its obligation to make a Term Loan
hereunder nor shall the Commitment of any Lender be increased or decreased as a
result of any such failure.
(b) Notice of Borrowing. When the Borrowers desire to borrow
under this Section 2.02, the Borrowers shall deliver to each Lender a Notice of
Borrowing, signed by them, no later than
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12:00 noon (New York time) at least one Business Day in advance of the proposed
Funding Date. Such Notice of Borrowing shall specify (i) the proposed Funding
Date (which shall be a Business Day) and (ii) the amount of the proposed
Borrowing with respect to the Term Loans. All Term Loans shall be Base Rate
Loans on the Closing Date but after the Closing Date may be converted to
Eurodollar Rate Loans pursuant to Section 4.01(c). Any Notice of Borrowing given
pursuant to this Section 2.02(b) shall be irrevocable.
(c) Making of Term Loans. (i) Each Lender shall deposit an
amount equal to its Pro Rata Share of the amount requested by the Borrowers
specified in such Notice of Borrowing to be made as Term Loans in the
Administrative Agent's Account at its office in New York, New York, in
immediately available funds, not later than 12:00 noon (New York time) on the
Funding Date. Subject to the fulfillment of the conditions precedent set forth
in Sections 5.01, 5.02 and 5.03, the Administrative Agent shall make the
proceeds of such amounts received by it available to the Borrowers at the
Administrative Agent's office in New York, New York on such Funding Date. The
failure of any Lender to deposit the amount described above with the
Administrative Agent on the Closing Date shall not relieve any other Lender of
its obligations hereunder to make its Term Loan on such Funding Date.
(ii) Unless the Administrative Agent shall have been notified
by any Lender no later than 1:00 p.m. (New York time) on the applicable Funding
Date in respect of any Borrowing of Term Loans that such Lender does not intend
to fund its Term Loan requested to be made on such Funding Date, the
Administrative Agent may assume that such Lender has funded its Term Loan and is
depositing the proceeds thereof with the Administrative Agent on the Funding
Date, and the Administrative Agent in its sole discretion may, but shall not be
obligated to, disburse a corresponding amount to the Borrowers on the Funding
Date. If the Term Loan proceeds corresponding to that amount are advanced to the
Borrowers by the Administrative Agent but are not in fact deposited with the
Administrative Agent by such Lender on or prior to the applicable Funding Date,
such Lender agrees to pay, and in addition the Borrowers agree to repay, to the
Administrative Agent forthwith on demand such corresponding amount, together
with interest thereon, for each day from the date such amount is disbursed to or
for the benefit of the Borrowers until the date such amount is paid or repaid to
the Administrative Agent, (A) in the case of the Borrowers, at the interest rate
applicable to such Borrowing and (B) in the case of such Lender, at the Federal
Funds Rate for the first Business Day, and thereafter at the interest rate
applicable to such Borrowing. If such Lender shall pay to the Administrative
Agent the corresponding amount, the amount so paid shall constitute such
Lender's Term Loan, and if both such Lender and the Borrowers shall pay such
corresponding amount, the Administrative Agent shall promptly pay to the
Borrowers such corresponding
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amount. This Section 2.02(c)(ii) does not relieve any Lender of its obligation
to make its Term Loan on any Funding Date; nor does this Section relieve the
Borrowers of their obligation to pay or repay any Lender funding its Term Loan
pursuant to this Section interest on such Term Loan from such Funding Date until
the date on which such Term Loan is repaid in full.
(d) Repayment of Term Loans. The principal amount of the Term
Loans outstanding on the Term Loan Termination Date (the "Outstanding Term Loan
Amount") shall be payable in fifteen (15) substantially equal consecutive
quarterly installments in the principal amount equal to 4.17% of the Outstanding
Term Loan Amount on the first day of February, May, August and November in each
year, commencing on February 1, 2000 through and including August 1, 2003 and
one (1) installment in the principal amount equal to 37.45% of the Outstanding
Term Loan Amount on the Maturity Date; provided, however, that the amount of the
last such installment shall be in the amount necessary to repay in full the
outstanding principal amount of the Term Loans.
2.03. Promise to Pay; Evidence of Debt. (a) The Borrowers
jointly and severally agree to pay when due the principal amount of each
Revolving Loan which is made to the Borrowers, and further agree to pay all
unpaid interest accrued thereon, in accordance with the terms of this Agreement
and the promissory notes evidencing the Revolving Loans owing to the Lenders.
The Borrowers shall execute and deliver to each Lender a promissory note to
evidence the Revolving Loans owing to such Lender and agrees to execute and
deliver to such Lender and any assignee of such Lender such promissory notes as
are necessary after giving effect to any assignment thereof pursuant to Section
13.01, each substantially in the form of Exhibit F-1 attached hereto and made a
part hereof (all such promissory notes and all amendments thereto, replacements
thereof and substitutions therefor being collectively referred to as the
"Revolving Loan Notes"; and "Revolving Loan Note" means any one of the Revolving
Loan Notes).
(b) The Borrowers jointly and severally agree to pay when due
the principal amount of each Term Loan which is made to the Borrowers, and
further agree to pay all unpaid interest accrued thereon, in accordance with the
terms of this Agreement and the promissory notes evidencing the Term Loans owing
to the Lenders. The Borrowers shall execute and deliver to each Lender a
promissory note to evidence the Term Loans owing to such Lender and agree to
execute and deliver to such Lender and any assignee of such Lender such
promissory notes as are necessary after giving effect to any assignment thereof
pursuant to Section 13.01, each substantially in the form of Exhibit F-2
attached hereto and made a part hereof (all such promissory notes and all
amendments thereto, replacements thereof and substitutions therefor being
collectively referred to as the "Term Loan Notes"; and "Term Loan Note" means
any one of the Term Loan Notes).
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2.04. Use of Proceeds of Loans. (a) The proceeds of the
Revolving Loans shall be used (i) to partially refinance certain existing
indebtedness of Aerospace and Microwave, (ii) to pay certain fees and expenses
incurred in connection with the Xxxxxxx-Xxxxxxx Acquisition and refinancing, and
(iii) to provide working capital in the ordinary course of business of Stellex
and its Subsidiaries and other general corporate purposes not prohibited
hereunder.
(b) The proceeds of the Term Loans shall be used to
fund Permitted Acquisitions.
2.05. Authorized Officers, Employees and Agents. On the
Closing Date and from time to time thereafter, the Borrowers shall deliver to
the Administrative Agent an Officer's Certificate setting forth the names of the
officers of each Borrower, employees and agents of such Borrower authorized to
request Loans on behalf of such Borrower and containing a specimen signature of
each such officer, employee or agent. The officers, employees and agents so
authorized shall also be authorized to act for such Borrower in respect of all
other matters relating to the Loan Documents. The Agents shall be entitled to
rely conclusively on such officer's, employee's or agent's authority to request
such Loan until the Agents receive written notice to the contrary. In addition,
the Agents shall be entitled to rely conclusively on any written notice sent to
it by telecopy. The Agents shall have no duty to verify the authenticity of the
signature appearing on, or any telecopy or facsimile of, any written Notice of
Borrowing or any other document, and, with respect to an oral request for such a
Loan, the Agents shall have no duty to verify the identity of any person
representing himself or herself as one of the officers, employees or agents
authorized to make such request or otherwise to act on behalf of any Borrower.
Neither any Agent nor any Lender shall incur any liability to any Borrower or
any other Person in acting upon any telecopy or facsimile or telephonic notice
referred to above which any Agent believes to have been given by a duly
authorized officer or other person authorized to borrow on behalf of any
Borrower.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in Revolving Loan Commitments.
(a) Voluntary Prepayments/Reductions.
(i) The Borrowers may, at any time and from time to time,
prepay the Loans in whole or in part; provided, however, that any partial
prepayment of Eurodollar Rate Loans shall be in minimum amounts of $500,000 and
in multiples of $100,000 in
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excess thereof and that any partial prepayment of Base Rate Loans shall be in
minimum amounts of $200,000 and in multiples of $100,000 in excess thereof;
provided, further, that Eurodollar Rate Loans may only be prepaid (A) in whole
or in part on the expiration date of the then applicable Eurodollar Interest
Period, upon at least one (1) Business Day's prior written notice to the
Administrative Agent (which the Administrative Agent shall promptly transmit to
each Lender, it being agreed that the failure of the Administrative Agent to
give such notice shall not affect the Borrowers' right to prepay any Loan) or
(B) otherwise upon payment of the amounts described in Section 4.02(f). Any
notice of prepayment given to the Administrative Agent under this Section
3.01(a)(i) shall specify the Loans to be prepaid, the date (which shall be a
Business Day) of prepayment, and the aggregate principal amount of the
prepayment. Any prepayment of Term Loans shall be applied pro rata to the
remaining principal installments of the Term Loans. When notice of prepayment is
delivered as provided herein, the principal amount of the Loans specified in the
notice shall become due and payable on the prepayment date specified in such
notice.
(ii) The Borrowers, upon at least five (5) Business Days'
prior notice to the Administrative Agent (which the Administrative Agent shall
promptly transmit to each Lender), shall have the right, at any time and from
time to time, to terminate in whole or permanently reduce ratably in part the
unused portions of the Commitments. Any partial reduction of the Commitments
shall be in an aggregate minimum amount of One Million Dollars ($1,000,000) and
integral multiples of One Hundred Thousand Dollars ($100,000) in excess of that
amount, and shall reduce the Commitment of each Lender proportionately in
accordance with such Lender's Pro Rata Share. Any notice of termination or
reduction given to the Administrative Agent under this Section 3.01(a)(ii) shall
specify whether the termination or reduction is applicable to the Revolving Loan
Commitment or the Term Loan Commitment, the date (which shall be a Business Day)
of such termination or reduction and, with respect to a partial reduction, the
aggregate principal amount thereof.
(iii) The prepayments and payments in respect of reductions
and terminations described in clauses (i) and (ii) of this Section 3.01(a) may
be made without premium or penalty (except as provided in Section 4.02(f)).
(b) Mandatory Prepayments/Reductions.
(i) Immediately upon any Loan Party's receipt of any Net Cash
Proceeds on account of an Asset Sale (other than Excluded Proceeds), such Loan
Party shall make or cause to be made a mandatory prepayment of the Term Loans in
an amount equal to 100% of such Net Cash Proceeds. Each such prepayment of Term
Loans shall be applied pro rata to the remaining principal installments of the
Term Loans.
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(ii) Immediately upon any Loan Party's receipt of any Net Cash
Proceeds from the issuance of any Securities (other than Excluded Securities) by
such Loan Party (other than such Net Cash Proceeds that are used by such Loan
Party to consummate a Permitted Acquisition within one year from the date such
Net Cash Proceeds are received, provided that such Net Cash Proceeds are
deposited into the Cash Collateral Account upon receipt of such Net Cash
Proceeds by such Loan Party until the earlier of (A) the date such Loan Party
consummates a Permitted Acquisition in accordance with the provisions hereof or
(B) the date which is the first annual anniversary of the date of deposit
thereof), such Loan Party shall make or cause to be made a mandatory prepayment
of the Term Loans in an amount equal to 100% of such Net Cash Proceeds. Each
such prepayment of Term Loans shall be applied pro rata to the remaining
principal installments of the Term Loans.
(iii) On the 90th day following the last day of each Fiscal
Year, the Borrowers shall make or cause to be made a mandatory prepayment of the
Term Loans in an amount equal to the lesser of 50% of the Excess Cash Flow for
such Fiscal Year or the aggregate principal amount of the Term Loans outstanding
as of the last day of such Fiscal Year; provided, however, that no mandatory
prepayment shall be required hereunder if the Leverage Ratio of Stellex and its
Subsidiaries on a consolidated basis for such Fiscal Year is less than 3.25 to
1.00. Each such prepayment of Term Loans shall be applied pro rata to the
remaining principal installments of the Term Loans.
(iv) Immediately upon the Revolving Credit Obligations
exceeding the Maximum Revolving Credit Amount, the Borrowers shall make or cause
to be made a mandatory prepayment of the Revolving Credit Obligations in an
amount equal to such excess, such amount to be applied in accordance with the
provisions of Section 3.02(b).
(v) Nothing in this Section 3.01(b) shall be construed to
constitute the Lenders' consent to any transaction which is not expressly
permitted by Article IX.
3.02. Payments. (a) Manner and Time of Payment. All
payments of principal, interest, fees and other Obligations which are payable to
the Administrative Agent or any Lender shall be made without condition or
deduction for any counterclaim, defense, recoupment or set-off, in Dollars and
in immediately available funds, delivered to the Administrative Agent not later
than 1:00 p.m. (New York time) on the date due, by deposit of such funds to the
Administrative Agent's Account. The Administrative Agent shall thereafter cause
to be distributed to the Lenders their respective Pro Rata Shares of such
payments in accordance with the provisions of Section 3.02(b) if received prior
to 1:00 p.m. (New York time), and on the next succeeding
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Business Day, if received thereafter, by the Administrative Agent.
(b) Apportionment of Payments. (i) Subject to the provisions
of Sections 3.02(b)(ii), all payments of principal in respect of outstanding
Revolving Loans shall be applied by the Administrative Agent to the ratable
payment of the Revolving Loans owing to the Lenders, and all payments of
principal in respect of outstanding Term Loans shall be applied by the
Administrative Agent to the ratable payment of the Term Loans owing to the
Lenders. Payments relating to interest shall be applied to the payment of
interest owing to the Lenders in respect of the Loans on a ratable basis.
(ii) After the occurrence of an Event of Default and while the same
is continuing, the Administrative Agent shall apply all payments and prepayments
of any Obligations and all proceeds of Collateral in the following order:
(A) first, to pay principal of and interest on any Loans which
the Administrative Agent may have advanced on behalf of any Lender
pursuant to Section 2.01(c)(ii) or Section 2.02(c)(ii) for which the
Administrative Agent has not been reimbursed by such Lender or the
Borrowers;
(B) second, to pay Obligations in respect of any fees,
expense reimbursements or indemnities then due to the Administrative
Agent or the Lenders;
(C) third, to pay interest on the Loans;
(D) fourth, to pay the principal amount of the Loans
then outstanding in accordance with each Lender's Pro Rata Share; and
(E) fifth, to pay all other Obligations in such
order as the Administrative Agent may determine in its sole discretion.
The order of priority set forth in this Section 3.02(b)(ii) and the related
provisions of this Agreement are set forth solely to determine the rights and
priorities of the Administrative Agent and the Lenders as among themselves. If
sufficient funds are not available to fund all Obligations described in any of
the foregoing clauses (A) through (E), the available funds shall be allocated to
the Obligations described in such clause ratably.
(c) Payments on Non-Business Days. Whenever any payment to be
made by the Borrowers hereunder or under the Notes is stated to be due on a day
which is not a Business Day, the payment shall instead be due on the next
succeeding Business Day,
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and any such extension of time shall be included in the computation of the
payment of interest and fees hereunder.
3.03. Taxes. (a) Payments Free and Clear of Taxes. Any and all
payments by the Borrowers hereunder, under the Notes or under any other Loan
Document shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of each Lender
and the Administrative Agent, taxes imposed on its income, capital, profits or
gains and franchise taxes imposed on it, in each case by (i) the United States
except withholding taxes contemplated pursuant to Section 3.03(e)(ii)(C), (ii)
the Governmental Authority of the jurisdiction in which such Lender's office is
located or (iii) the Governmental Authority in which such Person is organized,
managed, controlled or doing business, in each case including all political
subdivisions thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Borrowers shall be required by law to withhold or deduct any Taxes from
or in respect of any sum payable hereunder, under the Notes or under any other
Loan Document to any Lender or the Administrative Agent, (x) such sum payable
shall be increased as may be necessary so that after making all required
withholdings or deductions (including withholdings or deductions applicable to
additional sums payable under this Section 3.03) such Lender or the
Administrative Agent (as the case may be) receives an amount equal to the sum it
would have received had no such withholdings or deductions been made, (y) the
Borrowers shall make such withholdings or deductions, and (z) the Borrowers
shall pay the full amount withheld or deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) Other Taxes. In addition, the Borrowers agree to pay any
present or future stamp, value-added or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from and which relate
directly to (i) any payment made under any Loan Document or (ii) the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Notes or any other Loan Document (hereinafter referred to as "Other Taxes").
(c) Indemnification. The Borrowers will indemnify each Lender
and each Agent against, and reimburse each on demand for, the full amount of all
Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any Governmental Authority on amounts payable under this Section 3.03
and any additional income or franchise taxes resulting therefrom) incurred or
paid by such Lender or such Agent (as the case may be) or any Affiliate of such
Lender and any liability (including penalties, interest, and out-of-pocket
expenses paid to third
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parties) arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or lawfully payable. A certificate as to any amount
payable to any Person under this Section 3.03 submitted by such Person to the
Borrowers shall, absent manifest error, be final, conclusive and binding upon
all parties hereto. In determining such additional amount, such Person shall
take into account and reduce the amount otherwise payable by the Borrowers
pursuant to this Section 3.03 by an amount equal to the tax credits and other
tax benefits actually utilized (as determined by such Person in its reasonable
judgment). This indemnification shall be made within thirty (30) days from the
date such Person makes written demand therefor and within thirty (30) days after
the receipt of any refund of the Taxes or Other Taxes following final
determination that the Taxes or Other Taxes which gave rise to the
indemnification were not required to be paid, such Person shall repay the amount
of such paid indemnity to the Borrowers.
(d) Receipts. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes by the Borrowers, the Borrowers will furnish to
the Administrative Agent, at its address referred to in Section 13.10, the
original or a certified copy of a receipt or other documentation reasonably
satisfactory to the Administrative Agent evidencing payment thereof. The
Borrowers will furnish to the Administrative Agent upon the Administrative
Agent's request from time to time an Officer's Certificate stating that all
Taxes and Other Taxes of which it is aware that are due have been paid and that
no additional Taxes or Other Taxes of which it is aware are due.
(e) Foreign Bank Certifications. (i) Each Lender that is not
created or organized under the laws of the United States or a political
subdivision thereof shall deliver to the Borrowers and the Administrative Agent
on or before the Closing Date or the date on which such Lender becomes a Lender
pursuant to Section 13.01 hereof a true and accurate certificate executed in
duplicate by a duly authorized officer of such Lender to the effect that such
Lender is eligible to receive payments hereunder and under the Notes without
deduction or withholding of United States federal income tax (A) under the
provisions of an applicable tax treaty concluded by the United States (in which
case the certificate shall be accompanied by two duly completed copies of IRS
Form 1001 (or any successor or substitute form or forms)) or (B) under Sections
1442(c)(1) and 1442(a) of the Internal Revenue Code (in which case the
certificate shall be accompanied by two duly completed copies of IRS Form 4224
(or any successor or substitute form or forms)) and IRS Form W-8 or W-9 and any
other form which the Borrowers or the Administrative Agent shall reasonably
request in connection therewith. In the event a Lender fails to deliver the
requisite forms in accordance with the preceding sentence, such Lender shall not
be entitled to the indemnification provided by Section 3.03(c).
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(ii) Each such Lender further agrees to deliver to the Borrowers
and the Administrative Agent from time to time, a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender before or
promptly upon the occurrence of any event requiring a change in the most recent
certificate previously delivered by it to the Borrowers and the Administrative
Agent pursuant to this Section 3.03(e). Each certificate required to be
delivered pursuant to this Section 3.03(e)(ii) shall certify as to one of the
following:
(A) that such Lender can continue to receive payments
hereunder and under the Notes without deduction or withholding of
United States federal income tax;
(B) that such Lender cannot continue to receive payments
hereunder and under the Notes without deduction or withholding of
United States federal income tax as specified therein but does not
require additional payments pursuant to Section 3.03(a) because it is
entitled to recover the full amount of any such deduction or
withholding from a source other than the Borrowers;
(C) that such Lender is no longer capable of receiving
payments hereunder and under the Notes without deduction or withholding
of United States federal income tax as specified therein by reason of a
change in law (including the Code or applicable tax treaty) after the
later of the Closing Date or the date on which a Lender became a Lender
pursuant to Section 13.01 and that it is not capable of recovering the
full amount of the same from a source other than the Borrowers; or
(D) that such Lender is no longer capable of receiving
payments hereunder without deduction or withholding of United States
federal income tax as specified therein other than by reason of a
change in law (including the Code or applicable tax treaty) after the
later of the Closing Date or the date on which a Lender became a Lender
pursuant to Section 13.01.
Each Lender agrees to deliver to the Borrowers and the Administrative Agent duly
completed copies of the above-mentioned IRS forms on or before the earlier of
(x) the date that any such form expires or becomes obsolete or otherwise is
required to be resubmitted as a condition to obtaining an exemption from
withholding from United States federal income tax and (y) fifteen (15) days
after the occurrence of any event requiring a change in the most recent form
previously delivered by such Lender to the Borrowers and the Administrative
Agent, unless any change in
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treaty, law, regulation, or official interpretation thereof which would render
such form inapplicable or which would prevent the Lender from duly completing
and delivering such form has occurred prior to the date on which any such
delivery would otherwise be required and the Lender promptly advises the
Borrowers and the Administrative Agent that it is not capable of receiving
payments hereunder or under the Notes without any deduction or withholding of
United States federal income tax. In the event a Lender fails to deliver the
requisite forms in accordance with this Section 3.03(e), such Lender shall not
be entitled to the indemnification provided by Section 3.03(c).
3.04. Increased Capital. If any Lender reasonably determines
that (i) the adoption or implementation of or any change in or in the
interpretation or administration of any law or regulation or any guideline or
request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over such
Lender or banks or financial institutions generally (whether or not having the
force of law) effective after the date hereof, compliance with which affects or
would affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and (ii) the amount of such
capital is increased by or based upon the making or maintenance by any Lender of
its Loans, any Lender's participation in or obligation to participate in the
Loans or other advances made hereunder or under the Notes or the existence of
any Lender's obligation to make Loans, then, in any such case, upon demand by
such Lender (with a copy of such demand to the Administrative Agent), the
Borrowers agree to immediately pay to the Administrative Agent for the account
of such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender or such corporation therefor. Such
demand shall be accompanied by a statement as to the amount of such compensation
and include a brief summary of the basis for such demand. Such statement shall
be conclusive and binding for all purposes, absent manifest error.
ARTICLE IV
INTEREST AND FEES
4.01. Interest on the Loans and other Obligations.
(a) Rate of Interest. (i) All Revolving Loans and the
outstanding amount of all other Obligations (other than Term Loans) shall bear
interest on the unpaid amount thereof from the date such Loans are made and such
other Obligations are due and payable until paid in full, except as otherwise
provided in Section 4.01(d), as follows:
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(A) If a Base Rate Loan or other Obligation, at a rate per
annum equal to the sum of (I) the Base Rate as in effect from time to
time as interest accrues, plus (II) the Applicable Revolving Loan Base
Rate Margin in effect at such time; and
(B) If a Eurodollar Rate Loan, at a rate per annum equal to the
sum of (I) the Eurodollar Rate determined for the applicable Eurodollar
Interest Period, plus (II) the Applicable Revolving Eurodollar Rate
Margin in effect from time to time during such Eurodollar Interest
Period.
(ii) All Term Loans shall bear interest on the unpaid amount
thereof from the date such Loans are made until paid in full, except as
otherwise provided in Section 4.01(d), as follows:
(A) If a Base Rate Loan, at a rate per annum equal to the sum
of (I) the Base Rate as in effect from time to time as interest
accrues, plus (II) the Applicable Term Loan Base Rate Margin in effect
at such time; and
(B) If a Eurodollar Rate Loan, at a rate per annum equal to the
sum of (I) the Eurodollar Rate determined for the applicable Eurodollar
Interest Period, plus (II) the Applicable Term Loan Eurodollar Rate
Margin in effect from time to time during such Eurodollar Interest
Period.
(iii) The applicable basis for determining the rate of
interest on the Loans shall be selected by the Borrowers at the time a Notice of
Borrowing or a Notice of Conversion/Continuation is delivered by the Borrowers
to the Administrative Agent; provided, however, the Borrowers may not select the
Eurodollar Rate as the applicable basis for determining the rate of interest on
such a Loan if (x) such Loan is to be made on the Closing Date or (y) at the
time of such selection a Default or Event of Default would occur or has occurred
and is continuing. If on any day any Loan is outstanding with respect to which
notice has not been timely delivered to the Administrative Agent in accordance
with the terms hereof specifying the basis for determining the rate of interest
on that day, then for that day interest on that Loan shall be determined by
reference to the Base Rate.
(b) Interest Payments. (i) Interest accrued on each Base Rate
Loan shall be payable in arrears (A) on the first Business Day of each calendar
month, commencing on the first such day following the making of such Base Rate
Loan and (B) on the Commitment Termination Date.
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(ii) Interest accrued on each Eurodollar Rate Loan shall be
payable in arrears (A) on each Eurodollar Interest Payment Date applicable to
such Loan and (B) on the Commitment Termination Date.
(iii) Interest accrued on the balance of all other Obligations
shall be payable in arrears (A) on the first Business Day of each calendar
month, commencing on the first such day following the incurrence of such
Obligation and (B) on the Commitment Termination Date.
(c) Conversion or Continuation. (i) The Borrowers shall have
the option (A) to convert at any time all or any part of the outstanding Base
Rate Loans to Eurodollar Rate Loans; (B) to convert all or any part of
outstanding Eurodollar Rate Loans having Eurodollar Interest Periods which
expire on the same date to Base Rate Loans on such expiration date; or (C) to
continue all or any part of outstanding Eurodollar Rate Loans having Eurodollar
Interest Periods which expire on the same date as Eurodollar Rate Loans, and the
succeeding Eurodollar Interest Period of such continued Loans shall commence on
such expiration date; provided, however, no such outstanding Loan may be
continued as, or be converted into, a Eurodollar Rate Loan (i) if the
continuation of, or the conversion into, would violate any of the provisions of
Section 4.02 or (ii) if an Event of Default would occur or has occurred and is
continuing. Any conversion into or continuation of Eurodollar Rate Loans under
this Section 4.01(c) shall be in a minimum amount of Five Hundred Thousand
Dollars ($500,000) and in integral multiples of One Hundred Thousand Dollars
($100,000) in excess of that amount.
(ii) To convert or continue a Loan under Section 4.01(c)(i),
the Borrowers shall deliver a Notice of Conversion/Continuation to each Lender
no later than 12:00 noon (New York time) at least two (2) Business Days in
advance of the proposed conversion/continuation date. A Notice of
Conversion/Continuation shall specify (A) the proposed conversion/continuation
date (which shall be a Business Day), (B) the principal amount of the Loan to be
converted/continued, (C) whether such Loan shall be converted and/or continued
and (D) in the case of a conversion to, or continuation of, a Eurodollar Rate
Loan, the requested Eurodollar Interest Period. In lieu of delivering a Notice
of Conversion/Continuation, the Borrowers may give each Lender telephonic
notice of any proposed conversion/continuation by the time required under this
Section 4.01(c)(ii), and such notice shall be confirmed in writing delivered to
each Lender promptly (but in no event later than 5:00 p.m. (New York time) on
the same day). Any Notice of Conversion/Continuation for conversion to, or
continuation of, a Loan (or telephonic notice in lieu thereof) shall be
irrevocable, and the Borrowers shall be bound to convert or continue in
accordance therewith.
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(d) Default Interest. Notwithstanding the rates of interest
specified in Section 4.01(a) or elsewhere herein, effective immediately upon the
occurrence of any Event of Default and for as long thereafter as such Event of
Default shall be continuing, the principal balance of all Loans and of all other
Obligations, shall bear interest at a rate which is two percent (2.0%) per annum
in excess of the rate of interest applicable to such Obligations from time to
time (the "Default Rate").
(e) Computation of Interest. Interest on (i) Base Rate Loans
and all other Obligations shall be computed on the basis of the actual number of
days elapsed in the period during which interest accrues and a year of 360 days
and (ii) Eurodollar Rate Loans shall be computed on the basis of the actual
number of days elapsed in the period during which interest accrues and a year of
360 days. In computing interest on any Loan, the date of the making of the Loan
shall be included and the date of payment made in accordance with Section 3.02
shall be excluded; provided, however, if a Loan is repaid on the same day on
which it is made, one (1) day's interest shall be paid on such Loan.
(f) Changes; Legal Restrictions. If after the date hereof any
Lender reasonably determines that the adoption or implementation of or any
change in or in the interpretation or administration of any law or regulation or
any guideline or request from any central bank or other Governmental Authority
or quasi-governmental authority exercising jurisdiction, power or control over
any Lender or over banks or financial institutions generally (whether or not
having the force of law), compliance with which, in each case after the date
hereof:
(i) subjects a Lender (or its Applicable Lending Office) to
charges (other than Taxes) of any kind which is applicable to the
Commitments of the Lenders to make Eurodollar Rate Loans or changes the
basis of taxation of payments to that Lender of principal, fees,
interest, or any other amount payable hereunder with respect to
Eurodollar Rate Loans; or
(ii) imposes, modifies, or holds applicable, any reserve
(other than reserves taken into account in calculating the Eurodollar
Rate), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities
(including those pertaining to Letters of Credit) in or for the account
of, advances or loans by, commitments made, or other credit extended
by, or any other acquisition of funds by, a Lender or any Applicable
Lending Office or Eurodollar Affiliate of that Lender;
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and the result of any of the foregoing is to increase the cost to that Lender of
making, renewing or maintaining the Loans or its Commitments or to reduce any
amount receivable thereunder; then, in any such case, upon written demand by
such Lender (with a copy of such demand to the Administrative Agent), the
Borrowers shall immediately pay to the Administrative Agent for the account of
such Lender, from time to time as specified by such Lender, such amount or
amounts as may be necessary to compensate such Lender or its Eurodollar
Affiliate for any such additional cost incurred or reduced amount received. Such
demand shall be accompanied by a statement as to the amount of such compensation
and include a summary of the basis for such demand. Such statement shall be
conclusive and binding for all purposes, absent manifest error.
(g) Confirmation of Eurodollar Rate. Upon the request of the
Borrowers from time to time, the Administrative Agent shall promptly provide to
the Borrowers such information with respect to the applicable Eurodollar Rate as
may be reasonably requested.
4.02. Special Provisions Governing Eurodollar Rate
Loans. With respect to Eurodollar Rate Loans:
(a) Amount of Advance. Each Eurodollar Rate Loan shall be for
a minimum amount of Five Hundred Thousand Dollars ($500,000) and in integral
multiples of One Hundred Thousand Dollars ($100,000) in excess of that amount.
(b) Determination of Eurodollar Interest Period. By giving
notice as set forth in Section 2.01(b) or Section 2.02(b) (with respect to a
Borrowing of a Eurodollar Rate Loan) or Section 4.01(c) (with respect to a
conversion into or continuation of a Eurodollar Rate Loan), the Borrowers shall
have the option, subject to the other provisions of this Section 4.02, to select
an interest period (a "Eurodollar Interest Period") to apply to the Loans
described in such notice, subject to the following provisions:
(i) The Borrowers may only select, as to a particular
Borrowing of Eurodollar Rate Loans, a Eurodollar Interest Period of
either one, two, three or six months in duration;
(ii) In the case of immediately successive Eurodollar Interest
Periods applicable to a Borrowing of Eurodollar Rate Loans, each
successive Eurodollar Interest Period shall commence on the day on
which the next preceding Eurodollar Interest Period expires;
(iii) If any Eurodollar Interest Period would otherwise expire
on a day which is not a Business Day, such Eurodollar Interest Period
shall be extended to
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expire on the next succeeding Business Day if the next succeeding
Business Day occurs in the same calendar month, and if there shall be
no succeeding Business Day in such calendar month, such Eurodollar
Interest Period shall expire on the immediately preceding Business Day;
(iv) The Borrowers may not select a Eurodollar Interest Period
as to any Loan if such Eurodollar Interest Period terminates later than
the Commitment Termination Date or the Maturity Date;
(v) The Borrowers may not select a Eurodollar Interest Period
with respect to any portion of principal of a Loan which extends
beyond a date on which the Borrowers are required to make a scheduled
payment of such portion of principal; and
(vi) There shall be no more than six (6) Eurodollar Interest
Periods in effect at any one time.
(c) Determination of Interest Rate. As soon as practicable on
the second Business Day prior to the first day of each Eurodollar Interest
Period (the "Interest Rate Determination Date"), the Administrative Agent shall
determine (pursuant to the procedures set forth in the definition of "Eurodollar
Rate") the interest rate which shall apply to Eurodollar Rate Loans, for which
an interest rate is then being determined for the applicable Eurodollar Interest
Period and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to the Borrowers and to each Lender. The Administrative
Agent's determination shall be presumed to be correct, absent manifest error,
and shall be binding upon the Borrowers.
(d) Interest Rate Unascertainable, Inadequate or Unfair. In
the event that at least one (1) Business Day before the Interest Rate
Determination Date:
(i) the Administrative Agent reasonably determines that
adequate and fair means do not exist for ascertaining the applicable
interest rates by reference to which the Eurodollar Rate then being
determined is to be fixed;
(ii) the Requisite Lenders advise the Administrative Agent that
Dollar deposits in the principal amounts of the Eurodollar Rate Loans
comprising such Borrowing are not generally available in the London
interbank market for a period equal to such Eurodollar Interest Period;
or
(iii) the Requisite Lenders advise the Administrative Agent
that the Eurodollar Rate as determined by the
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Administrative Agent, after taking into account the adjustments for
reserves and increased costs provided for in Section 4.01(f), will not
adequately and fairly reflect the cost to such Lenders of funding Loans
of such Type;
then the Administrative Agent shall forthwith give notice thereof to the
Borrowers, whereupon (until the Administrative Agent notifies the Borrowers
that the circumstances giving rise to such suspension no longer exist) the right
of the Borrowers to elect to have Loans bear interest based upon the Eurodollar
Rate shall be suspended and each outstanding Loan of such Types shall be
converted into a Base Rate Loan on the last day of the then current Eurodollar
Interest Period therefor, and any Notice of Borrowing for which Revolving Loans
have not then been made shall be deemed to be a request for Base Rate Loans,
notwithstanding any prior election by the Borrowers to the contrary.
(e) Illegality. (i) If at any time any Lender determines
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties) that the making or continuation of any Eurodollar Rate
Loan has become unlawful or impermissible by compliance by that Lender with any
law, governmental rule, regulation or order of any Governmental Authority
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful or would result in costs or penalties), then, and in
any such event, such Lender may give notice of that determination, in writing,
to the Borrowers and the Administrative Agent, and the Administrative Agent
shall promptly transmit the notice to each other Lender.
(ii) When notice is given by a Lender under Section
4.02(e)(i), (A) the Borrowers' right to request from such Lender and such
Lender's obligation, if any, to make Eurodollar Rate Loans shall be immediately
suspended, and such Lender shall make a Base Rate Loan as part of any requested
Borrowing of Eurodollar Rate Loans and (B) if the affected Eurodollar Rate Loan
or Loans are then outstanding, the Borrowers shall immediately, or if permitted
by applicable law, no later than the date permitted thereby, upon at least one
(1) Business Day's prior written notice to the Administrative Agent and the
affected Lender, convert each such Loan into a Base Rate Loan.
(iii) If at any time after a Lender gives notice under Section
4.02(e)(i) such Lender determines that it may lawfully make Eurodollar Rate
Loans, such Lender shall promptly give notice of that determination, in writing,
to the Borrowers and the Administrative Agent, and the Administrative Agent
shall promptly transmit the notice to each other Lender. The Borrowers' right to
request, and such Lender's obligation, if any, to make Eurodollar Rate Loans
shall thereupon be restored.
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(f) Compensation. In addition to all amounts required to be
paid by the Borrowers pursuant to Section 4.01, the Borrowers shall compensate
each Lender, upon demand, for all losses, expenses and liabilities (including,
without limitation, any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Lender's Eurodollar Rate Loans to the Borrowers but excluding any
loss of the Applicable Eurodollar Rate Margin on the relevant Loans) which that
Lender may sustain (i) if for any reason a Borrowing, conversion into or
continuation of Eurodollar Rate Loans does not occur on a date specified
therefor in a Notice of Borrowing or a Notice of Conversion/Continuation given
by the Borrowers or in a telephonic request by it for borrowing or
conversion/continuation or a successive Eurodollar Interest Period does not
commence after notice therefor is given pursuant to Section 4.01(c), (ii) if for
any reason any Eurodollar Rate Loan is prepaid (including, without limitation,
mandatorily pursuant to Section 3.01(b)) on a date which is not the last day of
the applicable Eurodollar Interest Period, (iii) as a consequence of a required
conversion of a Eurodollar Rate Loan to a Base Rate Loan as a result of any of
the events indicated in Section 4.02(d) or (e) or (iv) as a consequence of any
failure by the Borrowers to repay Eurodollar Rate Loans when required by the
terms hereof. The Lender making demand for such compensation shall deliver to
the Borrowers concurrently with such demand a written statement in reasonable
detail as to such losses, expenses and liabilities, and this statement shall be
conclusive as to the amount of compensation due to that Lender, absent manifest
error.
(g) Affiliates Not Obligated. No Eurodollar Affiliate or other
Affiliate of any Lender shall be deemed a party hereto or shall have any
liability or obligation hereunder.
4.03. Fees. (a) Unused Commitment Fee. The Borrowers agree to
pay to the Administrative Agent, for the account of the Lenders in accordance
with their Pro Rata Shares, a fee (the "Unused Commitment Fee"), accruing on (i)
the average amount by which the Revolving Loan Commitments exceeds the amount of
the Revolving Credit Obligations for the period commencing on the Closing Date
and ending on the Commitment Termination Date, and (ii) the average amount by
which the Term Loan Commitments exceeds the outstanding Term Loans for the
period commencing on the Closing Date and ending on the Term Loan Termination
Date, at the rate of one-half of one percent (1/2 of 1%) per annum on such
aggregate amount payable quarterly, in arrears, on the first Business Day of
each calendar quarter and on the Commitment Termination Date.
(b) Computation of Fees. All of the above fees
payable on a per annum basis shall be computed on the basis of
the actual number of days elapsed in a year of 360 days. All
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such fees shall be payable in addition to, and not in lieu of, interest,
compensation, expense reimbursements, indemnification and other Obligations.
ARTICLE V
CONDITIONS TO LOANS
5.01. Conditions Precedent to the Initial Loans. The
obligation of each Lender on the Closing Date to make its initial
Loan requested to be made by it shall be subject to the
satisfaction of all of the following conditions precedent:
(a) Documents. The Administrative Agent (on behalf of itself
and the Lenders) shall have received on or before the Closing Date all of the
following:
(i) this Agreement, the Notes and all other agreements,
documents, instruments, certificates and opinions described in the List
of Closing Documents attached hereto and made a part hereof as Exhibit
E, each duly executed where appropriate and in form and substance
satisfactory to the Lenders and in sufficient copies for each of the
Lenders;
(ii) a pro-forma consolidated balance sheet of Stellex and its
Subsidiaries as of June 30, 1997 with adjustments as of the Closing
Date, giving effect to the transactions contemplated in the Transaction
Documents, certified by the Chief Financial Officer; and
(iii) such additional documentation as the Administrative
Agent or the Requisite Lenders may reasonably request.
(b) Perfection of Liens. All Uniform Commercial Code and other
filing and recording fees and taxes shall have been paid or duly provided for.
The Administrative Agent shall be satisfied that all Liens granted to the
Collateral Agent with respect to the Collateral are valid and effective and,
upon the filing of the duly executed Uniform Commercial Code financing
statements (or similar filings required by the applicable statutes of any
jurisdiction in which the Collateral Agent is being granted a Lien by any Loan
Party), will be perfected and of first priority, except as otherwise permitted
under this Agreement and except for compliance with the Assignment of Claims Act
of 1940, as amended, with respect to Receivables where the account debtor is the
United States of America or any department, agency or instrumentality thereof.
All certificates representing Capital Stock included in the Collateral shall
have been delivered to the Collateral Agent (with duly executed stock powers, as
appropriate) and all instruments included in the
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Collateral shall have been delivered to the Collateral Agent (duly endorsed to
the Collateral Agent).
(c) Xxxxxxx-Xxxxxxx Acquisition Agreement and Related Matters.
The Administrative Agent and the Lenders shall be satisfied that: (i) the
Xxxxxxx-Xxxxxxx Acquisition Documents which are to be entered into as of or
prior to the Closing Date shall have been duly approved and executed and
delivered by the parties thereto, (ii) all conditions precedent to closing under
the Xxxxxxx-Xxxxxxx Acquisition Agreement and the other Xxxxxxx-Xxxxxxx
Acquisition Documents have been met or waived and such documents are, or
simultaneously with the execution hereof, shall be, in full force and effect.
(d) Subordinated Notes and Related Matters. The
Administrative Agent and the Lenders shall be satisfied that: (i) the
Subordinated Note Documents are on terms and conditions satisfactory to the
Administrative Agent and the Lenders, (ii) all conditions precedent to closing
under the Subordinated Note Documents have been met or waived and such documents
are, or simultaneously with the execution hereof, shall be, in full force and
effect, and (iii) Stellex has received at least cash in an amount equal to
$100,000,000 less discounts and expenses in connection with its issuance of the
Subordinated Notes.
(e) Equity Contribution. The Administrative Agent and the
Lenders shall be satisfied that Stellex has received at least $7,500,000 in cash
equity.
(f) No Legal Impediments. No law, regulation, order, judgment
or decree of any Governmental Authority shall, and the Administrative Agent
shall not have received any notice that any action, suit, investigation,
litigation or proceeding is pending or threatened in any court or before any
arbitrator or Governmental Authority which (i) purports to enjoin, prohibit,
restrain or otherwise affect (A) the making of the Loans on the Closing Date or
(B) the consummation of the transactions contemplated pursuant to the
Transaction Documents or (ii) would be reasonably expected to impose or result
in the imposition of a Material Adverse Effect.
(g) Consents. Except as set forth on Schedule 5.01(A), each
Loan Party shall have received all consents and authorizations required pursuant
to any material Contractual Obligation with any other Person and shall have
obtained all consents and authorizations of, and effected all notices to and
filings with, any Governmental Authority, in each case, as may be necessary to
allow such Loan Party, lawfully and without risk of rescission, (i) to execute,
deliver and perform, in all material respects, its obligations under this
Agreement, the other Loan Documents to which it is, or is to be, a party and
each other agreement or instrument to be executed and delivered by it
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pursuant thereto or in connection therewith and (ii) to create and perfect or
continue the validity and perfection of the Liens on the Collateral to be owned
by it in the manner and for the purpose contemplated by the Loan Documents.
(h) No Change in Condition. No change in the condition
(financial or otherwise), business, performance, properties, assets or
operations of Stellex and its Subsidiaries, taken as a whole, shall have
occurred since December 31, 1996 which change will have or is reasonably likely
to have a Material Adverse Effect.
(i) No Default. No Default or Event of Default shall have
occurred and be continuing or would result from the making of the Loans.
(j) Representations and Warranties. All of the
representations and warranties contained in Section 6.01 and in the other Loan
Documents shall be true and correct in all material respects on and as of the
Closing Date.
(k) Fees and Expenses Paid. There shall have been paid or
there will, substantially concurrently with the closing hereunder, be paid to
the Administrative Agent and to the Lenders, all fees due and payable pursuant
to the Loan Documents on or before the Closing Date, and all expenses
(including, without limitation, reasonable legal fees and expenses) due and
payable pursuant to the Loan Documents on or before the Closing Date.
5.02. Conditions Precedent to All Loans. The obligation of
each Lender to make any Loan requested to be made by it on any Funding Date on
or after the Closing Date is subject to the following conditions precedent as of
each such date:
(a) Representations and Warranties. As of such date (unless
the representation and warranty expressly speaks of the Closing Date), both
before and after giving effect to the Loans to be made, all of the
representations and warranties contained in Section 6.01 and in the other Loan
Documents shall be true in all material respects.
(b) No Defaults. As of such date, no Default or Event of
Default shall have occurred and be continuing or would result from the making of
the requested Loan or the application of the proceeds therefrom.
(c) No Change in Condition. As of such date, no material
adverse change shall have occurred in the condition (financial or otherwise),
performance, properties or operations of Stellex and its Subsidiaries, taken as
a whole, since December 31, 1996.
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Each request by the Borrowers for a Loan, each submission by the Borrowers of a
Notice of Borrowing, each acceptance by the Borrowers of the proceeds of each
Loan made hereunder, shall constitute a representation and warranty by the
Borrowers as of the Funding Date in respect of such Loan that all the conditions
contained in this Section 5.02 have been satisfied.
5.03. Conditions Precedent to the Term Loans. The obligation
of each Lender to make any Term Loan requested to be made by it on any Funding
Date on or after the Closing Date is subject to the following conditions
precedent as of each such date:
(a) Certificate. The Administrative Agent and the Lenders
shall have received a Certificate from Chief Financial Officer of Stellex, which
certificate shall be in form and detail reasonably satisfactory to the
Administrative Agent, certifying (i) the specific uses to be made of the
proceeds of the Term Loans (broken down by Permitted Acquisition), (ii) the
information provided in the Information Package with respect to each Permitted
Acquisition is true and complete in all material respects, (iii) the
representations and warranties set forth on Schedule 5.03(A) are true in all
material respects, and (iv) Stellex and its Subsidiaries are in compliance with
the covenants set forth on Schedule 5.03(B).
(b) Liens. The Administrative Agent shall have received
documentation, in form and substance satisfactory to the Administrative Agent,
granting the Collateral Agent a Lien with respect to the assets and/or Capital
Stock relating to the Permitted Acquisition.
(c) Perfection. All Uniform Commercial Code and other filing
and recording fees and taxes shall have been paid or duly provided for. The
Administrative Agent shall be satisfied that all Liens granted to the Collateral
Agent with respect to the Collateral are valid and effective and, upon the
filing of the duly executed Uniform Commercial Code financing statements (or
similar filings required by the applicable statutes of any jurisdiction in which
the Collateral Agent is being granted a Lien by any Loan Party), will be
perfected and of first priority, except as otherwise permitted under this
Agreement and except for compliance with the Assignment of Claims Act of 1940,
as amended, with respect to Receivables where the account debtor is the United
States of America or any department, agency or instrumentality thereof. All
certificates representing Capital Stock included in the Collateral shall have
been delivered to the Collateral Agent (with duly executed stock powers, as
appropriate) and all instruments included in the Collateral shall have been
delivered to the Collateral Agent (duly endorsed to the Collateral Agent).
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(d) No Legal Impediments. No law, regulation, order, judgment
or decree of any Governmental Authority shall, and the Administrative Agent
shall not have received any notice that any action, suit, investigation,
litigation or proceeding is pending or threatened in any court or before any
arbitrator or Governmental Authority which (i) purports to enjoin, prohibit,
restrain or otherwise affect (A) the making of the Term Loans on the Funding
Date or (B) the consummation of the transactions contemplated pursuant to the
documentation relating to the Permitted Acquisition or (ii) would be reasonably
expected to impose or result in the imposition of a Material Adverse Effect.
(f) Consents. Stellex shall have received all consents and
authorizations required pursuant to any material Contractual Obligation with any
other Person in connection with such Permitted Acquisition and shall have
obtained all consents and authorizations of, and effected all notices to and
filings with, any Governmental Authority required in connection with such
Permitted Acquisition, in each case, as may be necessary to allow Stellex or a
Subsidiary of Stellex, lawfully and without risk of rescission, (i) to execute,
deliver and perform, in all material respects, its obligations under the
Collateral Documents and the other agreements to which it is, or is to be, a
party in connection with or relating to the Permitted Acquisition and each other
agreement or instrument to be executed and delivered by it in connection with or
relating to the Permitted Acquisition and (ii) to create and perfect or continue
the validity and perfection of the Liens on the Collateral to be owned by it in
the manner and for the purpose contemplated by the Loan Documents after giving
effect to the Permitted Acquisition.
Each request by Stellex for a Term Loan, each submission by Stellex of a Notice
of Borrowing, each acceptance by Stellex of the proceeds of each Term Loan made
hereunder, shall constitute a representation and warranty by Stellex as of the
Funding Date in respect of such Term Loan that all the conditions contained in
this Section 5.03 have been satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties of the Loan Parties. In
order to induce the Lenders to enter into this Agreement and to make the Loans,
each Loan Party hereby represents and warrants as follows:
(a) Organization; Powers. Each Loan Party (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California or the State of Delaware, as applicable, and (ii) has
all requisite power and
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authority to own, operate and encumber its assets and to conduct its business as
presently contemplated.
(b) Authority. (i) Each Loan Party has the requisite power
and authority to execute, deliver and perform each of the Transaction Documents
to which it is a party.
(ii) No other action or proceeding on the part of any Loan
Party is necessary to execute, deliver and perform each of the Transaction
Documents to which it is a party thereto or to consummate the transactions
contemplated thereby.
(iii) Each of the Loan Documents to which any Loan Party is a
party has been duly executed and delivered by such Loan Party and constitutes
the legal, valid and binding obligation of such Loan Party, enforceable against
such Loan Party in accordance with its terms.
(c) Ownership. Schedule 6.01(C) sets forth the ownership of
Stellex and its Subsidiaries. Each Loan Party has delivered to the
Administrative Agent true and complete copies of the Governing Documents for
such Loan Party. There exists no other agreement or understanding (written or
oral) affecting in any material respect the relative rights, obligations or
liabilities of such Loan Party other than said Governing Documents so delivered
and such Loan Party is in compliance in all material respects with all of its
Governing Documents.
(d) No Conflict. Except as set forth of Schedule 6.01(D), the
execution, delivery and performance by each Loan Party of each Transaction
Document to which it is a party and the consummation of the transactions
contemplated thereby do not and will not (i) conflict with the Governing
Documents of such Loan Party, (ii) violate any Requirements of Law or any
material Contractual Obligation of such Loan Party or require the termination
of such material Contractual Obligation by such Loan Party, (iii) to the best of
such Loan Party's knowledge, constitute a tortious interference with any
Contractual Obligation of any Person, or (iv) result in or require the creation
or imposition of any Lien whatsoever upon any of the property or assets of such
Loan Party, other than Liens contemplated by the Loan Documents.
(e) Governmental Consents. Except as set forth of Schedule
6.01(E), the execution, delivery and performance by each Loan Party of each
Transaction Document to which it is a party and the consummation of the
transactions contemplated thereby do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by any
Governmental Authority, except (i) filings and acknowledgments thereof necessary
to create or perfect security interests in the Collateral or cause any security
interest in Receivables where
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the account debtor is the United States of America or any department, agency or
instrumentality thereof to be valid against the United States of America and
(ii) consents that have been obtained.
(f) Governmental Regulation. No Loan Party is limited in its
ability to incur indebtedness or its ability to consummate the transactions
contemplated by the Transaction Documents by reason of regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, or the Investment Company Act of 1940, or any other
federal or state statute or regulation.
(g) Subsidiaries. Stellex has no Subsidiaries or interests in
any joint venture or partnership of any other Person other than the Subsidiaries
set forth on Schedule 6.01(C).
(h) Financial Position. True and complete copies of the
following financial statements have been delivered to the Administrative Agent
and the Lenders: (i) the audited consolidated balance sheet as at the end of
fiscal year ended December 31, 1996 and the related consolidated statements of
income, cash flows and shareholders equity and the notes thereto of Xxxxxxxx
Industries, Inc. and its Subsidiaries for such fiscal year then ended and the
unaudited consolidated balance sheet as at June 30, 1997 and the related
consolidated statements of income, cash flow and shareholders equity of Xxxxxxxx
Industries, Inc. and its Subsidiaries for such period then ended; (ii) the
audited combined balance sheet as at the end of fiscal year ended December 31,
1996 and the related combined statements of operations and invested equity and
cash flows and the notes thereto of Tactical Subsystems and Microwave Devices
Sectors of Xxxxxxx-Xxxxxxx Company for such fiscal year then ended and the
unaudited combined balance sheet as at June 30, 1997 and the related combined
statements of operations and invested equity and cash flows and the notes
thereto of Tactical Subsystems and Microwave Devices Sectors of Xxxxxxx-Xxxxxxx
Company for such period then ended. The foregoing financial statements were
prepared in conformity with GAAP, except as otherwise noted therein, and fairly
present the financial positions and the results of operations, equity and cash
flows of Xxxxxxxx Industries, Inc. and its Subsidiaries and the Tactical
Subsystems and Microwave Devices Sectors of Xxxxxxx-Xxxxxxx Company for each of
the periods covered thereby as at the respective dates thereof. No Loan Party
has any Accommodation Obligation, contingent liability or liability for any
Taxes, long-term leases or commitments, not reflected in the foregoing financial
statements which will have or is reasonably likely to have a Material Adverse
Effect.
(i) Projections. Stellex and its Subsidiaries have delivered
to each Lender pursuant to Section 5.01(a) certain
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projected financial statements of Stellex and its Subsidiaries which have been
prepared in good faith.
(j) Litigation; Adverse Effects. Except as set forth in
Schedules 6.01(J-1) and 6.01(P), no Loan Party has received any notice of any
action, suit, proceeding, investigation or arbitration before or by any
Governmental Authority or private arbitrator pending nor, to the knowledge of
such Loan Party, threatened against such Loan Party or any of its assets (i)
challenging the validity or the enforceability of any of the Transaction
Documents or transactions contemplated thereby or (ii) which will or is
reasonably likely to result in any Material Adverse Effect. Except as set forth
in Schedule 6.01(J-2), there is no material loss contingency within the meaning
of GAAP which has not been reflected in the financial statements of Xxxxxxxx
Industries, Inc. and its Subsidiaries and the Tactical Subsystems and Microwave
Devices Sectors of Xxxxxxx-Xxxxxxx Company with respect to the financial
statements referred to in Section 6.01(h) nor in any financial statements of
Stellex and its Subsidiaries delivered hereunder. No Loan Party is subject to,
or in default with respect to, any final judgment, writ, injunction, restraining
order or order of any nature, decree, rule or regulation of any court or
Governmental Authority which will have or is reasonably likely to have a
Material Adverse Effect.
(k) No Material Adverse Effect. Since December 31, 1996,
there has occurred no event which has had or is reasonably likely to have a
Material Adverse Effect.
(l) Payment of Taxes. Except as set forth on Schedule 6.01(L),
all tax returns and reports to be filed by Stellex and its Subsidiaries have
been timely filed, and all taxes, assessments, fees and other governmental
charges shown on such returns have been paid when due and payable, except such
taxes, if any, as are reserved against in accordance with GAAP and are being
contested in good faith by appropriate proceedings.
(m) Performance. No Loan Party has received notice, or has
actual knowledge, that (i) it is in default in the performance, observance or
fulfillment of any material (singularly or in the aggregate) Contractual
Obligations applicable to it or (ii) any condition exists which, with the giving
of notice or the lapse of time or both, would constitute a default with respect
to any material (singularly or in the aggregate) Contractual Obligation.
(n) Disclosure. The representations and warranties of each
Loan Party contained in the Loan Documents and all certificates and other
documents delivered pursuant to the terms thereof and the representations and
warranties of each Loan Party contained in the Acquisition Documents and all
certificates and
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other documents delivered pursuant to the terms thereof, do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. No Loan Party has
intentionally withheld any fact from the Administrative Agent or the Lenders in
regard to any matter which will have or is reasonably likely to have a Material
Adverse Effect.
(o) Requirements of Law. No Loan Party is in violation of any
Requirement of Law applicable to it or its business which violation (singularly
or in the aggregate) will have or is reasonably likely to have a Material
Adverse Effect.
(p) Environmental Matters. To the best of each Loan Party's
knowledge, except as set forth in Schedule 6.01(P) hereto, (i) the operations of
such Loan Party comply in all material respects with all applicable
Environmental, Health or Safety Requirements of Law; (ii) such Loan Party has
obtained all material environmental, health and safety Permits necessary for its
operations, and all such Permits are in effect and such Loan Party is in
material compliance with all terms and conditions of such Permits; (iii) no Loan
Party nor its operations is subject to any order from or agreement with any
Governmental Authority or private party respecting any Environmental, Health or
Safety Requirements of Law or requiring Remedial Action; (iv) no Loan Party nor
its operations is subject to any Liabilities and Costs arising from the Release
or threatened Release of a Contaminant into the environment; (v) no Loan Party
has filed any notice under any Requirement of Law indicating treatment, storage
or disposal of a hazardous waste, as that term is defined under 40 CFR Part 261
or any applicable state equivalent; (vi) no Loan Party has filed any notice
under applicable Requirement of Law reporting a Release of a Contaminant into
the environment; (vii) there is not on or in the Real Property of any such Loan
Party nor has there been under such Loan Party's ownership or occupancy of such
Real Property: (A) any treatment, storage or disposal of any hazardous waste, as
that term is defined under 40 CFR Part 261 or any applicable state equivalent,
by such Loan Party, except in material compliance with all Environmental, Health
or Safety Requirements of Law, (B) any underground storage tanks or surface
impoundments, (C) any asbestos-containing material, or (D) any polychlorinated
biphenyls (PCB's) used in hydraulic oils, electrical transformers or other
equipment; (viii) no Loan Party has received any written notice or Claim to the
effect that it is or may be liable to any Person as a result of the Release or
threatened Release of a Contaminant into the environment; (ix) no Loan Party's
present Property or the Loan Party's past Property is listed or proposed for
listing on the National Priorities List pursuant to CERCLA ("NPL") or on the
Comprehensive Environmental Response Compensation Liability Information System
List ("CERCLIS") or any similar state list of
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sites requiring Remedial Action; and (x) no Environmental Lien has attached to
any Property of any Loan Party.
(q) ERISA. Neither any Loan Party nor any ERISA Affiliate
maintains or contributes to any Benefit Plan other than a Benefit Plan listed on
Schedule 6.01(Q). Except as set forth on Schedule 6.01(Q), each Plan which is
maintained or contributed to by any Loan Party which is intended to be a
qualified plan has been determined by the IRS to be qualified under Section
401(a) of the Code, and each trust related to any such Plan has been so
determined to be exempt from federal income tax under Section 501(a) of the
Code, and such Plan and trust are being operated in all material respects in
compliance with and will be timely amended as necessary in accordance with the
Tax Reform Act of 1986 and the Omnibus Budget Reconciliation Act of 1987 as
interpreted by the regulations promulgated thereunder. Neither any Loan Party
nor any ERISA Affiliate, to the extent such ERISA Affiliate at any time has
joint and several liability with any Loan Party, maintains or contributes to any
employee welfare benefit plan within the meaning of Section 3(1) of ERISA, which
provides benefits to retirees (or their beneficiaries or dependents) other than
as may be required by the Consolidated Omnibus Reconciliation Act of 1985, as
amended and interpreted by regulations promulgated thereunder. Each Loan Party
is in compliance in all material respects with the responsibilities, obligations
or duties imposed on it by ERISA or regulations promulgated thereunder with
respect to all Plans. No material accumulated funding deficiency (as defined in
Section 302(a)(2) of ERISA and Section 412(a) of the Code) exists in respect to
any Benefit Plan. Except as set forth on Schedule 6.01(Q), neither any Loan
Party nor any ERISA Affiliate nor any fiduciary of any Plan has engaged in a
nonexempt "prohibited transaction" described in Section 406 of ERISA or Section
4975 of the Code. Neither any Loan Party nor any ERISA Affiliate nor any
fiduciary of any Plan has taken any action which would constitute or result in a
Termination Event with respect to any Plan such that the actions described in
the preceding sentence or this sentence, or both, would result in a Material
Adverse Effect. Neither any Loan Party nor any ERISA Affiliate has incurred any
material liability to the PBGC which remains outstanding other than the
liability to pay the PBGC insurance premiums for the current year. Schedule B to
the most recent annual report filed with the IRS with respect to each Benefit
Plan and furnished to the Administrative Agent is complete and accurate in all
material respects. Since the date of each such Schedule B, there has been no
material adverse change in the funding status or financial condition of the
Benefit Plan relating to such Schedule B which would result in a Material
Adverse Effect. Neither any Loan Party nor any ERISA Affiliate has failed to
make any required installment under subsection (m) of Section 412 of the Code
and any other payment required under Section 412 of the Code on or before the
due date for such installment or other payment which
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would in the aggregate have a Material Adverse Effect. Neither any Loan Party
nor any ERISA Affiliate is required to provide security to a Benefit Plan under
Section 401(a)(29) of the Code due to a Plan amendment that results in an
increase in current liability for the plan year. No Loan Party or ERISA
Affiliate is required to, or has contributed to in the past six years, a
Multiemployer Plan.
(r) Labor Matters. No Loan Party is a party to any labor
contract. There are no strikes, lockouts or other disputes relating to any
collective bargaining or similar agreement to which such Loan Party is a party
which would have or is reasonably likely to have a Material Adverse Effect.
(s) Securities Activities. No Loan Party is engaged in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock.
(t) Solvency. After giving effect to the receipt and
application of the Loans in accordance with the terms of this Agreement, each
Loan Party is Solvent.
(u) Patents, Trademarks, Permits, etc.; Government Approvals.
(i) Except as set forth on Schedule 6.01(U), each Loan Party
owns, is licensed or otherwise has the lawful right to use all permits
and other governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how and processes used in or necessary for
the conduct of its business as currently conducted which are material
to its condition (financial or otherwise), operations or performance.
There are no claims pending or, to the best of such Loan Party's
knowledge, threatened that such Loan Party is infringing or otherwise
adversely affecting the rights of any Person with respect to such
permits and other governmental approvals, patents, trademarks, trade
names, copyrights, technology, know-how and processes, except for such
claims and infringements as do not, in the aggregate, give rise to any
liability on the part of such Loan Party which has or is reasonably
likely to have a Material Adverse Effect.
(ii) The consummation of the transactions contemplated by the
Transaction Documents will not impair such Loan Party's ownership of or
rights under (or the license or other right to use, as the case may be)
any permits and governmental approvals, patents, trademarks, trade
names, copyrights, technology, know-how or processes in any manner
which has or is reasonably likely to have a Material Adverse Effect.
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(v) Assets and Properties. Each Loan Party has good and
marketable title or leasehold interests, as applicable, to all of its assets and
property (tangible and intangible), and all such assets and property are free
and clear of all Liens except Liens securing the Obligations and Liens permitted
under Section 9.03. Substantially all of the assets and property owned by,
leased to or used by such Loan Party are in good operating condition and repair,
ordinary wear and tear excepted, are free and clear of any known defects except
such defects as do not substantially interfere with the continued use thereof in
the conduct of normal operations, and are able to serve the function for which
they are currently being used, except in each case where the failure of such
asset to meet such requirements would not have or is not reasonably likely to
have a Material Adverse Effect. Neither this Agreement nor any other Transaction
Document, nor any transaction contemplated under any Transaction Document, will
affect any right, title or interest of such Loan Party in and to any of such
assets in a manner that would have or is reasonably likely to have a Material
Adverse Effect.
(w) Insurance. Schedule 6.01(W) accurately sets forth all
insurance policies and programs currently in effect with respect to the property
and assets and business of each Loan Party, specifying for each such policy and
program, (i) the amount thereof and the amount of the deductible relating
thereto, (ii) the risks insured against thereby, (iii) the name of the insurer
and each insured party thereunder, (iv) the policy or other identification
number thereof and (v) the expiration date thereof.
(x) Material Adverse Agreements. After giving effect to this
Agreement, no Loan Party is a party to or subject to any Contractual Obligation
or other restriction contained in its Governing Documents which has or is
reasonably likely to have a Material Adverse Effect.
(y) Forfeiture Proceeding. No Loan Party is engaged in or
proposes to be engaged in the conduct of any business or activity which could
result in a Forfeiture Proceeding and no Forfeiture Proceeding against it is
pending or, to the best of each Loan Party's knowledge, threatened.
(z) Bank Accounts. Except as set forth on Schedule 6.01(Z),
no Loan Party maintains a bank account or deposits funds with any other
financial institution.
ARTICLE VII
REPORTING COVENANTS
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Each Loan Party covenants and agrees so long as any Commitment
is outstanding and thereafter until payment in full of the Obligations:
7.01. Financial Statements. Each Loan Party shall maintain a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP, and each of the financial statements described below shall be
prepared from such system and records. Stellex shall deliver or cause to be
delivered to the Administrative Agent:
(a) Quarterly Reports. As soon as practicable, and in any
event within forty-five (45) days after the end of the first three fiscal
quarters in each Fiscal Year, consolidated balance sheet of Stellex and its
Subsidiaries as at the end of such period and the related statements of income
and cash flow of Stellex and its Subsidiaries for such fiscal quarter, certified
by the Chief Financial Officer of Stellex as fairly presenting the financial
position of Stellex and its Subsidiaries as at the dates indicated and the
results of its operations and cash flow for the fiscal quarter indicated in
accordance with GAAP, subject to normal year end adjustments.
(b) Annual Reports. As soon as practicable, and in any event
within ninety (90) days after the end of each Fiscal Year, (i) the audited
consolidated (and unaudited consolidating) balance sheet of Stellex and its
Subsidiaries as of the end of such Fiscal Year and the related audited
consolidated (and unaudited consolidating) statements of income and cash flow of
Stellex and its Subsidiaries for such Fiscal Year, and (ii) a report thereon of
an independent certified public accounting firm reasonably acceptable to the
Administrative Agent, which report shall be unqualified and shall state that
such financial statements fairly present the financial position of Stellex and
its Subsidiaries as at the dates indicated and the results of its operations and
cash flow for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years and that the examination by such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards.
(c) Certificates. (i) Together with each delivery of any
financial statement pursuant to paragraphs (a) and (b) of this Section 7.01, an
Officer's Certificate substantially in the form of Exhibit G attached hereto and
made a part hereof, stating that such officer has reviewed the terms of the Loan
Documents, and has made, or caused to be made under his supervision, a review in
reasonable detail of the transactions and consolidated financial condition of
Stellex and its Subsidiaries during the accounting period covered by such
financial statements, that such review has not disclosed the existence during or
at the end of
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such accounting period, and that such officer does not have knowledge of the
existence as at the date of such Officer's Certificate, of any condition or
event which constitutes an Event of Default or Default, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action the Borrowers have taken, are taking and
propose to take with respect thereto.
(ii) Together with each delivery of any financial statement
pursuant to paragraphs (a) and (b) of this Section 7.01, a certificate
substantially in the form of Exhibit H attached hereto (the "Compliance
Certificate"), signed by the Stellex's Chief Financial Officer, setting forth
calculations (with such specificity as the Lenders may reasonably request) for
the period then ended which demonstrate compliance, when applicable, with the
provisions of Article IX and Article X.
(d) Budgets; Business Plans; Financial Projections. As soon as
practicable after completion and in any event not later than fifteen (15) days
prior to the beginning of each Fiscal Year (i) a budget for such Fiscal Year;
(ii) an annual business plan for such Fiscal Year, accompanied by a report
reconciling all changes and departures from the business plan delivered to the
Administrative Agent for the preceding Fiscal Year; and (iii) a plan and
financial forecast, prepared in accordance with the Borrowers' normal accounting
procedures applied on a consistent basis, for such Fiscal Year and for the five
(5) succeeding Fiscal Years, but in no event for Fiscal Years later than 2003,
including, without limitation, (A) a forecasted balance sheet and changes in
financial position of Stellex and its Subsidiaries as at the end of such Fiscal
Year and (B) forecasted statements of income and cash flow of Stellex and its
Subsidiaries for such Fiscal Year and changes in financial position of Stellex
and its Subsidiaries as of the end of such Fiscal Year.
(e) Replacement Certificate. On June 30 and December 31 of
each Fiscal Year (and more often if so requested by the Administrative Agent),
Stellex shall provide the Administrative Agent with a replacement certificate
substantially in the form of Exhibit I attached hereto (the "Replacement
Certificate"), signed by Stellex's Chief Financial Officer, setting forth
calculations (with such specificity as the Lenders may reasonably request) for
the period then ended which demonstrate the Net Cash Proceeds that were used to
acquire replacement assets.
7.02. Borrowing Base Certificate. The Borrowers shall
provide the Administrative Agent and each Lender with a Borrowing Base
Certificate, certified as being true and correct by the Chief Financial Officer
of Stellex, on the thirtieth day following the last day of each month, or more
frequently if requested by the Administrative Agent. Each subsequent Borrowing
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Base Certificate shall be based upon, with respect to Receivables and Inventory,
information as of the last day of the immediately preceding month. Each such
Borrowing Base Certificate shall set forth Borrowing Base calculations since the
date of the last prior Borrowing Base Certificate and shall include a monthly
summary aging of Receivables and all Eligible Inventory that has become
ineligible, specifying the applicable category of ineligibility and such other
information as the Administrative Agent may request from time to time.
7.03. Other Financial Information. (a) The Borrowers shall
deliver or cause to be delivered to the Administrative Agent such other
information, reports, contracts, schedules, lists, documents, agreements and
instruments with respect to (i) the Collateral or (ii) the business, condition
(financial or otherwise), operations, performance or properties of any Loan
Party as the Administrative Agent or any Lender may, from time to time,
reasonably request. Each Loan Party hereby authorizes the Administrative Agent,
each Lender and their respective representatives to communicate directly with
the accountants and authorizes the accountants to disclose to the Administrative
Agent, such Lender and such representatives any and all financial statements and
other information of any kind, including copies of any management letter or the
substance of any oral information, that such accountants may have with respect
to the Collateral or the condition (financial or otherwise), operations,
properties and performance of Stellex and its Subsidiaries. Each Loan Party, on
or before the Closing Date, shall deliver a letter addressed to the accountants
instructing them to disclose such information in compliance with this Section
7.03(a).
(b) Stellex shall deliver or cause to be delivered to the
Administrative Agent copies of all financial statements, reports and notices, if
any, sent or made available generally by Stellex to the holders of its
publicly-held Securities or to a trustee under any indenture or filed with the
Commission, and of all press releases made available generally by Stellex to the
public concerning material developments in Stellex's business.
(c) The Borrowers shall deliver or cause to be delivered to
the Administrative Agent copies of any management reports delivered to any Loan
Party or to any officer or employee thereof by the accountants in connection
with the financial statements delivered pursuant to Section 7.01.
7.04. Events of Default. Promptly upon any Loan Party
obtaining knowledge (i) of any condition or event which constitutes a Default or
an Event of Default, (ii) that any Person has given any notice to any Loan Party
or taken any other action with respect to a claimed default or event or
condition of the type referred to in Section 11.01(e) or (iii) of any condition
or event which has or is reasonably likely to have a
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Material Adverse Effect or adversely affect the Collateral Agent's interest in
the Collateral or adversely affect the value of the Collateral in any material
respect, such Loan Party shall deliver to the Administrative Agent an Officer's
Certificate specifying (A) the nature and period of existence of any such
claimed default, Event of Default, Default, condition or event, (B) the notice
given or action taken by such Person in connection therewith and (C) what action
such Loan Party has taken, is taking and proposes to take with respect thereto.
7.05. Lawsuits. (a) Promptly upon any Loan Party obtaining
knowledge of the institution of, or written threat of, (i) (A) any action, suit,
proceeding or arbitration against or affecting such Loan Party or any asset of
such Loan Party not previously disclosed pursuant to Schedule 6.01(J) or
Schedule 6.01(P) involving an alleged liability or cost in excess of One Million
Dollars ($1,000,000) or any actions, suits, proceedings or arbitration which in
the aggregate involving money or property valued in excess of One Million
Dollars ($1,000,000), except where the same is fully covered by insurance (other
than applicable deductible), (B) any investigation or proceeding before or by
any Governmental Authority, the effect of which is reasonably likely to limit,
prohibit or restrict materially the manner in which such Loan Party currently
conducts its business or to declare any substance contained in such products
manufactured or distributed by it to be dangerous, except where the same is
fully covered by insurance (other than applicable deductible), or (C) any
Forfeiture Proceeding, such Loan Party shall give written notice thereof to the
Administrative Agent and provide such other information as may be reasonably
available to enable such Lender and the Administrative Agent and its counsel to
evaluate such matters; (ii) as soon as practicable and in any event within
forty-five (45) days after the end of each fiscal quarter, each Loan Party shall
provide the Administrative Agent with a litigation status report covering the
institution of, or written threat of, any action, suit, proceeding, governmental
investigation or arbitration reported pursuant to clause (i) above and shall
provide such other information at such time as may be reasonably available to
enable the Administrative Agent and its counsel to evaluate such matters; and
(iii) in addition to the requirements set forth in clauses (i) and (ii) of this
Section 7.05, each Loan Party upon request of the Administrative Agent or the
Requisite Lenders shall promptly give written notice to the Administrative Agent
of the status of any action, suit, proceeding, governmental investigation or
arbitration covered by a report delivered pursuant to clause (i) or (ii) above
and provide such other information as may be reasonably available to it to
enable the Administrative Agent and its counsel to evaluate such matters.
7.06. Insurance. As soon as practicable and in any
event by June 30 in each fiscal year, each Loan Party shall
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deliver to the Administrative Agent (i) an updated Schedule 6.01(W) in form and
substance reasonably satisfactory to the Administrative Agent and the Lenders
outlining all insurance policies and programs currently in effect with respect
to the property and assets and business of such Loan Party, insurance coverage
maintained as of the date of such report by such Loan Party and the loss payment
provisions of such coverage and (ii) evidence that all premiums with respect to
such coverage have been paid when due.
7.07. ERISA Notices. Each Loan Party shall deliver to
the Administrative Agent:
(i) As soon as possible, and in any event within ten (10)
Business Days after either a Loan Party or an ERISA Affiliate knows or
has reason to know that a Termination Event has occurred, a written
statement of the Chief Financial Officer of Stellex describing such
Termination Event and the action, if any, which such Loan Party or such
ERISA Affiliate has taken, is taking or proposes to take, with respect
thereto, and, when known, any action taken or threatened by the IRS,
the DOL or the PBGC with respect thereto;
(ii) as soon as possible, and in any event within ten (10)
Business Days, after either a Loan Party or an ERISA Affiliate knows or
has reason to know that a non-exempt prohibited transaction (defined in
Section 406 of ERISA and Section 4975 of the Code) has occurred, a
statement of the Chief Financial Officer of Stellex describing such
transaction;
(iii) within ten (10) days after the filing thereof with the
DOL, the IRS or the PBGC, copies of each annual report, including
Schedule B thereto, filed with respect to each Benefit Plan;
(iv) within ten (10) days after the filing thereof with the
IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by either a Loan Party or
an ERISA Affiliate with respect to such request;
(v) within ten (10) days after the first to occur of an
amendment of any existing Benefit Plan which will result in an increase
in the benefits under such Benefit Plan or a notification of any such
increase, or the establishment of any new Benefit Plan or the
commencement of contributions to any Benefit Plan to which either a
Loan Party or an ERISA Affiliate was not previously contributing, a
copy of said amendment, notification or Benefit Plan;
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(vi) promptly upon, and in any event within ten (10) Business
Days after, receipt by either a Loan Party or an ERISA Affiliate of a
notice of the PBGC's intention to terminate a Benefit Plan or to have a
trustee appointed to administer a Benefit Plan, copies of each such
notice;
(vii) promptly upon, and in any event within ten (10) Business
Days after, receipt by either a Loan Party or an ERISA Affiliate of an
unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code, a copy of
said determination letter, if such disqualification would have a
Material Adverse Effect;
(viii) promptly upon, and in any event within ten (10)
Business Days after receipt by any Loan Party of a notice from a
Multiemployer Plan regarding the imposition of withdrawal liability, a
copy of said notice; and
(ix) promptly upon, and in any event within ten (10) Business
Days after, Stellex or any of its Subsidiaries fails to make a required
installment under subsection (m) of Section 412 of the Code or any
other payment required under Section 412 of the Code on or before the
due date for such installment or payment, a notification of such
failure, if such failure could result in either the imposition of a
Lien under said Section 412 or otherwise have a Material Adverse
Effect.
7.08. Environmental Notices. Each Loan Party shall notify the
Administrative Agent, in writing, promptly, and in any event within thirty (30)
days after such Loan Party's learning thereof, of any: (i) written notice or
written Claim to the effect that such Loan Party is or may be liable to any
Person as a result of the Release or threatened Release of any Contaminant into
the environment; (ii) written notice that such Loan Party is subject to
investigation by any Governmental Authority evaluating whether any Remedial
Action is needed to respond to the Release or threatened Release of any
Contaminant into the environment; (iii) written notice that any Property of such
Loan Party is subject to an Environmental Lien; (iv) written notice of violation
to such Loan Party of any Environmental, Health or Safety Requirement of Law,
which could have a Material Adverse Effect on such Loan Party; (v) commencement
or written threat of any judicial or administrative proceeding alleging a
violation of any Environmental, Health or Safety Requirement of Law; (vi)
written notice from a Governmental Authority of any changes to any existing
Environmental, Health or Safety Requirement of Law that could have a Material
Adverse Effect on the operations of
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such Loan Party; or (vii) any proposed acquisition of stock, assets, real estate
or leasing of property, or any other action by such Loan Party that could
subject such Loan Party to Liabilities and Costs that could have a Material
Adverse Effect. For purposes of clauses (i), (ii) and (iii), written notice
shall include other non-written communications given to an agent or employee of
such Loan Party with direct or indirect supervisory responsibility with respect
to the activity, if any, which is the subject of such communication, if the
subject of such communication could have a Material Adverse Effect.
7.09. Labor Matters. Each Loan Party shall notify the
Administrative Agent in writing, promptly, but in any event within ten (10) days
after learning thereof, of (i) any material labor dispute to which such Loan
Party may become a party, any strikes, lockouts or other disputes relating to
such Loan Party's plants and other facilities and (ii) any material liability
incurred with respect to the closing of any plant or other facility of such Loan
Party.
7.10. Other Information. Promptly upon receiving a request
therefor from the Administrative Agent or the Requisite Lenders, each Loan Party
shall prepare and deliver to the Administrative Agent such other information
with respect to such Loan Party or the Collateral, including, without
limitation, schedules identifying and describing the Collateral and any
dispositions thereof, as from time to time may be reasonably requested by the
Administrative Agent or the Requisite Lenders.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees so long as any Commitment
is outstanding and thereafter until payment in full of the Obligations:
8.01. Existence, etc. Except for those transactions permitted
under Section 9.09 of this Agreement, each Loan Party shall at all times
maintain its existence and preserve and keep, or cause to be preserved and kept,
in full force and effect its rights and franchises material to its businesses
except where the loss or termination of such rights and franchises does not have
or is not reasonably likely to have a Material Adverse Effect.
8.02. Powers; Conduct of Business. Each Loan Party shall
qualify and remain qualified to do business in each jurisdiction in which the
nature of its business requires it to be so qualified except for those
jurisdictions where failure to so qualify does not have or is not reasonably
likely to have a Material Adverse Effect.
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8.03. Compliance with Laws, etc. Each Loan Party shall, (a)
comply with all Requirements of Law and all restrictive covenants affecting
such Person or the business, property, assets or operations of such Person, and
(b) obtain as needed all Permits necessary for its operations and maintain such
Permits in good standing except in the case where noncompliance with either
clause (a) or (b) above does not have or is not reasonably likely to have a
Material Adverse Effect.
8.04. Payment of Taxes and Claims. Each Loan Party shall pay
(a) all taxes, assessments and other governmental charges imposed upon it or on
any of its properties or assets or in respect of any of its franchises,
business, income or property before any penalty or interest accrues thereon, the
failure to make payment of which will have or is reasonably likely to have a
Material Adverse Effect, and (b) all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums which have become
due and payable prior to the same becoming subject to a Lien upon any of such
Person's properties or assets and prior to the time when any penalty or fine
shall be incurred with respect thereto; provided, however, that no such taxes,
assessments and governmental charges referred to in clause (a) above or claims
referred to in clause (b) above need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if
adequate reserves shall have been set aside therefor in accordance with GAAP.
8.05. Insurance. (a) Each Loan Party shall maintain insurance
against loss or damage of the kind customarily insured against by corporations
similarly situated with reputable insurers and with deductibles and on terms
customary for corporations similarly situated. All such policies and programs
shall be maintained with insurers reasonably satisfactory to the Administrative
Agent. Each certificate and policy relating to property damage, machinery and/or
business interruption coverage shall contain an endorsement, in form and
substance reasonably satisfactory to the Administrative Agent, showing loss
payable to the Collateral Agent, for the ratable benefit of the Lenders, and, if
required by the Administrative Agent, naming the Collateral Agent as an
additional insured under such policy. Each certificate and policy relating to
coverages other than the foregoing shall, if required by the Administrative
Agent, contain an endorsement naming the Collateral Agent as an additional
insured under such policy. Such endorsement or an independent instrument
furnished to the Administrative Agent shall provide that the insurance companies
will give the Collateral Agent at least thirty (30) days' written notice before
any such policy or policies of insurance shall be altered adversely to the
interests of the Collateral Agent and the Lenders or cancelled and that no act,
whether willful or negligent, or default of any Loan Party or any other Person
shall affect the right of the Collateral
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Agent to recover under such policy or policies of insurance in case of loss or
damage. In the event any Loan Party, at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required herein or to pay
any premium in whole or in part relating thereto, then the Administrative Agent,
without waiving or releasing any obligation or resulting Event of Default
hereunder, may at any time or times thereafter (but shall be under no obligation
to do so) obtain and maintain such policies of insurance and pay such premiums
and take any other action with respect thereto which the Administrative Agent
deems advisable; provided, however, in the event that the Administrative Agent
decides to obtain and maintain such policies, the Administrative Agent will give
notice to the Borrowers, at least ten days prior to taking any such action, and
an opportunity for the Borrowers to cure such failure. All sums so disbursed by
the Administrative Agent shall be part of the Obligations hereunder, payable on
demand.
(b) Each Loan Party will appoint or designate a person, with
the approval of the Administrative Agent, to settle or adjust such claims
individually not in excess of Five Hundred Thousand Dollars ($500,000) per
occurrence or in the aggregate One Million Dollars ($1,000,000) during any
fiscal year without the consent of the Administrative Agent. In the event such
claims exceed the foregoing amounts, or claims individually or in the aggregate
have or are likely to have a Material Adverse Effect, such settlements and
adjustments thereof shall be made with the Administrative Agent's consent, which
consent shall not be unreasonably withheld. The Net Cash Proceeds of any such
insurance claim or settlement shall be applied, after deducting any expenses and
fees incurred by the Administrative Agent in the settlement and collection
thereof, as follows: (i) if no Default or Event of Default then exists and the
Administrative Agent receives a certification from the applicable Loan Party
contemporaneously with its receipt of such proceeds that such Loan Party intends
to use such proceeds to replace or repair such asset, such proceeds shall be
applied in accordance with Section 3.01(b)(i) hereof, (ii) if no Default or
Event of Default then exists and no certification is received by the
Administrative Agent, such proceeds shall be applied to the outstanding balance
of the Revolving Loans, and (iii) if a Default or Event of Default then exists,
such proceeds shall be applied to the Obligations in accordance with Section
3.02(b)(ii).
(c) So long as no Event of Default has occurred and is
continuing and all Obligations are paid when due, the proceeds received under
any business interruption insurance policy shall be remitted to the Loan Party
for a period of up to six months. Thereafter, the Administrative Agent shall be
entitled to receive such proceeds to apply against the Obligations.
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8.06. Inspection of Property; Books and Records; Discussions.
Each Loan Party shall permit any authorized representative(s) designated by
either any Agent or any Lender to visit and inspect any of the assets of such
Loan Party, to examine, audit, check and make copies of its financial and
accounting records, books, journals, orders, receipts and any correspondence and
other data relating to its businesses or the transactions contemplated by the
Loan Documents (including, without limitation, in connection with environmental
compliance, hazard or liability), and to discuss such Person's affairs, finances
and accounts with its officers and independent certified public accountants, all
upon reasonable notice and at such reasonable times during normal business
hours, as often as may be reasonably requested; provided, however, that upon the
occurrence and during the continuance of an Event of Default each Loan Party
shall permit any authorized representative(s) designated by any Agent or any
Lender to do all of the foregoing without notice, at any time and as often as
the Agents or the Lenders may request. Each such visitation and inspection (i)
by or on behalf of any Lender shall be at such Lender's expense and (ii) by or
on behalf of any Agent shall be at the Borrowers' expense; provided, however, so
long as no Event of Default exists, the Borrowers shall only pay the reasonable
expenses in connection with one inspection or audit per year. Each Loan Party
shall keep and maintain in all material respects proper books of record and
account in which entries sufficient to prepare financial statements in
conformity with GAAP shall be made of all dealings and transactions in relation
to its businesses and activities, including, without limitation, transactions
and other dealings with respect to the Collateral. If an Event of Default has
occurred and is continuing, each Loan Party, upon the Administrative Agent's
request, shall turn over copies of any such records to the Administrative Agent
or its representatives.
8.07. Tax Identification Numbers. Each Loan Party
shall provide the Administrative Agent in writing its tax
identification number promptly upon the availability thereof.
8.08. ERISA Compliance. Each Loan Party shall, and shall cause
each ERISA Affiliate to, establish, maintain and operate all Plans to comply in
all material respects with the provisions of ERISA, the Code, all other
applicable laws, and the regulations and interpretations thereunder and the
respective requirements of the governing documents for such Plans.
8.09. Maintenance of Property. Each Loan Party shall maintain
in all respects all of its owned and leased property in good, safe and insurable
condition and repair and in accordance with any applicable manufacturers'
specifications and recommendations, and not permit, commit or suffer any waste
(except in the ordinary course of business) or abandonment of any such property
and from time to time shall make or cause to be
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made all repairs, renewal and replacements thereof, except in the case where
noncompliance thereof, singularly or in the aggregate, does not have or is not
reasonably likely to have a Material Adverse Effect.
8.10. Condemnation. Immediately upon learning of the
institution of any proceeding for the condemnation or other taking of any of
the owned or leased Real Property of any Loan Party, such Loan Party shall
notify the Administrative Agent of the pendency of such proceeding, and permit
the Administrative Agent to participate in any such proceeding, and from time to
time will deliver to the Administrative Agent all instruments reasonably
requested by the Administrative Agent to permit such participation.
8.11. Maintenance of Licenses, Permits, etc. Each Loan Party
shall maintain in full force and effect all licenses, permits, governmental
approvals, franchises, authorizations or other rights necessary for the
operation of its business, except where the failure to obtain any of the
foregoing would not have or is not reasonably likely to have a Material Adverse
Effect; and notify the Administrative Agent in writing, promptly after learning
thereof, of the suspension, cancellation, revocation or discontinuance of or of
any pending or threatened action or proceeding seeking to suspend, cancel,
revoke or discontinue any such license, permit, governmental approval, franchise
authorization or right.
8.12. Post Closing Matters. The Loan Parties shall
cause each of the requirements set forth on Schedule 8.12 to be
satisfied on or before the date set forth opposite such
requirement.
ARTICLE IX
NEGATIVE COVENANTS
Each Loan Party covenants and agrees so long as any Commitment
is outstanding and thereafter until payment in full of the Obligations:
9.01. Indebtedness. The Loan Parties shall not, directly or
indirectly, create, incur, assume or otherwise become or remain liable with
respect to any Indebtedness, except:
(i) the Obligations;
(ii) trade payables in the ordinary course of business;
(iii) Permitted Existing Indebtedness;
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(iv) to the extent permitted by Section 9.13, Capital Leases
and purchase money Indebtedness incurred by the Loan Parties to finance
the acquisition of fixed assets in an aggregate principal amount
outstanding at any one time not to exceed Seven Million Five Hundred
Thousand Dollars ($7,500,000);
(v) Indebtedness owing by one Loan Party to another Loan
Party;
(vi) endorsements of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(vii) Interest Rate Contracts with respect to the Loans;
(viii) Indebtedness (other than the type of Indebtedness
referred to in clauses (i) through (vii) or clauses (ix) through (xiv)
of this Section 9.01) incurred in the ordinary course of business in an
aggregate principal amount of up to One Million Dollars ($1,000,000)
outstanding at any time;
(ix) extensions, substitutions, renewals, and replacements of
the Deed of Trust in favor of Farm Bureau Life Insurance Company
described in item 3 on Schedule 1.01(A), provided that the amount
extended, substituted, renewed or replaced does not exceed the
principal amount outstanding at such time and that such extension,
substitution, renewal or replacement is on terms and conditions no less
favorable to Paragon than such Deed of Trust;
(x) Indebtedness represented by the Subordinated Notes or any
instrument evidencing subordinated indebtedness that extends, renews or
replaces the Subordinated Notes, provided that (A) the terms and
conditions of such subordinated indebtedness (other than pricing) are
substantially similar to, or more favorable to the Lenders than, the
terms and conditions of the Subordinated Notes and (B) no Default or
Event of Default has occurred and is continuing either before or after
giving effect to the incurrence of such subordinated indebtedness;
(xi) subordinated indebtedness that has terms and conditions
(other than pricing) that are substantially similar to, or more
favorable to the Lenders than, the terms and conditions of the
Subordinated Notes, provided that (A) after giving effect to the
incurrence of such subordinated indebtedness the Loan Parties are in
compliance with the covenants contained in Article X, (B) no Default or
Event of Default has occurred and is continuing either before or after
giving effect to the incurrence of such subordinated
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indebtedness, and (C) the proceeds of such subordinated indebtedness
are applied in accordance with Section 3.01(b)(ii);
(xii) Indebtedness of Stellex or a Subsidiary represented by
Put/Call Promissory Notes or the Put/Call Preferred Stock, in each
case, incurred or issued in exchange for Management Equity Interests,
in an aggregate amount not to exceed the value (calculated in
accordance with the respective agreements pursuant to which such
Management Equity Interests were issued or exchanged) of the Management
Equity Interests exchanged so long as no Default or Event of Default
has occurred and is continuing at the time of such incurrence or
issuance or would occur after giving effect to the incurrence of such
Put/Call Promissory Note or the issuance of the Put/Call Preferred
Stock;
(xiii) Indebtedness of a Subsidiary outstanding on or prior to
the date on which such Subsidiary was acquired by Stellex or a
Subsidiary of Stellex (other than Indebtedness incurred in connection
with, or in contemplation of, the transaction or series of related
transactions pursuant to which such Subsidiary became a Subsidiary or
was otherwise acquired by Stellex or a Subsidiary of Stellex) and
Indebtedness assumed by Stellex or a Subsidiary of Stellex in
connection with a Permitted Acquisition which is outstanding on or
prior to the date of such Permitted Acquisition (other than
Indebtedness incurred in connection with, or in contemplation of, such
Permitted Acquisition; provided that the aggregate permitted amount,
accreted value or liquidation preference, as applicable, of all such
Indebtedness does not exceed Four Million Dollars ($4,000,000) at any
one time outstanding;
(xiv) Indebtedness evidenced by a subordinated note, held by a
seller in connection with a Permitted Acquisition, that has terms and
conditions that are satisfactory to the Administrative Agent, provided
that (A) after giving effect to the incurrence of such subordinated
indebtedness the Loan Parties are in compliance with the covenants
contained in Article X, (B) no Default or Event of Default has occurred
and is continuing either before or after giving effect to the
incurrence of such subordinated indebtedness, and (C) the aggregate
amount of such Indebtedness and the aggregate amount of the outstanding
Indebtedness permitted under Section 9.01(xiii) does not exceed Eight
Million Dollars ($8,000,000) in the aggregate; and
(xv) extensions, substitutions, renewals and replacements of
any Indebtedness described in clause (xiii) and (xiv) above, provided
that (A) the amount extended, substituted, renewed or replaced does not
exceed the
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principal amount outstanding at such time with respect to such
Indebtedness, (B) that such extension, substitution, renewal or
replacement is on terms (other than pricing) and conditions no less
favorable to the Loan Party and the Lenders than the terms and
conditions of the Indebtedness being extended, substituted, renewed or
replaced.
9.02. Sales of Assets. The Loan Parties shall not sell,
assign, transfer, lease, convey or otherwise dispose of any assets, whether now
owned or hereafter acquired, or any income or profits therefrom, or enter into
any agreement to do so, except:
(i) sales of Inventory in the ordinary course of business;
(ii) the disposition of Equipment if such Equipment is
obsolete or no longer useful in the ordinary course of such Loan
Party's business;
(iii) sales of assets with an aggregate book value not in
excess of Five Hundred Thousand Dollars ($500,000) in any Fiscal Year;
(iv) the disposition of Property by casualty or
condemnation;
(v) assignments, transfers, conveyances and other
dispositions from a Wholly Owned Subsidiary of a Loan Party to another
Wholly Owned Subsidiary of a Loan Party; provided, however, that until
the Farm Bureau Consent has been delivered to the Administrative Agent,
no assets may be assigned, transferred, leased or otherwise conveyed to
Paragon;
(vi) Permitted Dispositions, provided that no Permitted
Disposition may be made prior to the first annual anniversary of the
Closing Date, and provided, further, that no Permitted Disposition may
be made prior to the Term Loan Termination Date if any portion of the
Net Cash Proceeds therefrom will be used to purchase any portion of the
Subordinated Notes;
(vii) any Loan Party may enter into a license agreement
granting licenses in respect of patents and other rights and assets
with its suppliers on terms and conditions that are commercially
reasonable; and
(viii) all licenses granted in connection with the
Xxxxxxx-Xxxxxxx Acquisition.
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9.03. Liens. The Loan Parties shall not, directly or
indirectly, create, incur, assume or permit to exist any Lien on or with respect
to the Collateral, except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) Liens securing Indebtedness permitted by Section
9.01(iv) covering only assets acquired with such Indebtedness and Liens
securing Indebtedness permitted by Section 9.01(ix) covering only the
assets subject to a Lien under the Deed of Trust; and
(v) a Lien with respect to a deposit made by a customer of
a Loan Party in connection with a purchase order placed by such
customer so long as such Lien is limited to the inventory covered by
such purchase order and such inventory is not scheduled on any
Borrowing Base Certificate;
(vi) Liens on property of a Person existing at the time such
Person becomes a Subsidiary of Stellex or of a Subsidiary of Stellex,
provided that such Liens were in existence prior to the time such
Person becomes a Subsidiary and do not extend to any other assets;
(vii) Liens on property existing at the time of acquisition
thereof by Stellex or a Subsidiary of Stellex, provided that such Liens
were in existence prior to the contemplation of such acquisition and do
not extend to any other assets; and
(viii) other Liens securing obligations incurred in the
ordinary course of business which obligations do not exceed Five
Hundred Thousand Dollars ($500,000) at any one time outstanding.
9.04. Investments. The Loan Parties shall not, directly or
indirectly, make or own any Investment, except:
(i) Investments in Cash Equivalents;
(ii) Investments by any Loan Party in its Subsidiaries;
(iii) Investments in Interest Rate Contracts permitted
pursuant to Section 9.01(vii);
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(iv) Investments received in connection with the bankruptcy
or reorganization of customers of any Loan Party or received in
settlement
of delinquent obligations of or disputes with such Loan Party's
customers in the ordinary course of business; and
(v) other Investments not otherwise permitted under this
Section 9.04 having an aggregate market value (measured on the date
that such Investment was made and without giving affect to subsequent
changes in value) not to exceed $2,500,000 outstanding at any time;
provided that the Collateral Agent has a first priority Lien with
respect to such Investments and such Investment does not violate
Section 9.09.
9.05. Accommodation Obligations. The Loan Parties shall not,
directly or indirectly, create or become or be liable with respect to any
Accommodation Obligation, except (i) recourse obligations resulting from
endorsement of negotiable instruments for collection in the ordinary course of
business, (ii) the Farm Bureau Guaranty, (iii) lease obligations in connection
with office space in New York, New York where Stellex and Mentmore Holding
Corporation will be joint tenants, (iv) Accommodation Obligations by one Loan
Party on behalf of another Loan Party (other than Paragon until the Farm Bureau
Consent has been delivered to the Administrative Agent) but only in connection
with Indebtedness permitted pursuant to Section 9.01(i), (ii), (iii) (iv), (v),
(vi), (vii), (viii), (x) or (xi), and (v) Accommodation Obligations by one Loan
Party that is the acquiror or the target in connection with a Permitted
Acquisition on behalf of another Loan Party that is the acquiror or the target
in connection with such Permitted Acquisition but only in connection with
Indebtedness permitted pursuant to Section 9.01(xiii) or (xiv).
9.06. Restricted Junior Payments. The Loan Parties
shall not declare or make any Restricted Junior Payments, except:
(i) dividends and other distributions made by any Loan Party
(other than Stellex) to Stellex or another Loan Party;
(ii) payments of interest on the Subordinated Notes or the
other subordinated indebtedness permitted pursuant to Section 9.01(xi)
or Section 9.01(xii), provided that such payments are made in
accordance with the provisions of the Subordinated Note Indenture or
such subordinated indebtedness;
(iii) Restricted Junior Payments made to a Management Equity
Holder pursuant to the Put/Call Promissory Notes, the Put/Call
Preferred Stock or to purchase Management Equity Interests, so long as
no Default or Event of Default has
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occurred and is continuing or would occur after giving effect to the
making of such Restricted Junior Payment; provided that (a) the
aggregate amount of such Restricted Junior Payments does not exceed
$500,000 during any Fiscal Year; provided, further, that, with respect
to any Fiscal Year after December 31, 2000, (A) if the Leverage Ratio
for Stellex and its Subsidiaries on a consolidated basis as of the last
day of the immediately preceding Fiscal Year is less than 4.0 to 1.0,
then the aggregate amount of such Restricted Junior Payments that may
be made during such Fiscal Year shall not exceed $2,000,000 and (B) if
the Leverage Ratio for Stellex and its Subsidiaries on a consolidated
basis as of the last day of the immediately preceding Fiscal Year is
less than 3.5 to 1.0, then the aggregate amount of such Restricted
Junior Payments that may be made during such Fiscal Year shall not
exceed $4,000,000; and
(iv) Restricted Junior Payments made by the issuance of
Put/Call Promissory Notes or Put/Call Preferred Stock, in each case, in
exchange for Management Equity Interests, in an aggregate amount not to
exceed the value (calculated in accordance with the respective
agreements pursuant to which such Management Equity Interests were
issued or exchanged) of the Management Equity Interests exchanged so
long as no Default or Event of Default has occurred and is continuing
at the time of such incurrence or issuance or would occur after giving
effect to the issuance of such Put/Call Promissory Note or such
Put/Call Preferred Stock.
9.07. Change in Nature of Business. The Loan Parties shall not
make any material change in the nature or conduct of its business from the
businesses carried on as of the Closing Date other than the Permitted
Acquisitions made in accordance with the provisions of this Agreement.
9.08. Transactions with Affiliates. None of the Loan Parties
shall, directly or indirectly, enter into or permit to exist any transaction
with any Affiliate of such Loan Party except for (i) transactions the terms of
which are in the ordinary course of business, in accordance with customary
practice, and not less favorable to such Loan Party than those that might be
obtained in an arm's length transaction at the time from a Person who is not an
Affiliate, (ii) reasonable salaries, bonuses and other compensation (including
deferred compensation, retirement, loan arrangements and severance benefits)
paid to current and former officers, directors and managers of such Loan Party
commensurate with salary, bonus and compensation levels of other companies
engaged in a similar business in similar circumstances, specifically including
those amount contemplated by the Management Participation Agreement as in effect
on the date hereof, (iii) transactions permitted under Sections 9.01(v),
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9.01(xiii), 9.04(ii), 9.05, 9.06, 9.09 and 9.17, (iv) the loan from Trinity
Investment Corp. in an amount of Two Million Five Hundred Thousand Dollars
($2,500,000) plus accrued and unpaid interest, which amount shall be paid to
Trinity Investment Corp. on the Closing Date and (v) tax-sharing arrangement
among the Loan Parties described in the Tax Sharing Agreement.
9.09. Restriction on Fundamental Changes. (a) No Loan Party
shall enter into any merger or consolidation, or liquidate, wind-up or dissolve
(or suffer any liquidation or dissolution), or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of transactions, all or
substantially all of its business or assets, whether now or here after acquired,
except (i) Permitted Dispositions and (ii) any Wholly Owned Subsidiary of a Loan
Party may merge or consolidate into, or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or a series of related transactions,
all or substantially all of its business or assets to, another Wholly Owned
Subsidiary of such Loan Party so long as the terms and conditions of any such
transaction and the documentation in connection therewith are in form and
substance satisfactory to Requisite Lenders and all assets remain subject to the
first priority Lien of the Collateral Agent under the Collateral Documents.
(b) No Loan Party shall acquire by purchase or otherwise all
or substantially all of the business property or assets of, or stock or other
evidence of beneficial ownership of, any Person; provided, however, that a Loan
Party may make a Permitted Acquisition if (i) such Loan Party acquires at least
75% of the equity interests (including 75% of the Voting Stock) of a Person in
connection with a Permitted Acquisition involving the acquisition of such
Person; (ii) the equity interests and/or assets acquired by such Loan Party with
respect to any such Permitted Acquisition are pledged by such Loan Party to the
Collateral Agent pursuant to agreements, substantially in the forms of the
Collateral Documents; (iii) any acquired Person guarantees the Obligations
pursuant to an agreement, substantially in the form of the Guaranty and becomes
a Loan Party under the Contribution Agreement; (iv) no Default or Event of
Default has occurred and is continuing; and (iv) all documentation (including,
without limitation, UCC financing statements, opinions of counsel, and
appropriate consents) in connection with such Permitted Acquisition is in form
and substance reasonably satisfactory to the Administrative Agent and the
Requisite Lenders.
(c) No Loan Party shall create any new Subsidiary, joint
venture or partnership; provided, however, that a Loan Party may create a new
corporate Subsidiary if (i) a Loan Party holds at least 75% of the equity
interests (including at least 75% of the Voting Stock) of such newly created
Subsidiary; (ii)
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all of the equity interests that a Loan Party has (whether as legal or
beneficial owner) are pledged to the Collateral Agent, on terms and conditions
satisfactory to the Administrative Agent and all of the assets of such new
Subsidiary are pledged to the Collateral Agent, on terms and conditions
satisfactory to the Administrative Agent; (ii) such new Subsidiary guarantees
the Obligations on terms and conditions satisfactory to the Administrative Agent
and becomes a Loan Party under the Contribution Agreement; (iii) no Default or
Event of Default has occurred and is continuing; and (iv) all documentation
(including, without limitation, security agreements, guarantees, pledge
agreements, UCC financing statements, opinions of counsel, and appropriate
consents) in connection with such new Subsidiary shall be in form and substance
reasonably satisfactory to the Administrative Agent and the Requisite Lenders.
(c) Except as permitted under this Agreement, no Loan Party
shall change its corporate, capital or legal structure.
9.10. Sales and Leasebacks. No Loan Party shall become liable,
by assumption or by Accommodation Obligation, with respect to any lease, whether
a Capital Lease or an operating lease, of any property (whether real or personal
or mixed) (i) which such Loan Party has sold or transferred or will sell or
transfer to any other Person or (ii) which such Loan Party intends to use for
substantially the same purposes as any other asset which it has sold or
transferred or will sell or transfer to any other Person in connection with such
lease.
9.11. Margin Regulations. No Loan Party shall use all or any
portion of the proceeds of any Loan made under this Agreement to purchase or
carry Margin Stock.
9.12. ERISA. No Loan Party shall, nor shall it permit any
ERISA Affiliate to, do any of the following to the extent that such act or
failure to act would result in the aggregate, after taking into account any
other such acts or failure to act, in a Material Adverse Effect:
(i) engage, or knowingly permit an ERISA Affiliate to engage,
in any prohibited transaction described in Sections 406 of ERISA or
4975 of the Code for which a class exemption is not available or a
private exemption has not been previously obtained from the DOL;
(ii) permit to exist any accumulated funding deficiency (as
defined in Sections 302 of ERISA or 412 of the Code), with respect to
any Benefit Plan, which has not been waived;
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(iii) fail, or permit any ERISA Affiliate to fail, to pay
timely required contributions or annual installments due with respect
to any waived funding deficiency to any Plan if such failure could
result in the imposition of a Lien or otherwise could have a Material
Adverse Effect;
(iv) terminate, or permit any ERISA Affiliate to terminate,
any Benefit Plan which would result in any liability of such Loan
Party, or any ERISA Affiliate under Title IV of ERISA or under such
Benefit Plan; or
(v) fail, or permit any ERISA Affiliate to fail, to pay any
required installment under section (m) of Section 412 of the Code or
any other payment required under Section 412 of the Code or Section 302
of ERISA on or before the due date for such installment or other
payment, if such failure could result in the imposition of a Lien or
otherwise could have a Material Adverse Effect.
9.13. Capital Expenditures. None of the Loan Parties shall
make or incur any Capital Expenditures (a) during the period from the Closing
Date to the end of Fiscal Year 1997 if, after giving effect to such Capital
Expenditures, the aggregate amount of all Capital Expenditures made by the Loan
Parties would exceed One Million Seven Hundred Thousand Dollars ($1,700,000) for
such period, and (b) during any Fiscal Year thereafter if, after giving effect
to such Capital Expenditures, the aggregate amount of all Capital Expenditures
made by the Loan Parties during such Fiscal Year would exceed Four Million
Dollars ($4,000,000) for such Fiscal Year; provided, however, the Loan Parties
may carry forward from one Fiscal Year (other than Fiscal Year 1997) to the next
Fiscal Year any Capital Expenditures permitted but not made or incurred in such
Fiscal Year.
9.14. Amendment of Governing Documents. No Loan Party (other
than Stellex) shall amend, supplement or otherwise change its Governing
Documents in any material respect, and Stellex shall not amend, supplement or
otherwise change its Governing Documents in any material respect which is
adverse to the interests of the Lenders.
9.15. Environmental Liabilities. Except as disclosed in
Schedule 6.01(P), no Loan Party shall become subject to any Liabilities and
Costs which exceed One Million Dollars ($1,000,000) in a particular instance or
Two Million Five Hundred Thousand Dollars ($2,500,000) in the aggregate, arising
out of or relating to (a) the Release or threatened Release at any location of
any Contaminant into the environment, or any Remedial Action in response thereto
or (b) any violation of any Environmental, Health or Safety Requirement of Law.
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9.16. No Activities Leading to Forfeiture. No Loan Party
shall engage in the conduct of any business or activity which could result in a
Forfeiture Proceeding.
9.17. Management Fees and Consulting Fees. The Loan Parties
shall not pay any management fee or consulting fee or transfer any assets to any
Affiliate, other than the following payments:
(i) the payment of management fees pursuant to the Management
Agreement in an amount not to exceed (A) Seven Hundred Fifty Thousand
Dollars ($750,000) during any Fiscal Year, exclusive of expenses, and
(B) after the first anniversary of the Closing Date, additional
payments in an amount not to exceed one percent (1%) of sales for
Stellex and its Subsidiaries on a consolidated basis during such Fiscal
Year less any amount paid pursuant to the preceding clause (A),
exclusive of expenses, provided, in the case of clause (B) above, that
the Interest Coverage Ratio for Stellex and its Subsidiaries on a
consolidated basis for the immediately preceding Fiscal Year, after
giving pro forma effect to such payment, is equal to or greater than
2.25 to 1.0; provided, further, that at the time of any such payment
and after giving effect to such payment no Default or Event of Default
shall have occurred and be continuing;
(ii) the reimbursement of reasonable business expenses
incurred in the ordinary course of business by an Affiliate on behalf
of any Loan Party, provided that the Loan Parties are in compliance
with Section 9.08;
(iii) the payment of investment banking fees by the Loan
Parties to Mentmore Holdings Corporation in connection with the
transactions contemplated by the Transaction Documents in an amount not
to exceed One Million Dollars ($1,000,000); and
(iv) the payment of investment banking fees by the Loan
Parties to Mentmore Holdings Corporation in connection with any
Permitted Acquisition in an amount not to exceed one percent (1%) of
the transaction value.
9.18. Farm Bureau Life Insurance Company. Aerospace shall not
assign or transfer any moneys, securities or other property to Farm Bureau, or
permit any moneys, securities or other property to be in the constructive or
actual possession of or on deposit with Farm Bureau, provided, however, that
Aerospace may make payments to Farm Bureau that are due and payable under the
Farm Bureau Guaranty.
9.19. Amendment of Subordinated Documents. No Loan Party
shall amend, supplement or otherwise change the provisions
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of the Subordinated Note Documents or any documents evidencing the subordinated
indebtedness referred to in Section 9.01(xii) in any material respect which
would be adverse to the interests of the Lenders.
ARTICLE X
FINANCIAL COVENANTS
Each Loan Party covenants and agrees so long as any Commitment
is outstanding and thereafter until payment in full of the Obligations:
10.01. Minimum Net Worth. The Net Worth of Stellex and its
Subsidiaries on a consolidated basis at the end of each fiscal quarter of each
Fiscal Year shall not be less than the sum of (i) $5,500,000 plus (ii) an amount
equal to 50% of Net Income since the Closing Date (excluding any losses).
10.02. Minimum Interest Coverage Ratio. The Interest
Coverage Ratio of Stellex and its Subsidiaries on a consolidated
basis at the end of each Financial Covenant Period set forth
below shall not be less than the ratio set forth opposite such
date:
Financial Covenant
Period Ending: Ratio
------------------ -----
March 31, 1998 1.60 to 1.00
June 30, 1998 1.60 to 1.00
September 30, 1998 1.60 to 1.00
December 31, 1998 1.70 to 1.00
March 31, 1999 1.70 to 1.00
June 30, 1999 1.70 to 1.00
September 30, 1999 1.70 to 1.00
December 31, 1999 2.00 to 1.00
March 31, 2000 2.00 to 1.00
June 30, 2000 2.00 to 1.00
September 30, 2000 2.00 to 1.00
December 31, 2000 2.50 to 1.00
March 31, 2001 2.50 to 1.00
June 30, 2001 2.50 to 1.00
September 30, 2001 2.50 to 1.00
December 31, 2001 2.75 to 1.00
March 31, 2002 2.75 to 1.00
June 30, 2002 2.75 to 1.00
September 30, 2002 2.75 to 1.00
December 31, 2002 3.00 to 1.00
March 31, 2003 3.00 to 1.00
June 30, 2003 3.00 to 1.00
September 30, 2003 3.00 to 1.00
December 31, 2003 3.00 to 1.00
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10.03. Minimum Fixed Charge Coverage Ratio. The Fixed Charge
Coverage Ratio of Stellex and its Subsidiaries on a consolidated basis at the
end of each Financial Covenant Period commencing with the Financial Covenant
Period ending March 31, 2000 shall not be less than 1.50 to 1.00.
10.04. Maximum Leverage Ratio. The Leverage Ratio of
Stellex and its Subsidiaries on a consolidated basis, at the end
of each Financial Covenant Period set forth below, shall not be
greater than the ratio set forth opposite such date:
Financial Covenant
Period Ending: Ratio
------------------ -----
March 31, 1998 6.00 to 1.00
June 30, 1998 6.00 to 1.00
September 30, 1998 6.00 to 1.00
December 31, 1998 6.00 to 1.00
March 31, 1999 6.00 to 1.00
June 30, 1999 6.00 to 1.00
September 30, 1999 6.00 to 1.00
December 31, 1999 4.75 to 1.00
March 31, 2000 4.75 to 1.00
June 30, 2000 4.75 to 1.00
September 30, 2000 4.75 to 1.00
December 31, 2000 4.25 to 1.00
March 31, 2001 4.25 to 1.00
June 30, 2001 4.25 to 1.00
September 30, 2001 4.25 to 1.00
December 31, 2001 3.50 to 1.00
March 31, 2002 3.50 to 1.00
June 30, 2002 3.50 to 1.00
September 30, 2002 3.50 to 1.00
December 31, 2002 3.25 to 1.00
March 31, 2003 3.25 to 1.00
June 30, 2003 3.25 to 1.00
September 30, 2003 3.25 to 1.00
December 31, 2003 3.25 to 1.00
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. Events of Default. Each of the following
occurrences shall constitute an Event of Default under this
Agreement:
(a) Failure to Make Payments When Due. The Borrowers shall
fail to pay any principal of any Note when due, or shall fail to pay any
interest on any Note or any other Obligation within three (3) Business Days
after such interest or Obligation shall become due.
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(b) Breach of Representation or Warranty. Any representation
or warranty made or deemed to have been made by any Loan Party under, relating
to or in connection with this Agreement, the Notes, any of the other Loan
Documents or any certificate or statement furnished by any Loan Party pursuant
to or in connection with this Agreement shall be false or misleading in any
material respect when made.
(c) Breach of Certain Covenants. Any Loan Party shall fail
duly and punctually to perform or observe any agreement, covenant or obligation
binding on such Loan Party under Section 7.04, Section 8.01, Section 8.02,
Section 8.03, Section 8.06, Article IX or Article X of this Agreement or under
any section of any other Loan Document.
(d) Other Defaults. Any Loan Party shall fail duly and
punctually to perform or observe any term, covenant or obligation binding on
such Loan Party (i) under Section 7.01 or Section 7.02 of this Agreement and
such failure shall continue for ten (10) Business Days after the occurrence of
such failure or (ii) under this Agreement (other than as described in Sections
11.01(a), (c) or (d)(i)), and such failure shall continue for thirty (30) days
after any Loan Party knew of such failure.
(e) Default as to Other Indebtedness. Any Loan Party shall
fail to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) with respect to any Indebtedness
(other than (i) an Obligation, (ii) the Seller Note or (iii) any Put/Call
Promissory Notes or the Put/Call Preferred Stock but only so long as such
Put/Call Promissory Notes or Put/Call Preferred Stock (or any payments
thereunder or failure to make payments thereunder) do not give rise to a default
or event of default under or in connection with any other Indebtedness) if the
aggregate amount of such other Indebtedness is One Million Dollars ($1,000,000)
or more; or any breach, default or event of default shall occur, or any other
condition shall exist under any instrument, agreement or indenture pertaining to
any such Indebtedness, if the effect thereof (with or without the giving of
notice or lapse of time or both) is to cause an acceleration, mandatory
redemption or other required repurchase of such Indebtedness or permit the
holder or holders of such Indebtedness to accelerate the maturity of any such
Indebtedness or require a redemption or other repurchase of such Indebtedness;
or any such Indebtedness shall be otherwise declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed or otherwise
repurchased by any Loan Party (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; or the holder or holders of
any Lien, in any amount, shall commence foreclosure of such Lien upon property
of any Loan Party having an aggregate value in excess of One Million Dollars
($1,000,000).
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(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i)
An involuntary case shall be commenced against any Loan Party and the petition
shall not be dismissed, stayed, bonded or discharged for a period of thirty (30)
days; or a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of any Loan Party in an involuntary case, under any
applicable bankruptcy, insolvency or other similar law now or hereinafter in
effect; or any other similar relief shall be granted under any applicable
federal, state, local or foreign law; or the board of directors of any Loan
Party (or any committee thereof) adopts any resolution or otherwise authorizes
any action to approve any of the foregoing.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over any Loan Party or over all
or a substantial part of the assets of any Loan Party shall be entered and such
decree or order shall not be stayed, dismissed or discharged for a period of
thirty (30) days; or an interim receiver, trustee or other custodian of any Loan
Party or of all or a substantial part of the assets of any Loan Party shall be
appointed or a warrant of attachment, execution or similar process against any
substantial part of the assets of any Loan Party shall be issued and any such
event shall not be stayed, dismissed, bonded or discharged for a period of
thirty (30) days; or the board of directors of any Loan Party (or any committee
thereof) adopts any resolution or otherwise authorizes any action to approve any
of the foregoing.
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. Any
Loan Party shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its assets; or any Loan Party shall
make any assignment for the benefit of creditors or shall be unable or fail, or
shall admit in writing its inability, to pay its debts as such debts become due,
or the board of directors of any Loan Party (or any committee thereof) adopts
any resolution or otherwise authorizes any action to approve any of the
foregoing.
(h) Judgments and Attachments. Any money judgment (other than
a money judgment covered by insurance as to which the insurance company has
acknowledged coverage), writ or warrant of attachment, or similar process
against any Loan Party or any assets of any Loan Party involving in any case an
amount in excess of One Million Dollars ($1,000,000) is entered and shall remain
undischarged, unvacated, unbonded or unstayed for a period of thirty (30) days.
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(i) Dissolution. Any order, judgment or decree shall be
entered against any Loan Party decreeing its involuntary dissolution or split
up and such order shall remain undischarged and unstayed for a period of thirty
(30) days; or any Loan Party shall otherwise dissolve or cease to exist (except
as permitted under this Agreement).
(j) Loan Documents; Failure of Security. At any time, for any
reason, (i) any Loan Document ceases to be in full force and effect or any Loan
Party seeks to repudiate its obligations thereunder and the Liens intended to be
created thereby are, or any Loan Party seeks to render such Liens, invalid and
unperfected, or (ii) Liens in favor of the Collateral Agent and/or the Lenders
contemplated by the Loan Documents shall, at any time, for any reason, be
invalidated or otherwise cease to be in full force and effect, or such Liens
shall be subordinated or shall not have the priority contemplated by this
Agreement or the Loan Documents.
(k) ERISA Liabilities. Any Termination Event occurs which will
or is reasonably likely to subject either a Loan Party or an ERISA Affiliate to
a liability which will, or is reasonably likely to have, a Material Adverse
Effect.
(l) Waiver Application. The plan administrator of any Benefit
Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code and the substantial business
hardship upon which the application for the waiver is based could subject either
any Loan Party or any ERISA Affiliate to liability which will or is reasonably
likely to have a Material Adverse Effect.
(m) Change of Control. A Change of Control shall have
occurred.
(n) Government Contracts. At any time, for any reason, (i) a
notice of debarment, notice of suspension or notice of termination for default
shall have been issued to any Borrower under or in connection with any
Government Contract which could reasonably result in a Material Adverse Effect;
(ii) a notice of debarment, notice of suspension or notice of termination for
default shall have been issued to any other party under a Government Contract as
a direct or indirect result of any Borrower's performance or malfeasance
thereunder which could reasonably result in a Material Adverse Effect; (iii) any
Borrower is barred or suspended from contracting with any Governmental
Authority; (iv) a Government investigation shall have been commenced in
connection with any Government Contract or any Borrower which could reasonably
result in criminal or civil liability, suspension, debarment or any other
adverse administrative action arising by reason of alleged fraud, willful
misconduct, neglect, default or other wrongdoing; (v) the actual
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termination of any Material Contract due to alleged fraud, willful misconduct,
neglect, default or other wrongdoing which could reasonably result in a Material
Adverse Effect; or (vi) a cure notice issued under any Government Contract shall
remain uncured beyond (A) the expiration of the time period available to such
Borrower pursuant to such Government Contract and/or such cure notice, to cure
the noticed default or (B) the date on which the other contracting party is
entitled to exercise its rights and remedies under the Government Contract as a
consequence of such default, which could reasonably result in a Material Adverse
Effect.
An Event of Default shall be deemed "continuing" until cured
or waived in writing in accordance with Section 13.09.
11.02. Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any
Event of Default described in Section 11.01(f) or 11.01(g), the Commitments
shall automatically and immediately terminate and the unpaid principal amount
of, and any and all accrued interest on, the Obligations and all accrued fees
shall automatically become immediately due and payable, without presentment,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of intent
to demand or accelerate and of acceleration), all of which are hereby expressly
waived by the Borrowers, and the obligations of the Lenders to make Loans
hereunder shall thereupon terminate; and upon the occurrence and during the
continuance of any other Event of Default, the Administrative Agent shall, at
the request, or may with the consent, of the Requisite Lenders, declare (i) that
the Commitments are terminated, whereupon the Commitments shall immediately
terminate, and/or (ii) the unpaid principal amount of, and any and all accrued
interest on, the Obligations and all accrued fees to be, and the same shall
thereupon be, immediately due and payable, without presentment, demand, or
protest or other requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice of intent to demand
or accelerate and of acceleration, except as may be specifically provided for
herein), all of which are hereby expressly waived by the Borrowers.
(b) Enforcement. Each Loan Party acknowledges that in the
event any Loan Party fails to perform, observe or discharge any of its
respective obligations or liabilities under this Agreement or any other Loan
Document, any remedy of law may prove to be inadequate relief to the Agents and
the Lenders; therefore, the Loan Parties agree that the Agents and the Lenders
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
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ARTICLE XII
THE AGENTS
12.01. Appointment. (a) Each Lender hereby designates and
appoints SocGen as the Administrative Agent of such Lender under this Agreement,
and each Lender hereby irrevocably authorizes the Administrative Agent to take
such action on its behalf under the provisions of this Agreement, the Notes and
the Loan Documents and to exercise such powers as are set forth herein or
therein together with such other powers as are reasonably incidental thereto. As
to any matters not expressly provided for by this Agreement or the other Loan
Documents, the Administrative Agent shall not be required to exercise any
discretion or take any action. Notwithstanding the foregoing, the Administrative
Agent shall be required to act or refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Requisite Lenders (unless the instructions or consent of all of the Lenders is
required hereunder or thereunder) and such instructions shall be binding upon
all Lenders; provided, however, the Administrative Agent shall not be required
to take any action which (i) the Administrative Agent believes will expose it to
personal liability unless the Administrative Agent receives an indemnification
satisfactory to it from the Lenders with respect to such action or (ii) is
contrary to this Agreement, the Notes, the other Loan Documents or applicable
law. The Administrative Agent agrees to act as such on the express conditions
contained in this Article XII.
(b) Each Lender hereby designates and appoints First Union as
the Syndication Agent and the Collateral Agent of such Lender under this
Agreement, and each Lender hereby irrevocably authorizes the Syndication Agent
and the Collateral Agent to take such action on its behalf under the provisions
of this Agreement, the Notes and the Loan Documents and to exercise such powers
as are set forth herein or therein together with such other powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement or the other Loan Documents, the Syndication Agent and the
Collateral Agent shall not be required to exercise any discretion or take any
action. Notwithstanding the foregoing, the Syndication Agent and the Collateral
Agent shall be required to act or refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Requisite Lenders (unless the instructions or consent of all of the Lenders is
required hereunder or thereunder) and such instructions shall be binding upon
all Lenders; provided, however, the Syndication Agent and the Collateral Agent
shall not be required to take any action which (i) the Syndication Agent and the
Collateral Agent believes will expose it to personal liability unless the
Syndication Agent and the Collateral Agent receives an indemnification
satisfactory
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to it from the Lenders with respect to such action or (ii) is contrary to this
Agreement, the Notes, the other Loan Documents or applicable law. The
Syndication Agent and the Collateral Agent agrees to act as such on the express
conditions contained in this Article XII.
(c) The provisions of this Article XII are solely for the
benefit of the Agents and the Lenders, and none of the Loan Parties shall have
any rights to rely on or enforce any of the provisions hereof (other than as
expressly set forth in Section 12.07). In performing its functions and duties
under this Agreement, the Agents shall act solely as agents of the Lenders and
does not assume and shall not be deemed to have assumed any obligation or
relationship of agency, trustee or fiduciary with or for any Loan Party. The
Agents may perform any of their respective duties hereunder, or under the Loan
Documents, by or through their respective agents or employees.
12.02. Nature of Duties. The Agents shall not have any duties
or responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of the Agents shall be mechanical and administrative
in nature. The Agents shall not have by reason of this Agreement a fiduciary
relationship in respect of any Holder. Nothing in this Agreement or any of the
Loan Documents, expressed or implied, is intended to or shall be construed to
impose upon the Agents any obligations in respect of this Agreement or any of
the Loan Documents except as expressly set forth herein or therein. Each Lender
shall make its own independent investigation of the financial condition and
affairs of Stellex and the other Loan Parties in connection with the Loans
hereunder and shall make its own appraisal of the credit worthiness of Stellex
and the other Loan Parties initially and on a continuing basis, and the Agents
shall not have any duty or responsibility, either initially or on a continuing
basis, to provide any Holder with any credit or other information with respect
thereto (except for reports required to be delivered by the Agents under the
terms of this Agreement). If the Agents seek the consent or approval of the
Lenders to the taking or refraining from taking of any action hereunder, the
Agents shall send notice thereof to each Lender. The Agents shall promptly
notify each Lender at any time that the Lenders so required hereunder have
instructed the Agents to act or refrain from acting pursuant hereto.
12.03. Rights, Exculpation, etc. (a) Liabilities;
Responsibilities. None of the Agents, any Affiliate of any Agent, or any of
their respective officers, directors, employees, agents, attorneys or
consultants shall be liable to any Holder for any action taken or omitted by
them hereunder, under the Notes or under any of the Loan Documents, or in
connection therewith, except that no Person shall be relieved of any liability
imposed by law for gross negligence or willful
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misconduct. No Agent shall be liable for any apportionment or distribution of
payments made by it in good faith, and if any such apportionment or distribution
is subsequently determined to have been made in error the sole recourse of any
Holder to whom payment was due, but not made, shall be to recover from other
Holders any payment in excess of the amount to which they are determined to have
been entitled. The Agents shall not be responsible to any Holder for any
recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, legality, enforceability,
collectability, or sufficiency of this Agreement, the Notes or any of the other
Loan Documents or the transactions contemplated thereby, or for the financial
condition of Stellex or any other Loan Party. None of the Agents are making any
representation and warranty in connection with, and shall not be required to
make any inquiry concerning, the Collateral, the performance or observance of
any of the terms, provisions or conditions of this Agreement, the Notes or any
of the Loan Documents, or the financial condition of Stellex or any other Loan
Party, or the existence or possible existence of any Default or Event of
Default.
(b) Right to Request Instructions. Any Agent may at any time
request instructions from the Lenders (and after all Obligations owing to the
Lenders have been paid in full, from the Holders) with respect to any actions or
approvals which by the terms of any of the Loan Documents such Agent is
permitted or required to take or to grant, and such Agent shall be absolutely
entitled to refrain from taking any action or to withhold any approval and shall
not be under any liability whatsoever to any Person for refraining from any
action or withholding any approval under any of the Loan Documents until it
shall have received such instructions from those Lenders or Holders, as the case
may be, from whom such Agent is required to obtain such instructions for the
pertinent matter in accordance with the Loan Documents. Without limiting the
generality of the foregoing, no Holder shall have any right of action whatsoever
against any Agent as a result of such Agent acting or refraining from acting
under the Loan Documents in accordance with the instructions of all Lenders or,
where required by the express terms of this Agreement, a lesser proportion of
the Lenders, or of all Holders (after the Obligations owing to the Lenders have
been paid in full).
12.04. Reliance. Each Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel, independent public
accountants and other experts selected by it.
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12.05. Indemnification. To the extent that the Agents are not
reimbursed and indemnified by the Borrowers, the Lenders will reimburse and
indemnify each Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, reasonable costs,
reasonable expenses or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by, or asserted against it in any way relating to or
arising out of the Loan Documents or any action taken or omitted by such Agent
under the Loan Documents, in proportion to each Lender's Pro Rata Share;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. The obligations of the Lenders under this Section 12.05
shall survive the payment in full of the Loans and all other Obligations and the
termination of this Agreement. In the event that after payment and distribution
of any amount by the Administrative Agent to Lenders, any Lender or third party,
including any Loan Party, any creditor of any Loan Party or a trustee in
bankruptcy, recovers from the Administrative Agent any amount found to have been
wrongfully paid to the Administrative Agent or disbursed by the Administrative
Agent to Lenders, then Lenders, in proportion to their respective Pro Rata
Shares, shall reimburse the Administrative Agent for all such amounts.
12.06. The Agents Individually. With respect to the Loans made
by it, SocGen and First Union shall have and may exercise the same rights and
powers hereunder and is subject to the same obligations and liabilities as and
to the extent set forth herein for any other Lender. The terms "Lenders" or
"Requisite Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include SocGen and First Union in their respective
individual capacities as a Lender or one of the Requisite Lenders. Each of
SocGen and First Union and their respective Affiliates may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with any Loan Party or any of its Affiliates as if it were not acting
as an Agent pursuant hereto.
12.07. Successor Agents. (a) Resignation. Any Agent may
resign from the performance of all its functions and duties hereunder at any
time by giving at least thirty (30) days' prior written notice to the Borrowers
and the Lenders. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to this Section 12.07.
(b) Appointment by Requisite Lenders. Upon any such notice of
resignation, the Requisite Lenders shall have the right to appoint a successor
Agent selected from among the Lenders, which appointment shall be subject to the
prior written approval of Stellex (which may not be unreasonably withheld, and
shall not
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be required upon the occurrence and during the continuance of an Event of
Default or Default).
(c) Appointment by Retiring Agent. If a successor Agent shall
not have been appointed within the thirty (30) day period provided in paragraph
(a) of this Section 12.07, the retiring Agent shall then appoint a successor
Agent who shall serve as such Agent until such time, if any, as the Requisite
Lenders appoint a successor Agent as provided above. Each Lender shall indemnify
and hold such Agent harmless for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, reasonable
costs, reasonable expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against it in any way relating
to or arising out of the appointment of a successor Agent pursuant to the terms
of this paragraph (c).
(d) Rights of the Successor and Retiring Agents. Upon the
acceptance of any appointment hereunder as Administrative Agent, Collateral
Agent or Syndication Agent, as the case may be, 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 from its duties and obligations under this Agreement.
After any retiring Agent's resignation hereunder as an Agent, the provisions of
this Article XII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was such Agent under this Agreement.
12.08. Relations Among Lenders. Each Lender agrees that it
will not take any legal action, nor institute any actions or proceedings,
against any Loan Party or any other Loan Party or with respect to any
Collateral, without the prior written consent of the Requisite Lenders. Without
limiting the generality of the foregoing, no Lender may accelerate or otherwise
enforce its portion of the Obligations, except in accordance with Section
11.02(a).
12.09. Concerning the Collateral and the Loan Documents. (a)
Authority. Subject to the terms and conditions hereof, each Lender authorizes
and directs the Collateral Agent to enter into the Loan Documents relating to
the Collateral for the benefit of the Lenders. Each Lender agrees that any
action taken by any Agent or all Lenders (or, where required by the express
terms of this Agreement, a lesser proportion of the Lenders) in accordance with
the provisions of this Agreement or the other Loan Documents, and the exercise
by any Agent or all Lenders (or, where so required, such lesser proportion) of
the powers set forth herein or therein, together with such other powers as are
reasonably incidental thereto, shall be authorized and binding upon all of the
Lenders. Without limiting the generality of the foregoing, (i) the
Administrative Agent shall
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have the sole and exclusive right and authority to act as the disbursing and
collecting agent for the Lenders with respect to all payments and collections
arising in connection with this Agreement and the Loan Documents relating to the
Collateral and (ii) the Collateral Agent shall have the sole and exclusive right
and authority to execute and deliver each Loan Document relating to the
Collateral and accept delivery of each such agreement delivered by any Loan
Party; act as collateral agent for the Lenders for purposes of the perfection of
all security interests and Liens created by such agreements and all other
purposes stated therein; manage, supervise and otherwise deal with the
Collateral; take such action as is necessary or desirable to maintain the
perfection and priority of the security interests and Liens created or purported
to be created by the Loan Documents; and except as may be otherwise specifically
restricted by the terms of this Agreement or any other Loan Document, exercise
all remedies given to the Collateral Agent or the Lenders with respect to the
Collateral under the Loan Documents, applicable law or otherwise.
(b) Release of Collateral. (i) Each Lender hereby directs the
Collateral Agent to release or to subordinate any Lien held by the Agent for the
benefit of the Lenders (A) against all of the Collateral, upon payment in full
of the Obligations and termination of this Agreement or (B) against the
Collateral sold, assigned, transferred, conveyed or otherwise disposed of
pursuant to Sections 9.02(ii), (iii) and (vi) when the Collateral Agent receives
a certificate from the Borrowers pursuant to which the Borrowers represent and
warrant that the Collateral is being sold, assigned, transferred, conveyed or
otherwise disposed of in compliance with Section 9.02(ii), (iii) or (vi).
(ii) Each Lender hereby directs the Collateral Agent to
execute and deliver or file such termination and partial release statements and
do such other things as are necessary to release Liens to be released pursuant
to this Section 12.09(b) promptly upon the effectiveness of any such release.
Upon request by the Collateral Agent at any time, the Lenders will confirm in
writing the Collateral Agent's authority to release particular types or items as
Collateral pursuant to this Section 12.09.
(iii) Without in any manner limiting the Collateral Agent's
authority to act without any specific or further authorization or consent by the
Lenders (as set forth in Section 12.09(b)), each Lender agrees to confirm in
writing, upon request by Stellex, the authority to release or subordinate Liens
in the Collateral conferred upon the Collateral Agent under Section 12.09(b). So
long as no Event of Default or Default is then continuing, upon receipt by the
Collateral Agent of any such written confirmation from the Lenders of its
authority to release any particular items or types of Collateral, and upon at
least
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five (5) Business Days prior written request by Stellex, the Collateral Agent
shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the Liens granted to
the Collateral Agent for the benefit of Lenders herein or pursuant hereto upon
such Collateral; provided, that (A) the Collateral Agent shall not be required
to execute any such document on terms which, in the Collateral Agent's opinion,
would expose the Collateral Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without recourse or
warranty, and (B) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon (or obligations of the Borrowers in
respect of) all interests retained by the Loan Parties all of which shall
continue to constitute part of the Collateral.
(iv) The Collateral Agent shall have no obligation whatsoever
to the Lenders or to any other Person to 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 the Liens granted to the Collateral Agent pursuant to the
Loan Documents 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 the Collateral Agent in this
Section 12.09 or in any of the Loan Documents, it being understood and agreed
that in respect of the Collateral, or in any act, omission or event related
thereto, the Collateral Agent may act in any manner it may deem appropriate, in
its sole discretion, given its own interest in the Collateral as one of the
Lenders and that the Collateral Agent shall have no duty or liability whatsoever
to any Lender unless required to act or refrain from acting upon the
instructions of the Lenders and then only in accordance with Section 12.01.
ARTICLE XIII
MISCELLANEOUS
13.01. Assignments and Participations. (a) Assignments. No
assignment or participation of any Lender's rights or obligations under this
Agreement and the Notes shall be made except in accordance with this Section
13.01. Each Lender may assign to one or more Eligible Assignees all or a portion
of its rights and obligations under this Agreement and the Notes in accordance
with the provisions of this Section 13.01.
(b) Limitations on Assignments. Each assignment shall be
subject to the following conditions: (i) each assignment shall be of a
constant, and not a varying, ratable percentage of
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all of the assigning Lender's rights and obligations in respect of its interest
being assigned under this Agreement and its Note and, in the case of a partial
assignment, shall be in a minimum principal amount of Five Million Dollars
($5,000,000) except that such limitations shall not apply to an assignment by
any Lender of any portion of its rights and obligations to another Lender or an
assignment by any Lender of all of its rights or obligations to another Person,
(ii) each such assignment shall be to an Eligible Assignee, and (iii) the
parties to each such assignment shall execute and deliver to the Administration
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with a processing and recordation fee of Three Thousand
Five Hundred Dollars ($3,500); provided, however, any Lender may assign any or
all of its rights and obligations under this Agreement to any of its Affiliates
without notice to or consent of the Borrowers or the Administrative Agent and
without being subject to the foregoing conditions. Upon such execution,
delivery, acceptance and recording in the Register, from and after the effective
date specified in each Assignment and Acceptance and accepted by the
Administrative Agent (which effective date shall not be any earlier than the
date on which the Administrative Agent so accepts and records the Assignment and
Acceptance in the Register), (x) the assignee thereunder shall, in addition to
any rights and obligations hereunder held by it immediately prior to such
effective date, if any, have the rights and obligations hereunder that have been
assigned to it pursuant to such Assignment and Acceptance and shall, to the
fullest extent permitted by law, have the same rights and benefits hereunder as
if it were an original Lender hereunder and (y) the assigning Lender shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of such
assigning Lender's rights and obligations under this Agreement, the assigning
Lender shall cease to be a party hereto).
(c) The Register. The Administrative Agent shall maintain at
its address referred to in Section 13.09 a copy of each Assignment and
Acceptance delivered to and accepted by it and a register (the "Register") for
the recordation of the names and addresses of the Lenders and the Commitment of
each Lender from time to time and whether such Lender is an original Lender or
the assignee of another Lender pursuant to an Assignment and Acceptance. The
Administrative Agent shall incur no liability of any kind to any Loan Party, any
Lender or any other Person with respect to its maintenance of the Register or
the recordation of information therein. The Register shall be available for
inspection by the Borrowers or any Lender at any reasonable time and from time
to time upon reasonable prior notice. No assignment shall be effective unless
and until the Assignment and
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Acceptance has been accepted by the Administrative Agent and registered in the
Register.
(d) Fee. Upon its receipt of an Assignment and Acceptance
executed by the assigning Lender and an Eligible Assignee and a processing and
recordation fee of $3500 (payable by the assigning Lender or the assignee, as
shall be agreed between them), the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in compliance with this
Agreement and in substantially the form of Exhibit A hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrowers and the other
Lenders.
(e) Participations. Each Lender may sell participations to
one or more commercial banks, lending institutions, finance companies, insurance
companies, other financial institutions or funds in or to all or a portion of
its rights and obligations under and in respect of any and all facilities under
this Agreement (including, without limitation, all or a portion of any or all of
its Commitments hereunder and the Loans owing to it); provided, however, that
(i) such Lender's obligations under this Agreement (including, without
limitation, its Commitments hereunder) shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the Borrowers, the Agents and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and (iv) such participant's
rights to agree or to restrict such Lender's ability to agree to the
modification, waiver or release of any of the terms of the Loan Documents or to
the release of any Collateral covered by the Loan Documents, to consent to any
action or failure to act by any party to any of the Loan Documents or any of
their respective Affiliates, or to exercise or refrain from exercising any
powers or rights which any Lender may have under or in respect of the Loan
Documents or any Collateral, shall be limited to the right to consent to (A) the
increase in the Commitment of the Lender from whom such participant purchased a
participation, (B) the reduction of the principal of, or rate or amount of
interest on, the Loans subject to such participation (other than by the payment
or prepayment thereof), (C) the postponement of any date fixed for any payment
of principal of, or interest on, the Loan(s) subject to such participation
(except with respect to any modifications of the provisions relating to
prepayments of Loans and other Obligations) and (D) the release of any guarantor
of the Obligations or all or a substantial portion of the Collateral except as
provided in Section 12.09(b).
(f) Information Regarding the Borrowers. Any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 13.01,
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disclose to the assignee or participant or proposed assignee or participant, any
information relating to the Borrowers furnished to such Lender by any Agent or
by or on behalf of the Borrowers; provided that, prior to any such disclosure,
such assignee or participant, or proposed assignee or participant, shall agree
to preserve in accordance with Section 13.23 the confidentiality of any
confidential information described therein.
(g) Payment to Participants. Anything in this Agreement to
the contrary notwithstanding, in the case of any participation, all amounts
payable by the Borrowers under the Loan Documents shall be calculated and made
in the manner and to the parties required hereby as if no such participation had
been sold.
(h) Lenders' Creation of Security Interests. Notwithstanding
any other provision set forth in this Agreement, any Lender may at any time
create a security interest in all or any portion of its rights under this
Agreement and its Notes (including, without limitation, Obligations owing to it
and the Notes held by it) in favor of any Federal Reserve Bank of the Federal
Reserve Board without notice to or consent of the Borrowers or the Agents.
13.02. Relations Among Lenders. Each Lender agrees
that it will not take any action, nor institute any actions or
proceedings, against the Borrowers with respect to the
Obligations or any Collateral, without the prior written consent
of Requisite Lenders.
13.03. Replacement of Lender. In the event that a Replacement
Event occurs and is continuing with respect to any Lender, the Borrowers may
designate a Replacement Lender to assume such Lender's Commitment hereunder, to
purchase the Loans and participations of such Lender and such Lender's rights
hereunder, without recourse to or representation or warranty by, or expense to,
such Lender for a purchase price equal to the outstanding principal amount of
the Loans payable to such Lender plus any accrued but unpaid interest on such
Loans and accrued but unpaid fees owing to such Lender, and upon such
assumption, purchase and substitution, and subject to the execution and delivery
to the Administrative Agent by the Replacement Lender of documentation
satisfactory to the Administrative Agent (pursuant to which such Replacement
Lender shall assume the obligations of such original Lender under this
Agreement), the Replacement Lender shall succeed to the rights and obligations
of such Lender hereunder and such Lender shall no longer be a party hereto or
have any rights hereunder provided that the obligations of the Borrowers to such
Lender under Section 13.05 hereof with respect to events occurring or
obligations arising before such replacement shall survive such replacement.
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13.04. Expenses.
(a) Generally. The Borrowers agree upon demand to pay, or
reimburse each Agent for, all of such Agent's reasonable audit, legal,
appraisal, valuation, filing, document duplication and reproduction and
investigation expenses and for all other out-of-pocket costs and expenses of
every type and nature (including, without limitation, the reasonable fees,
expenses and disbursements of legal counsel, auditors, accountants, appraisers,
printers, insurance and environmental advisers, and other consultants and
agents) incurred by such Agent in connection with (i) the preparation,
negotiation, and execution of this Agreement and the other Loan Documents; (ii)
the interpretation of this Agreement (including, without limitation, the
satisfaction or attempted satisfaction of any of the conditions set forth in
Article V), the other Loan Documents and the making of the Loans hereunder;
(iii) the creation, perfection or protection of the Liens under the Loan
Documents; (iv) the ongoing administration of this Agreement and the Loans,
including consultation with attorneys in connection therewith and with respect
to such Agent's rights and responsibilities under this Agreement and the other
Loan Documents and, to the extent provided under Section 8.06, such Agent's
periodic inspections and audits of the Borrowers; (v) the protection, collection
or enforcement of any of the Obligations or the enforcement of any of the Loan
Documents; (vi) the commencement, defense or intervention in any court
proceeding relating in any way to the Obligations, the assets of any Borrower,
this Agreement or any of the other Loan Documents; (vii) the response to, and
preparation for, any subpoena or request for document production with which such
Agent is served or deposition or other proceeding in which such Agent is called
to testify, in each case, relating in any way to the Obligations, the assets of
any Borrower, this Agreement or any of the other Loan Documents; and (viii) any
amendments, consents, waivers, assignments, restatements, or supplements to any
of the Loan Documents and the preparation, negotiation, and execution of the
same.
(b) After Default. The Borrowers further agree to pay or
reimburse each Agent and each Lender upon demand for all out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys' fees incurred by
such Agent or such Lender after the occurrence of an Event of Default (i) in
enforcing any Loan Document or any of the Obligations or any security therefor
or exercising or enforcing any other right or remedy available by reason of such
Event of Default; (ii) in connection with any refinancing or restructuring of
the credit arrangements provided under this Agreement in the nature of a
"work-out" or in any insolvency or bankruptcy proceeding; (iii) in commencing,
defending or intervening in any litigation or in filing a petition, complaint,
answer, motion or other pleadings in any legal proceeding relating to the
Obligations, the Property, any
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Borrower and related to or arising out of the transactions contemplated hereby
or by any of the other Loan Documents; and (iv) in taking any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise) described in
clauses (i) through (iii) above.
13.05. Indemnity. The Borrowers further agree to defend,
protect, indemnify, and hold harmless each Agent and each of the Lenders and
each of their respective Affiliates, and their respective officers, directors,
employees, attorneys and agents (including, without limitation, those retained
in connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article V) (collectively, the "Indemnitees") from and
against any and all liabilities, obligations, losses (other than loss of
profits), damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (excluding any taxes and
including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitees in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitees shall be designated a party
thereto), imposed on, incurred by, or asserted against such Indemnitees in any
manner relating to or arising out of (a) this Agreement, the Notes, the other
Loan Documents, or any act, event or transaction related or attendant thereto,
the making of the Loans, the management of such Loans, the use or intended use
of the proceeds of the Loans, or any of the transactions contemplated by the
Loan Documents, or (b) any Liabilities and Costs under federal, state or local
environmental, health or safety laws, regulations or common law principles
arising from or in connection with the past, present or future operations of any
Borrower or any of its predecessors in interest, or, the past, present or future
environmental condition of any Property of any Borrower, the presence of
asbestos-containing materials at any Property of any Borrower or the Release or
threatened Release of any Contaminant into the environment from any Property of
any Borrower (collectively, the "Indemnified Matters"); provided, however, the
Borrowers shall have no obligation to an Indemnitee hereunder with respect to
Indemnified Matters caused by or resulting from the willful misconduct or gross
negligence of such Indemnitee, as determined by a court of competent
jurisdiction in a final non-appealable judgment or order. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrowers shall contribute the maximum portion which it is permitted
to pay and satisfy under applicable law, to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnitees.
13.06. Change in Accounting Principles. If any change
in the accounting principles used in the preparation of the most
recent financial statements referred to in Section 7.01 are
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hereafter required or permitted by the rules, regulations, pronouncements and
opinions of the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or successors thereto or agencies with similar
functions) and are adopted by Stellex and its Subsidiaries with the agreement of
its independent certified public accountants and such changes result in a change
in the method of calculation of any of the covenants, standards or terms found
in Article IX and Article X, the parties hereto agree to enter into negotiations
in order to amend such provisions so as to equitably reflect such changes with
the desired result that the criteria for evaluating compliance with such
covenants, standards and terms by Stellex and its Subsidiaries shall be the same
after such changes as if such changes had not been made; provided, however, no
change in GAAP that would affect the method of calculation of any of the
covenants, standards or terms shall be given effect in such calculations until
such provisions are amended, in a manner satisfactory to the Requisite Lenders
and Stellex, to so reflect such change in accounting principles.
13.07. Setoff. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law, upon the
occurrence and during the continuance of any Event of Default, each Lender and
any Affiliate of any Lender is hereby authorized by each Borrower at any time
and from time to time, without notice to any Person (any such notice being
hereby expressly waived) to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured (but not
including tax, payroll and trust accounts)) and any other Indebtedness at any
time held or owing by such Lender or any of its Affiliates to or for the credit
or the account of such Borrower against and on account of the Obligations of the
Borrowers to such Lender or any of its Affiliates, including, but not limited
to, all Loans and all claims of any nature or description arising out of or in
connection with this Agreement or the Notes, irrespective of whether or not (i)
such Lender shall have made any demand hereunder or (ii) the Administrative
Agent, at the request or with the consent of the Requisite Lenders, shall have
declared the principal of and interest on the Loans and other amounts due
hereunder and under the Notes to be due and payable as permitted by Article XI
and even though such Obligations may be contingent or unmatured. Each Lender
agrees that it shall not, without the express consent of the Requisite Lenders,
and that it shall, to the extent it is lawfully entitled to do so, upon the
request of the Requisite Lenders, exercise its setoff rights hereunder against
any accounts of any Borrower now or hereafter maintained with such Lender or any
of its Affiliates.
13.08. Ratable Sharing. The Lenders agree among themselves
that (i) with respect to all amounts received by them
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which are applicable to the payment of the Obligations (excluding the fees
described in Sections 3.03, 3.04 and 4.01(e)) equitable adjustment will be made
so that, in effect, all such amounts will be shared among them ratably in
accordance with their Pro Rata Shares, whether received by voluntary payment, by
the exercise of the right of setoff or banker's lien, by counterclaim or
cross-action or by the enforcement of any or all of the Obligations (excluding
the fees and amounts described in Sections 3.03, 3.04 and 4.01(e)) or the
Collateral, (ii) if any of them shall by voluntary payment or by the exercise of
any right of counterclaim, setoff, banker's lien or otherwise, receive payment
of a proportion of the aggregate amount of the Obligations held by it, which is
greater than the amount which such Lender is entitled to receive hereunder, the
Lender receiving such excess payment shall purchase, without recourse or
warranty, an undivided interest and participation (which it shall be deemed to
have done simultaneously upon the receipt of such payment) in such Obligations
owed to the others so that all such recoveries with respect to such Obligations
shall be applied ratably in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases shall be rescinded and
the purchase prices paid for such participations shall be returned to such party
to the extent necessary to adjust for such recovery, but without interest except
to the extent the purchasing party is required to pay interest in connection
with such recovery. Each Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 13.08 may, to the
fullest extent permitted by law, exercise all its rights of payment (including,
subject to Section 13.07, the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of such
Borrower in the amount of such participation.
13.09. Amendments and Waivers. Unless otherwise provided in
this Agreement, no amendment or modification of any provision of this Agreement
or the Notes shall be effective without the written agreement of the Requisite
Lenders and the Borrowers, and no termination or waiver of any provision of this
Agreement or the Notes, or consent to any departure by the Borrowers therefrom,
shall be effective without the written concurrence of the Requisite Lenders,
which the Requisite Lenders shall have the right to grant or withhold in their
sole discretion. Notwithstanding the foregoing, any amendment, modification,
termination, waiver or consent with respect to any of the following provisions
of this Agreement and the Notes shall be effective only by a written agreement,
signed by each Lender: (a) waiver of any of the conditions specified in Sections
5.01, 5.02 and 5.03 (except with respect to a condition based upon another
provision of this Agreement, the waiver of which requires only the concurrence
of the Requisite Lenders), (b) increase in the aggregate amount of the
Commitments or the Commitment of any
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Lender, (c) reduction of the principal of, rate or amount of interest on the
Loans or any fees or other amounts payable to such Lender (other than by the
payment or prepayment thereof), (d) postponement of the Commitment Termination
Date or any other date fixed for any payment of principal of, or interest on,
the Loans or any fees or other amounts payable to such Lender (except with
respect to any modifications of the provisions relating to prepayments of Loans
and other Obligations), (e) release of all or a substantial portion of the
Collateral (except as provided in Section 12.09(b)), (f) amendment of the
definition of "Requisite Lenders", or (g) amendment of Section 13.08 or this
Section 13.09. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on the Borrowers in any case shall entitle the Borrowers to any other or
further notice or demand in similar or other circumstances. Notwithstanding
anything to the contrary contained in this Section 13.09, no amendment,
modification, waiver or consent shall affect the rights or duties of the Agents
under this Agreement or the other Loan Documents, unless made in writing and
signed by the Agents in addition to the Lenders required above to take such
action.
13.10. Notices. (a) Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telecopied, telexed or
sent by courier service or United States certified mail and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
a telecopy or telex or four (4) Business Days after deposit in the United States
mail with postage prepaid and properly addressed. Notices to the Agents pursuant
to Articles II, III or XII shall not be effective until received by the Agents.
For the purposes hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this Section 13.10) shall be as set
forth below each party's name on the signature pages hereof or the signature
page of any applicable Assignment and Acceptance, or, as to each party, at such
other address as may be designated by such party in a written notice to all of
the other parties to this Agreement.
(b) The Borrowers agree to indemnify and hold harmless each
Indemnitee from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses of any kind or nature (including, without limitation, reasonable
fees and disbursements of counsel to any such Indemnitee) which may be imposed
on, incurred by or asserted against any such Indemnitee in any manner relating
to or arising out of any action taken or omitted by such Indemnitee in good
faith in reliance on any notice or other written communication in the form of a
telecopy or facsimile purporting to be from the Borrowers; provided that the
Borrowers shall have no obligation under this Section 13.10(b) to an
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Indemnitee with respect to any indemnified matter caused by or resulting from
the gross negligence or willful misconduct of that Indemnitee, as determined by
a court of competent jurisdiction in a final non-appealable judgment or order.
13.11. Survival of Warranties and Agreements. All
representations and warranties made herein and all obligations of the Borrowers
in respect of taxes, indemnification and expense reimbursement shall survive the
execution and delivery of this Agreement and the other Loan Documents, the
making and repayment of the Loans and the termination of this Agreement and
shall not be limited in any way by the passage of time or occurrence of any
event and shall expressly cover time periods when any of the Agents or any of
the Lenders may have come into possession or control of any assets of any
Borrower.
13.12. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any Agent or any Lender in the exercise of
any power, right or privilege under this Agreement, the Notes or any of the
other Loan Documents shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing under this Agreement, the Notes and the other Loan Documents
are cumulative to and not exclusive of any rights or remedies otherwise
available.
13.13. Marshalling; Payments Set Aside. Neither any Agent nor
any Lender shall be under any obligation to xxxxxxxx any assets in favor of any
Borrower or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Borrowers make a payment or payments to the
Agents or the Lenders, or any of such Persons receives payment from the proceeds
of the Collateral or exercises its rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party, then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, right and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
13.14. Independence of Covenants. All covenants here
under shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not
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avoid the occurrence of an Event of Default or Default if such action is taken
or condition exists.
13.15. Severability. In case any provision in or obligation
under this Agreement, the Notes or the other Loan Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
13.16. Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement or be given any substantive effect.
13.17. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED,
AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
13.18. Limitation of Liability. No claim may be made by any
Borrower, any Lender, any Agent or any other Person against any other Agent or
any other Lender or the Affiliates, directors, officers, employees, attorneys or
agents of any of them for any special, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement or
the Notes or the other Loan Documents, or any act, omission or event occurring
in connection therewith; and each Borrower, each other Borrower, each Lender and
each Agent hereby waive, release and agree not to xxx upon any such claim for
any such damages, whether or not accrued and whether or not known or suspected
to exist in its favor.
13.19. Successors and Assigns. This Agreement, the Notes and
the other Loan Documents shall be binding upon the parties thereto and their
respective successors and assigns and shall inure to the benefit of the parties
thereto and the successors and permitted assigns of the Lenders. The rights
hereunder of the Borrowers, or any interest therein, may not be assigned without
the written consent of all Lenders.
13.20. Certain Consents and Waivers.
(a) Personal Jurisdiction. (i) EACH OF THE AGENTS, THE
LENDERS, THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR
FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING JURISDICTION
OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING
ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN
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CONNECTION WITH THIS AGREEMENT, WHETHER ARISING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT
OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE BORROWERS
IRREVOCABLY DESIGNATES AND APPOINTS MENTMORE HOLDINGS CORPORATION, AS ITS AGENT
(THE "PROCESS AGENT"), WITH AN OFFICE LOCATED AT THE ADDRESS IN NEW YORK, NEW
YORK SET FORTH IN THE LETTER DATED AS OF THE DATE HEREOF BETWEEN THE
ADMINISTRATIVE AGENT AND THE PROCESS AGENT, FOR SERVICE OF ALL PROCESS IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. EACH OF THE AGENTS, THE LENDERS
AND THE BORROWERS AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE BORROWERS WAIVES IN
ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE.
(ii) EACH OF THE BORROWERS AGREES THAT EACH AGENT SHALL HAVE
THE RIGHT TO PROCEED AGAINST ANY BORROWER OR ITS PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE THE AGENTS AND THE LENDERS TO REALIZE ON THE COLLATERAL OR
ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER ENTERED IN FAVOR OF ANY AGENT OR ANY LENDER. EACH OF THE BORROWERS AGREES
THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT
BY ANY AGENT OR ANY LENDER TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY
FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
ANY AGENT OR ANY LENDER. EACH OF THE BORROWERS WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH ANY AGENT OR ANY LENDER MAY COMMENCE
A PROCEEDING DESCRIBED IN THIS SECTION.
(b) Service of Process. EACH OF THE BORROWERS IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE PROCESS AGENT OR SUCH BORROWER'S NOTICE
ADDRESS SPECIFIED BELOW, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER
SUCH MAILING. EACH OF THE BORROWERS IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY
OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF ANY AGENT OR ANY LENDER TO BRING
-111-
PROCEEDINGS AGAINST ANY BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE AGENTS, THE
LENDERS AND THE BORROWERS IRREVOCABLY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTES OR
ANY OTHER LOAN DOCUMENT.
13.21. Counterparts; Effectiveness; Inconsistencies. This
Agreement and any amendments, waivers, consents, or supplements hereto may be
executed in counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective against each
Borrower, each Lender and each Agent on the date hereof when each such party
hereto executes and delivers this Agreement. This Agreement and each of the
other Loan Documents shall be construed to the extent reasonable to be
consistent one with the other, but to the extent that the terms and conditions
hereof are actually inconsistent with the terms and conditions of any other Loan
Document, this Agreement shall govern.
13.22. Entire Agreement. This Agreement, taken together with
all of the other Loan Documents, embodies the entire agreement and understanding
among the parties hereto and supersedes all prior agreements and understandings,
written and oral, relating to the subject matter hereof.
13.23. Confidentiality. The Lenders shall hold all nonpublic
information obtained pursuant to the requirements of this Agreement and
identified as such by the Borrowers in accordance with such Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by a bona fide offeree, transferee or participant
in connection with the contemplated transfer or participation or as required or
requested by any Governmental Authority or representative thereof or pursuant to
legal process and shall require any such offeree, transferee or participant to
agree (and require any of its offerees, transferees or participants to agree) to
comply with this Section 13.23. In no event shall any Lender be obligated or
required to return any materials furnished by the Borrowers; provided, however,
each offeree shall be required to agree that if it does not become a transferee
or participant it shall return all materials furnished to it by the Borrowers in
connection with this Agreement.
-112-
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first above written.
STELLEX INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: Vice Chairman
-------------------------
KII HOLDING CORP.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: Vice Chairman
-------------------------
TSMD ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: President
-------------------------
KII ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: Vice Chairman
-------------------------
STELLEX MICROWAVE SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: Vice Chairman
-------------------------
STELLEX AEROSPACE
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: Vice Chairman
-------------------------
PARAGON PRECISION PRODUCTS
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: Vice Chairman
-------------------------
XXXXX MACHINING INTERNATIONAL
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: Vice Chairman
-------------------------
SCANNING ELECTRON ANALYSIS
LABORATORIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: Vice Chairman
-------------------------
GENERAL INSPECTION LABORATORIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: Vice Chairman
-------------------------
Notice address:
c/o Stellex Industries, Inc.
00000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Call, President
Telecopy: (000) 000-0000
with copies to:
Mentmore Holdings Corporation
0000 Xxxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, President
Telecopy: (000) 000-0000
and
Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxxx Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
SOCIETE GENERALE,
as Administrative Agent
By: /s/ Xxxx X. Xxxxx
---------------------------------
Title: Director
---------------------------
Notice address:
Societe Generale
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxx, Director
Telecopy: (000) 000-0000
Societe Generale
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
with copies to:
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
FIRST UNION COMMERCIAL CORPORATION,
as Syndication Agent and
Collateral Agent
By: /s/ Xxxxx Xxxxxx
---------------------------------
Title: Vice President
--------------------------
Notice address:
0000 Xxxxx Xxxxxx Xxxx
Mail Code VA1942
XxXxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Telecopy: (000) 000-0000
Revolving Loan SOCIETE GENERALE, as Lender
Commitment
--------------
$17,500,000
By: /s/ Xxxx X. Xxxxx
Term Loan ---------------------------------
Commitment Title: Director
---------- ------------------------
$17,500,000
Notice address:
Societe Generale
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxx, Director
Telecopy: (000) 000-0000
Societe Generale
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
with copies to:
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Revolving Loan
Commitment
----------
$7,500,000
Term Loan
Commitment
----------
$7,500,000
FIRST UNION COMMERCIAL CORPORATION,
as Lender
By: /s/ Xxxxx Xxxxxx
---------------------------------
Title: Vice President
---------------------------
Notice address:
0000 Xxxxx Xxxxxx Xxxx
Mail Code VA1942
XxXxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Telecopy: (000) 000-0000
EXHIBIT A
Form of Assignment and Acceptance
ASSIGNMENT AND ACCEPTANCE
ASSIGNMENT AND ACCEPTANCE dated ____________ __, 199_, between
_______________________ (the "Assignor") and __________________________ (the
"Assignee").
PRELIMINARY STATEMENTS
A. Reference is made to the Credit Agreement dated as of October __, 1997
among Stellex Industries, Inc., KII Holding Corp., TSMD Acquisition Corp., KII
Acquisition Corp., Stellex Microwave Systems, Inc., Stellex Aerospace, Paragon
Precision Products, Xxxxx Machining International, Scanning Electron Analysis
Laboratories, Inc., and General Inspection Laboratories, Inc. (collectively, the
"Borrowers", and individually, a "Borrower"), the financial institutions from
time to time parties thereto as lenders (the "Lenders"), and Societe Generale,
in its capacity as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), and First Union Commercial Corporation, in its
capacities as collateral agent and syndication agent for the Lenders (together
with the Administrative Agent and the collateral agent, the "Agents") (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement and not otherwise defined
herein are used herein with the meanings ascribed thereto in the Credit
Agreement.
B. The Assignor is a Lender under the Credit Agreement and desires to sell
and assign to the Assignee, and the Assignee desires to purchase and assume from
the Assignor, on the terms and conditions set forth below, a ___ percent (____%)
xxxxxxxx0 in the Assignor's Commitment (the "Assigned Percentage") together with
the Assignor's rights and obligations under the Credit Agreement with respect to
the Assigned Percentage.
NOW, THEREFORE, the Assignor and the Assignee hereby agree as follows:
--------
1 Such percentage shall be in compliance with the minimum principal amount
permitted for a partial assignment under Section 13.01(b) of the Credit
Agreement.
-1-
1. In consideration of the Assignee's payment to the Assignor of
$_____________, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, the Assigned
Percentage, together with the Assignor's rights and obligations under the Credit
Agreement with respect to such Assigned Percentage, including, without
limitation, the obligation to make Revolving Loans and Term Loans.
2. The Assignor (i) represents and warrants that as of the date hereof its
Pro Rata Share (without giving effect to assignments thereof which have not yet
become effective) is ____% and that such Pro Rata Share multiplied by the
aggregate Commitments is equal to $_____________; (ii) represents and warrants
that it has legal and beneficial title to the interests being assigned by it
hereunder free and clear of any claim adverse to such title; (iii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any of the other Loan
Documents, or any other instrument or document furnished pursuant thereto or
executed and delivered in connection therewith; (iv) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Loan Party or the performance or observance by any Borrower of its
obligations under the Credit Agreement, any other Loan Document or any
instrument or document furnished pursuant thereto; and (v) attaches the
Revolving Loan Note[s] and the Term Loan Note[s] delivered to it under the
Credit Agreement and has requested that the Borrowers exchange such Notes for
the following new Notes:
Revolving Loan
Note Payable Revolving Loan
to the Order of: Note Amount
---------------- -----------
[Name of Assignor] $_________
[Name of Assignee] $_________
-2-
Term Loan
Note Payable Term Loan
to the Order of: Note Amount
---------------- -----------
[Name of Assignor] $_________
[Name of Assignee] $_________
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (ii) confirms that it has received
a copy of the Credit Agreement, together with copies of such other Loan
Documents, information, exhibits, reports, projections and forecasts which the
Assignee has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (iii) agrees that it shall have no
recourse against the Assignor with respect to any matters relating to the Credit
Agreement, any other Loan Document or this Assignment and Acceptance (except
with respect to the representations and warranties made by the Assignor in
clauses (i) and (ii) of paragraph 2 above); (iv) agrees that it will,
independently and without reliance upon any of the Agents, the Assignor or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement and the other Loan Documents; (v)
appoints and authorizes each of the Agents to take such action as Agents on its
behalf and to exercise such powers under the Credit Agreement and the other Loan
Documents as are delegated to each of such Agents, respectively, by the terms
thereof, together with such powers as are reasonably incidental thereto; (vi)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement and the other Loan
Documents are required to be performed by it as a Lender; (vii) confirms that it
is an Eligible Assignee; and (viii) specifies as its address for notices the
address set forth beneath its name on the signature page hereof, together with
the name and address of its Domestic Lending Office and its Eurodollar Lending
Office.
4. The effective date for this Assignment and Acceptance shall be
___________ __, 199_ (the "Effective Date").2 Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
acceptance by the
--------
2 Such date shall be at least two (2) Business Days after the date of execution
of this Assignment and Acceptance by the Assignor and Assignee.
-3-
Administrative Agent and for recording in the Register by the Administrative
Agent, together with a processing and recordation fee of $3,500 to be paid to
the Administrative Agent by the [Assignor][Assignee]3.
5. As of the Effective Date, provided that the Administrative Agent accepts
this Assignment and Acceptance, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Lender thereunder and (ii) the Assignor shall
relinquish its rights and be released from its obligations under the Credit
Agreement with respect to the Assigned Percentage.
6. From and after the Effective Date, provided that the Administrative
Agent accepts this Assignment and Acceptance, the Administrative Agent shall
make all payments under the Credit Agreement in respect of the Assigned
Percentage (including, without limitation, all payments of principal, interest
and fees with respect thereto) to the Assignee. The Assignor and Assignee shall
make all appropriate adjustments in payments under the Credit Agreement for
periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned
has caused this Assignment and Acceptance to be executed on its behalf by its
officer thereunto duly authorized, as of _________ __, 199_.
[NAME OF ASSIGNOR]
By______________________________
Name:_________________________
Title:________________________
New Pro Rata Share ______%
New Commitment $__________
--------
3 Insert applicable selection.
-4-
[NAME OF ASSIGNEE]
By______________________________
Name:_________________________
Title:________________________
Notice Address and
Domestic Lending Office:
Eurodollar Lending Office:
Pro Rata Share ______%
Commitment $____________
Agreed to and accepted this ___
day of ___________, 199_
SOCIETE GENERALE, as Administrative Agent
By____________________________
Each of the undersigned Borrowers hereby confirms its acceptance of the Assignee
as an Eligible Assignee.
STELLEX INDUSTRIES, INC.
By____________________________
Name:
Title:
KII HOLDING CORP.
By____________________________
Name:
Title:
TSMD ACQUISITION CORP.
By____________________________
Name:
Title:
-5-
KII ACQUISITION CORP.
By____________________________
Name:
Title:
STELLEX MICROWAVE SYSTEMS, INC.
By____________________________
Name:
Title:
STELLEX AEROSPACE
By____________________________
Name:
Title:
PARAGON PRECISION PRODUCTS
By____________________________
Name:
Title:
XXXXX MACHINING INTERNATIONAL
By____________________________
Name:
Title:
SCANNING ELECTRON ANALYSIS
LABORATORIES, INC.
By____________________________
Name:
Title:
-6-
GENERAL INSPECTION
LABORATORIES, INC.
By____________________________
Name:
Title:
-7-
EXHIBIT B
Form of Borrowing Base Certificate
BORROWING BASE CERTIFICATE
To: Societe Generale, in its capacity as administrative agent (the
"Administrative Agent") and First Union Commercial Corporation, in its
capacity as collateral agent (the "Collateral Agent") for the Lenders (as
defined below) under that certain Credit Agreement dated as of October 31,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Stellex Industries, Inc., KII Holding Corp., TSMD
Acquisition Corp., KII Acquisition Corp., Stellex Microwave Systems, Inc.,
Stellex Aerospace, Paragon Precision Products, Xxxxx Machining
International, Scanning Electron Analysis Laboratories, Inc., and General
Inspection Laboratories, Inc. (each individually, a "Borrower", and
collectively, the "Borrowers"), the financial institutions from time to
time party thereto (the "Lenders"), the Administrative Agent, the
Collateral Agent, and First Union Commercial Corporation, as syndication
agent.
Pursuant to the provisions of the Credit Agreement, the undersigned hereby
certifies that:
1. I am the duly [elected] [appointed], qualified and acting [Chief
Financial Officer]1 of Stellex Industries, Inc.
2. Unless otherwise defined herein, terms are used herein as defined in the
Credit Agreement.
3. The information set forth below with respect to Inventory and
Receivables of the Borrowers as of the close of business on ________________ is
true, accurate and complete.
A. Inventory
Total Inventory: __________________
(less) non-Eligible Inventory: __________________
equals [Eligible Inventory: __________________]
[--------------------
--------------------
--------------------]
--------
1 Insert title if being delivered by other office or member of management of
Stellex Industries, Inc. with significant responsibility for its financial
affairs.
50% of Eligible Inventory: __________________ ("T1")
B. Receivables
Total Receivables: __________________
(less) [non-Eligible Receivables: __________________]
[--------------------
--------------------
--------------------]
equals Eligible Receivables: __________________
85% of Eligible Receivables: __________________ ("T2")
C. Borrowing Base (preliminary calculation)
Sum of T1 plus T2 (from above): _______________
4. I hereby certify that the information contained in this certificate is
true, complete and accurate, and acknowledge that the preliminary calculation of
the Borrowing Base is an accurate calculation and is based on the information
contained in this certificate.
STELLEX INDUSTRIES, INC.
By:_______________________
Name:
-2-
EXHIBIT C
Form of Notice of Borrowing
NOTICE OF BORROWING
To: Societe Generale, in its capacity as administrative agent (with its
successors in such capacity, the "Administrative Agent") for the Lenders
(as defined below) under the Credit Agreement dated as of October __, 1997
(as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement")1 among Stellex Industries, Inc., a Delaware
corporation, KII Holding Corp., a Delaware corporation, TSMD Acquisition
Corp., a Delaware corporation, KII Acquisition Corp., a Delaware
corporation, Stellex Microwave Systems, Inc., a California corporation,
Stellex Aerospace, a California corporation, Paragon Precision Products, a
California corporation, Xxxxx Machining International, a California
corporation, Scanning Electron Analysis Laboratories, Inc., a California
corporation, and General Inspection Laboratories, Inc., a California
corporation (collectively, the "Borrowers", and individually, a
"Borrower"), the financial institutions from time to time parties thereto
as lenders (the "Lenders"), First Union Commercial Corporation, in its
capacities as collateral agent and syndication agent for the Lenders, and
the Administrative Agent.
Pursuant to Section [2.01(b)][2.02(b)] of the Credit Agreement, this Notice
of Borrowing (this "Notice") represents the request of all of the Borrowers to
borrow on [the date hereof] [_______________, 199__ ](the "Funding Date")from
the Lenders the principal amount of [Revolving Loans]2 [Term Loans]3
--------
1 Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Notice.
2 For Borrowings of Revolving Loans, a Notice of Borrowing must be given (i)
no later than 12:00 P.M. (New York time) on the proposed Funding Date, in
the case of a Borrowing consisting of Base Rate Loans, and (ii) no later
than 12:00 P.M. (New York time) at least two (2) Business Days in advance
of the proposed Funding Date, in the case of a Borrowing consisting of
Eurodollar Rate Loans.
3 The request to borrow Term Loans must be given no later than 12:00 P.M.
(New York time) at least one (1) Business Day in advance of the proposed
Funding Date.
of $______________ as [Base Rate Loans] [Eurodollar Rate Loans]4. [The Interest
Period for such Eurodollar Rate Loans is requested to be a [one, two, three, or
six] month period.] Proceeds of such Loans are to be deposited on the Funding
Date into the [insert name of appropriate account]. [The Availability as of the
date hereof is $_____________.]5
Each of the undersigned certifies that as of the Funding Date all of the
conditions precedent contained in [Sections 5.01,]6 5.02 [and 5.03]7 of the
Credit Agreement have been satisfied (or waived pursuant to Section 13.09 of the
Credit Agreement) and that all representations and warranties of the Borrowers
set forth in Section 6.01 of the Credit Agreement and the other Loan Documents
are true and correct in all material respects on the Funding Date (other than
representations and warranties which expressly speak as of another date).
Dated this ___ day of ___________, 199_.
STELLEX INDUSTRIES, INC.
By:_________________________________
Title:___________________________
KII HOLDING CORP.
--------
4 Term Loans may only be made as Base Rate Loans but may be converted to
Eurodollar Rate Loans pursuant to Section 4.01(c) of the Credit Agreement.
5 To be used for Revolving Loans.
6 To be used for Loans to be made on the Closing Date.
7 To be used for Term Loans.
-2-
By:_________________________________
Title:___________________________
TSMD ACQUISITION CORP.
By:_________________________________
Title:___________________________
KII ACQUISITION CORP.
By:_________________________________
Title:___________________________
STELLEX MICROWAVE SYSTEMS, INC.
By:_________________________________
Title:___________________________
STELLEX AEROSPACE
By:_________________________________
Title:___________________________
PARAGON PRECISION PRODUCTS
-3-
By:_________________________________
Title:___________________________
XXXXX MACHINING INTERNATIONAL
By:_________________________________
Title:___________________________
SCANNING ELECTRON ANALYSIS
LABORATORIES, INC.
By:_________________________________
Title:___________________________
GENERAL INSPECTION LABORATORIES, INC.
By:_________________________________
Title:___________________________
-4-
EXHIBIT D
Form of Notice of Conversion/Continuation
To: Societe Generale, in its capacity as administrative agent (with its
successors in such capacity, the "Administrative Agent") for the Lenders
(as defined below) under the Credit Agreement dated as of October __, 1997
(as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") among Stellex Industries, Inc., a Delaware
corporation, KII Holding Corp., a Delaware corporation, TSMD Acquisition
Corp., a Delaware corporation, KII Acquisition Corp., a Delaware
corporation, Stellex Microwave Systems, Inc., a California corporation,
Stellex Aerospace, a California corporation, Paragon Precision Products, a
California corporation, Xxxxx Machining International, a California
corporation, Scanning Electron Analysis Laboratories, Inc., a California
corporation, and General Inspection Laboratories, Inc., a California
corporation (collectively, the "Borrowers", and individually, a
"Borrower"), the financial institutions from time to time parties thereto
as lenders (the "Lenders"), First Union Commercial Corporation, in its
capacities as collateral agent and syndication agent for the Lenders, and
the Administrative Agent.
Pursuant to Section 4.01(c)(ii) of the Credit Agreement, this Notice of
Conversion/Continuation (this "Notice") represents the election of the Borrowers
to:
[1. Convert $_____________1 in aggregate principal amount of Base Rate
Loans to Eurodollar Rate Loans on __________________, 199_.2 The initial
Interest Period for such Eurodollar Rate Loans is requested to be a [one, two,
three or six] month period.]
--------
1/Must be in a principal amount of at least $500,000 and in integral multiples
of $100,000 in excess of that amount.
2/Must be a Business Day at least two (2) Business Days following the Business
Day on which the Notice of Conversion/Continuation is delivered to the
Administrative Agent.
[2. Convert $_____________ in aggregate principal amount of outstanding
Eurodollar Rate Loans to Base Rate Loans on __________________, 199__.3]
[3. Continue as Eurodollar Rate Loans $________________4 in aggregate
principal amount of Revolving Loans consisting of Eurodollar Rate Loans with a
current Interest Period ending ________________, 199__. The succeeding Interest
Period for such Eurodollar Rate Loans is requested to be a [one, two, three or
six] month period.]
[Each of the Borrowers hereby certifies that (i) the proposed
[continuation] [conversion] would not violate any provisions of Section 4.02 of
the Credit Agreement, (ii) no Event of Default would occur or has occurred and
is continuing under the Credit Agreement and (iii) all representations and
warranties of the Borrowers set forth in Section 6.01 of the Credit Agreement
and the other Loan Documents are and will be true and correct in all material
respects on the date of the proposed [continuation] [conversion] (other than
representations and warranties which expressly speak as of the Closing Date).]5
--------
3/Must be a Business Day at least two (2) Business Days following the Business
Day on which the Notice of Conversion/Continuation is delivered to the
Administrative Agent. Must also be the date of expiration of the relevant
Interest Period[s].
4/Must be a Business Day at least two (2) Business Days following the Business
Day on which the Notice of Conversion/Continuation is delivered to the
Administrative Agent. Must also be in a principal amount of at least $500,000
and in integral multiples of $100,000 in excess of that amount.
5/To be used for continuations of, and conversions into, Eurodollar Rate Loans.
-2-
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Notice.
Dated this ____ day of ______________, 199__.
STELLEX INDUSTRIES, INC.
By:_______________________________
Title:_________________________
KII HOLDING CORP.
By:_______________________________
Title:_________________________
TSMD ACQUISITION CORP.
By:_______________________________
Title:_________________________
KII ACQUISITION CORP.
By:_______________________________
Title:_________________________
STELLEX MICROWAVE SYSTEMS, INC.
By:_______________________________
Title:_________________________
-3-
STELLEX AEROSPACE
By:_______________________________
Title:_________________________
PARAGON PRECISION PRODUCTS
By:_______________________________
Title:_________________________
XXXXX MACHINING INTERNATIONAL
By:_______________________________
Title:_________________________
SCANNING ELECTRON ANALYSIS
LABORATORIES, INC.
By:_______________________________
Title:_________________________
GENERAL INSPECTION LABORATORIES, INC.
By:_______________________________
Title:_________________________
-4-
EXHIBIT E
$50,000,000
SECURED CREDIT FACILITY
to
STELLEX INDUSTRIES, INC.
KII HOLDING CORP.
TSMD ACQUISITION CORP.
KII ACQUISITION CORP.
STELLEX MICROWAVE SYSTEMS, INC.
STELLEX AEROSPACE
PARAGON PRECISION PRODUCTS
XXXXX MACHINING INTERNATIONAL
SCANNING ELECTRON ANALYSIS LABORATORIES, INC.
GENERAL INSPECTION LABORATORIES, INC.
LIST OF CLOSING DOCUMENTS(1)
A. Loan Documents
1. Credit Agreement, dated as of October 31, 1997 (the "Agreement") among
STELLEX INDUSTRIES, INC., a Delaware corporation, KII HOLDING CORP., a
Delaware corporation, TSMD ACQUISITION CORP., a Delaware corporation, KII
ACQUISITION CORP., a Delaware corporation, STELLEX MICROWAVE SYSTEMS, INC., a
California corporation, STELLEX AEROSPACE, a California corporation, PARAGON
PRECISION PRODUCTS, a California corporation, XXXXX MACHINING INTERNATIONAL, a
California corporation, SCANNING ELECTRON ANALYSIS LABORATORIES, INC., a
California corporation, and GENERAL INSPECTION LABORATORIES, INC., a
California corporation (collectively, the "Borrowers", and individually, a
"Borrower"), the financial institutions from time to time parties thereto,
whether by execution of this Agreement or an Assignment and Acceptance (the
"Lenders"), SOCIETE GENERALE ("SocGen"), in its capacity as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"), and
FIRST UNION COMMERCIAL CORPORATION, in its capacity as collateral agent (the
"Collateral Agent") and syndication agent (the "Syndication Agent",
collectively, with the Administrative Agent and the Collateral Agent the
"Agents"), evidencing a secured credit facility to be made available to the
Borrowers of up to $50,000,000 with the Exhibits and Schedules listed below
attached thereto:
--------
1 Unless otherwise defined herein, capitalized terms used herein have
the meanings ascribed to them in the Agreement.
1
EXHIBITS
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Borrowing Base Certificate
Exhibit C -- Form of Notice of Borrowing
Exhibit D -- Form of Notice of Conversion/Continuation
Exhibit E -- List of Closing Documents
Exhibit F-1 -- Form of Revolving Loan Note
Exhibit F-2 -- Form of Term Loan Note
Exhibit G -- Form of Officer's Certificate
Exhibit H -- Form of Compliance Certificate
Exhibit I -- Form of Replacement Certificate
Exhibit J -- Form of Guaranty
Exhibit K -- Form of Cash Collateral Pledge Agreement
Exhibit L -- Form of Security Agreement
Exhibit M -- Form of Pledge Agreement
Exhibit N -- Form of Patent Security Agreement
SCHEDULES
Schedule 1.01(A) -- Permitted Existing Indebtedness
Schedule 1.01(B) -- Permitted Existing Liens
Schedule 1.05 -- Knowledge
Schedule 5.01(A) -- Consents to be Obtained
Schedule 5.03(A) -- Representations and Warranties
Schedule 5.03(B) -- Covenants
Schedule 6.01(C) -- Ownership
Schedule 6.01(D) -- No Conflict
Schedule 6.01(E) -- Governmental Consents to be Sought
Schedule 6.01(J) -- Litigation; Adverse Effects
Schedule 6.01(L) -- Payment of Taxes
Schedule 6.01(P) -- Environmental Matters
Schedule 6.01(Q) -- ERISA Matters
Schedule 6.01(U) -- Governmental Permits
Schedule 6.01(W) -- Insurance
Schedule 6.01(Z) -- Bank Accounts
Schedule 8.12 -- Post-Closing Matters
2. Revolving Loan Notes made by the Borrowers in favor of
each Lender in the principal amount of such Lender's Revolving Loan
Commitment.
3. Term Loan Notes made by the Borrowers in favor of each
Lender in the principal amount of such Lender's Term Loan Commitment.
B. Collateral Documents
4. Guaranty made by the Borrowers in favor of the Agents and
the Lenders, pursuant to which each Borrower guaranties the obligations of
each other Borrower under the Agreement and under such Guaranty.
2
5. Contribution Agreement executed by each Loan Party in
favor of each other Loan Party.
6. Security Agreement executed by Stellex Industries,
Inc. in favor of the Collateral Agent, for the benefit of the
Agents, the Lenders, and the other Holders, pursuant to which
Stellex Industries, Inc. grants to the Collateral Agent a
security interest in all of its personal property.
7. Security Agreement executed by KII Holding Corp. in favor
of the Collateral Agent, for the benefit of the Agents, the Lenders, and the
other Holders, pursuant to which KII Holding Corp. grants to the Collateral
Agent a security interest in all of its personal property.
8. Security Agreement executed by TSMD Acquisition Corp. in
favor of the Collateral Agent, for the benefit of the Agents, the Lenders, and
the other Holders, pursuant to which TSMD Acquisition Corp. grants to the
Collateral Agent a security interest in all of its personal property.
9. Security Agreement executed by KII Acquisition Corp. in
favor of the Collateral Agent, for the benefit of the Agents, the Lenders, and
the other Holders, pursuant to which KII Acquisition Corp. grants to the
Collateral Agent a security interest in all of its personal property.
10. Security Agreement executed by Stellex Microwave
Systems, Inc. in favor of the Collateral Agent, for the benefit of the Agents,
the Lenders, and the other Holders, pursuant to which Stellex Microwave
Systems, Inc. grants to the Collateral Agent a security interest in all of its
personal property.
11. Security Agreement executed by Stellex Aerospace in
favor of the Collateral Agent, for the benefit of the Agents, the Lenders, and
the other Holders, pursuant to which Stellex Aerospace grants to the
Collateral Agent a security interest in all of its personal property.
12. Security Agreement executed by Paragon Precision
Products in favor of the Collateral Agent, for the benefit of the Agents, the
Lenders, and the other Holders, pursuant to which Paragon Precision Products
grants to the Collateral Agent a security interest in all of its personal
property.
13. Security Agreement executed by Xxxxx Machining
International in favor of the Collateral Agent, for the benefit of the Agents,
the Lenders, and the other Holders, pursuant to which Xxxxx Machining
International grants to the Collateral Agent a security interest in all of its
personal property.
14. Security Agreement executed by Scanning Electron
Analysis Laboratories, Inc. in favor of the Collateral Agent, for
3
the benefit of the Agents, the Lenders, and the other Holders,
pursuant to which Scanning Electron Analysis Laboratories, Inc.
grants to the Collateral Agent a security interest in all of its
personal property.
15. Security Agreement executed by General Inspection
Laboratories, Inc. in favor of the Collateral Agent, for the benefit of the
Agents, the Lenders, and the other Holders, pursuant to which General
Inspection Laboratories, Inc. grants to the Collateral Agent a security
interest in all of its personal property.
16. Patent Security Agreement executed by Stellex Microwave
Systems, Inc. in favor of the Collateral Agent, for the benefit of the Agents,
the Lenders, and the other Holders, pursuant to which Stellex Microwave
Systems, Inc. grants to the Collateral Agent a security interest in all of its
patents and patent licenses.
17. Patent Security Agreement executed by TSMD Acquisition
Corp. in favor of the Collateral Agent, for the benefit of the Agents, the
Lenders, and the other Holders, pursuant to which TSMD Acquisition Corp.
grants to the Collateral Agent a security interest in all of its patents and
patent licenses.
18. Cash Collateral Pledge Agreement executed by each of the
Borrowers in favor of the Collateral Agent, for the benefit of the Agents, the
Lenders and the other Holders, evidencing the pledge of the Cash Collateral
Account.
19. Pledge Agreement executed by Stellex Industries, Inc. in
favor of the Collateral Agent, for the benefit of the Agents, the Lenders and
the other Holders, evidencing the pledge of (i) all the promissory notes held
by Stellex Industries, Inc., together with such original promissory notes duly
endorsed and in transferable form; and (ii) all the issued and outstanding
capital stock of KII Holding Corp. owned by Stellex Industries, Inc. and all
the issued and outstanding capital stock of TSMD Acquisition Corp., together
with stock certificates and appropriate stock powers undated and endorsed in
blank.
20. Pledge Agreement executed by TSMD Acquisition Corp. in
favor of the Collateral Agent, for the benefit of the Agents, the Lenders and
the other Holders, evidencing the pledge of all the issued and outstanding
capital stock of Stellex Microwave Systems, Inc., together with stock
certificates and appropriate stock powers undated and endorsed in blank.
21. Pledge Agreement executed by KII Holding Corp. in favor
of the Collateral Agent, for the benefit of the Agents, the Lenders and the
other Holders, evidencing the pledge of all the issued and outstanding capital
stock of KII Acquisition Corp.,
4
together with stock certificates and appropriate stock powers undated and
endorsed in blank.
22. Pledge Agreement executed by KII Acquisition Corp. in
favor of the Collateral Agent, for the benefit of the Agents, the Lenders and
the other Holders, evidencing the pledge of all the issued and outstanding
capital stock of Stellex Aerospace, together with stock certificates and
appropriate stock powers undated and endorsed in blank.
23. Pledge Agreement executed by Stellex Aerospace in favor
of the Collateral Agent, for the benefit of the Agents, the Lenders and the
other Holders, evidencing the pledge of all the issued and outstanding stock
of Xxxxx Machining International, Scanning Electron Analysis Laboratories,
Inc. and General Inspection Laboratories, Inc., together with stock
certificates and appropriate stock powers undated and endorsed in blank.
24. Consent of Xxxxxxx-Xxxxxxx Company
25. UCC Lien Search Reports of filings against each Borrower
in the offices with respect to each set forth on Schedule I hereto.
26. Tax Lien and Judgment Search Reports relating to each
Borrower in the offices with respect to each set forth on Schedule I hereto.
27. UCC-1 Financing Statements (the "UCC-1 Financing
Statements") to be filed against each Borrower in the offices with respect to
each set forth on Schedule III hereto.
28. UCC-3 Termination Statements (the "UCC-3 Termination
Statements") to be filed with respect to each of KII Acquisition Corp., KII
Holding Corp., Xxxxxxxx Industries, Inc., Paragon Precision Products, Xxxxx
Machining International, Scanning Electron Analysis Laboratories, Inc., and
General Inspection Laboratories, Inc. in the offices with respect to each set
forth on Schedule II hereto.
29. Loss Payable Endorsement(s) relating to insurance
policies covering the Collateral (with insurance certificate(s) attached).
C. Corporate Documents
30. Certificate of Incorporation of Stellex Industries, Inc.
together with all amendments thereto certified by the Secretary of State of
Delaware and Good Standing Certificates for Stellex Industries, Inc. from the
appropriate offices of the states set forth on Schedule IV hereto under the
heading "Stellex Industries, Inc. Good Standing Certificates".
5
31. Certificate of Incorporation of KII Holding Corp.
together with all amendments thereto certified by the Secretary of State of
Delaware and Good Standing Certificates for KII Holding Corp. from the
appropriate offices of the states set forth on Schedule IV hereto under the
heading "KII Holding Corp.
Good Standing Certificates".
32. Certificate of Incorporation of TSMD Acquisition
Corp. together with all amendments thereto certified by the
Secretary of State of Delaware and Good Standing Certificates for
TSMD Acquisition Corp. from the appropriate offices of the states
set forth on Schedule IV hereto under the heading "TSMD
Acquisition Corp. Good Standing Certificates".
33. Certificate of Incorporation of KII Acquisition
Corp. together with all amendments thereto certified by the
Secretary of State of Delaware and Good Standing Certificates for
KII Acquisition Corp. from the appropriate offices of the states
set forth on Schedule IV hereto under the heading "KII
Acquisition Corp. Good Standing Certificates".
34. Certificate of Incorporation of Stellex Microwave
Systems, Inc. together with all amendments thereto certified by the Secretary
of State of California and Good Standing Certificates for Stellex Microwave
Systems, Inc. from the appropriate offices of the states set forth on Schedule
IV hereto under the heading "Stellex Microwave Systems, Inc. Good Standing
Certificates".
35. Certificate of Incorporation of Stellex Aerospace
together with all amendments thereto certified by the Secretary of State of
California and Good Standing Certificates for Stellex Aerospace from the
appropriate offices of the states set forth on Schedule IV hereto under the
heading "Stellex Aerospace Good Standing Certificates".
36. Certificate of Incorporation of Paragon Precision
Products together with all amendments thereto certified by the Secretary of
State of California and Good Standing Certificates for Paragon Precision
Products from the appropriate offices of the states set forth on Schedule IV
hereto under the heading "Paragon Precision Products Good Standing
Certificates".
37. Certificate of Incorporation of Xxxxx Machining
International together with all amendments thereto certified by the Secretary
of State of California and Good Standing Certificates for Xxxxx Machining
International from the appropriate offices of the states set forth on Schedule
IV hereto under the heading "Xxxxx Machining International Good Standing
Certificates".
38. Certificate of Incorporation of Scanning Electron
Analysis Laboratories, Inc. together with all amendments thereto
6
certified by the Secretary of State of California and Good
Standing Certificates for Scanning Electron Analysis
Laboratories, Inc. from the appropriate offices of the states set
forth on Schedule IV hereto under the heading "Scanning Electron
Analysis Laboratories, Inc. Good Standing Certificates".
39. Certificate of Incorporation of General Inspection
Laboratories, Inc. together with all amendments thereto certified by the
Secretary of State of California and Good Standing Certificates for General
Inspection Laboratories, Inc. from the appropriate offices of the states set
forth on Schedule IV hereto under the heading "General Inspection
Laboratories, Inc. Good Standing Certificates".
40. Certificate of the Secretary of Stellex Industries,
Inc., certifying, among other things, (i) resolutions of the Board of
Directors authorizing the Agreement, the Notes and the Loan Documents to which
it is a party, (ii) the names and signatures of the officers of the Company
authorized on behalf of such company to execute the Agreement, the Notes and
the Loan Documents to which it is a party and the other instruments and
documents to be executed and delivered on behalf of such company, (iii) that
attached thereto is a true and correct copy of the Bylaws of such company as
in effect on the date of such certification, and (iv) that there have been no
changes in the Certificate of Incorporation of such company since the date of
the most recent certification thereof by the Secretary of State of Delaware.
41. Certificate of the Secretary of KII Holding Corp.,
certifying, among other things, (i) resolutions of the Board of Directors
authorizing the Agreement, the Notes and the Loan Documents to which it is a
party, (ii) the names and signatures of the officers of the Company authorized
on behalf of such company to execute the Agreement, the Notes and the Loan
Documents to which it is a party and the other instruments and documents to be
executed and delivered on behalf of such company, (iii) that attached thereto
is a true and correct copy of the Bylaws of such company as in effect on the
date of such certification, and (iv) that there have been no changes in the
Certificate of Incorporation of such company since the date of the most recent
certification thereof by the Secretary of State of Delaware.
42. Two Certificates of the Secretary of TSMD Acquisition
Corp., the first such certificate certifying, among other things, (i)
resolutions of the Board of Directors authorizing the Agreement, the Notes and
the Loan Documents to which it is a party, (ii) the names and signatures of
the officers of the Company authorized on behalf of such company to execute
the Agreement, the Notes and the Loan Documents to which it is a party and the
other instruments and documents to be executed and delivered on behalf of such
company, (iii) that
7
attached thereto is a true and correct copy of the By-laws of such company as
in effect on the date of such certification, and (iv) that there have been no
changes in the Certificate of Incorporation of such company since the date of
the most recent certification thereof by the Secretary of State of Delaware,
and the second such certificate certifying resolutions of the Board of
Directors authorizing the Xxxxxxx-Xxxxxxx Acquisition Agreement and the
transaction contemplated thereby.
43. Certificate of the Secretary of KII Acquisition Corp.,
certifying, among other things, (i) resolutions of the Board of Directors
authorizing the Agreement, the Notes and the Loan Documents to which it is a
party, (ii) the names and signatures of the officers of the Company authorized
on behalf of such company to execute the Agreement, the Notes and the Loan
Documents to which it is a party and the other instruments and documents to be
executed and delivered on behalf of such company, (iii) that attached thereto
is a true and correct copy of the Bylaws of such company as in effect on the
date of such certification, and (iv) that there have been no changes in the
Certificate of Incorporation of such company since the date of the most recent
certification thereof by the Secretary of State of Delaware.
44. Two Certificates of the Secretary of Stellex Microwave
Systems, Inc., the first such certificate certifying, among other things, (i)
resolutions of the Board of Directors authorizing the Agreement, the Notes and
the Loan Documents to which it is a party, (ii) the names and signatures of
the officers of the Company authorized on behalf of such company to execute
the Agreement, the Notes and the Loan Documents to which it is a party and the
other instruments and documents to be executed and delivered on behalf of such
company, (iii) that attached thereto is a true and correct copy of the By-laws
of such company as in effect on the date of such certification, and (iv) that
there have been no changes in the Certificate of Incorporation of such company
since the date of the most recent certification thereof by the Secretary of
State of California, and the second such certificate certifying resolutions of
the Board of Directors authorizing the Xxxxxxx-Xxxxxxx Acquisition Agreement
and the transaction contemplated thereby.
45. Certificate of the Secretary of Stellex Aerospace,
certifying, among other things, (i) resolutions of the Board of Directors
authorizing the Agreement, the Notes and the Loan Documents to which it is a
party, (ii) the names and signatures of the officers of the Company authorized
on behalf of such company to execute the Agreement, the Notes and the Loan
Documents to which it is a party and the other instruments and documents to be
executed and delivered on behalf of such company, (iii) that attached thereto
is a true and correct copy of the Bylaws of such company as in effect on the
date of such certification, and (iv) that there have been no changes in the
8
Certificate of Incorporation of such company since the date of the most recent
certification thereof by the Secretary of State of California.
46. Certificate of the Secretary of Paragon Precision
Products, certifying, among other things, (i) resolutions of the Board of
Directors authorizing the Agreement, the Notes and the Loan Documents to which
it is a party, (ii) the names and signatures of the officers of the Company
authorized on behalf of such company to execute the Agreement, the Notes and
the Loan Documents to which it is a party and the other instruments and
documents to be executed and delivered on behalf of such company, (iii) that
attached thereto is a true and correct copy of the Bylaws of such company as
in effect on the date of such certification, and (iv) that there have been no
changes in the Certificate of Incorporation of such company since the date of
the most recent certification thereof by the Secretary of State of California.
47. Certificate of the Secretary of Xxxxx Machining
International, certifying, among other things, (i) resolutions of the Board of
Directors authorizing the Agreement, the Notes and the Loan Documents to which
it is a party, (ii) the names and signatures of the officers of the Company
authorized on behalf of such company to execute the Agreement, the Notes and
the Loan Documents to which it is a party and the other instruments and
documents to be executed and delivered on behalf of such company, (iii) that
attached thereto is a true and correct copy of the Bylaws of such company as
in effect on the date of such certification, and (iv) that there have been no
changes in the Certificate of Incorporation of such company since the date of
the most recent certification thereof by the Secretary of State of California.
48. Certificate of the Secretary of Scanning Electron
Analysis Laboratories, Inc., certifying, among other things, (i) resolutions
of the Board of Directors authorizing the Agreement, the Notes and the Loan
Documents to which it is a party, (ii) the names and signatures of the
officers of the Company authorized on behalf of such company to execute the
Agreement, the Notes and the Loan Documents to which it is a party and the
other instruments and documents to be executed and delivered on behalf of such
company, (iii) that attached thereto is a true and correct copy of the By-laws
of such company as in effect on the date of such certification, and (iv) that
there have been no changes in the Certificate of Incorporation of such company
since the date of the most recent certification thereof by the Secretary of
State of California.
49. Certificate of the Secretary of General Inspection
Laboratories, Inc., certifying, among other things, (i) resolutions of the
Board of Directors authorizing the Agreement, the Notes and the Loan Documents
to which it is a
9
party, (ii) the names and signatures of the officers of the Company authorized
on behalf of such company to execute the Agreement, the Notes and the Loan
Documents to which it is a party and the other instruments and documents to be
executed and delivered on behalf of such company, (iii) that attached thereto
is a true and correct copy of the By-laws of such company as in effect on the
date of such certification, and (iv) that there have been no changes in the
Certificate of Incorporation of such company since the date of the most recent
certification thereof by the Secretary of State of California.
D. Opinions
50. Opinion of counsel for the Borrowers, Winston & Xxxxxx,
addressed to the Agents and the Lenders.
51. Opinion of the following Local Counsel for the Borrowers
in respect of personal property matters, addressed to the Agents and the
Lenders:
a. California
52. Opinion of Xxxxxx Xxxxxx & Co. addressed to the
Agents and the Lenders concerning the solvency of each Borrower
after giving effect to the transactions contemplated by the
Transaction Documents.
E. Acquisition Documents
53. a copy of the Stock Purchase Agreement, dated as of
August 29, 1997 by and among TSMD Acquisition Corp., Xxxxxxx- Xxxxxxx Company
and Stellex Microwave Systems, Inc. (formerly known as X-X TSMC, Inc.,
together with all schedules thereto, certified as a true and complete copy by
an officer of Stellex Industries, Inc.
F. Subordinated Note Documents
54. a copy of the Subordinated Note Indenture, together with
all schedules and exhibits thereto, certified as a true and complete copy by
an officer of Stellex Industries, Inc.
G. Other Agreements
55. a copy of the Management Participation Agreement.
56. a copy of the Management Agreement.
10
57. a copy of the Tax Allocation and Indemnity
Agreement dated as of October 31, 1997 among Stellex Industries,
Inc. and its Subsidiaries named therein.
H. Miscellaneous
58. Publication Consent executed by each Borrower.
59. Notice of Borrowing for the Loans to be advanced on the
Closing Date.
60. Letter from Process Agent, Mentmore Holdings
Corporation, accepting an appointment in New York as agent for service for
service of process for each Borrower.
61. Insurance Certificates or other insurance information
satisfactory to the Collateral Agent.
62. Borrowing Base Certificate.
63. Funds Flow Memorandum outlining the flow of funds to
occur on the Closing Date.
64. Certificate of the Chief Financial Officer certifying as
to pro-forma consolidated balance sheets of Stellex Industries, Inc. and its
Subsidiaries as of June 30, 1997 with adjustments as of the Closing Date,
giving effect to the transactions contemplated in the Transaction Documents.
65. Officer's Certificate of Stellex Industries, Inc.
setting forth the names of persons authorized to request Loans.
G. Postclosing Matters
66. Post-Closing Lien Search Reports of filings against each
Borrower in the offices with respect to each set forth on Schedule V hereto.
11
SCHEDULE I
Jurisdictions Searched
STELLEX INDUSTRIES, INC.
California
Secretary of State UCC, TL, PSJ
Los Angeles County UCC, FF, TL, PSJ
STELLEX HOLDING CORP.
California
Secretary of State UCC
KII HOLDING CORP.
New York
Secretary of State UCC, TL, PSJ
New York County UCC, FF, TL, PSJ
TSMD ACQUISITION CORP.
California
Secretary of State UCC, TL, PSJ
Santa Xxxxx County UCC, FF, TL, PSJ
KII ACQUISITION CORP.
California
Secretary of State UCC, TL, PSJ
Los Angeles County UCC, FF, TL, PSJ
X-X TSMD Inc. (now known as Stellex Microwave Systems, Inc.)
California
Secretary of State UCC, TL, PSJ
Santa Xxxxx County UCC, FF, TL, PSJ
STELLEX AEROSPACE
California
Secretary of State UCC, TL, PSJ
Los Angeles County UCC, FF, TL, PSJ
12
XXXXXXXXXX X-XXX, INC.
California
Secretary of State UCC
PARAGON PRECISION PRODUCTS
California
Secretary of State UCC, TL, PSJ
Los Angeles County UCC, FF, TL, PSJ
XXXXX MACHINING INTERNATIONAL
California
Secretary of State UCC, TL, PSJ
Los Angeles County UCC, FF, TL, PSJ
SCANNING ELECTRON ANALYSIS LABORATORIES, INC.
California
Secretary of State UCC, TL, PSJ
Los Angeles County UCC, FF, TL, PSJ
GENERAL INSPECTION LABORATORIES, INC.
California
Secretary of State UCC, TL, PSJ
Los Angeles County UCC, FF, TL, PSJ
XXXXXXX-XXXXXXX COMPANY
California
Secretary of State UCC, TL, PSJ
Santa Xxxxx County UCC, FF, TL, PSJ
EXPLANATION:
UCC = UCC-1s, UCC-2s and UCC-3s of Record
FF = Fixture Filings
TL = Federal and State Tax Liens and Judgements
PSJ = Pending Suits and Judgments
13
SCHEDULE II
Jurisdictions Where UCC-3 Termination Statements will be Filed
KII ACQUISITION CORP.
California
Secretary of State
Los Angeles County
KII HOLDING CORP.
New York
Secretary of State
New York County
XXXXXXXX INDUSTRIES, INC.
California
Secretary of State
Los Angeles County
PARAGON PRECISION PRODUCTS
California
Secretary of State
Los Angeles County
XXXXX MACHINING INTERNATIONAL
California
Secretary of State
Los Angeles County
SCANNING ELECTRON ANALYSIS LABORATORIES, INC.
California
Secretary of State
Los Angeles County
GENERAL INSPECTION LABORATORIES, INC.
California
Secretary of State
Los Angeles County
14
SCHEDULE III
Jurisdictions Where UCC-1 Financing Statements will be Filed
STELLEX INDUSTRIES, INC.
New York
Secretary of State
New York County
KII HOLDING CORP.
New York
Secretary of State
New York County
TSMD ACQUISITION CORP.
California
Secretary of State
Santa Xxxxx County
KII ACQUISITION CORP.
California
Secretary of State
Los Angeles County
STELLEX MICROWAVE SYSTEMS, INC.
California
Secretary of State
Santa Xxxxx County
STELLEX AEROSPACE
California
Secretary of State
Los Angeles County
PARAGON PRECISION PRODUCTS
California
Secretary of State
Los Angeles County
XXXXX MACHINING INTERNATIONAL
California
Secretary of State
Los Angeles County
15
SCANNING ELECTRON ANALYSIS LABORATORIES, INC.
California
Secretary of State
Los Angeles County
GENERAL INSPECTION LABORATORIES, INC.
California
Secretary of State
Los Angeles County
16
SCHEDULE IV
Good Standing Certificates
STELLEX INDUSTRIES, INC.
Delaware
KII HOLDING CORP.
Delaware
TSMD ACQUISITION CORP.
Delaware
KII ACQUISITION CORP.
Delaware
STELLEX MICROWAVE SYSTEMS, INC.
California
STELLEX AEROSPACE
California
PARAGON PRECISION PRODUCTS
California
XXXXX MACHINING INTERNATIONAL
California
SCANNING ELECTRON ANALYSIS LABORATORIES, INC.
California
GENERAL INSPECTION LABORATORIES, INC.
California
17
SCHEDULE V
Post-Closing Lien Search Reports
STELLEX INDUSTRIES, INC.
New York
Secretary of State
New York County
KII HOLDING CORP.
New York
Secretary of State
New York County
TSMD ACQUISITION CORP.
California
Secretary of State
Santa Xxxxx County
KII ACQUISITION CORP.
California
Secretary of State
Los Angeles County
STELLEX MICROWAVE SYSTEMS, INC.
California
Secretary of State
Santa Xxxxx County
STELLEX AEROSPACE
California
Secretary of State
Los Angeles County
PARAGON PRECISION PRODUCTS
California
Secretary of State
Los Angeles County
XXXXX MACHINING INTERNATIONAL
California
Secretary of State
Los Angeles County
18
SCANNING ELECTRON ANALYSIS LABORATORIES, INC.
California
Secretary of State
Los Angeles County
GENERAL INSPECTION LABORATORIES, INC.
California
Secretary of State
Los Angeles County
19
EXHIBIT F-1
Form of Revolving Loan Note
REVOLVING LOAN NOTE
$__________ October __, 0000
Xxx Xxxx, Xxx Xxxx
For value received, the undersigned, STELLEX INDUSTRIES, INC., a Delaware
corporation, KII HOLDING CORP., a Delaware corporation, TSMD ACQUISITION CORP.,
a Delaware corporation, KII ACQUISITION CORP., a Delaware corporation, STELLEX
MICROWAVE SYSTEMS, INC., a California corporation, STELLEX AEROSPACE, a
California corporation, PARAGON PRECISION PRODUCTS, a California corporation,
XXXXX MACHINING INTERNATIONAL, a California corporation, SCANNING ELECTRON
ANALYSIS LABORATORIES, INC., a California corporation, and GENERAL INSPECTION
LABORATORIES, INC., a California corporation (each a "Borrower" and
collectively, the "Borrowers"), jointly and severally promise to pay to the
order of ______________ (the "Lender"), on the Commitment Termination Date (as
defined in the Credit Agreement referred to below), the lesser of (i) the
principal amount of __________________________ ($__________) or (ii) the unpaid
principal amount of all Revolving Loans made by the Lender to the Borrowers
under the Credit Agreement (referred to below).
The Borrowers also promise to pay interest on the unpaid principal amount
borrowed hereunder from the date advanced until paid at the rates (which shall
not exceed the maximum rate permitted by applicable law) and at the times
determined in accordance with the provisions of the Credit Agreement dated as of
October __, 1997 (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement") among the Borrowers, the financial
institutions from time to time parties thereto as lenders (the "Lenders"),
Societe Generale, in its capacity as administrative agent for the Lenders (in
such capacity, the "Administrative Agent"), and First Union Commercial
Corporation, in its capacities as collateral agent and syndication agent for the
Lenders. Terms defined in the Credit Agreement and not otherwise defined herein
are used herein with the meanings so defined.
This Note is issued pursuant to, and is entitled to the benefits of, the
Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Revolving Loans evidenced hereby are made and are to be repaid. This Note is
secured by certain of the Loan Documents, and reference is made to such Loan
Documents for the terms and conditions governing the collateral security for the
Obligations of the Borrowers hereunder.
All payments of principal and interest in respect of Revolving Loans shall
be made to the Administrative Agent's Account not later than 1:00 p.m. (New York
time) on the date due in lawful money of the United States of America in
immediately available funds.
This Note may be prepaid at the option of the Borrowers as provided in
Section 3.01(a) of the Credit Agreement and must be prepaid as provided in
Section 3.01(b) of the Credit Agreement.
The Lender shall record in accordance with its usual practice the date and
amount of each Revolving Loan made hereunder and the date and amount of each
payment of principal; provided, however, that the failure to record any such
amount shall not limit or otherwise affect the obligation of the Borrowers to
repay to the Lender the outstanding principal amount evidenced by this Note
together with accrued interest thereon in accordance with the terms of the
Credit Agreement.
Upon the occurrence of any one or more of certain Events of Default, the
unpaid balance of the principal amount of this Note may become, and upon the
occurrence and continuation of any one or more of certain other Events of
Default, such unpaid balance may be declared to be due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
No reference herein to the Credit Agreement and no provisions of this Note,
the Credit Agreement or the other Loan Documents shall alter or impair the
obligation of the Borrowers, which is absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective times,
and in the currency herein prescribed.
The Borrowers promise to pay all costs and expenses, including reasonable
attorneys' fees and disbursements incurred in the collection and enforcement of
this Note or any appeal of a judgment rendered thereon all in accordance with
the provisions of the Credit Agreement. The Borrowers hereby waive diligence,
presentment, protest, demand and notice of every kind except as required
pursuant to the Credit Agreement.
-2-
The Credit Agreement and this Note shall be governed by, and shall be
construed and enforced in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed and
delivered by their duly authorized officers, as of the day and year and at the
place first above written.
STELLEX INDUSTRIES, INC.
By:_________________________________
Title:___________________________
KII HOLDING CORP.
By:_________________________________
Title:___________________________
TSMD ACQUISITION CORP.
By:_________________________________
Title:___________________________
KII ACQUISITION CORP.
By:_________________________________
Title:___________________________
STELLEX MICROWAVE SYSTEMS, INC.
By:_________________________________
Title:___________________________
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STELLEX AEROSPACE
By:_________________________________
Title:___________________________
PARAGON PRECISION PRODUCTS
By:_________________________________
Title:___________________________
XXXXX MACHINING INTERNATIONAL
By:_________________________________
Title:___________________________
SCANNING ELECTRON ANALYSIS
LABORATORIES, INC.
By:_________________________________
Title:___________________________
GENERAL INSPECTION LABORATORIES, INC.
By:_________________________________
Title:___________________________
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EXHIBIT F-2
Form of Term Loan Note
TERM LOAN NOTE
$__________ October __, 0000
Xxx Xxxx, Xxx Xxxx
For value received, the undersigned, STELLEX INDUSTRIES, INC., a Delaware
corporation, KII HOLDING CORP., a Delaware corporation, TSMD ACQUISITION CORP.,
a Delaware corporation, KII ACQUISITION CORP., a Delaware corporation, STELLEX
MICROWAVE SYSTEMS, INC., a California corporation, STELLEX AEROSPACE, a
California corporation, PARAGON PRECISION PRODUCTS, a California corporation,
XXXXX MACHINING INTERNATIONAL, a California corporation, SCANNING ELECTRON
ANALYSIS LABORATORIES, INC., a California corporation, and GENERAL INSPECTION
LABORATORIES, INC., a California corporation, jointly and severally promise to
pay to the order of ______________________________ (the "Lender") the principal
amount of _______________ ($__________) in fifteen (15) substantially equal
consecutive quarterly installments in the principal amount equal to 4.17% of the
Outstanding Term Loan Amount (as defined in the Credit Agreement referred to
below) on the first day of February, May, August and November in each year,
commencing on February 1, 2000 through and including August 1, 2003 and one (1)
installment in the principal amount equal to 37.45% of the Outstanding Term Loan
Amount (as defined in the Credit Agreement referred to below) on October 31,
2003 (the "Maturity Date"); provided, however, that the amount of the last such
installment shall be in the amount necessary to repay in full the outstanding
principal amount of the Term Loan represented by this Note.
The Borrowers also promise to pay interest on the unpaid principal amount
borrowed hereunder from the date advanced until paid at the rates (which shall
not exceed the maximum rate permitted by applicable law) and at the times
determined in accordance with the provisions of the Credit Agreement dated as of
October __, 1997 (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement") among the Borrowers, the financial
institutions from time to time parties thereto as lenders (the "Lenders"),
Societe Generale, in its capacity as administrative agent for the Lenders (in
such capacity, the "Administrative Agent"), and First Union Commercial
Corporation, in its capacities as collateral agent and syndication agent for the
Lenders. Terms defined in the Credit Agreement and not otherwise defined herein
are used herein with the meanings so defined.
This Note is issued pursuant to, and is entitled to the benefits of, the
Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Term Loan evidenced hereby
is made and is to be repaid. This Note is secured by certain of the Loan
Documents, and reference is made to such Loan Documents for the terms and
conditions governing the collateral security for the Obligations of the
Borrowers hereunder.
All payments of principal and interest in respect of this Note shall be
made to the Administrative Agent's Account not later than 1:00 p.m. (New York
time) on the date due in lawful money of the United States of America in
immediately available funds.
This Note may be prepaid at the option of the Borrowers as provided in
Section 3.01(a) of the Credit Agreement and must be prepaid as provided in
Section 3.01(b) of the Credit Agreement.
The Lender shall record in accordance with its usual practice the date and
amount of each Term Loan made hereunder and the date and amount of each payment
of principal; provided, however, that the failure to record any such amount
shall not limit or otherwise affect the obligation of the Borrowers to repay to
the Lender the outstanding principal amount evidenced by this Note together with
accrued interest thereon in accordance with the terms of the Credit Agreement.
Upon the occurrence of any one or more of certain Events of Default, the
unpaid balance of the principal amount of this Note may become, and upon the
occurrence and continuation of any one or more of certain other Events of
Default, such unpaid balance may be declared to be due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
No reference herein to the Credit Agreement and no provisions of this Note,
the Credit Agreement or the other Loan Documents shall alter or impair the
obligation of the Borrowers, which is absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective times,
and in the currency herein prescribed.
The Borrowers promise to pay all costs and expenses, including reasonable
attorneys' fees and disbursements incurred in the collection and enforcement of
this Note or any appeal of a judgment rendered thereon all in accordance with
the provisions of the Credit Agreement. The Borrowers hereby waive diligence,
presentment, protest, demand and notice of every kind except as required
pursuant to the Credit Agreement.
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The Credit Agreement and this Note shall be governed by, and shall be
construed and enforced in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Borrowers have caused this Note
to be executed and delivered by their duly authorized officers, as of the day
and year and at the place first above written.
STELLEX INDUSTRIES, INC.
By:_________________________________
Title:___________________________
KII HOLDING CORP.
By:_________________________________
Title:___________________________
TSMD ACQUISITION CORP.
By:_________________________________
Title:___________________________
KII ACQUISITION CORP.
By:_________________________________
Title:___________________________
STELLEX MICROWAVE SYSTEMS, INC.
By:_________________________________
Title:___________________________
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STELLEX AEROSPACE
By:_________________________________
Title:___________________________
PARAGON PRECISION PRODUCTS
By:_________________________________
Title:___________________________
XXXXX MACHINING INTERNATIONAL
By:_________________________________
Title:___________________________
SCANNING ELECTRON ANALYSIS
LABORATORIES, INC.
By:_________________________________
Title:___________________________
GENERAL INSPECTION LABORATORIES, INC.
By:_________________________________
Title:___________________________
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EXHIBIT G
Form of Officer's Certificate to Accompany Reports
OFFICER'S CERTIFICATE
To: Societe Generale, in its capacity as administrative agent (with its
successors in such capacity, the "Administrative Agent") for the Lenders
(as defined below) under the Credit Agreement dated as of October __, 1997
(as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") among Stellex Industries, Inc., a Delaware
corporation, KII Holding Corp., a Delaware corporation, TSMD Acquisition
Corp., a Delaware corporation, KII Acquisition Corp., a Delaware
corporation, Stellex Microwave Systems, Inc., a California corporation,
Stellex Aerospace, a California corporation Paragon Precision Products, a
California corporation, Xxxxx Machining International, a California
corporation, Scanning Electron Analysis Laboratories, Inc., a California
corporation, and General Inspection Laboratories, Inc., a California
corporation (collectively, the "Borrowers", and individually, a
"Borrower"), the financial institutions from time to time party thereto as
lenders (the "Lenders"), the Administrative Agent, and First Union
Commercial Corporation, in its capacities as collateral agent and
syndication agent for the Lenders.
Pursuant to Section 7.01(c) of the Credit Agreement, the __________________
of Stellex Industries, Inc. (the "Parent") hereby certifies that:
1. Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Certificate.
2. The undersigned has reviewed the terms of the Loan Documents and has
made, or caused to be made under [his][her] supervision, a review in reasonable
detail of the transactions and consolidated financial condition of the Parent
and its Subsidiaries during the accounting period(s) covered by the financial
statements identified below. Such review [has] [has not] disclosed the existence
during or at the end of such accounting period(s), and as at the date hereof the
undersigned [does] [does not] have knowledge of, any condition or event which
constitutes an Event of Default or Default. [If such condition or event exists
or existed, specify (i) nature and period of such condition or event and (ii)
action being taken and/or proposed to be taken with respect thereto.]
3. The financial statements, reports and copies of certain instruments and
documents attached hereto, namely,
A. ___________________, dated ______________
B. ___________________, dated ______________
C. ___________________, dated ______________
are true and complete copies of the aforesaid which constitute part of the
customary books and reports of the Parent and its Subsidiaries.
STELLEX INDUSTRIES, INC.
By:________________________________
Name:
Title:
-2-
EXHIBIT I
FORM OF REPLACEMENT CERTIFICATE
To: Societe Generale, in its capacity as administrative agent (with its
successors in such capacity, the "Administrative Agent") for the Lenders
(as defined below) under the Credit Agreement dated as of October __, 1997
(as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") among Stellex Industries, Inc., a Delaware
corporation, KII Holding Corp., a Delaware corporation, TSMD Acquisition
Corp., a Delaware corporation, KII Acquisition Corp., a Delaware
corporation, Stellex Microwave Systems, Inc., a California corporation,
Stellex Aerospace, a California corporation, Paragon Precision Products, a
California corporation, Xxxxx Machining International, a California
corporation, Scanning Electron Analysis Laboratories, Inc., a California
corporation, and General Inspection Laboratories, Inc., a California
corporation (collectively, the "Borrowers", and individually, a
"Borrower"), the financial institutions from time to time party thereto as
lenders (the "Lenders"), the Administrative Agent, and First Union
Commercial Corporation, in its capacities as collateral agent and
syndication agent for the Lenders.
Pursuant to Section 7.01(e) of the Credit Agreement,
______________________, the Chief Financial Officer of STELLEX INDUSTRIES, INC.
(the "Parent") hereby certifies, as of _________________ __, 199_, as follows:
1. Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Certificate.
2. During the period from _________, 199_ to _______, 199_, the Borrowers
received Net Cash Proceeds in the aggregate amount of $_____ as a result of
sales of assets, issuance of Securities or receipt of insurance proceeds as
follows:
[For each sale of assets, issuance of Securities or receipt of insurance
proceeds, (i) indicate amount of Net Cash Proceeds received and date
received, (ii) describe sale, issuance or nature of loss suffered, (iii)
describe replacement asset acquired or Permitted Acquisition consummated
and cost of such asset or Permitted Acquisition.]
3. For each such sale of assets, issuance of Securities or receipt of
insurance proceeds, Net Cash Proceeds
1
received which were not spent as specifically indicated above have been applied
to repay Loans in accordance with the Credit Agreement.
STELLEX INDUSTRIES, INC.
By:_________________________
Name:
Title: Chief Financial Officer
2
EXHIBIT J
Form of Guaranty
GUARANTY
This GUARANTY (as amended, supplemented or otherwise modified from time to
time, this "Guaranty") is made as of _______ __, 199_, by STELLEX INDUSTRIES,
INC., a Delaware corporation, KII HOLDING CORP., a Delaware corporation, TSMD
ACQUISITION CORP., a Delaware corporation, KII ACQUISITION CORP., a Delaware
corporation, STELLEX MICROWAVE SYSTEMS, INC., a California corporation, STELLEX
AEROSPACE, a California corporation, PARAGON PRECISION PRODUCTS, a California
corporation, XXXXX MACHINING INTERNATIONAL, a California corporation, SCANNING
ELECTRON ANALYSIS LABORATORIES, INC., a California corporation, and GENERAL
INSPECTION LABORATORIES, INC., a California corporation (each individually, a
"Guarantor", and collectively, the "Guarantors"), in favor of the Agents and the
Lenders under that certain Credit Agreement referred to below.
W I T N E S S E T H
WHEREAS, each of the Guarantors is a Borrower under the Credit Agreement
dated as of October __, 1997 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement") among such Guarantors, as borrowers
(the "Borrowers"), Societe Generale, as administrative agent (the
"Administrative Agent"), First Union Commercial Corporation, as collateral agent
(the "Collateral Agent") and syndication agent (the "Syndication Agent", and
collectively, with the Administrative Agent and the Collateral Agent, the
"Agents"), and the financial institutions party thereto (the "Lenders").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.
WHEREAS, the Lenders and the Agents have required as a condition, among
others, to entering into the Credit Agreement, that each Guarantor guarantee (x)
the Obligations of each other Guarantor as a Borrower under the Credit Agreement
and (y) the obligations of each such other Guarantor under this Guaranty (all
such Obligations and such obligations hereunder, the "Guaranteed Obligations");
NOW THEREFORE, in consideration of the premises set forth above, the terms
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Guaranty. (i) For value received and in consideration of any loan,
advance or financial accommodation of any kind whatsoever heretofore, now or
hereafter made, given or
granted to any Borrower by the Lenders, each Guarantor unconditionally
guarantees the full and prompt payment when due, whether at maturity or earlier,
by reason of acceleration or otherwise, and at all times thereafter, of all the
Guaranteed Obligations (including, without limitation, interest accruing
following the filing of a bankruptcy petition by or against any applicable
Borrower, at the applicable rate specified in the Credit Agreement, whether or
not such interest is allowed as a claim in bankruptcy).
(ii) At any time after the occurrence of an Event of Default, each
Guarantor shall pay to the Administrative Agent, for the ratable benefit of the
Agents and the Lenders, on demand and in immediately available funds, the full
amount of the Guaranteed Obligations. Each Guarantor further agrees to pay and
reimburse the Agents and the Lenders for, on demand and in immediately available
funds, (a) all reasonable fees, costs and expenses (including, without
limitation, all court costs and reasonable attorneys' fees, costs and expenses)
paid or incurred by such Person in: (1) endeavoring to collect all or any part
of the Guaranteed Obligations owing to such Person from, or in prosecuting any
action against, the applicable Borrower or Borrowers relating to the Credit
Agreement, this Guaranty or the transactions contemplated thereby; (2) taking
any action with respect to any security or collateral securing the Guaranteed
Obligations; and (3) preserving, protecting or defending the enforceability of,
or enforcing, this Guaranty or the Agents' or the Lenders' rights hereunder (all
such costs and expenses are hereinafter referred to as the "Expenses") and (b)
interest on the Expenses, from the date of demand under this Guaranty until paid
in full at the per annum rate of interest described in Section 4.01(d) of the
Credit Agreement. Each Guarantor hereby agrees that this Guaranty is an absolute
guaranty of payment and is not a guaranty of collection.
(iii) Notwithstanding anything contained in this Guaranty to the contrary,
the amount guaranteed by each Guarantor hereunder shall be limited to an
aggregate amount which, together with other amounts owing by such Guarantor to
the Agents and the Lenders, is equal to the largest amount that would not be
subject to avoidance under Section 548 of Title 11 of the United States Code (11
U.S.C. xx.xx. 101 et seq.) (the "Bankruptcy Code") or any applicable provisions
of any comparable state law.
2. Obligations Unconditional. Each Guarantor hereby agrees that its
obligations under this Guaranty shall be unconditional, irrespective of:
(i) the validity, enforceability, avoidance or subordination of any of
the Guaranteed Obligations or any of the Loan Documents;
(ii) the absence of any attempt by, or on behalf of, any of the Agents
or the Lenders to collect, or to take any other
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action to enforce, all or any part of the Guaranteed Obligations whether
from or against any applicable Borrower or any other Person;
(iii) the election of any remedy available under any Loan Document or
any applicable Requirement of Law by, or on behalf of, any of the Agents or
the Lenders with respect to all or any part of the Guaranteed Obligations;
(iv) the waiver, consent, extension, forbearance or granting of any
indulgence by, or on behalf of, any of the Agents or the Lenders with
respect to any provision of any Loan Document;
(v) the failure of any of the Agents or the Lenders to take any steps
to perfect and maintain its security interest in, or to preserve its rights
to, any security or collateral for the Guaranteed Obligations;
(vi) the election by, or on behalf of, any of the Agents or the
Lenders, in any proceeding instituted under Chapter 11 of the Bankruptcy
Code, of the application of Section 1111(b)(2) of the Bankruptcy Code;
(vii) any borrowing or grant of a security interest by any applicable
Borrower, as debtor-in-possession, under Section 364 of the Bankruptcy
Code;
(viii) the disallowance, under Section 502 of the Bankruptcy Code, of
all or any portion of the claims against any applicable Borrower held by
any of the Lenders or the Agents, for repayment of all or any part of the
Guaranteed Obligations or any Expenses; or
(ix) any other circumstance which might otherwise constitute a legal
or equitable discharge or defense of any applicable Borrower (other than
payment in full of the Guaranteed Obligations);
provided, however, that nothing contained in this Section 2 shall be deemed to
waive or modify any rights, defenses or claims which such Guarantor, in its
capacity as a Borrower under the Credit Agreement, as a Pledgor under a Pledge
Agreement or as a Grantor under a Security Agreement, may have and which it has
not expressly waived therein.
3. Enforcement; Application of Payments. Upon the occurrence and during the
continuance of an Event of Default, the Agents and/or the Lenders may proceed
directly and at once, without notice, against any Guarantor to obtain
performance of and to collect and recover the full amount, or any portion, of
the Guaranteed Obligations owing to such Person or Persons, without first
proceeding against any applicable Borrower or any other
-3-
Person, or against any security or collateral for the Guaranteed Obligations.
4. Waivers. (i) Each Guarantor hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of receivership or
bankruptcy of any Borrower, protest or notice with respect to the Guaranteed
Obligations, all setoffs and all presentments, demands for performance, notices
of nonperformance, protests, notices of protest, notices of dishonor and notices
of acceptance of this Guaranty, and all other demands whatsoever (and shall not
require that the same be made on any Borrower as a condition precedent to such
Guarantor's obligations hereunder), and covenants that this Guaranty will not be
discharged, except by payment in full of the Guaranteed Obligations. Each
Guarantor further waives all notices of the existence, creation or incurring of
new or additional Indebtedness, arising either from additional loans extended to
any Borrower or otherwise, and also waives all notices that the principal
amount, or any portion thereof, and/or any interest on any instrument or
document evidencing all or any part of the Guaranteed Obligations is due,
notices of any and all proceedings to collect from the maker, any endorser or
any other guarantor of all or any part of the Guaranteed Obligations, or from
any other Person, and, to the extent permitted by law, notices of exchange,
sale, surrender or other handling of any security or collateral given to the
Collateral Agent or the Lenders to secure payment of all or any part of the
Guaranteed Obligations; provided, however, that nothing contained herein shall
be deemed to waive or modify any rights, defenses or claims which such
Guarantor, in its capacity as a Borrower under the Credit Agreement, as a
Pledgor under a Pledge Agreement or as a Grantor under a Security Agreement, may
have and which it has not expressly waived therein.
(ii) The Agents and/or the Lenders are hereby authorized, without notice or
demand and without affecting the liability of the Guarantors hereunder, from
time to time, (a) to renew, extend, accelerate or otherwise change the time for
payment of, or other terms relating to, all or any part of the Guaranteed
Obligations, or to otherwise modify, amend or change the terms of any of the
Loan Documents; (b) to accept partial payments on all or any part of the
Guaranteed Obligations; (c) to take and hold security or collateral for the
payment of all or any part of the Guaranteed Obligations, or any liabilities of
the Borrowers, (d) to exchange, enforce, waive and release any such security or
collateral; (e) to apply such security or collateral and direct the order or
manner of sale thereof as in its discretion it may determine; (f) to settle,
release, exchange, enforce, waive, compromise or collect or otherwise liquidate
all or any part of the Guaranteed Obligations, this Guaranty, or any other
guaranty, and any security or collateral for the Guaranteed Obligations or for
any such guaranty; provided, however, that nothing contained herein shall be
deemed to waive or modify any rights, defenses or claims which such Guarantor,
in its capacity as a Borrower under the Credit Agreement, as a Pledgor under a
Pledge Agreement or as
-4-
a Grantor under a Security Agreement, may have and which it has not expressly
waived therein. Any of the foregoing may be done in any manner, without
affecting or impairing the obligations of the Guarantors hereunder.
5. Setoff. Subject to Sections 13.07 and 13.08 of the Credit Agreement, at
any time after all or any part of the Guaranteed Obligations have become due and
payable (by acceleration or otherwise), the Lenders may, without notice to any
Guarantor and regardless of the acceptance of any security or collateral for the
payment hereof, appropriate and apply toward the payment of all or any part of
the Guaranteed Obligations owing to such Persons in accordance with the
provisions of Section 3.02(b)(ii) of the Credit Agreement (i) any Indebtedness
due or to become due from the Lenders to such Guarantor, and (ii) any moneys,
credits or other property belonging to such Guarantor, at any time held by or
coming into the possession of the Lenders or their respective affiliates.
6. Financial Information. Each Guarantor hereby assumes responsibility for
keeping itself informed of the financial condition of each Borrower (other than
such Guarantor) and any and all other endorsers and/or other guarantors of all
or any part of the Guaranteed Obligations, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations, or any part
thereof, that diligent inquiry would reveal, and such Guarantor hereby agrees
that none of the Agents or the Lenders shall have any duty to advise any
Guarantor of information known to it regarding such condition or any such
circumstances. In the event any of the Agents or the Lenders, in its sole
discretion, undertakes at any time or from time to time to provide any
information to any Guarantor, such Agent or Lender shall be under no obligation
(i) to undertake any investigation not a part of its regular business routine,
(ii) to disclose any information which such Agent or Lender, pursuant to
accepted or reasonable commercial finance or banking practices, wishes to
maintain confidential or (iii) to make any other disclosures or updates relating
to such information or any other information to such Guarantor.
7. No Marshalling; Reinstatement. Each Guarantor consents and agrees that
none of the Agents or the Lenders or any Person acting for or on behalf of any
of them shall be under any obligation to xxxxxxxx any assets in favor of any
Guarantor or against or in payment of any or all of the Guaranteed Obligations.
Each Guarantor further agrees that, to the extent that any Borrower (other than
such Guarantor) or any other guarantor of all or any part of the Guaranteed
Obligations makes a payment or payments to any Agent or Lender, or any Agent or
Lender receives any proceeds of Collateral, which payment, payments or proceeds,
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to any Borrower, any other
guarantor or any other Person, or their respective estates, trustees, receivers
or any other party,
-5-
including, without limitation, such Guarantor under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or repayment, the part of the Guaranteed Obligations which has been paid,
reduced or satisfied by such amount shall be reinstated and continued in full
force and effect as of the time immediately preceding such initial payment,
reduction or satisfaction.
8. Subrogation. Until the Guaranteed Obligations shall have been paid in
full, each Guarantor hereby agrees that it (i) shall have no right of
subrogation with respect to such Guaranteed Obligations (under contract, Section
509 of the Bankruptcy Code or otherwise) or any other right of indemnity,
reimbursement or contribution, and (ii) hereby waives any right to enforce any
remedy which any of the Agents or the Lenders now have or may hereafter have
against any Borrower, any endorser or any other guarantor of all or any part of
the Guaranteed Obligations or any other Person, and each Guarantor hereby waives
any benefit of, and any right to participate in, any security or collateral
given to the Agents and the Lenders to secure the payment or performance of all
or any part of the Guaranteed Obligations or any other liability of the
Borrowers to the Agents and the Lenders.
9. Subordination. Each Guarantor agrees that any and all claims of such
Guarantor against the other Borrowers or any endorser or other guarantor of all
or any part of the Guaranteed Obligations, or against any of their respective
properties, shall be subordinated to all of the Guaranteed Obligations.
Notwithstanding any right of any Guarantor to ask for, demand, xxx for, take or
receive any payment from any other Borrower, all rights and Liens of such
Guarantor, whether now or hereafter arising and howsoever existing, in any
assets of any other Borrower (whether constituting part of the Collateral or
otherwise) shall be and hereby are subordinated to the rights of the Agents or
the Lenders in those assets. Such Guarantor shall have no right to possession of
any such asset or to foreclose upon any such asset, whether by judicial action
or otherwise, unless and until all of the Guaranteed Obligations shall have been
paid in full and all of the Commitments have been terminated. If all or any part
of the assets of any Borrower, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of such Borrower, whether
partial or complete, voluntary or involuntary, and whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the benefit
of creditors or any other action or proceeding, or if the business of any
Borrower is dissolved or if substantially all of the assets of any Borrower are
sold, then, and in any such event, any payment or distribution of any kind or
character, either in cash, securities or other property, which shall be payable
or deliverable upon or with respect to any Indebtedness of such Borrower to such
Guarantor ("Borrower Indebtedness") shall be paid or delivered directly to the
Lenders for application on the Guaranteed Obligations, due or to become due,
until such
-6-
Guaranteed Obligations shall have first been paid in full and all of the
Commitments have been terminated. Each Guarantor irrevocably authorizes and
empowers each of the Agents and the Lenders to demand, xxx for, collect and
receive every such payment or distribution and give acquittance therefor and to
make and present for and on behalf of such Guarantor such proofs of claim and
take such other action, in such Agent's or Lender's own name or in the name of
such Guarantor or otherwise, as such Agent or Lender may deem reasonably
necessary or reasonably advisable for the enforcement of this Guaranty. After
the occurrence and during the continuance of an Event of Default, each Lender
may vote, with respect to the Guaranteed Obligations owed to it, such proofs of
claim in any such proceeding, receive and collect any and all dividends or other
payments or disbursements made thereon in whatever form the same may be paid or
issued and apply the same on account of any of the Guaranteed Obligations.
Should any payment, distribution, security or instrument or proceeds thereof be
received by any Guarantor upon or with respect to the Borrower Indebtedness
prior to the payment in full of all of the Guaranteed Obligations and the
termination of all of the Commitments, such Guarantor shall receive and hold the
same in trust, as trustee, for the ratable benefit of the Agents and the Lenders
and shall forthwith deliver the same to the Administrative Agent in precisely
the form received (accompanied by the endorsement or assignment of such
Guarantor where necessary), for application to the Guaranteed Obligations, due
or not due, and, until so delivered, the same shall be held in trust by such
Guarantor as the property of the Agents and the Lenders. After the occurrence
and during the continuance of an Event of Default, if any Guarantor fails to
make any such endorsement or assignment to the Agents or the Lenders, the Agents
or the Lenders or any of their officers or employees are hereby irrevocably
authorized to make the same. Each Guarantor agrees that until the Guaranteed
Obligations have been paid in full and all of the Commitments have been
terminated, such Guarantor will not assign or transfer to any Person any claim
such Guarantor has or may have against any other Borrower.
10. Enforcement; Amendments; Waivers. No delay on the part of any of the
Agents or the Lenders in the exercise of any right or remedy arising under this
Guaranty, the Credit Agreement, any of the other Loan Documents or otherwise
with respect to all or any part of the Guaranteed Obligations, the Collateral or
any other guaranty of or security for all or any part of the Guaranteed
Obligations shall operate as a waiver thereof, and no single or partial exercise
by any of the Agents or the Lenders of any such right or remedy shall preclude
any further exercise thereof. No modification or waiver of any of the provisions
of this Guaranty shall be binding upon any of the Agents or the Lenders, except
as expressly set forth in a writing duly signed and delivered by the Agents and
the Lenders. Failure by any of the Agents or the Lenders at any time or times
hereafter to require strict performance by any Borrower or any other guarantor
of all or any part of the Guaranteed Obligations or any other
-7-
Person of any of the provisions, warranties, terms and conditions contained in
any of the Loan Documents now or at any time or times hereafter executed by such
Persons and delivered to any of the Agents or the Lenders shall not waive,
affect or diminish any right of any of the Agents or the Lenders at any time or
times hereafter to demand strict performance thereof and such right shall not be
deemed to have been waived by any act or knowledge of any of the Agents or the
Lenders, or their agents, officers or employees, unless such waiver is contained
in an instrument in writing, directed and delivered to the Borrowers specifying
such waiver, and is signed by the Administrative Agent. No waiver of any Event
of Default by the Lenders shall operate as a waiver of any other Event of
Default or the same Event of Default on a future occasion, and no action by any
of the Agents or the Lenders permitted hereunder shall in any way affect or
impair any Agent's or Lender's rights and remedies or the obligations of the
Guarantors under this Guaranty. Any determination by a court of competent
jurisdiction of the amount of any principal and/or interest owing by the
Borrowers to the Agents and the Lenders shall be conclusive and binding on each
Guarantor irrespective of whether such Guarantor was a party to the suit or
action in which such determination was made.
11. Effectiveness; Termination. This Guaranty shall become effective
against any Guarantor upon its execution by such Guarantor and shall continue in
full force and effect and may not be terminated or otherwise revoked until the
Guaranteed Obligations have been paid in full in cash and all of the Commitments
have been terminated. If, notwithstanding the foregoing, any Guarantor shall
have any right under applicable law to terminate or revoke its obligations under
this Guaranty, such Guarantor agrees that such termination or revocation shall
not be effective until a written notice of such revocation or termination,
specifically referring hereto, signed by such Guarantor, is received by the
Agents and the Lenders. Such notice shall not affect the right and power of any
of the Agents or the Lenders to enforce rights arising prior to receipt thereof
by the Agents and the Lenders. If any of the Lenders grants loans or takes other
action after such Guarantor terminates or revokes its obligations under this
Guaranty but before the Agents and the Lenders receive such written notice, the
rights of such Lender with respect thereto shall be the same as if such
termination or revocation had not occurred.
12. Successors and Assigns. This Guaranty shall be binding upon each
Guarantor and upon the successors and permitted assigns of such Guarantor and
shall inure to the benefit of the Agents and the Lenders and their respective
successors and permitted assigns; all references herein to the Borrowers and to
the Guarantors shall be deemed to include their respective successors and
permitted assigns. The successors and permitted assigns of the Guarantors and
the Borrowers shall include, without limitation, their respective receivers,
trustees or
-8-
debtors-in-possession. All references to the singular shall be deemed to include
the plural where the context so requires.
13. Governing Law. This Guaranty shall be construed and enforced and the
rights and duties of the parties shall be governed in all respects in accordance
with the law of the State of New York.
14. Consent to Jurisdiction and Service of Process. Each of the Guarantors
agrees that the terms of Section 13.20 of the Credit Agreement with respect to
consent to jurisdiction and service of process shall apply equally to this
Security Agreement.
15. Waiver of Jury Trial. EACH OF THE GUARANTORS WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG
ANY OF THE AGENTS, THE LENDERS OR THE GUARANTORS ARISING OUT OF OR RELATED TO
THIS GUARANTY OR ANY OTHER LOAN DOCUMENT. ANY SUCH PERSON MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS GUARANTY WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
16. Waiver of Bond. Each Guarantor waives the posting of any bond otherwise
required of the Agents and the Lenders in connection with any judicial process
or proceeding to realize on the Collateral or any other security for the
Guaranteed Obligations, to enforce any judgment or other court order entered in
favor of the Agents and the Lenders, or to enforce by specific performance,
temporary restraining order, or preliminary or permanent injunction, this
Guaranty or any other agreement or document between the any Agent or any Lender
and such Guarantor.
16. Advice of Counsel. Each Guarantor represents and warrants to the
Administrative Agent that it has discussed this Guaranty and, specifically, the
provisions of Sections 13 through 15 hereof, with such Guarantor's lawyers.
17. Notices. All notices and other communications required or desired to be
served, given or delivered hereunder shall be in writing or by a
telecommunications device capable of creating a printed record and shall be
addressed to the party to be notified at the address indicated for each in
Section 13.10 of the Credit Agreement. All such notices and communications shall
be deemed to be validly served, given or delivered (i) ten (10) days following
deposit in the United States mails with proper postage prepaid; (ii) upon
delivery thereof if delivered by hand or by overnight courier service to the
party to be notified; or (iii) upon confirmation of receipt thereof if
transmitted by a telecommunications device.
18. Severability. Wherever possible, each provision of this Guaranty shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law,
-9-
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 Guaranty.
19. Collateral. Each Guarantor hereby acknowledges and agrees that its
obligations under this Guaranty are secured pursuant to the terms and provisions
of the applicable Loan Documents to which it is a party.
20. Merger. This Guaranty represents the final agreement of each Guarantor
with respect to the matters contained herein and may not be contradicted by
evidence of prior or contemporaneous agreements, and/or subsequent oral
agreements, between such Guarantor and any Agent or any Lender.
21. Execution in Counterparts. This Guaranty may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
22. No Waiver Under Certain Other Loan Documents. Nothing contained herein
shall be deemed to waive or modify any rights, defenses or claims which such
Guarantor, in its capacity as a Borrower under the Credit Agreement, as a
Pledgor under a Pledge Agreement or as a Grantor under a Security Agreement, may
have and which it has not expressly waived therein.
-10-
IN WITNESS WHEREOF, this Guaranty has been duly executed by each Guarantor
as of the day and year first set forth above.
STELLEX INDUSTRIES, INC.
By____________________________
Name:
Title:
KII HOLDING CORP.
By____________________________
Name:
Title:
TSMD ACQUISITION CORP.
By____________________________
Name:
Title:
KII ACQUISITION CORP.
By____________________________
Name:
Title:
STELLEX MICROWAVE SYSTEMS, INC.
By____________________________
Name:
Title:
STELLEX AEROSPACE
By____________________________
Name:
Title:
-11-
PARAGON PRECISION PRODUCTS
By____________________________
Name:
Title:
XXXXX MACHINING INTERNATIONAL
By____________________________
Name:
Title:
SCANNING ELECTRON ANALYSIS
LABORATORIES, INC.
By____________________________
Name:
Title:
GENERAL INSPECTION
LABORATORIES, INC.
By____________________________
Name:
Title:
-12-
EXHIBIT K
EXECUTION COPY
CASH COLLATERAL
PLEDGE AND ASSIGNMENT AGREEMENT
THIS CASH COLLATERAL PLEDGE AND ASSIGNMENT AGREEMENT (as amended,
supplemented or otherwise modified from time to time, this "Agreement") dated as
of October 31, 1997, by and among STELLEX INDUSTRIES, INC., a Delaware
corporation, KII HOLDING CORP., a Delaware corporation, TSMD ACQUISITION CORP.,
a Delaware corporation, KII ACQUISITION CORP., a Delaware corporation, STELLEX
MICROWAVE SYSTEMS, INC., a California corporation, STELLEX AEROSPACE, a
California corporation, PARAGON PRECISION PRODUCTS, a California corporation,
XXXXX MACHINING INTERNATIONAL, a California corporation, SCANNING ELECTRON
ANALYSIS LABORATORIES, INC., a California corporation, and GENERAL INSPECTION
LABORATORIES, INC., a California corporation,(each, individually, a "Pledgor"
and collectively, the "Pledgors") and FIRST UNION COMMERCIAL CORPORATION, in its
capacity as collateral agent (with its successors in such capacity, the
"Collateral Agent") for the Agents, the Lenders, and the other Holders, in each
case under and as defined in that certain Credit Agreement dated as of October
31, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") among each of the Pledgors as borrowers (collectively, the
"Borrowers"), Societe Generale, as administrative agent (the "Administrative
Agent"), the Collateral Agent and First Union Commercial Corporation, as
syndication agent (the "Syndication Agent, and collectively with the
Administrative Agent and the Collateral Agent, the "Agents"), and the financial
institutions from time to time parties thereto (the "Lenders"). Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to such terms in the Credit Agreement.
PRELIMINARY STATEMENTS:
(1) The Pledgors have opened a special non- interest-bearing cash
collateral account (the "Account") with First Union National Bank at its office
at 0000 Xxxxx Xxxxxx Xxxx, XX0000, XxXxxx, XX 00000, Account No. _____________,
in the name of the Collateral Agent and under the sole control and dominion of
the Collateral Agent and subject to the terms of this Agreement.
(2) It is a condition precedent to the making of Loans by the Lenders under
the Credit Agreement that the Pledgors shall have made the pledge and assignment
contemplated by this Agreement.
NOW THEREFORE, in consideration of the premises and in order to induce the
Lenders to make the Loans under the Credit Agreement, each Pledgor hereby agrees
with the Collateral Agent
for its benefit and the ratable benefit of the Lenders, the Agents and the other
Holders as follows:
SECTION 1. Pledge and Assignment. Each Pledgor hereby pledges and assigns
to the Collateral Agent for its benefit and the ratable benefit of the Lenders,
Agents and the other Holders, and grants to the Collateral Agent for its benefit
and the ratable benefit of the Lenders, the Agents and the other Holders a
security interest in, the following collateral (the "Collateral"):
(i) the Account, all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing the
Account;
(ii) all Investments (as hereinafter defined) from time to time, and
all certificates and instruments, if any, from time to time representing or
evidencing the Investments;
(iii) all notes, certificates of deposit, deposit accounts, checks and
other instruments from time to time hereafter delivered to or otherwise
possessed by the Collateral Agent for or on behalf of such Pledgor in
substitution for or in addition to any or all of the then existing
Collateral;
(iv) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the then existing Collateral; and
(v) all proceeds of any and all of the foregoing Collateral.
SECTION 2. Security for Obligations. This Agreement secures the payment of
all Obligations and all obligations of the Pledgors now or hereafter existing
under this Agreement (all such obligations being the "Liabilities").
SECTION 3. Delivery of Collateral. All certificates or instruments, if any,
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent. The Collateral Agent shall have the right, at any time in
its discretion and without notice to the Pledgor, to transfer to or to register
in the name of the Collateral Agent or any of its nominees any or all of the
Collateral. In addition, the Collateral Agent shall have the right at any time
to exchange certificates or instruments representing or evidencing Collateral
for certificates or instruments of smaller or larger denominations.
-2-
SECTION 4. Maintaining the Account. So long as any Lender has any
Commitment or any Note shall remain unpaid:
(a) The Pledgors will maintain the Account with First Union National
Bank.
(b) It shall be a term and condition of the Account, notwithstanding
any term or condition to the contrary in any other agreement relating to
the Account and except as otherwise provided by the provisions of Section 6
and Section 14, that no amount (including interest on the Account) shall be
paid or released to or for the account of, or withdrawn by or for the
account of, any Pledgor or any other person or entity from the Account.
The Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
SECTION 5. Investing of Amounts in the Account. If requested by the
Pledgors, the Collateral Agent will, subject to the provisions of Section 6 and
Section 14, from time to time (a) invest amounts on deposit in the Account in
such Cash Equivalents as the Pledgors may select and the Collateral Agent may
approve and (b) invest interest paid on the Cash Equivalents referred to in
clause (a) above, and reinvest other proceeds of any such Cash Equivalents which
may mature or be sold, in each case in such Cash Equivalents as the Pledgors may
select and the Collateral Agent may approve (the Cash Equivalents referred to in
clauses (a) and (b) above being collectively "Investments"), provided that all
such amounts (and all interest on such amounts) invested in Cash Equivalents
shall be available for and shall be deposited into the Account not later than
one year after such amounts were so invested. Interest and proceeds that are not
invested or reinvested in Investments as provided above shall be deposited and
held in the Account.
SECTION 6. Release of Amounts. So long as no Default or Event of Default
shall have occurred and be continuing, funds shall be released to the Pledgors
or their designee among the Loan Parties as follows:
(a) If the Collateral Agent receives a certificate, substantially in
the form of Exhibit A attached hereto, signed by any Pledgor that has
deposited Net Cash Proceeds into the Account on a Business Day within the
immediately preceding 365 day period (the "Deposited Amount"), the
Collateral Agent shall release the amount requested in such certificate to
such Pledgor.
(b) After the Commitments have been terminated and at the request of
the Pledgors, amounts of credit balance of the Account shall be released to
the Pledgors.
-3-
Each Pledgor authorizes the Collateral Agent to liquidate Investments if and as
necessary in order for the Collateral Agent to comply with clauses (a) and (b)
above.
SECTION 7. Payment of Amounts to Administrative Agent for Application. On
the first anniversary of the date on which each amount is deposited into the
Account, Investments shall be liquidated, if necessary, so that an amount equal
to such deposited amount, if such deposited amount has not previously been
released in accordance with the provisions of Section 6, shall be remitted by
the Collateral Agent to the Administrative Agent for application by the
Administrative Agent to outstanding Obligations in accordance with the
provisions of the Credit Agreement.
SECTION 8. Representations and Warranties. Each Pledgor represents and
warrants as follows:
(a) Such Pledgor is the legal and beneficial owner of the Collateral free
and clear of any lien, security interest, option or other charge or encumbrance
except for the security interest created by this Agreement.
(b) The pledge and assignment of the Collateral pursuant to this Agreement
creates a valid and perfected first priority security interest in the
Collateral, securing the payment of the Liabilities.
(c) No consent of any other person or entity and no authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required (i) for the pledge and assignment by
such Pledgor of the Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by such Pledgor, (ii) for the
perfection or maintenance of the security interest created hereby (including the
first priority nature of such security interest) or (iii) for the exercise by
the Collateral Agent of its rights and remedies hereunder.
SECTION 9. Further Assurances. Each Pledgor agrees that at any time and
from time to time, at the expense of the Pledgors, such Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Collateral Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
SECTION 10. Transfers and Other Liens. Each Pledgor agrees that it will not
(i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral, or (ii) create or
permit to exist any lien, security interest, option or other charge or
-4-
encumbrance upon or with respect to any of the Collateral, except for the
security interest under this Agreement.
SECTION 11. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Collateral Agent such Pledgor's attorney-in-fact, with full
authority in the place and stead of such Pledgor and in the name of such Pledgor
or otherwise, from time to time in the Collateral Agent's discretion to take any
action and to execute any instrument which the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, indorse and collect all instruments made payable
to such Pledgor or Pledgors representing any interest payment, dividend or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.
SECTION 12. Collateral Agent May Perform. If any Pledgor fails to perform
any agreement contained herein, the Collateral Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Pledgors under Section
15.
SECTION 13. The Collateral Agent's Duties. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Agent shall have no
duty as to any Collateral, as to ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not the Collateral Agent, any Lender or any other
Agent has or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which the Collateral Agent accords its own property.
SECTION 14. Remedies upon Default. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may, without notice to the Pledgors except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Collateral in the Account against
the Liabilities or any part thereof.
(b) The Collateral Agent may also exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the
-6-
rights and remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of New York at that time (the
"Code") (whether or not the Code applies to the affected Collateral), and
may also, without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any
of the Collateral Agent's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable. Each Pledgor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to the Pledgors of
the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The Collateral
Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(c) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
be applied (after payment of any amounts payable to the Collateral Agent
pursuant to Section 15) in whole or in part by the Collateral Agent for the
ratable benefit of the Agents, the Lenders and the other Holders against,
all or any part of the Liabilities in such order as the Collateral Agent
shall elect. Any surplus of such cash or cash proceeds held by the
Collateral Agent and remaining after payment in full of all the Liabilities
shall be paid over to the Pledgors.
SECTION 15. Expenses. The Pledgors will upon demand pay to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which the
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent, the Lenders or the
other Agents hereunder or (iv) the failure by any Pledgor to perform or observe
any of the provisions hereof.
SECTION 16. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, and no consent to any departure by any Pledgor herefrom shall in
any event be effective unless the same shall be in writing and signed by the
Collateral Agent, and then such waiver or consent shall be effective only in
-6-
the specific instance and for the specific purpose for which given.
SECTION 17. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Pledgors, at their respective addresses
specified in the Credit Agreement, and if to the Collateral Agent, at its
address specified in the Credit Agreement, or, as to either party, at such other
address as shall be designated by such party in a written notice to the other
party. All such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
SECTION 18. Continuing Security Interest; Assignments under Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the later of (x)
the payment in full of the Liabilities and all other amounts payable under this
Agreement and (y) the Commitment Termination Date, (ii) be binding upon each
Pledgor, its successors and assigns, and (iii) inure to the benefit of, and be
enforceable by, the Collateral Agent, the other Agents, the Lenders, and the
other Holders, and each of their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), any Lender or any
Agent may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitment, the Loans owing to it and any Note held by it) to
any other person or entity, and such other person or entity shall thereupon
become vested with all the benefits in respect thereof granted to such Lender or
such Agent herein or otherwise. Upon the later of the payment in full of the
Liabilities and all other amounts payable under this Agreement and the
Commitment Termination Date, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the Pledgors. Upon
any such termination, the Collateral Agent will, at the Pledgors' expense,
return to the Pledgors such of the Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof and execute and deliver to the
Pledgors such documents as the Pledgors shall reasonably request to evidence
such termination.
SECTION 19. Governing Law; Terms. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except to the
extent that perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of New York. Unless otherwise defined herein
or in the Credit Agreement, terms
-7-
defined in Article 9 of the Code are used herein as therein defined.
-8-
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
STELLEX INDUSTRIES, INC.
By____________________________
Name:
Title:
KII HOLDING CORP.
By____________________________
Name:
Title:
TSMD ACQUISITION CORP.
By____________________________
Name:
Title:
KII ACQUISITION CORP.
By____________________________
Name:
Title:
STELLEX MICROWAVE SYSTEMS, INC.
By____________________________
Name:
Title:
STELLEX AEROSPACE
By____________________________
Name:
Title:
PARAGON PRECISION PRODUCTS
By____________________________
Name:
Title:
S-1
XXXXX MACHINING INTERNATIONAL
By____________________________
Name:
Title:
SCANNING ELECTRON ANALYSIS
LABORATORIES, INC.
By____________________________
Name:
Title:
GENERAL INSPECTION
LABORATORIES, INC.
By____________________________
Name:
Title:
Acknowledged and agreed to as of October 31, 1997.
FIRST UNION COMMERCIAL CORPORATION, as Collateral Agent
By:_____________________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
S-2
EXHIBIT A
FORM OF OFFICER'S CERTIFICATE
I, __________________, the duly [appointed] [elected] _____________1 of
[Name of Pledgor] (the "Pledgor"), do hereby certify as follows in connection
with the Cash Collateral Pledge Agreement and the Credit Agreement (each, as
defined below):
1. Reference is made to that certain Cash Collateral Pledge and Assignment
Agreement(as amended, supplemented or otherwise modified from time to time, the
"Cash Collateral Pledge Agreement") dated as of October 31, 1997, by and among
the Pledgors named therein and First Union Commercial Corporation, in its
capacity as collateral agent (with its successors in such capacity, the
"Collateral Agent") for the Agents, the Lenders, and the other Holders, in each
case under and as defined in that certain Credit Agreement dated as of October
31, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") among each of the Pledgors as borrowers (collectively, the
"Borrowers"), Societe Generale, as administrative agent (the "Administrative
Agent"), the Collateral Agent, and First Union Commercial Corporation, as
syndication agent (the "Syndication Agent, and collectively with the
Administrative Agent and the Collateral Agent, the "Agents"), and the financial
institutions from time to time parties thereto (the "Lenders"). Capitalized
terms used in this Certificate and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Cash Collateral Pledge
Agreement.
2. The Pledgor is requesting that $__________ (the "Requested Amount") be
released to it or its designee among the Loan Parties on __________________ (the
"Release Date") from the Account.
3. The Requested Amount has been deposited by the Pledgor within the 365
day period immediately preceding the Release Date.
4. The Pledgor or its designee among the Loan Parties is using the
Requested Amount [to acquire an asset on the Release Date] or [to fund the
purchase price of a Permitted Acquisition on the Release Date] in accordance
with the provisions of the Credit Agreement.
5. No Default or Event of Default under the Credit Agreement has occurred
and is continuing.
--------
1/Chief Financial Officer, or other officer of the Pledgor with significant
supervisory responsibility for the financial affairs of the Pledgor.
S-3
6. All representatives and warranties of the Pledgor contained in the
Credit Agreement are true and correct as of today, other than those that
expressly speak as of a different date.
[5. All of the conditions precedent set forth in Section 5.03 of the Credit
Agreement have been satisfied or waived in writing by the Lenders.]2
WITNESS my hand this __ day of __________, 199_:
--------------------------
Name:
Title:
--------
2/To be used if the Requested Amount is being requested in connection with a
Permitted Acquisition.
S-4
EXHIBIT L
Form of Security Agreement
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise modified
from time to time, this "Security Agreement") dated as of _______ __, 199_, by
and among [NAME OF GRANTOR] (with its successors and permitted assigns, the
"Grantor"), and FIRST UNION COMMERCIAL CORPORATION, in its capacity as
collateral agent (with its successors in such capacity, the "Collateral Agent")
for the Agents, the Lenders, and the other Holders, in each case under and as
defined in that certain Credit Agreement dated as of October __, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") among the Grantor and the other borrowers named therein
(collectively, the "Borrowers"), Societe Generale, as administrative agent (the
"Administrative Agent"), the Collateral Agent, and First Union Commercial
Corporation, as syndication agent (the "Syndication Agent", and collectively
with the Administrative Agent and the Collateral Agent, the "Agents"), and the
financial institutions from time to time parties thereto (the "Lenders").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.
WITNESSETH:
WHEREAS, the Grantor is a party to the Credit Agreement, pursuant to which
the Lenders have agreed, subject to certain conditions precedent, to make loans
and other financial accommodations to the Borrowers from time to time;
WHEREAS, in order to secure the prompt and complete payment, observance and
performance of (i) all of the Obligations and (ii) all of the Grantor's
obligations and liabilities hereunder and in connection herewith (all the
Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Agents and the Lenders have
required as a condition, among others, to entering into the Credit Agreement
that the Grantor execute and deliver this Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth above, the terms
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Defined Terms.
(a) Unless otherwise defined herein, each capitalized term used herein that
is defined in the Credit Agreement shall have the meaning specified for such
term in the Credit Agreement.
Unless otherwise defined herein or in the Credit Agreement, all terms defined in
Article 8 and Article 9 of the Uniform Commercial Code in effect as of the date
hereof in the State of New York are used herein as defined therein as of the
date hereof.
(b) The words "hereby," "hereof," "herein" and "hereunder" and words of
like import when used in this Security Agreement shall refer to this Security
Agreement as a whole and not to any particular provision of this Security
Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the singular shall have
comparable meanings when used in the plural, and vice versa, unless otherwise
specified.
2. Grant of Security Interest. To secure the prompt and complete payment,
observance and performance of all the Liabilities, the Grantor hereby grants to
the Collateral Agent for the ratable benefit of the Agents, the Lenders, and the
other Holders a security interest in all of the Grantor's rights, title and
interests in and to the following property, whether now owned or existing or
hereafter arising or acquired and wheresoever located (the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts receivable and
other rights of the Grantor to payment for the sale or lease of goods or the
rendition of services (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance (collectively, "Accounts");
(b) EQUIPMENT: All of the Grantor's present and future (i) equipment and
fixtures, including, without limitation, wherever located, all machinery,
manufacturing, distribution, selling, data processing and office equipment,
furniture, furnishings, assembly systems, tools, tooling, molds, dies,
appliances and vehicles, (ii) other tangible personal property (other than the
Grantor's Inventory) and (iii) any and all accessions, parts and appurtenances
attached to any of the foregoing or used in connection therewith, and any
substitutions therefor and replacements, products and proceeds thereof
(collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Grantor's present and future general
intangibles, choses in action, causes of action, and all other intangible
personal property of every kind and nature including, without limitation,
corporate, partnership and other business books and records, inventions,
designs, patents, patent applications, trademarks, service marks, trademark
applications, service xxxx applications, trade names,
2
trade secrets, goodwill, registrations, copyrights, licenses, franchises,
customer lists, computer programs, software and other computer materials, tax
refunds, tax refund claims, rights and claims against charters, carriers,
shippers, franchisees, lessors, and lessees, and rights to indemnification,
intercompany receivables, and any security documents executed in connection
therewith, deposit accounts (excluding tax, payroll and trust accounts),
proceeds of any letters of credit, indemnity, warranty or guaranty payable to
the Grantor from time to time with respect to the foregoing or proceeds of any
insurance policies on which the Grantor is named as beneficiary, claims against
third parties for advances and other financial accommodations and any other
obligations whatsoever owing to the Grantor, contract rights, customer and
supplier contracts, rights in and to all security agreements, security interests
or other security held by the Grantor to secure payment of the Grantor's
accounts, all right, title and interest under leases, subleases, and concessions
and other agreements relating to real or personal property (including, without
limitation, all rents, issues and profits related thereto), rights in and under
guarantees, instruments, securities, documents of title and other contracts
securing, evidencing, supporting or otherwise relating to any of the foregoing,
together with all rights in any goods, merchandise or Inventory (as defined
below) which any of the foregoing may represent (collectively, "General
Intangibles");
(d) INVENTORY: All of the Grantor's present and future (i) inventory, (ii)
goods, merchandise and other personal property furnished or to be furnished
under any contract of service or intended for sale or lease, and all goods
consigned by the Grantor and all other items which have previously constituted
Equipment but are then currently being held for sale or lease in the ordinary
course of the Grantor's business, (iii) raw materials, work-in-process and
finished goods, (iv) materials, components and supplies of any kind, nature or
description used or consumed in the Grantor's business or in connection with the
manufacture, production, packing, shipping, advertising, finishing or sale of
any of the Property described in clauses (i) through (iii) above, (v) goods in
which the Grantor has a joint or other interest to the extent of the Grantor's
interest therein or right of any kind (including, without limitation, goods in
which the Grantor has an interest or right as consignee), and (vi) goods which
are returned to or repossessed by the Grantor; in each case whether in the
possession of the Grantor, a bailee, a consignee, or any other Person for sale,
storage, transit, processing, use or otherwise, and any and all documents for or
relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, all
instruments (as defined in Article 9 of the Uniform Commercial Code) and
securities (as defined in Article 8 of the Uniform Commercial Code), all bills
of lading, warehouse receipts and other documents of title and documents, in
each
3
instance whether now owned or hereafter acquired by the Grantor (collectively,
"Chattel Paper, Instruments and Documents");
(f) OTHER PROPERTY: To the extent not included in the foregoing (and except
to the extent expressly excluded from the foregoing), all property or interests
in property now owned or hereafter acquired by the Grantor, whether in the
possession, custody or control of any Agent, any Lender, or any other Holder, or
any agent or affiliate of any of them in any way or for any purpose (whether for
safekeeping, deposit, custody, pledge, transmission, collection or otherwise),
including, without limitation, all rights and interests of the Grantor, now
existing or hereafter arising and however and wherever arising, in respect of
any and all (v) investment property; (w) notes, drafts, letters of credit,
stocks, bonds, and debt and equity securities, whether or not certificated, and
warrants, options, puts and calls and other rights to acquire or otherwise
relating to the same; (x) money; (y) proceeds of loans, including, without
limitation, all the Loans made to the Grantor under the Credit Agreement; and
(z) insurance proceeds and books and records relating to any of the property
covered by this Security Agreement (collectively, "Other Property");
together with respect to each of the items set forth in paragraphs (a) through
(f) above with all accessions and additions thereto, substitutions therefor, and
replacements, proceeds and products thereof.
3. Continuing Liability. The Grantor hereby expressly agrees that,
notwithstanding anything set forth herein to the contrary, the Grantor shall
remain solely responsible under each contract, agreement, interest or obligation
as to which a Lien has been granted to the Collateral Agent hereunder for the
observance and performance of all of the conditions and obligations to be
observed and performed by the Grantor thereunder, all in accordance with and
pursuant to the terms and provisions thereof, and the exercise by the Collateral
Agent, any other Agent or any Lender of any rights under this Security
Agreement, the Credit Agreement or any other Loan Document shall not release the
Grantor from any of the Grantor's duties or obligations hereunder and under each
such contract, agreement, interest or obligation. None of the Collateral Agent,
any other Agent or any Lender shall have any duty, responsibility, obligation or
liability under any such contract, agreement, interest or obligation by reason
of or arising out of this Security Agreement or the assignment thereof by the
Grantor to the Collateral Agent or the granting by the Grantor to the Collateral
Agent of a Lien thereon or the receipt by the Collateral Agent, any other Agent
or any Lender of any payment relating to any such contract, agreement, interest
or obligation pursuant hereto, nor shall the Collateral Agent, any other Agent
or any Lender be required or obligated (nor to the extent prohibited by the
terms of such contract, agreement, interest or
4
obligation or applicable law, rule or regulation, shall the Collateral Agent,
any other Agent or any Lender be permitted), in any manner, to (a) perform or
fulfill any of the obligations of the Grantor thereunder or pursuant thereto,
(b) make any payment, or to make any inquiry as to the nature or the sufficiency
of any payment received by the Grantor or the sufficiency of any performance by
any party under any such contract, agreement, interest or obligation, or (c)
present or file any claim, or take any action to collect or enforce any
performance or payment of any amounts which may have been assigned to the
Grantor, on which the Grantor has been granted a Lien to which the Grantor may
be entitled at any time or times.
4. Representations, Warranties and Covenants. The Grantor hereby
represents, warrants and covenants that as of the date of the execution of this
Security Agreement, and until the termination of this Security Agreement
pursuant to Section 14 below:
(a) All of the Equipment and Inventory (other than Inventory and
Equipment sold in accordance with the terms of the Credit Agreement,
Equipment being repaired or serviced, Inventory in transit or in the
possession and control of subcontractors of the Grantor or any other Person
for processing and vehicles) are located at the places specified in
Schedule 1 attached hereto and such location is an owned, leased, bailment
or other location as specified in Schedule 1 attached hereto. As of the
date hereof, the correct corporate name, the principal place of business,
the chief executive office, and the federal tax identification number of
the Grantor and the places where the Grantor's books and records concerning
the Collateral are currently kept are set forth in Schedule 2 attached
hereto and made a part hereof, and the Grantor will not change such
principal place of business or chief executive office or remove such
records without (i) providing the Collateral Agent with at least thirty
(30) days' prior written notice of such change, and (ii) making all filings
under the Uniform Commercial Code necessary or appropriate to preserve the
perfection of the security interests described herein to the extent such
security interest may be perfected by such filings. The Grantor will not
change its name, identity or corporate structure in any manner which might
make any financing statement filed hereunder misleading, unless the Grantor
shall have (A) given the Collateral Agent at least thirty (30) days' prior
written notice thereof (and received any consent that may be required under
the terms of the Credit Agreement), and (B) certified to the Collateral
Agent that all filings reflecting such new name, identity or structure have
been made which are necessary or appropriate to preserve the perfection of
the security interests described herein. The Grantor will hold and preserve
such records and chattel paper and will permit representatives of the
5
Collateral Agent at any time during normal business hours to inspect and
make abstracts from such records and chattel paper.
(b) The Grantor has exclusive possession and control of the Equipment
and Inventory, except for (i) Inventory in the possession and control of a
bailee or warehouseman of the Grantor as specified in Schedule 1 attached
hereto; (ii) Inventory in the possession and control of subcontractors of
the Grantor or any other Person for processing; (iii) Equipment being
repaired or serviced; and (iv) Equipment and Inventory in transit with
common or other carriers.
(c) The Grantor is the legal and beneficial owner of the Collateral
free and clear of all Liens except as permitted under Section 9.03 of the
Credit Agreement. The Grantor has not, during the five (5) years preceding
the date hereof, been known as or used any other corporate or fictitious
name, except as disclosed on Schedule 3 hereto, nor acquired all or
substantially all the assets, capital stock or operating unit of any
Person, except as disclosed on Schedule 3 hereto and each predecessor in
interest of the Grantor during the five (5) years preceding the Closing
Date is disclosed on Schedule 3 hereto.
(d) This Security Agreement creates in favor of the Collateral Agent a
legal, valid and enforceable security interest in the Collateral, securing
the payment of the Liabilities. When financing statements have been filed
in the appropriate offices in the locations listed on Schedules 1 and 2
hereto, the Collateral Agent will have a fully perfected first priority
Lien on the Collateral to the extent such Lien may be perfected by Uniform
Commercial Code filings, except, in the case of priority, for Liens
permitted by Section 9.03 of the Credit Agreement.
5. Covenants. The Grantor covenants and agrees with the Collateral Agent
that from and after the date of this Secur ity Agreement and until the
termination of this Security Agreement pursuant to Section 14 below:
(a) At any time and from time to time, upon the Collateral Agent's
written request and at the expense of the Grantor, the Grantor will
promptly and duly execute and deliver any and all such further instruments
and documents and take such further action as the Collateral Agent
reasonably may deem desirable in order to perfect and protect any Lien
granted or purported to be granted hereby or to enable the Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to
the Collateral. Without limiting the generality of the foregoing, the
Grantor will: (i) upon the occurrence and
6
during the continuance of an Event of Default, at the request of the
Collateral Agent, xxxx conspicuously each item of chattel paper included in
the Collateral and each related contract and, each of its records
pertaining to the Collateral, with a legend, in form and substance
satisfactory to the Collateral Agent, indicating that such document,
chattel paper, related contract or Collateral is subject to the security
interest granted hereby; (ii) if any Collateral shall be evidenced by a
promissory note or other instrument (other than checks or drafts received
in the ordinary course of the Grantor's business), deliver and pledge to
the Collateral Agent hereunder such note or instrument duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to the Collateral Agent; and (iii) execute
and file such financing or continuation statements, or amendments thereto,
and such other instruments or notices as the Collateral Agent may request,
as may be necessary or desirable, in order to perfect and preserve the
security interest granted or purported to be granted hereby. The Grantor
hereby authorizes the Collateral Agent to file any such financing or
continuation statements without the signature of the Grantor to the extent
permitted by applicable law. The Grantor hereby agrees that a carbon,
photographic, photostatic or other reproduction of this Security Agreement
or of a financing statement is sufficient as a financing statement to the
extent permitted by applicable law.
(b) The Grantor shall keep the Equipment and Inventory (other than
Inventory and Equipment sold in accordance with the terms of the Credit
Agreement, Equipment being repaired or serviced, Inventory in transit or in
the possession and control of subcontractors of the Grantor or any other
person for Processing and vehicles) at the places specified in Schedule 1
hereto and deliver written notice to the Collateral Agent at least 30 days
prior to establishing any other location at which it reasonably expects to
maintain Inventory and/or Equipment (it being understood and agreed that
all action required by Section 5(a)(iii) hereof shall have been taken in
the relevant jurisdiction with respect to all such Equipment and/or
Inventory prior to the establishment of any such location). Upon the
establishment of any such location, and after notice thereof to the
Collateral Agent as required in the preceding sentence, Schedule 1 hereto
shall be deemed amended to add such location thereto without further action
by the Collateral Agent or the Grantor and the Grantor hereby authorizes
the Collateral Agent to substitute a new Schedule 1 hereto to reflect such
additional location(s).
(c) The Grantor will keep and maintain at the Grantor's own cost and
expense satisfactory and complete
7
records of the Collateral in a manner reasonably acceptable to the
Collateral Agent, including, without limitation, a record of all payments
received and all credits granted with respect to such Collateral and a
record of the Collateral Agent's security interest in the Collateral. Upon
the occurrence and during the continuance of an Event of Default, the
Grantor shall, for the Collateral Agent's further security, deliver and
turn over to the Collateral Agent or the Collateral Agent's designated
representatives at any time upon three (3) days' notice from the Collateral
Agent or the Collateral Agent's designated representative, copies of any
such books and records (including, without limitation, subject to
limitations in applicable licensing or similar arrangements, any and all
computer tapes, programs and source codes relating to the Collateral or any
part or parts thereof).
(d) In any suit, proceeding or action brought by the Collateral Agent
under any account comprising part of the Collateral, the Grantor will save,
indemnify and keep the Collateral Agent and each Lender harmless from and
against all expense, loss or damages suffered by reason of any defense,
setoff, counterclaim, recoupment or reduction of liability whatsoever of
the obligor thereunder, arising out of a breach by the Grantor of any
obligation 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 the
Grantor, and all such obligations of the Grantor shall be and shall remain
enforceable against and only against the Grantor and shall not be
enforceable against the Collateral Agent or any Lender; provided, however,
the Grantor shall have no obligation to the Collateral Agent with respect
to the matters indemnified pursuant to this subsection (d) resulting from
the willful misconduct or gross negligence of the Collateral Agent, as
determined in a final non-appealable judgment by a court of competent
jurisdiction.
(e) The Grantor will not create, permit or suffer to exist, and will
defend the Collateral against and take such other action as is necessary to
remove, any Lien on such Collateral, other than Liens permitted under
Section 9.03 of the Credit Agreement, and will defend the right, title and
interest of the Collateral Agent in and to the Grantor's rights to such
Collateral, including, without limitation, the proceeds and products
thereof, against the claims and demands of all Persons whatsoever other
than claims secured by liens permitted under Section 9.03 of the Credit
Agreement.
(f) The Grantor will not, without the Collateral Agent's prior written
consent, except in the ordinary course of business and for amounts which
are not material to the
8
Grantor in the aggregate, (i) grant any extension of the time of payment of
any of the Collateral or compromise, compound or settle the same for less
than the full amount thereof; (ii) release, wholly or partly, any Person
liable for the payment thereof; or (iii) allow any credit or discount
whatsoever thereon other than trade discounts granted in the ordinary
course of business.
(g) The Grantor will advise the Collateral Agent promptly, in
reasonable detail, of (i) any material Lien or claim made by or asserted
against any or all of the Collateral (other than Liens existing on the
Closing Date and listed on Schedule 1.01(A) to the Credit Agreement and
Liens permitted under Section 9.03 of the Credit Agreement), and (ii) the
occurrence of any other event which would have a material adverse effect on
the aggregate value of the Collateral or on the Liens with respect to such
Collateral created hereunder.
6. Collections. Except as otherwise provided in this Section 6, the Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to the Grantor under the Accounts. In connection with such collections, the
Grantor may take (and, after the occurrence of an Event of Default, at the
Collateral Agent's direction, must take) such action as the Grantor or, after
the occurrence and during the continuation an Event of Default, the Collateral
Agent may deem necessary or advisable to enforce collection of the Accounts;
provided, however, that the Collateral Agent shall have the right at any time,
upon the occurrence and during the continuance of an Event of Default, (i) to
require the Grantor to prepare notices of assignment for each government
contract to which the Grantor is a party and to file such notices of assignment
with the appropriate contracting officer of the United States Government and
(ii) to otherwise notify the account debtors or obligors under any Accounts of
the assignment of such Accounts to the Collateral Agent and to direct such
account debtors or obligors to make payment of all amounts due or to become due
to the Grantor thereunder directly to the Collateral Agent and, upon such
notification and at the expense of the Grantor, to enforce collection of any
such Accounts, and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as the Grantor might have
done. After receipt by the Grantor of notice from the Collateral Agent requiring
performance of any of the acts referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including instruments) received by the
Grantor in respect of the Accounts shall be received in trust for the ratable
benefit of the Collateral Agent, the Lenders, and the other Holders hereunder,
shall be segregated from other funds of the Grantor and shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any necessary
endorsement) to be applied to the Obligations in accordance with the Credit
Agreement (including,
9
without limitation, Section 3.02(b)(ii) thereof) and (ii) the Grantor shall not
adjust, settle or compromise the amount or payment of any Account, release
wholly or partly any account debtor or obligor thereof, or allow any credit or
discount thereon.
7. Remedies, Application of Proceeds, Rights upon Event of Default.
(a) Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent may exercise in respect of the Collateral, in addition to
all other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies provided for in the Credit Agreement and all the
rights and remedies of a secured party under the Uniform Commercial Code, and
all other applicable law as in effect in any relevant jurisdiction. In addition,
the Collateral Agent may, upon the occurrence and during the continuance of an
Event of Default:
(i) require the Grantor to, and the Grantor hereby agrees that it will
at its expense and upon request of the Collateral Agent, promptly assemble
all, or such part, of the Collateral as directed by the Collateral Agent
and make such Collateral available to the Collateral Agent at a place
designated by the Collateral Agent, which place shall be reasonably
convenient to the Collateral Agent, whether at the premises of the Grantor
or otherwise;
(ii) enter, with or without process of law and without breach of the
peace, any premises where any of the Collateral or the books and records of
the Grantor related thereto are or may be located and, without charge or
liability to the Collateral Agent, seize and remove such Collateral and
such books and records from such premises, or remain upon such premises and
use the same for the purpose of enforcing any and all rights and remedies
of the Collateral Agent under this Security Agreement, the Credit Agreement
or any of the other Loan Documents; and
(iii) without notice, except as specified below, sell, lease, assign,
grant an option or options to purchase or otherwise dispose of all or any
part of the Collateral in one or more parcels, at public or private sale or
sales, at any exchange, broker's board or at any of the Collateral Agent's
offices or elsewhere, at such prices as the Collateral Agent may deem best,
for cash, on credit or for future delivery, and upon such other terms as
the Collateral Agent may deem commercially reasonable; provided, however,
that the Grantor shall not be credited with the net proceeds of any such
credit sale, future delivery or lease of the Collateral until the cash
proceeds thereof are actually received by the Collateral Agent and
provided, further that
10
any such sale, lease assignment, option to purchase or other disposition
(each a "disposition") shall be subject to any prohibition or restriction
thereon contained in any agreement, contract, interest or right comprising
a part of the Collateral subject to such disposition and any applicable
law, rule or regulation. The Grantor agrees that, to the extent notice of
sale shall be required by law, ten (10) or more Business Days' notice, or
such longer period as may be required by law, to the Grantor of the time
and place of any public sale, or the time after which any private sale is
to be made, shall constitute reasonable notification. No notification
required by law need be given to the Grantor if the Grantor has signed,
after the occurrence of an Event of Default, a statement renouncing any
right to notification of sale or other intended disposition. The Collateral
Agent shall not be obligated to make any sale of any of the Collateral
regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. The Collateral
Agent, each other Agent and each Lender shall have the right upon any such
public sale or sales and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in the Grantor, which
right or equity is hereby expressly waived and released. In the event of a
sale of any Collateral, or any part thereof, to a Lender, the Collateral
Agent or any other Agent upon the occurrence and during the continuance of
an Event of Default, such Lender or Agent shall not deduct or offset from
any part of the purchase price to be paid therefor any indebtedness owing
to it by the Grantor. Any and all proceeds received by the Collateral Agent
with respect to any sale of, collection from or other realization upon all
or any part of the Collateral, whether consisting of monies, checks, notes,
drafts, bills of exchange, money orders or commercial paper of any kind
whatsoever, shall be held by the Collateral Agent and distributed by the
Collateral Agent in accordance with the Credit Agreement (including,
without limitation, Section 3.02(b)(ii) thereof) and the Grantor shall
remain liable for any deficiency following the sale of the Collateral.
Subject to the terms of any applicable license agreement to which the
Grantor is a party, the Collateral Agent is hereby granted an irrevocable
license or other right to use, without charge, the Grantor's labels,
copyrights, patents, rights of use of any name, trade names, general
intangibles, trademarks and advertising matter, or any property of a
similar nature, in completing production of, advertising for sale and
selling any Collateral.
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(b) To the extent permitted by applicable law, the Grantor waives all
claims, damages and demands against the Collateral Agent, any other Agent or any
Lender arising out of the repossession, retention or sale of the Collateral, or
any part or parts thereof, except as provided in Section 9 hereof.
(c) The Grantor recognizes that in the event the Grantor fails to perform,
observe or discharge any of its obligations or liabilities under this Security
Agreement, no remedy at law will provide adequate relief to the Collateral Agent
and the Collateral Agent shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
(d) The rights and remedies provided under this Security Agreement are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law or equity.
8. The Collateral Agent May Perform. If the Grantor fails to perform any
agreement contained herein, the Collateral Agent, after giving notice in
accordance with the Credit Agreement, may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall constitute an Obligation payable by the Grantor in accordance
with the terms of the Credit Agreement.
9. The Collateral Agent's Duty of Care. The Collateral Agent shall not be
liable for any acts, omissions, errors of judgment or mistakes of fact or law
including, without limitation, acts, omissions, errors or mistakes with respect
to the Collateral, except for those arising out of or in connection with the
Collateral Agent's (i) gross negligence or willful misconduct, or (ii) failure
to use reasonable care with respect to the safe custody of the Collateral in the
Collateral Agent's possession. Without limiting the generality of the foregoing,
the Collateral Agent shall be under no obligation to take any steps necessary to
preserve rights in the Collateral against any other parties but may do so at its
option. All expenses incurred in connection therewith shall be for the sole
account of the Grantor, and shall constitute part of the Liabilities secured
hereby.
10. Marshalling, Payments Set Aside; Collateral Agent Appointed
Attorney-in-Fact. The Collateral Agent shall be under no obligation to marshal
any assets in favor of the Grantor or against or in payment of any or all of the
Liabilities. To the extent that the Grantor makes a payment or payments to the
Collateral Agent or the Collateral Agent receives any payment or proceeds of the
Collateral for the ratable benefit of the Collateral Agent, any other Agent, any
Lender, or any other Holder, which payment(s) or proceeds or any part thereof
are subsequently invalidated, declared to be fraudulent or
12
preferential, set aside and/or required to be repaid to a trustee, receiver or
any party under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or proceeds received, the
Liabilities or any part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment or proceeds had not been
received by the Collateral Agent.
The Grantor agrees, promptly upon all requests of the Collateral Agent, to
take any action and execute any instrument which the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Security Agreement.
The Grantor hereby irrevocably constitutes and appoints the Collateral Agent and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the
Grantor, or in its own name, from time to time in the Collateral Agent's
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes hereof and, without limiting the generality of the foregoing, hereby
gives the Collateral Agent the power and right on behalf of the Grantor, without
notice to or assent by the Grantor, to the extent permitted by applicable law,
to do the following:
(i) to obtain and adjust insurance required to be paid to the
Collateral Agent subject to and in accordance with Section 8.05 of the
Credit Agreement;
(ii) upon the occurrence and during the continuance of an Event of
Default, ask, demand, collect, xxx for, recover, compromise, receive and
give acquittance and receipt for monies due and to become due under or in
respect of any of the Collateral;
(iii) upon the occurrence and during the continuance of an Event of
Default, receive, take, endorse, assign and deliver any and all checks,
notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received by
the Collateral Agent in connection with this Security Agreement;
(iv) upon the occurrence and during the continuance of an Event of
Default, to commence, file, prosecute, defend, settle, compromise or adjust
any claim, suit, action or proceeding with respect to the Collateral;
(v) upon the occurrence and during the continuance of an Event of
Default, to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of this
Security Agreement; and
13
(vi) upon the occurrence and during the continuance of an Event of
Default, to do, at its option and at the expense and for the account of the
Grantor, at any time or from time to time, all acts and things which the
Agent deems necessary to protect or preserve the Collateral and to realize
upon the Collateral.
11. Severability. If any provision of this Security Agreement is held to be
prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
12. Amendments, Waivers and Consents. None of the terms or provisions of
this Security Agreement may be waived, altered, modified or amended, and no
consent to any departure by the Grantor herefrom shall be effective, except by
or pursuant to an instrument in writing which (i) is duly executed by the
Grantor and the Collateral Agent and (ii) complies with the requirements of the
Credit Agreement. Any such waiver shall be valid only to the extent set forth
therein. A waiver by the Collateral Agent of any right or remedy under this
Security Agreement on any one occasion shall not be construed as a waiver of any
right or remedy which the Collateral Agent would otherwise have on any future
occasion. No failure to exercise or delay in exercising any right, power or
privilege under this Security Agreement on the part of the Collateral Agent
shall operate as a waiver thereof; and no single or partial exercise of any
right, power or privilege under this Security Agreement shall preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.
13. Binding Effect; Successors and Assigns. This Security Agreement shall
be binding upon the Grantor and its successors, and upon any assign(s) of the
Grantor in accordance with Section 13.19 of the Credit Agreement, and shall
inure to the ratable benefit of the Collateral Agent, the other Agents, the
Lenders, and the other Holders, and their respective successors and assigns.
Nothing set forth herein or in any other Loan Document is intended or shall be
construed to give any other Person any right, remedy or claim under, to or in
respect of this Security Agreement, the Credit Agreement or any other Loan
Document or any Collateral. The Grantor's successors shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for the Grantor.
14. Termination of this Security Agreement; Release of Collateral.
(a) The security interest granted by the Grantor under this Security
Agreement shall terminate against all the
14
Collateral upon final payment in full in cash of the Liabilities and termination
of the Revolving Loan Commitments and of the Term Loan Commitments. Upon such
termination and at the written request of the Grantor, and at the cost and
expense of the Grantor, the Collateral Agent shall execute in a timely manner a
satisfaction of this Security Agreement and such instruments, documents or
agreements as are necessary or desirable to terminate and remove of record any
documents constituting public notice of this Security Agreement and the security
interests and assignments granted hereunder and shall assign and transfer or
cause to be assigned and transferred, and shall deliver or cause to be
delivered, to the Grantor all property, including all monies, instruments and
securities of the Grantor then held by the Collateral Agent.
(b) Notwithstanding anything in this Security Agree ment to the contrary,
the Grantor may, to the extent permitted by Section 9.02 of the Credit Agreement
sell, assign, transfer or otherwise dispose of any Collateral. In addition, the
Collateral shall be subject to release from time to time (with the Collateral
referred to in the immediately preceding sentence, the "Released Collateral") in
7accordance with Section 12.09(b) of the Credit Agreement. The Liens under this
Security Agreement shall terminate with respect to the Released Collateral upon
such sale, transfer, assignment, disposition or release, and upon the request of
the Grantor, the Collateral Agent shall execute and deliver such instrument or
document as may be necessary to release the Liens granted hereunder; provided,
however, that (i) the Collateral Agent shall not be required to execute any such
documents on terms which, in the Collateral Agent's opinion, would expose the
Collateral Agent to liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Liabilities or
any Liens on (or obligations of the Grantor in respect of) all interests
retained by the Grantor, including without limitation, the proceeds of any sale,
all of which shall continue to constitute part of the Collateral unless and
until released strictly in accordance with the Loan Documents.
15. The Collateral Agent's Exercise of Rights and Remedies upon the
Occurrence and during the Continuance of an Event of Default. Notwithstanding
anything set forth herein to the contrary, it is hereby expressly agreed that
upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent may, and upon the written direction of the Requisite Lenders
shall, exercise any of the rights and remedies provided in this Security
Agreement, the Credit Agreement and any of the other Loan Documents.
16. Notices. Any notice, demand, request or any other communication
required or desired to be served, given or delivered hereunder shall be in
writing and shall be served,
15
given or delivered as provided in Section 13.10 of the Credit Agreement.
17. Section Headings. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
18. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE JURISDICTIONS.
19. Further Indemnification. The Grantor agrees to pay, and to save the
Collateral Agent and each Lender harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all excise, sales or
other taxes which may be payable or determined to be payable with respect to any
of the Collateral or in connection with any of the transactions contemplated by
this Security Agreement.
20. Counterparts. This Security Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
21. Consent to Jurisdiction and Service of Process. The Grantor agrees that
the terms of Section 13.20 of the Credit Agreement with respect to consent to
jurisdiction and service of process shall apply equally to this Security
Agreement.
22. Waiver of Bond. The Grantor waives the posting of any bond otherwise
required of the Collateral Agent in connection with any judicial process or
proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Collateral Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Collateral Agent and
the Grantor.
23. Advice of Counsel. The Grantor represents and warrants to the
Collateral Agent and the Lenders that it has discussed this Security Agreement
and, specifically, the provisions of Sections 18, 21, 22 and 25 hereof, with the
Grantor's attorneys.
24. Further Assurances. The Grantor agrees that it will cooperate with the
Collateral Agent and will execute and deliver, or cause to be executed and
delivered, all such other stock powers, proxies, instruments and documents, and
will take all such other actions, including, without limitation, the
16
execution and filing of financing statements, as the Collateral Agent may
reasonably request from time to time in order to carry out the provisions and
purposes of this Security Agreement.
25. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE COLLATERAL AGENT
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, BETWEEN THE COLLATERAL AGENT AND THE GRANTOR ARISING OUT OF
OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS SECURITY AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH. EITHER THE GRANTOR OR THE COLLATERAL AGENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
17
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers as of the date first set forth above.
[NAME OF GRANTOR]
By____________________________
Name:
Title:
FIRST UNION COMMERCIAL CORPORATION,
as Collateral Agent
By____________________________
Name:
Title:
18
SCHEDULE 1
TO
SECURITY AGREEMENT
([Name of Grantor])
Dated as of October __, 1997
Locations of Inventory and Equipment
and Status
Location Status
SCHEDULE 2
TO
SECURITY AGREEMENT
([Name of Grantor])
Dated as of October __, 1997
Locations of Books and Records
1. Correct Corporate Name
2. Chief Executive Office
3. Principal Place of Business
4. Federal Tax Identification Number
5. Location(s) of the Grantor's Books and Records Concerning the Collateral
SCHEDULE 3
TO
SECURITY AGREEMENT
([Name of Grantor])
Dated as of October __, 1997
I. Previous Grantor Names
II. Acquisitions of all or substantially all of the assets, capital stock or
operating unit of any Person
III. Predecessor in interest of the Grantor during the five preceding years
EXHIBIT M
Form of Pledge Agreement
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended, supplemented or otherwise modified from
time to time, this "Pledge Agreement") dated as of _______ __, 199_, by and
among [NAME OF PLEDGOR] (with its successors and permitted assigns, the
"Pledgor"), and FIRST UNION COMMERCIAL CORPORATION, in its capacity as
collateral agent (with its successors in such capacity, the "Collateral Agent")
for the Agents, the Lenders, and the other Holders, in each case under and as
defined in that certain Credit Agreement dated as of October __, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") among the Pledgor and the other borrowers named therein
(collectively, the "Borrowers"), Societe Generale, as administrative agent (the
"Administrative Agent"), the Collateral Agent, and First Union Commercial
Corporation, as syndication agent (the "Syndication Agent", and collectively
with the Administrative Agent and the Collateral Agent, the "Agents"), and the
financial institutions from time to time parties thereto (the "Lenders").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.
WITNESSETH:
WHEREAS, the Pledgor is a party to the Credit Agreement, pursuant to which
the Lenders have agreed, subject to certain conditions precedent, to make loans
and other financial accommodations to the Pledgor and the other Borrowers from
time to time;
WHEREAS, the Pledgor owns [(i)] the shares of capital stock described in
Exhibit A hereto and issued by the issuers named therein [and (ii) the
indebtedness described in Exhibit C hereto and issued by the obligors named
therein]1; and
WHEREAS, in order to secure the prompt and complete payment, observance and
performance of (i) the Obligations and (ii) all of the Pledgor's obligations and
liabilities hereunder and in connection herewith (all Obligations and such
obligations and liabilities hereunder being hereinafter referred to collectively
as the "Liabilities"), the Lenders have required, as a condition, among others,
to entering into the Credit Agreement
--------
1 This and subsequent references to the Pledged Debt will be included in the
Stellex Industries, Inc. Pledge Agreement.
with the Borrowers, that the Pledgor execute and deliver this Pledge Agreement;
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without limitation,
any loan or advance by renewal, refinancing or extension of the agreements
described hereinabove or otherwise) heretofore, now or hereafter made to or for
the benefit of the Borrowers pursuant to the Credit Agreement or any other
agreement, instrument or document executed pursuant to or in connection
therewith, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Pledgor and the Collateral
Agent hereby agree as follows:
1. Defined Terms.
(a) Unless otherwise defined herein, all terms defined in Article 8 and
Article 9 of the Uniform Commercial Code in effect as of the date hereof in the
State of New York are used herein as defined therein.
(b) The words "hereby," "hereof," "herein" and "hereunder" and words of
like import when used in this Pledge Agreement shall refer to this Pledge
Agreement as a whole and not to any particular provision of this Pledge
Agreement. Section references herein are to this Pledge Agreement unless
otherwise specified.
(c) All terms defined in this Pledge Agreement in the singular shall have
comparable meanings when used in the plural, and vice versa, unless otherwise
specified.
2. Pledge. The Pledgor hereby pledges to the Collateral Agent, for the
ratable benefit of the Agents, the Lenders and the other Holders (each
individually a "Secured Party", and collectively, the "Secured Parties"), and
grants to the Collateral Agent, for the ratable benefit of the Secured Parties,
a security interest in the following (collectively, the "Pledged Collateral"):
(a) The shares of the capital stock described in Exhibit A hereto, and
the certificates representing the shares of such capital stock, all options
and warrants for the purchase of shares of such capital stock held in the
name of the Pledgor (all of said capital stock, options and warrants and
all capital stock held in the name of the Pledgor as a result of the
exercise of such options or warrants being hereinafter collectively
referred to as the "Pledged Stock"), herewith delivered to the Collateral
Agent accompanied by stock powers in the form of Exhibit B hereto and made
a part hereof (the "Stock Powers") duly executed in
-2-
blank, and all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of, or in
exchange for, any or all of the Pledged Stock;
(b) All additional shares of stock of any issuer referred to in
Exhibit A hereto from time to time acquired by the Pledgor in any manner,
and all of the shares of the capital stock issued to the Pledgor by any
other wholly owned Subsidiary of the Pledgor which is organized under the
laws of the United States or any state or other political subdivision
thereof after the date hereof, and the certificates representing such
additional shares (any such additional shares shall constitute part of the
Pledged Stock and the Collateral Agent is irrevocably authorized to amend
Exhibit A from time to time to reflect such additional shares), and all
options, warrants, dividends, cash, instruments and other rights and
options from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares;
[(c) The indebtedness of each issuer referred to in Exhibit C attached
hereto (the "Pledged Debt") and the instruments evidencing such Pledged
Debt, duly endorsed and in transferable form, all payments of principal
thereof and interest thereon, due and to become due thereunder, and all
books and records applicable thereto, herewith delivered to the Collateral
Agent;]
[(d) All additional instruments evidencing indebtedness which is from
time to time owed to the Pledgor by any Person, duly endorsed and in
transferable form, and all payments of principal thereof and interest
thereon, due and to become due thereunder, and all books and records
applicable thereto (such additional obligations shall constitute part of
the Pledged Debt and the Collateral Agent is irrevocably authorized to
amend Exhibit C from time to time to reflect such additional obligations);]
(e) The property and interests in property described in Section 4
below; and
(f) All proceeds of the foregoing.
3. Security for Obligations. The Pledged Collateral secures the prompt
payment, performance and observance of the Liabilities.
4. Pledged Collateral Adjustments. If, during the term of this Pledge
Agreement:
-3-
(a) Any stock dividend, reclassification, readjustment or other change
is declared or made in the capital structure of any issuer of Pledged
Stock, or any option included within the Pledged Collateral is exercised,
or both, or
(b) Any subscription warrants or any other rights or options shall be
issued to the Pledgor in connection with the Pledged Collateral, [or
(c) Any additional indebtedness owing to the Pledgor is incurred by
any of the obligors of the Pledged Debt,]
then all new, substituted and additional shares, warrants, rights, options,
notes or other securities, issued by reason of any of the foregoing, shall be
promptly delivered to and held by the Collateral Agent under the terms of this
Pledge Agreement and shall constitute Pledged Collateral hereunder; provided,
however, that nothing contained in this Section 4 shall be deemed to permit any
stock dividend, issuance of additional stock, warrants, rights or options,
reclassification, readjustment or other change in the capital structure of any
issuer of Pledged Stock which is prohibited in the Credit Agreement.
5. Subsequent Changes Affecting Pledged Collateral. The Pledgor represents
and warrants that it has made its own arrangements for keeping informed of
changes or potential changes affecting the Pledged Collateral (including, but
not limited to, rights to convert, rights to subscribe, payment of dividends,
reorganization or other exchanges, tender offers and voting rights), and the
Pledgor agrees that, subject to Xxxxxxx 00, xxxx of the Secured Parties shall
have any obligation to inform the Pledgor of any such changes or potential
changes or to take any action or omit to take any action with respect thereto.
The Collateral Agent may, upon the occurrence and during the continuation of an
Event of Default, without notice and at its option, transfer or register the
Pledged Collateral or any part thereof into its or its nominee's name with or
without any indication that such Pledged Collateral is subject to the security
interest hereunder, and the Pledgor will cause each issuer of Pledged Stock to
cooperate with the Collateral Agent in effecting any such transfer or
registration. In addition, the Collateral Agent may at any time exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations and the Pledgor
will cause each issuer of Pledged Stock to cooperate with the Agent in effecting
any such exchange.
6. Representations and Warranties. The Pledgor represents and warrants as
follows:
(a) The Pledgor is the sole legal and beneficial owner of the
percentage of the issued and outstanding shares of
-4-
capital stock of the respective issuers thereof listed on Exhibit A hereto,
free and clear of any Lien except for the security interest created by this
Pledge Agreement, and the Pledged Stock constitutes that percentage of the
issued and outstanding shares of capital stock of the respective issuers
thereof set forth in Exhibit A hereto;
[(b) The Pledgor is the sole legal and beneficial owner of the Pledged
Debt, free and clear of any Lien except for the security interest created
by this Pledge Agreement, and the Pledged Debt is a valid and binding
obligation of its obligor, enforceable in accordance with its terms;]
(c) The Pledgor has, as applicable, full corporate power and authority
to execute, deliver and perform this Pledge Agreement;
(d) There are no restrictions upon the voting rights associated with,
or upon the transfer of, any of the Pledged Collateral, other than pursuant
to this Pledge Agreement or as otherwise may be expressly permitted by any
of the other Loan Documents;
(e) The Pledgor has the right to vote, pledge and grant a security
interest in or otherwise transfer such Pledged Collateral free of any
Liens;
(f) No authorization, approval, or other action by, and no notice to
or filing with, any Governmental Authority or regulatory body is required
either (i) for the pledge of the Pledged Collateral pursuant to this Pledge
Agreement or for the execution, delivery or performance of this Pledge
Agreement by the Pledgor or (ii) for the exercise by the Collateral Agent
of the voting or other rights provided for in this Pledge Agreement or the
remedies in respect of the Pledged Collateral pursuant to this Pledge
Agreement (except as may be required in connection with such disposition by
laws affecting the offering and sale of securities generally);
(g) The pledge of the Pledged Collateral pursuant to this Pledge
Agreement creates a valid and perfected first priority security interest in
the Pledged Collateral, in favor of the Collateral Agent for the benefit of
the Secured Parties securing the payment and performance of the
Liabilities;
(h) The Stock Powers are duly executed and give the Agent the
authority they purport to confer; and
(i) The grant and perfection of the security interests in the Pledged
Collateral for the ratable benefit of the
-5-
Secured Parties, in accordance with the terms herein, are not made in
violation of the registration requirements of the Securities Act of 1933
(the "Securities Act"), any applicable provisions of other federal
securities laws, state securities or "Blue Sky" law, foreign securities
law, or applicable general corporation law or any other applicable law.
7. Voting Rights. During the term of this Pledge Agreement, and except as
provided in this Section 7 below, the Pledgor shall have the right to vote the
Pledged Stock on all corporate questions in a manner not inconsistent with the
terms of this Pledge Agreement, the Credit Agreement and any other agreement,
instrument or document executed pursuant thereto or in connection therewith.
Upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent may, at the Collateral Agent's option and following written
notice from the Collateral Agent to the Pledgor, exercise all voting powers
pertaining to the Pledged Collateral, including the right to take action by
shareholder consent.
8. Dividends and Other Distributions. (a) So long as no Event of Default
shall have occurred and be continuing:
(i) The Pledgor shall be entitled to receive and retain any and all
dividends, including dividends in connection with a reduction of capital,
capital surplus or paid-in surplus and interest paid in respect of the
Pledged Collateral, provided, however, that, except as otherwise provided
in the Credit Agreement, any and all
(A) dividends and interest paid or payable other than in cash
with respect to, and instruments and other property received,
receivable or otherwise distributed with respect to, or in exchange
for, any of the Pledged Collateral;
(B) dividends and other distributions paid or payable in cash
with respect to any of the Pledged Collateral on account of a partial
or total liquidation or dissolution; and
(C) cash paid, payable or otherwise distributed with respect to
principal of, or in redemption of, or in exchange for, any of the
Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered to the
Collateral Agent to hold, for the ratable benefit of the Secured Parties,
as Pledged Collateral and shall, if received by the Pledgor, be received in
trust for the Collateral Agent, for the ratable benefit of the Secured
Parties, and shall be segregated from the other property or
-6-
funds of the Pledgor. All such Pledged Collateral so received in the form
of monies, checks, notes, drafts or funds shall be delivered promptly to
the Collateral Agent (with any necessary endorsement) as proceeds of
Collateral in accordance with the applicable provisions of the Credit
Agreement, and all other such Pledged Collateral so received shall be
delivered promptly to the Collateral Agent as Pledged Collateral in the
same form as so received (with any necessary endorsement); and
(ii) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to receive the dividends or interest payments which
the Pledgor is authorized to receive and retain pursuant to clause (i)
above.
(b) Upon the occurrence and during the continuance of an Event of Default:
(i) All rights of the Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 8(a)(i) hereof shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, for the ratable benefit of
the Secured Parties, which shall thereupon have the sole right to receive
and hold as Pledged Collateral such dividends and interest payments; and
(ii) All dividends and interest payments which are received by the
Pledgor contrary to the provisions of clause (i) of this Section 8(b) shall
be received in trust for the Collateral Agent, for the ratable benefit of
the Secured Parties, shall be segregated from other funds of the Pledgor
and shall be paid over immediately to the Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary
endorsements);
(iii) The Pledgor shall, upon the request of the Collateral Agent, at
Pledgor's expense, execute and deliver all such instruments and documents,
and do or cause to be done all such other acts and things, as may be
reasonably necessary or, in the opinion of the Collateral Agent, the
Pledgor or either of their counsel, reasonably advisable to register the
applicable Pledged Collateral under the provisions of the Securities Act in
order to sell the same, and to exercise its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in
-7-
the opinion of the Collateral Agent, the Pledgor or either of their
counsel, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(iv) The Pledgor shall, upon the reasonable request of the Collateral
Agent, at Pledgor's expense, use its best efforts to qualify the Pledged
Collateral under state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Pledged Collateral, as
requested by the Collateral Agent;
(v) The Pledgor shall, upon the request of the Collateral Agent, at
the Pledgor's expense, make available to the holders of its securities, as
soon as practicable, earnings statements which will satisfy the provisions
of Section 11(a) of the Securities Act; and
(vi) The Pledgor shall, upon the request of the Collateral Agent, at
the Pledgor's expense, do or cause to be done all such other acts and
things as may be reasonably necessary to make such sale of the Pledged
Collateral or any part thereof valid and binding and in compliance with
applicable law.
The Pledgor will reimburse the Collateral Agent for all reasonable expenses
incurred by the Collateral Agent, including, without limitation, reasonable
attorneys' and accountants' fees and expenses, in connection with the foregoing.
Upon or at any time after the occurrence and during the continuance of an Event
of Default, if the Collateral Agent determines that, prior to any public
offering of any securities constituting part of the Pledged Collateral, such
securities should be registered under the Securities Act and/or registered or
qualified under any other federal or state law and such registration and/or
qualification is not practicable, then the Pledgor agrees that it will be deemed
commercially reasonable if a private sale, upon at least ten (10) Business Days'
notice to the Pledgor, is arranged so as to avoid a public offering, even though
the sales price established and/or obtained at such private sale may be
substantially less than prices which could have been obtained for such security
on any market or exchange or in any other public sale.
9. Transfers and Other Liens. The Pledgor agrees that it will not (i) sell
or otherwise dispose of, or grant any option with respect to, any of the Pledged
Collateral without the prior written consent of the Collateral Agent, other than
as permitted by the Credit Agreement, or (ii) create or permit to exist any Lien
upon or with respect to any of the Pledged
-8-
Collateral, except for the security interest under this Pledge Agreement.
10. Remedies; Application of Proceeds. (a) The Collateral Agent shall have,
in addition to any other rights given under this Pledge Agreement or by law, all
of the rights and remedies with respect to the Pledged Collateral of a secured
party under the Uniform Commercial Code as in effect in the State of New York.
In addition, upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent shall have such powers of sale and other powers as
may be conferred by applicable law. With respect to the Pledged Collateral or
any part thereof which shall then be in or shall thereafter come into the
possession or custody of the Collateral Agent or which the Collateral Agent
shall otherwise have the ability to transfer under applicable law, the
Collateral Agent may, in its sole discretion, without notice except as specified
below, after the occurrence of an Event of Default, sell or cause the same to be
sold at any exchange, broker's board or at public or private sale, in one or
more sales or lots, at such price as the Collateral Agent may reasonably deem
best, for cash or on credit or for future delivery, without assumption of any
credit risk, and the purchaser of any or all of the Pledged Collateral so sold
shall thereafter own the same, absolutely free from any claim, encumbrance or
right of any kind whatsoever. Any Secured Party may, in its own name, or in the
name of a designee or nominee, buy the Pledged Collateral at any public sale
and, if permitted by applicable law, buy the Pledged Collateral at any private
sale. In the event of a sale of any Collateral, or any part thereof, to a
Secured Party upon the occurrence and during the continuance of an Event of
Default, such Secured Party shall not deduct or offset from any part of the
purchase price to be paid therefor any indebtedness owing to it by the Pledgor.
The Pledgor will pay to the Collateral Agent all reasonable expenses (including,
without limitation, court costs and reasonable attorneys' and paralegals' fees
and expenses) of, or incidental to, the enforcement of any of the provisions
hereof. The Collateral Agent agrees to distribute any proceeds of the sale of
the Pledged Collateral in accordance with the Credit Agreement (including,
without limitation, Section 3.02 thereof) and the Pledgor shall remain liable
for any deficiency following the sale of the Pledged Collateral.
(b) Unless any of the Pledged Collateral threatens to decline speedily in
value or is or becomes of a type sold on a recognized market, the Collateral
Agent will give the Pledgor reasonable notice of the time and place of any
public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Pledged Collateral conducted
in conformity with reasonable commercial practices of banks, commercial finance
companies, insurance companies or other financial institutions disposing of
property
-9-
similar to the Pledged Collateral shall be deemed to be commercially reasonable.
Notwithstanding any provision to the contrary contained herein, the Pledgor
agrees that any requirements of reasonable notice shall be met if such notice is
received by the Pledgor as provided in Section 23 below at least ten (10)
Business Days before the time of the sale or disposition; provided, however,
that the Collateral Agent may give any shorter notice that is commercially
reasonable under the circumstances. Any other requirement of notice, demand or
advertisement for sale is waived, to the extent permitted by law.
(c) In view of the fact that federal and state securities laws may impose
certain restrictions on the method by which a sale of the Pledged Collateral may
be effected after an Event of Default, the Pledgor agrees that upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent may, from time to time, attempt to sell all or any part of the Pledged
Collateral by means of a private placement restricting the bidders and
prospective purchasers to those who are qualified and will represent and agree
that they are purchasing for investment only and not for distribution. In so
doing, the Collateral Agent may solicit offers to buy the Pledged Collateral, or
any part of it, from a limited number of investors deemed by the Collateral
Agent, in its reasonable judgment, to be financially responsible parties who
might be interested in purchasing the Pledged Collateral. If the Collateral
Agent solicits and receives such offers from not less than four (4) such
investors, then the acceptance by the Collateral Agent of the highest offer
obtained therefrom shall be deemed to be a commercially reasonable method of
disposing of such Pledged Collateral; provided, however, that this Section does
not impose a requirement that the Collateral Agent solicit offers from four or
more investors in order for the sale to be commercially reasonable.
11. Collateral Agent Appointed Attorney-in-Fact. The Pledgor hereby
appoints the Collateral Agent its attorney-in-fact, with full authority, in the
name of the Pledgor or otherwise, upon the occurrence and during the continuance
of an Event of Default, from time to time in the Collateral Agent's sole
discretion, to take any action and to execute any instrument which the
Collateral Agent may deem reasonably necessary or reasonably advisable to
accomplish the purposes of this Pledge Agreement, including, without limitation
(subject to Section 8 hereof), to receive, endorse and collect all instruments
made payable to the Pledgor representing any dividend, interest payment or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same and to arrange for the transfer of all or any
part of the Pledged Collateral on the books of each of the issuers of such
Pledged Stock to the name of the Collateral Agent or the Collateral Agent's
nominee.
-10-
12. Waivers. The Pledgor waives presentment and demand for payment of any
of the Obligations, protest and notice of dishonor or Event of Default with
respect to any of the Obligations and all other notices to which the Pledgor
might otherwise be entitled except as otherwise expressly provided herein or in
the Credit Agreement.
13. Termination of This Pledge Agreement; Release of Pledged Collateral.
The pledge made and the security interest granted by the Pledgor under this
Pledge Agreement shall terminate against all the Collateral upon final payment
in full in cash of the Obligations and termination of the Commitments. Upon such
termination (other than as a result of the sale of the Pledged Collateral) and
at the written request of the Pledgor or its successors or assigns, and at the
cost and expense of the Pledgor or its successors or assigns, the Collateral
Agent shall execute in a timely manner such instruments, documents or agreements
as are reasonably necessary or reasonably desirable to terminate the Collateral
Agent's security interest in the Pledged Collateral and deliver the Pledged
Stock and the Stock Powers, subject to any disposition made by the Collateral
Agent pursuant to the Pledge Agreement.
14. Successors and Assigns. This Pledge Agreement shall be binding upon the
Pledgor and its successors, and upon any assign(s) of the Pledgor, and shall
inure to the benefit of the Secured Parties and their respective successors and
assigns. Nothing set forth herein or in any other Loan Document is intended or
shall be construed to give any other Person any right, remedy or claim under, to
or in respect of this Pledge Agreement, the Credit Agreement or any other Loan
Document or any Pledged Collateral. The Pledgor's successors shall include,
without limitation, a receiver, trustee or debtor-in-possession of or for the
Pledgor.
15. APPLICABLE LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS AND DECISIONS OF THE
STATE OF NEW YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS
AND LIENS IN OTHER JURISDICTIONS WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE
JURISDICTIONS.
16. Consent to Jurisdiction and Service of Process. The Pledgor agrees that
the terms of Section 13.20 of the Credit Agreement with respect to consent to
jurisdiction and service of process shall apply equally to the Pledgor under
this Pledge Agreement.
17. WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR AND THE COLLATERAL AGENT
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, BETWEEN THE COLLATERAL AGENT AND THE PLEDGOR ARISING OUT OF
OR
-11-
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH.
EITHER THE PLEDGOR OR THE COLLATERAL AGENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
18. Waiver of Bond. The Pledgor waives the posting of any bond otherwise
required of the Collateral Agent in connection with any judicial process or
proceeding to realize on the Pledged Collateral or any other security for the
Obligations, to enforce any judgment or other court order entered in favor of
the Collateral Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Pledge Agreement
or any other agreement or document between the Collateral Agent and the Pledgor.
19. Advice of Counsel. The Pledgor represents and warrants to the Secured
Parties that it has discussed this Pledge Agreement and, specifically, the
provisions of Sections 15 through 18 hereof, with the Pledgor's attorneys.
20. Severability. Whenever possible, each provision of this Pledge
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but, if any provision of this Pledge Agreement shall be held to
be prohibited or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Pledge Agreement.
21. Further Assurances. The Pledgor agrees that it will cooperate with the
Collateral Agent and will execute and deliver, or cause to be executed and
delivered, all such other stock powers, proxies, instruments and documents, and
will take all such other actions, including, without limitation, the execution
and filing of financing statements, as the Collateral Agent may reasonably
request from time to time in order to carry out the provisions and purposes of
this Pledge Agreement.
22. The Collateral Agent's Duty of Care. The Collateral Agent shall not be
liable for any acts, omissions, errors of judgment or mistakes of fact or law
including, without limitation, acts, omissions, errors or mistakes with respect
to the Pledged Collateral, except for those arising out of or in connection with
the Collateral Agent's (i) gross negligence or willful misconduct, (ii) material
breach of a material provision of this Pledge Agreement, or (iii) failure to use
reasonable care with respect to the safe custody of the Pledged Collateral in
the Collateral Agent's possession. Without limiting the generality of the
foregoing, the Collateral Agent shall be under no obligation to take any steps
necessary to preserve rights in the
-12-
Pledged Collateral against any other parties but may do so at its option. All
reasonable expenses incurred in connection therewith shall be for the sole
account of the Pledgor, and shall constitute part of the Obligations secured
hereby.
23. Notices. All notices and other communications required or desired to
be served, given or delivered hereunder shall be in writing and shall be served,
given or delivered as provided in Section 13.10 of the Credit Agreement.
24. Amendments, Waivers and Consents. None of the terms or provisions of
this Pledge Agreement may be waived, altered, modified or amended, and no
consent to any departure by the Pledgor herefrom shall be effective, except by
or pursuant to an instrument in writing which (i) is duly executed by the
Pledgor and the Collateral Agent and (ii) complies with the requirements of
Section 13.09 of the Credit Agreement. Any such waiver shall be valid only to
the extent set forth therein. A waiver by the Collateral Agent of any right or
remedy under this Pledge Agreement on any one occasion shall not be construed as
a waiver of any right or remedy which the Collateral Agent would otherwise have
on any future occasion. No failure to exercise or delay in exercising any right,
power or privilege under this Pledge Agreement on the part of the Collateral
Agent shall operate as a waiver thereof; and no single or partial exercise of
any right, power or privilege under this Pledge Agreement shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
25. Section Titles. The section titles herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
26. Execution in Counterparts. This Pledge Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
-13-
IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have executed this
Pledge Agreement as of the date set forth above.
[NAME OF PLEDGOR]
By:
Name:
Title:
FIRST UNION COMMERCIAL CORPORATION,
as Collateral Agent
By:
Name:
Title:
-14-
FORM OF
ACKNOWLEDGMENT
The undersigned hereby acknowledges receipt of a copy of the foregoing
Pledge Agreement, agrees promptly to note on its books the security interests
granted under such Pledge Agreement, and waives any rights or requirement at any
time hereafter to receive a copy of such Pledge Agreement in connection with the
registration of any Pledged Collateral in the name of the Collateral Agent or
its nominee or the exercise of voting rights by the Collateral Agent.
[NAME OF ISSUER]
By:
Name:_______________________________
Title: _____________________________
-15-
EXHIBIT A
to
PLEDGE AGREEMENT
([Name of Pledgor])
dated as of October __, 1997
Pledged Stock
Percentage of Issued Percentage of Shares of Capital
and Outstanding Capital Stock owned Stock owned by
Capital Stock owned by the Pledgor the Pledgor
Stock Issuer by the Pledgor Subject to Pledge Subject to Pledge
------------ -------------- ----------------- -----------------
100%
100%
100%
EXHIBIT B
to
PLEDGE AGREEMENT
([Name of Pledgor])
dated as of October __, 1997
Form of Stock Power
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer
to _____________________________________ ____ Shares of Common Stock of
____________________ represented by Certificate[s] No. _____ [and _____] (the
"Stock"), standing in the name of the undersigned on the books of said
corporation and does hereby irrevocably constitute and appoint
________________________ as the undersigned's true and lawful attorney, for and
in name and stead, to sell, assign and transfer all or any of the Stock, and for
that purpose to make and execute all necessary acts of assignment and transfer
thereof; and to substitute one or more persons with like full power, hereby
ratifying and confirming all that said attorney or substitute or substitutes
shall lawfully do by virtue hereof.
Dated: _______________
[NAME OF PLEDGOR]
By: _________________________
Name:
Title:
[EXHIBIT C
to
PLEDGE AGREEMENT
([Name of Pledgor])
dated as of October __, 1997
Pledged Debt]
EXHIBIT N
EXECUTION COPY
PATENT SECURITY AGREEMENT
THIS PATENT SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Agreement"), dated as of October 31, 1997, by
and among STELLEX MICROWAVE SYSTEMS, INC. (with its successors and permitted
assigns, the "Borrower"), and FIRST UNION COMMERCIAL CORPORATION, in its
capacity as collateral agent (with its successors in such capacity, the
"Collateral Agent") for the Agents, the Lenders, and the other Holders, in each
case under and as defined in that certain Credit Agreement dated as of October
31, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") among the Borrower and the other borrowers named therein
(collectively, the "Borrowers"), Societe Generale, as administrative agent (the
"Administrative Agent"), the Collateral Agent, and First Union Commercial
Corporation, as syndication agent (the "Syndication Agent, and collectively with
the Administrative Agent and the Collateral Agent, the "Agents"), and the
financial institutions from time to time parties thereto (the "Lenders").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Borrower is a party to the Credit Agreement, pursuant to which
the Lenders have agreed, subject to certain conditions precedent, to make loans
and other financial accommodations to the Borrowers from time to time;
WHEREAS, the Borrower and the Collateral Agent are parties to that certain
Security Agreement of even date herewith (as the same may hereafter be amended,
restated, supplemented or otherwise modified from time to time, the "Security
Agreement"), pursuant to which the Borrower has granted a security interest in
certain of its assets to the Collateral Agent for the ratable benefit of the
Agents, the Lenders, and the other Holders; and
WHEREAS, in order to secure the prompt and complete payment, observance and
performance of (i) all of the Obligations and (ii) all of the Borrower's
obligations and liabilities hereunder and in connection herewith (all the
Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Agents and the Lenders have
required as a condition, among others, to entering into the Credit Agreement
that the Borrower execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the premises set forth above, the terms
and conditions contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms.
(a) Unless otherwise defined herein, each capitalized term used herein that
is defined in the Credit Agreement shall have the meaning specified for such
term in the Credit Agreement.
(b) The words "hereby," "hereof," "herein" and "hereunder" and words of
like import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section references
are to this Agreement unless otherwise specified.
(c) All terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and vice versa, unless otherwise
specified.
2. Incorporation of Credit Agreement. The Credit Agreement and the terms
and provisions thereof are hereby incorporated herein in their entirety by this
reference thereto.
3. Incorporation of Premises. The premises set forth above are incorporated
into this Agreement by this reference thereto and are made a part hereof.
4. Security Interest in Patents. To secure the complete and timely payment,
performance and satisfaction of all of the Liabilities, the Borrower hereby
grants to the Collateral Agent, for the ratable benefit of the Agents, the
Lenders, and the other Holders, a security interest in, as and by way of a first
mortgage and security interest having priority over all other security
interests, with power of sale to the extent permitted by applicable law, all of
the Borrower's now owned and hereafter acquired:
(a) patents and patent applications, and the inventions and
improvements described and claimed therein, including, without limitation,
those patents and patent applications listed on Schedule A attached hereto
and made a part hereof, and (i)the reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof, (ii) all income,
royalties, damages and payments now and hereafter due and/or payable under
and with respect thereto, including, without limitation, payments under all
licenses entered into in connection therewith and damages and payments for
past or future infringements thereof, (iii) the right to xxx for past,
present and future infringements thereof, (iv) all patented technology and
know-how, and (v) all of the Borrower's rights corresponding thereto
throughout the world (all of the foregoing patents and
2
applications, together with the items described in clauses (i)-(v) in this
paragraph 4(a) are sometimes hereinafter individually and/or collectively
referred to as the "Patents"); and
(b) rights under or interest in any patent license agreements with any
other party, whether the Borrower is a licensee or licensor under any such
license agreement, including, without limitation, those patent license
agreements listed on Schedule B attached hereto and made a part hereof, in
each case to the extent assignable without violation thereof, and the right
to prepare for sale and sell any and all Inventory now or hereafter owned
by the Borrower and now or hereafter covered by such licenses (all of the
foregoing are hereinafter referred to collectively as the "Licenses").
The Borrower hereby authorizes the Collateral Agent to file this Agreement, or a
duplicate thereof, with the United States Patent and Trademark Office or with
any other authority the Collateral Agent deems appropriate, and the Borrower
agrees to cooperate with the Collateral Agent as the Collateral Agent may
request in order to effectuate such filing or filings.
5. Restrictions on Future Agreements. The Borrower agrees that it will not
take any action, and will use its best efforts not to permit any action to be
taken by others, including, without limitation, licensees, or fail to take any
action, which could reasonably be expected to have a material adverse effect on
the validity or enforcement of the rights collaterally assigned to the
Collateral Agent under this Agreement or the rights associated with any material
Patents or Licenses, and in particular, the Borrower will not permit to lapse or
become abandoned, any Patent or License if such lapse or abandonment could
reasonably be expected to have a Material Adverse Effect.
6. New Patents and Licenses. The Borrower represents and warrants that, as
of the Closing Date, to the best of its knowledge, after reasonable inquiry, (a)
the Patents listed on Schedule A include all of the patents and patent
applications now owned or held by the Borrower, (b) the Licenses listed on
Schedule B include all of the patent license agreements under which the Borrower
is the licensee or licensor which are material individually or in the aggregate
to the operation of the business of the Borrower and (c) other than the rights
of any party to the Licenses with respect to the Patents, no liens, claims or
security interests in such Patents and Licenses have been granted by the
Borrower to any Person other than the Collateral Agent. If, prior to the
termination of this Agreement, the Borrower shall (i) obtain rights to any new
patentable inventions, (ii) become entitled to the benefit of any patent, patent
application, license or any reissue, division, continuation, renewal,
3
extension or continuation-in-part of any Patent or any improvement on any Patent
or License, or (iii) enter into any new patent license agreement where the
Borrower is the licensee, the provisions of paragraph 4 above shall
automatically apply thereto (but only to the extent such licenses are assignable
without violation thereof, it being understood and agreed that the Borrower
shall use commercially reasonable efforts to insure that such licenses are
assignable for security purposes). The Borrower shall give to the Collateral
Agent written notice of events described in clauses (i), (ii) and (iii) of the
preceding sentence not less frequently than on an annual basis. The Borrower
hereby authorizes the Collateral Agent to modify this Agreement unilaterally (i)
by amending Schedule A to include any future patents and patent applications
owned or held by the Borrower, and by amending Schedule B to include any patent
license agreements (A) to which the Borrower becomes a party and (B), which are
Patents or Licenses under paragraph 4 above or under this paragraph 6, and (ii)
by filing, in addition to and not in substitution for this Agreement, either a
duplicate original of, or a Notice of Amendment to, this Agreement containing on
Schedule A or B thereto, as the case may be, such future patents, patent
applications and license agreements.
7. Royalties. The Borrower hereby agrees that when an Event of Default has
occurred and is continuing the use by the Collateral Agent of the Patents and
Licenses as authorized hereunder in connection with the Collateral Agent's
exercise of its rights and remedies under paragraph 15 or pursuant to Section 7
of the Security Agreement shall be coextensive with the Borrower's rights
thereunder and with respect thereto and without any liability for royalties or
other related charges from the Collateral Agent, the Agents, the Lenders, or the
other Holders to the Borrower.
8. Further Assignments and Security Interests. Except as permitted under
Section 9.02 of the Credit Agreement, the Borrower agrees not to sell or assign
its respective interests in, or grant any license under, the Patents or the
Licenses without the prior and express written consent of the Collateral Agent.
9. Nature and Continuation of the Collateral Agent's Security Interest;
Termination of the Collateral Agent's Security Interest; Release of Collateral.
(a) This Agreement is made for collateral security purposes only. This
Agreement shall create a continuing security interest in the Patents and
Licenses and shall terminate only when the Liabilities have been paid in full in
cash and the Credit Agreement has been terminated. Upon such termination and at
the written request of the Borrower or its successors or assigns, and at the
cost and expense of the Borrower or its successors or assigns, the Collateral
Agent shall execute in a
4
timely manner such instruments, documents or agreements as are necessary or
desirable to terminate the Collateral Agent's security interest in the Patents
and the Licenses, subject to any disposition thereof which may have been made by
the Collateral Agent pursuant to this Agreement or the Security Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, the
Borrower may, to the extent permitted by Section 9.02 of the Credit Agreement
sell, assign, transfer or otherwise dispose of any Patents and any Licenses. In
addition, the Patents and Licenses shall be subject to release from time to time
(with the Patents and Licenses referred to in the immediately preceding
sentence, the "Released Collateral") in accordance with Section 12.09(b) of the
Credit Agreement. The Liens under this Agreement shall terminate with respect to
the Released Collateral upon such sale, transfer, assignment, disposition or
release, and upon the request of the Borrower, the Collateral Agent shall
execute and deliver such instrument or document as may be necessary to release
the Liens granted hereunder; provided, however, that (i) the Collateral Agent
shall not be required to execute any such documents on terms which, in the
Collateral Agent's opinion, would expose the Collateral Agent to liability or
create any obligation or entail any consequence other than the release of such
Liens without recourse or warranty, and (ii) such release shall not in any
manner discharge, affect or impair the Liabilities or any Liens on (or
obligations of the Borrower in respect of) all interests retained by the
Borrower, including without limitation, the proceeds of any sale, all of which
shall continue to constitute part of the Collateral.
10. Duties of the Borrower. The Borrower shall have the duty, to the extent
desirable in the normal conduct of the Borrower's business, to: (i) prosecute
diligently any material patent application that is part of the Patents pending
as of the date hereof or hereafter until the termination of this Agreement, and
(ii) make application on unpatented but patentable inventions. The Borrower
further agrees (i) not to abandon any Patent or License if such abandonment
could reasonably be expected to have a Material Adverse Effect without the prior
written consent of the Collateral Agent, and (ii) to use its reasonable best
efforts to obtain and maintain in full force and effect the Patents and the
Licenses that are or shall be necessary or economically desirable in the
operation of the Borrower's business. Any expenses incurred in connection with
the foregoing shall be borne by the Borrower. None of the Agents or the Lenders
shall have any duty with respect to the Patents and Licenses. Without limiting
the generality of the foregoing, none of the Agents or the Lenders shall be
under any obligation to take any steps necessary to preserve rights in the
Patents or Licenses against any other parties, but the Collateral Agent may do
so at its option from and after the occurrence of an Event of Default, and all
expenses incurred in connection therewith shall
5
be for the sole account of the Borrower and shall be added to the
Liabilities secured hereby.
11. The Collateral Agent's Right to Xxx. From and after the occurrence of
an Event of Default, the Collateral Agent shall have the right, but shall not be
obligated, to bring suit in its own name to enforce the Patents and the Licenses
and, if the Collateral Agent shall commence any such suit, the Borrower shall,
at the request of the Collateral Agent, do any and all lawful acts and execute
any and all proper documents required by the Collateral Agent in aid of such
enforcement. The Borrower shall, upon demand, promptly reimburse the Collateral
Agent for all costs and expenses incurred by the Collateral Agent in the
exercise of its rights under this paragraph 11 (including, without limitation,
reasonable fees and expenses of attorneys and paralegals for the Collateral
Agent).
12. Amendments, Waivers and Consents. None of the terms or provisions of
this Agreement may be waived, altered, modified or amended, and no consent to
any departure by the Borrower herefrom shall be effective, except by or pursuant
to an instrument in writing which (i) is duly executed by the Borrower and the
Collateral Agent and (ii) complies with the requirements of the Credit
Agreement. Any such waiver shall be valid only to the extent set forth therein.
A waiver by the Collateral Agent of any right or remedy under this Agreement on
any one occasion shall not be construed as a waiver of any right or remedy which
the Collateral Agent would otherwise have on any future occasion. No failure to
exercise or delay in exercising any right, power or privilege under this
Agreement on the part of the Collateral Agent shall operate as a waiver thereof;
and no single or partial exercise of any right, power or privilege under this
Agreement shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
13. Severability. If any provision of this Agreement is held to be
prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
14. Modification. This Agreement cannot be altered, amended or modified in
any way, except as specifically provided in paragraph 6 hereof or by a writing
signed by the parties hereto.
15. Cumulative Remedies; Power of Attorney. The Borrower hereby irrevocably
designates, constitutes and appoints the Collateral Agent (and all Persons
designated by the Collateral Agent in its sole and absolute discretion) as the
Borrower's true and lawful attorney-in-fact, and authorizes the
6
Collateral Agent and any of the Collateral Agent's designees, in the Borrower's
or the Collateral Agent's name, to take any action and execute any instrument
which the Collateral Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, from and after the
occurrence of an Event of Default and the giving by the Collateral Agent of
notice to the Borrower of the Collateral Agent's intention to enforce its rights
and claims against the Borrower, to (i) endorse the Borrower's name on all
applications, documents, papers and instruments necessary or desirable for the
Collateral Agent in the use, prosecution or protection of the Patents or the
Licenses, (ii) assign, pledge, convey or otherwise transfer title in or dispose
of the Patents or the Licenses to anyone on commercially reasonable terms (but
subject to the terms thereof), (iii) grant or issue any exclusive or
nonexclusive license under the Patents or under the Licenses, to anyone on
commercially reasonable terms (but only, in the case of Licenses, to the extent
permitted under such Licenses) and (iv) take any other actions with respect to
the Patents or the Licenses as the Collateral Agent deems in its own best
interest or in the best interest of the Agents or the Lenders. The Borrower
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and shall be
irrevocable until all of the Liabilities shall have been paid in full in cash
and the Credit Agreement shall have been terminated. The Borrower acknowledges
and agrees that this Agreement is not intended to limit or restrict in any way
the rights and remedies of the Collateral Agent, the other Agents or the Lenders
under the Loan Documents, but rather is intended to facilitate the exercise of
such rights and remedies.
The Collateral Agent shall have, in addition to all other rights and
remedies given it by the terms of this Agreement, all rights and remedies
allowed by law and the rights and remedies of a secured party under the Uniform
Commercial Code as enacted in any jurisdiction in which the Patents or the
Licenses may be located or deemed located. Upon the occurrence of an Event of
Default and the election by the Collateral Agent to exercise any of its remedies
under Section 9-504 or Section 9-505 of the Uniform Commercial Code with respect
to the Patents and Licenses, the Borrower agrees to assign, convey and otherwise
transfer title in and to the Patents and the Licenses to the Collateral Agent or
any transferee of the Collateral Agent and to execute and deliver to the
Collateral Agent or any such transferee all such agreements, documents and
instruments as may be necessary, in the Collateral Agent's sole discretion
exercised in a commercially reasonable manner, to effect such assignment,
conveyance and transfer. All of the Collateral Agent's rights and remedies with
respect to the Patents and the Licenses, whether established hereby, by the
Security Agreement, by any other agreements or by law, shall be cumulative and
may be exercised separately or concurrently. Notwithstanding anything set forth
herein to the contrary, it is hereby expressly agreed
7
that upon the occurrence of an Event of Default, the Collateral Agent may
exercise any of the rights and remedies provided in this Agreement, the Security
Agreement and any of the other Loan Documents. The Borrower agrees that any
notification of intended disposition of any of the Patents and Licenses required
by law shall be deemed reasonably and properly given if given at least ten (10)
days before such disposition; provided, however, that the Collateral Agent may
give any shorter notice that is commercially reasonable under the circumstances.
16. Successors and Assigns. This Agreement shall be binding upon the
Borrower and its successors and assigns, and shall inure to the benefit of each
of the Agents and the Lenders, and each of all of their nominees, successors and
assigns. The Borrower's successors and assigns shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for the Borrower;
provided, however, that the Borrower shall not voluntarily assign or transfer
its rights or obligations hereunder without the Collateral Agent's prior written
consent.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND BE CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCEPT FOR
PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE JURISDICTIONS.
18. Notices. Any notice, demand, request or any other communication
required or desired to be served, given or delivered hereunder shall be in
writing and shall be served, given or delivered as provided in Section 13.10 of
the Credit Agreement.
19. Section Headings. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
20. Counterparts. This Agreement may be executed in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which shall constitute one and the same agreement.
21. Consent to Jurisdiction and Service of Process. The Borrower agrees
that the terms of Section 13.20 of the Credit Agreement with respect to consent
to jurisdiction and service of process shall apply equally to this Agreement.
22. WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE COLLATERAL AGENT
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, BETWEEN THE COLLATERAL AGENT AND THE BORROWER ARISING OUT OF
OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH.
EITHER THE BORROWER OR THE COLLATERAL AGENT
8
MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
9
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
STELLEX MICROWAVE SYSTEMS, INC.
By: ______________________________
Name:
Title:
Accepted and agreed to as of the day and
year first above written.
FIRST UNION COMMERCIAL CORPORATION
as Collateral Agent
By:_______________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
SCHEDULE A
TO
PATENT SECURITY AGREEMENT
(STELLEX MICROWAVE SYSTEMS, INC.)
Dated as of October 31, 1997
Patents and Patent Applications
Serial/Patent
Project No/ No. Filing/
Status Title Inventor Issued Date
------ ----- -------- -----------
Pending Patent Xxxxxxxxxxx
Xxxx # Xxxxx Xxxxxx
-00-
XXXXXXXX X
TO
PATENT SECURITY AGREEMENT
(STELLEX MICROWAVE SYSTEMS, INC.)
Dated as of October 31, 1997
License Agreements
LICENSES FROM THE BORROWER TO OTHER COMPANIES
Company Subject Term Royalties
------- ------- ---- ---------
LICENSES FROM OTHER COMPANIES TO THE BORROWER
Company Subject/Type Term Royalties
------- ------------ ---- ---------
-12-
STATE OF ________ )
) SS
COUNTY OF ________ )
On the ___ day of October, 1997, before me personally came
________________, to me known, who being by me duly sworn, did depose and say
that he/she resides at _________________________________________________; that
he/she is a ____________________ of STELLEX MICROWAVE SYSTEMS, INC., the
corporation described in and which accepted and agreed to the foregoing
instrument; and that he/she signed his/her name thereto by authority of the
Board of Directors of said corporation.
----------------------------
Notary Public
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
On the ___ day of October, 1997, before me personally came
________________, to me known, who being by me duly sworn, did depose and say
that he/she resides at ______________________ ______________________; that
he/she is a __________________ of First Union Commercial Corporation, the
corporation described in and which accepted and agreed to the foregoing
instrument; and that he/she signed his/her name thereto by authority of the
board of directors of said corporation.
-----------------------------
Notary Public
SCHEDULE 1.01(A)
PERMITTED EXISTING INDEBTEDNESS
1. Note (the "Farm Bureau Note") Secured by Deed of Trust, dated
September 6, 1991, and First Loan Modification Agreement,
dated November 1, 1996, by Paragon Precision Products, Inc.
("Paragon") to Farm Bureau Life Insurance Company ("Farm
Bureau") in the original principal amount of $2,850,000.
2. Guaranty (including the subordination of rights to payment) of
Stellex Aerospace ("Aerospace"), formerly known as Xxxxxxxx
Industries, Inc., dated September 6, 1991, and Reaffirmation
of Guaranty, dated November 1, 1996, in favor of Farm Bureau
with respect to Paragon's obligation under the Farm Bureau
Note.
3. Guaranty of Lease by Aerospace, dated November 21, 1989, in
favor of Grand Xxxx Company (as lessor) with respect to the
performance by Scanning Electron Analysis Laboratories, Inc.
("SEAL") (as lessee) of its obligations under the Industrial
Real Estate Lease, dated September, 1989, by and between Grand
Xxxx Company and SEAL, as modified by certain Riders and by
certain amendments, dated June 19, 1990 and June 12, 1995,
respectively, for premises located at 000 Xxxxx Xxxx Xxxxxx,
Xx Xxxxxxx, Xxxxxxxxxx 00000.
4. Stellex Aerospace - Success Sharing Plan, dated June 1989.
5. Cost Per Copy Rental Agreement between SEAL and Astro Office
Products, Inc., dated June 29, 1994, for GP-55 and NP6030.
6. Management Incentive Plan (M.I.P.) Incentive Bonus Program.
7. The Promissory Note issued by KII Acquisition Corp. ("KII") in
favor of Xxxxxxxx Industries Holding AG in the principal
amount of $1,750,000.
8. In connection with and upon the consummation of the
acquisition of Stellex Microwave Systems, Inc., TSMD
Acquisition Corp. has agreed to adopt a 401(k) Plan.
9. Capital Lease for AS-400 computer and application software
with DKM.
10. Capital Lease for Catia-CADM Application Software and certain
hardware equipment with Dassault systems.
11. Various intercompany loans between the Borrowers as described
in the attached list.
SCHEDULE 1.01(A)(11)
List of Intercompany Loans as of October 24, 1997
OBLIGOR OBLIGEE AGGREGATE AMOUNT
Xxxxx Machining International Aerospace $ 11,654,800
("Xxxxx")
Paragon Aerospace $ 7,752,600
SEAL Aerospace $ 1,018,900
General Inspection Aerospace $ 1,046,200
Laboratories, Inc.
SCHEDULE 1.01(B)
PERMITTED EXISTING LIENS
1. Uniform Commercial Code Financing Statement No. 9710060886,
filed April 4, 1997 in favor of Machinery Sales Co., as
Secured Party, against Paragon, as Debtor, securing one
Charmilles Roboform 40 CNC Diesinking EDM machine with all
standard equipment wired 230/3/60 including Hi Inertia C- Axis
and 2 Ton Chiller and any additions, etc., as more
particularly described thereon. (The Chief Financial Officer
of Aerospace has advised that all payments have been made and
that a UCC termination statement has been requested of the
Secured Party.)
2. Deed of Trust with Assignment of Rents and Fixture Filing
dated September 6, 1991, in the original principal amount of
$2,850,000, by Paragon, as Maker, in favor of Farm Bureau,
filed for record on October 16, 1991 with the Los Angeles
County Registrar-Recorder/County Clerk as Instrument No. 91-
1635037 (the "Farm Bureau Deed of Trust").
3. Assignment of Leases and Rents dated September 6, 1991, by
Paragon in favor of Farm Bureau, filed for record on October
16, 1991 with the Los Angeles County Registrar-Recorder/County
Clerk as Instrument No. 91- 1635038.
4. Uniform Commercial Code Financing Statement No. 91233708,
filed October 30, 1991 in favor of Farm Bureau, as Secured
Party, against Paragon, as Debtor, as continued July 19, 1996,
securing goods which are located at Paragon's real property
and which are used in the operation or occupancy of the real
property (excepting any personal property, equipment and
fixtures which are used in the trade or business conducted on
the real property), general intangibles relating to the
development or use of the real property, documents of
membership, and proceeds and claims.
5. Cost Per Copy Rental Agreement between SEAL and Astro Office
Products, Inc., dated June 29, 1994, for GP-55 and NP6030.
6. The Guarantee, dated September 6, 1991, in favor of Farm
Bureau contains a provision granting Farm Bureau a lien upon
and right of set-off against all monies, securities and other
property of Aerospace now or hereafter in the actual or
constructive possession of Farm Bureau. To the knowledge of
Aerospace, Farm Bureau does not have possession of any monies,
securities or any other property of Aerospace.
SCHEDULE 1.05
KNOWLEDGE
Chairman of Stellex Industries, Inc. ("Stellex")
Vice President of Stellex
President of Stellex
Chief Financial Officer of Stellex
President of each Borrower other than Stellex
SCHEDULE 5.01(A)
CONSENTS
--------
The following are exceptions to the satisfaction of the conditions
precedent set forth in Section 5.01(g):
1. Non-compliance with the Assignment of Claims Act, as amended.
2. The following have not been obtained as of the date of this
Agreement, all in connection with the Xxxxxxx-Xxxxxxx Acquisition:
(a) U.S. Government approval of change of ownership of Stellex
Microwave Systems, Inc. re facility security clearance.
(b) Novation of all contracts with the U.S. Government
held by Stellex Microwave Systems, Inc.
(c) Consents to assignment, or new issuance, to Stellex
Microwave Systems, Inc., and, in addition, consents
to Liens in favor of the Collateral Agent, of
permits, licenses and other governmental
authorizations and approvals required or used in the
business, including the following:
Business Permits:
Business State of California; County of
Santa Xxxxx
Facilities Permits:
Base Station (Facilities) Federal Communications
Commission
Base Station (Security) Federal Communications
Commission
Emergency generator State of California
Pressure vessels California Occupational Safety
and Health Administration
Propane tanks California Occupational Safety
and Health Administration
Elevator California Occupational Safety
and Health Administration
Boilers City of Palo Alto; Building
Department
Company Trucks California Department of Motor
Vehicles
Environmental and air permits are listed separately:
BAAQMD AIR PERMITS
Facility ID: 944
Schedule 3.19
Bldg. Location Source No. Exempt Description
------------ ---------------------------- --------------- ----------------- --------------------------------------------------
1 000 X-000 Xxx-Xxxxxx Vapor Degreaser Xxxxx Xxxxxxxxx (Model MLR-120)
1 B-1 Total S-135 Non-Exempt BLDG. 1-Solvent Clean., Wipe Cleaning (Dispenser)
1 Boiler Room, 00 X-000 Xxxxxx Boiler
1 Boiler Room, 00 X-000 Xxxxxx Boiler
1 MIM Assy., 000 X-000 Xxxxxx MTGL/SEC, Hydrogen Annealing
1 MIM Assy., 115 GONE S-501 Exempt MTGL/SEC, Annealing, Nickel
1 MIM, 000X X-000 Xxx-Xxxxxx Metal Injection Molding Operation
1 Paint Shop, 84 S-104 Non-Exempt Spray Booth
1 Paint Shop, 84 S-106 Non-Exempt Curing Oven
0 Xxxxx Xxxx, 00 X-000 Xxx-Xxxxxx Curling Oven
1 Paint Shop, 85 S-103 Non-Exempt Spray Booth
1 Paint Shop, 81 S-120 Non-Exempt Solvent Clean., Cold Cleaning, Tank #1
1 Plate Shop, 81 S-121 Non-Exempt Solvent Clean., Cold Cleaning, Tank #2
1 Plate Shop, 00 X-000 Xxxxxx Misc. Chem., Electroplating Line
2 Boiler Room, 00 X-000 Xxxxxx Boiler
2 stora S-402 Non-Exempt Vapor Degreaser Xxxxx Xxxxxxxxx / / (Model MLR-
120)
Schedule 3.19
Bldg. Location Chemicals
------------ ---------------------------- ------------------------------------------
1 118 AMS Defluxer Solvent, HCFC-
225ca, HCFC-225cb
1 B-1 Total IPA, Acetone
1 Boiler Room, 73 None
1 Boiler Room, 80 None
1 MIM Assy., 115 Hydrogen
1 MIM Assy., 115 GONE Nickel
1 MIM, 115D Nickel Powder, Iron Powder,
Heptane
1 Paint Shop, 84 Paint, Primers
1 Paint Shop, 84 Paint, Primers
1 Paint Shop, 85 Paint, Primers
1 Paint Shop, 85 Paint, Primers
1 Paint Shop, 81 IPA
1 Plate Shop, 81 IPA
1 Plate Shop, 81 Gold ACR 414, Nickel Sulfate,
Copper, Nickel Sulfamate
2 Boiler Room, 76 None
2 stora AMS Defluxer Solvent, HCFC-
225ca, HCFC-225cb
1
BAAQMD AIR PERMITS
Facility ID: 944
Schedule 3.19
Bldg. Location Source No. Exempt Description
------------ ---------------------------- --------------- ----------------- ---------------------------------------------------
3 Amp. Assy., 000X X-000 Xxx-Xxxxxx BLDG.3-Solvent Clean., Cold Cleaner Bath
3 B-3 Total X-000 Xxx-Xxxxxx XXXX.0-Xxxxxxx Clean., Wipe Cleaning
3 B-3 Total X-000 Xxx-Xxxxxx XXXX.0-Xxxxxxx Clean., Wipe Cleaning (Dispenser)
3 Boiler Room, 00 X-000 Xxxxxx Boiler
3 Prod. Assy., 000 X-000 Xxxxxx Roller Coater, Roller Ink Drying Oven, Solvent
General
3 Prod. Assy., 000 X-000 Xxxxxx Dryer Electric, Marker Ink Drying Oven
3 Prod. Assy., 000X X-000 Xxx-Xxxxxx Vapor Degreaser Xxxxx Xxxxxxxxx (Model MLR-120)
4 B-4 Total S-412 Non-Exempt Solvent Clean., Wipe Cleaning
4 B-6 Total S-608 Exempt Solvent Clean., Cold Cleaning
4 Boiler Room, 00 X-000 Xxxxxx Boiler
4 Elect. Testing & Assy, S-413 Exempt Solvent Clean., Cold Cleaner dipping into beakers
ALL
4 YIG Assy., 000 X-000 Xxx-Xxxxxx Vapor Degreaser Xxxxx Xxxxxxxxx (Model # MLR-
120)
4 YIG Assy., 000 X-000 Xxx-Xxxxxx Vapor Degreaser Branson Ultrasonic
4 YIG Assy., 000 X-000 Xxxxxx Epoxy Heat Curing Ovens
4 YIG Assy., 000 X-000 Xxx-Xxxxxx Silk Screen, Epoxy, Epoxy Missing Appl.
4 YIG Assy., 000 X-000 Xxxxxx Misc. MTGL/SEC Solder Lead Flux
Schedule 3.19
Bldg. Location Chemicals
------------ ---------------------------- ------------------------------------------
3 Amp. Assy., 101A IPA
3 B-3 Total IPA, Acetone
3 B-3 Total IPA, Acetone
3 Boiler Room, 70 None
3 Prod. Assy., 108 Markem Inks
3 Prod. Assy., 108 Markem Inks
3 Prod. Assy., 108A AMS Defluxer Solvent, HCFC-
225ca, HCFC-225cb
4 B-4 Total IPA, Acetone
4 B-6 Total IPA, Acetone
4 Boiler Room, 70
4 Elect. Testing & Assy, IPA, Acetone
ALL
4 YIG Assy., 102 AMS Defluxer Solvent, HCFC-
225ca, HCFC-225cb
4 YIG Assy., 102 AMS Defluxer Solvent, HCFC-
225ca, HCFC-225cb
4 YIG Assy., 102
4 YIG Assy., 102 Epoxy Resins, Part A & B
4 YIG Assy., 102
2
BAAQMD AIR PERMITS
Facility ID: 944
Schedule 3.19
Bldg. Location Source No. Exempt Description
------------ ---------------------------- --------------- ----------------- --------------------------------------------------
4 YIG Assy., 000 X-000 Xxx-Xxxxxx Vapor Phase Solder Reflow System
4 YIG Assy., 000 X-000 Xxx-Xxxxxx Dipping, Wire, Conformal Coating
4 XXX Xxxxxx, 00 X-000 Xxx-Xxxxxx MTGL/SEC Cleaning, Chem., Hydrocarbon
0 Xxxxxxx Xxxxxx, 00X X-000 Xxxxxx Solvent Clean., Crystal Ingot Growing
6L B-6 Total S-607 Non-Exempt Solvent Clean., Wipe Cleaning (Dispenser)
6L Boiler Room S-610 Exempt Boiler for Space heat Only, 2800K BTU
6L Integration Test, 000 X-000 Xxx-Xxxxxx Conformal Coating
6U Pressroom S-611 Exempt Offset Printers
Cafeter Boiler Room S-204 Exempt Boiler, Model #WGX - 1050, SN# A621331, BTU/HR
INPUT 1050000
Schedule 3.19
Bldg. Location Chemicals
------------ ---------------------------- ------------------------------------------
4 YIG Assy., 102 SF-21, FC70 Flourinert
4 YIG Assy., 108 Humiseal 1A33, 1B73, / /1500
Thinner
4 YIG Sphere, 82 IPA, Acetone, Diamond Slurry
5 Crystal Growth, 91A IPA
6L B-6 Total IPA, Acetone
6L Boiler Room
6L Integration Test, 104 Humiseal 1A33
6U Pressroom Inks
Cafeter Boiler Room None
3
OTHER ENVIRONMENTAL PERMITS
Schedule 3.19
HAZMAT PERMIT
AGENCY: PALO ALTO FIRE DEPT.
FD ID NUMBER 1818 B-1
-----------------
FD ID NUMBER 1820 B-3
-----------------
FD ID NUMBER 1821 B-4
-----------------
FD ID NUMBER 1823 B-6
-----------------
HAZWASTE PERMIT
AGENCY: SANTA XXXXX COUNTY HEALTH DEPT, ENVIRONMENTAL DIV.
PERMIT NUMBER 9462-E
--------------------
FOR ENTIRE FACILITY
WASTEWATER PERMIT
AGENCY: CITY OF PALO ALTO PUBLIC WORKS DEPT (REGIONAL WATER QUALITY
CONTROL PLANT)
#94121 ZERO DISCHARGE PERMIT
----------------------------
CAL XXXX WASTEWATER TREATMENT SYSTEM SUPPORTING PLATE SHOP
CALIFORNIA HAZWASTE ID
CAD061623229
------------
AGENCY: DTSC
PERMIT BY RULE (HAZWASTE)
AGENCY: DTSC
CONDITIONALLY AUTHORIZED TO CONDITIONALLY EXEMPT
WASTEWATER TREATMENT SYSTEM SUPPORTING PLATE SHOP
STORMWATER PERMIT
AGENCY: SAN FRANCISCO BAY REGIONAL WATER BOARD
WDID #2 00X000000
-----------------
FOR ENTIRE FACILITY
The following export licenses issued by the U.S. Department of State,
Office of Defense Trade Controls, are active for TSMD products:
Product ID: Country License Number Expiration Date
CV-951 Korea T-071529 Oct 26, 0000
XX-000 Xxxxx Xxxxxx T-072294 Xxx 00, 0000
XX-000 XX Xxxxxxx T-071350 Oct 28, 1997
WJ-31200C Bahrain, Egypt, Kuwait, Saudi Arabia, UAE T-075444 Jan 24, 1999
XX-00000X Xxxxxxxxx T-078484 July 31, 1999
XX-00000X Xxxxxxx T-075413 July 31, 1999
XX-00000X Xxxxxx, Xxxxxxx, Xxxxx T-078602 Aug 04, 1999
WJ-31200C Taiwan T-074689 Feb 02, 1999
WJ-31200C India 686121 Jan 14, 1001
WJ-31290-1 Brazil, Chile, Colombia, Mexico, Venezuela T-077384 May 04, 1999
WJ-31290-1 Egypt, Israel, Jordan, Kuwait, UAE, Bahrain T-077384 April 24, 1999
XX-000000-0 Xxxxxxxxx T-077383 Jun 12, 1999
XX-000000-0 Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxx Xxxxxxx T-074259 July 21, 1998
XX-000000-0 Xxxxxxx, Finland, Spain, Sweden T-076633 Feb 14, 1999
XX-000000-0 Xxxxxx, Xxxxxxx, Xxxxx, Turkey T-076632 Feb 14, 1999
WJ-312900-1 Czech Rep, Hungary, Poland T-077385 Jun 06, 1999
XX-000000-0 Xxxxxxxxx, Malaysia T-076631 Feb 09, 1999
WJ-312900-1 Japan, Singapore, Thailand T-074258 Jul 28, 1999
XX-000000-0 Xxxxx Xxxxxx T-077388 Apr 24, 1999
WJ-312900-1 Taiwan T-076630 Feb 14, 1999
XX-00000 Xxxxxxx 683304 Aug 30 2000
WJ-31410 and Germany 697806 May 20 2001
WJ-31400
XX-00000 Xxxxxxx 672954 Aug 15, 2000
XX-00000 Xxxxxxx 705247 Apr 28, 2001
XX-0000X Xxxxxxxxx T-073411 May 00, 0000
XX-0000X0 Xxxxxx Xxxxxxx 664190 Feb 14, 2000
XX-0000X-0 Xxxxxx Xxxxxxx 588829 Jan 13, 1998
Technical Assistance Agreements:
Case # Country Customer Commodity Expiration
AG-479-96 India CABSEC Training Dec 31, 2005
AG-465-96 UK Xxxxxx UK FMRAAM Proposal Dec 31, 2005
3. All Customer Contracts listed on Schedule 2.5(a) to the
Xxxxxxx-Xxxxxxx Acquisition Agreement (a copy of which is attached hereto)
require the consent of the other party to the grant of the Lien thereon to the
Collateral Agent. In addition, Supplier Contracts that require such a consent
are: Oracle software license (PO 22802), the Comdisco lease (PO 9726) and the
Sun Finance lease (PO 9602). In addition, the nondisclosure/teaming agreements
disclosed on Schedule 2.5(h) of the Xxxxxxx-Xxxxxxx Acquisition Agreement
require such a consent. None of such consents has been obtained as of the date
of this Agreement.
SCHEDULE 2.5(a)
Customer Contracts
Exhibit A to Schedule 2.5(a) lists all Customer Contracts that provide for
payments to or performance by Seller or Company in excess of $250,000.
Schedule 2.5(a)
EXHIBIT A
OPEN ORDERS OVER $250K
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
XXXXXX MISSILE SYSTEMS 6-916799-R-A9-X 6/30/95 55,744,923.00 16,062,011.00 AMRAAM XXXX 0,
0, 00
XXXXXXXX XXXXXXXXXXX MDA904-94-D-1501 3/31/94 11,925,893.90 1,403,641.00 WINDJAMMER
XXXXXX MISSILE SYSTEMS 6-962271-R-A0-X 4/15/97 11,510,835.00 11,510,835.00 AMRAAM XXX 00
XXXXXX XXXXXXXX XXXXXXXXXX X00000 8/1/97 8,821,348.00 8,821,348.00
TECHNOLOGIES LONGBOW
XXXXXX CORP 4916142 11/4/94 5,399,957.31 180,000.00 ICS
RAYTHEON TI SYSTEMS INC. 105936762 9/10/97 3,951,012.00 3,951,012.00 P102
XXXXXX MISSILE SYSTEMS 8K-906504-7F4 9/28/93 3,429,487.00 49,227.00 AMRAAM
TEXAS INSTRUMENTS INC 100759015 6/18/96 3,183,346.00 2,191,812.00 P102
XXXXXXXX XX 00-XX00-00-0000 4/4/97 2,798,778.00 0.00 AMRAAM XXX 00
XXXXXXXX XX 00-XX00-00-0000 4/4/97 2,485,587.00 0.00 AMRAAM XXX 00
XXX XXXXXXXXXXXXXX XXX 00000 5/30/97 2,345,000.00 2,345,000.00 CLASSIFIED
MOTOROLA INC LETTER 12/19/95 2,245,186.00 91,858.00
SUBCONTRACT Q563 P94
XXXXXXXX XX 00-00X0-00-0000 12/23/96 2,200,000.00 2,200,000.00 XX XX BLK IVA
RAYTHEON CO 72-2082-68-0085 5/31/96 1,980,000.00 328,250.00 XX XX BLK IV
RAYTHEON CO 72-55F6-68-0195 5/31/96 1,940,400.00 1,605,177.00 XX XX BLK IV
OPEN ORDERS OVER $250K
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
XXXXXXXX XX 00-XX00-00-0000 5/16/97 1,560,000.00 0.00 AMRAAM
E-SYSTEMS 4061SC09 12/19/95 1,446,127.00 411,711.00 RIVET JOINT
LOCKHEED XXXXXX FEDERAL SYSTEMS 496643 3/18/94 1,371,168.00 229,376.00 STAR
XXXXXX MISSILE SYSTEMS 6-936616-R-G2-X 12/21/95 1,310,026.00 297,594.00 XX XX BLK IV
RAYTHEON CO 92-184H-G-0005 6/30/95 1,272,000.00 14,400.00 SLQ-32
NORTEL LTD NB03158 7/25/97 1,260,000.00 163,800.00
XXXXXX XXXXXXXX XX X0-000000 4/1/97 1,243,818.00 1,217,778.00 ICO
SEOCAL INC 0013-A-5-02526 1/9/95 1,182,831.00 72,468.00 MELCO
XXXXXX MISSILE SYSTEMS 6-965204-R-G2-X 8/3/97 1,070,786.00 1,070,786.00 SM2/ESSM
NORTEL LTD. NB03104 3/11/97 1,002,000.00 546,925.00 XX-00
XXXXXX XXXXXXXX XX X0-000000-XX0 6/25/96 1,000,000.00 531,250.00 F15 RDR SET MSIP
XXXXXX SYSTEMS INC C5065 3/19/97 932,120.00 682,110.00 X0X
XXXXXX XXXXXXXX XX X0-000000 6/27/97 828,235.00 778,906.00 ICO
XXXXXX XXXXX XXXXXXX X0XX000000X 12/5/95 751,107.00 48,000.00 PAC 3
LOCKHEED XXXXXX FEDERAL SYSTEMS 152902 6/20/96 749,500.00 349,500.00 AV1
XXXXXX MISSILE SYSTEMS 6-936623-R-A9-X 3/29/96 737,800.00 234,515.00 XX XX BLK III
& IV
NORTEL LTD NB03943 9/10/97 729,000.00 729,000.00
OPEN ORDERS OVER $250K
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
NORTEL LTD NB03592 8/1/97 630,000.00 630,000.00
XXXXXX AIRCRAFT CO B8-599658-FLS 11/2/95 535,359.00 699.00 MDR
IFR SYSTEMS INC 202008 3/8/95 535,009.00 14,668.00
TEXAS INSTRUMENTS INC 100759031 5/30/97 525,000.00 525,000.00 P3 I
RAYTHEON CO 92-227-H-G-2029 9/1/95 518,202.00 22,724.00 ALQ-184
LOCKHEED MARTN AEROSPACE KKM007288 12/23/92 515,000.00 181,405.00 SCAMP
XXXXXX CORP 6943858 12/20/96 510,963.00 12,582.00 HT
RAYTHEON TI SYSTEMS INC 105936747 9/10/97 487,000.00 487,000.00 X000
XXXXXX XXXXXXX XXXXXXX XXX 0X-000000-0X0 5/30/97 484,465.00 384,715.00 XX XX
XXXXXXXX XX 00-00X0-XX-0000 12/17/96 466,612.00 124,933.31 ESSM
XXXXXX MISSILE SYSTEMS 8K-831170-7F3 3/31/95 443,361.17 36,170.59 AMRAAM
XXXXXXXX XX 00-XX00-00-0000 5/22/97 443,300.00 393,250.00 SPARROW
ALCATEL NETWORK SYSTEMS 39300004041 5/28/96 442,210.00 158,630.00 ACES, MTSAT,
WORLDSTAR
MARYLAND PROCUREMENT MDA904-96-C-1373 9/27/96 420,549.00 53,505.00 WINDJAMMER
DEFENSE SUPPLY CENTER SP0970-94-D-C006/ 2/12/97 396,934.00 266,867.00
0004,0005,0006
U.S. AIR FORCE F09603-95-D-0908 10/28/95 390,607.00 223,530.00 ALQ-184
DO 0001/0002
OPEN ORDERS OVER $250K
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
XXXXXXXX XX 00-XX00-00-0000 8/28/97 387,777.00 387,777.00 AMRAAM
IFR SYSTEMS INC 202005 2/28/95 380,794.82 2,114.00
XXXXXXXX XX 00-XX00-00-0000 5/22/97 374,660.00 374,660.00 SPARROW
AIL SYSTEMS 120100-000 12/12/96 372,552.00 169,164.00 EA6B
XXXXXX MISSILE SYSTEMS 6-907044-B-L6 5/21/93 370,820.00 47,371.00 AMRAAM
MARYLAND PROCUREMENT MDA904-96-C-1409 9/27/96 330,584.00 180,512.00 Z-GROUP
SAAB ERICSSON SPACE 53-6-1059 10/22/96 326,420.00 71,840.00
WAVETRON INC W951215010WJ 12/18/95 312,715.91 24,307.67
IFR SYSTEMS INC 202007 3/8/95 312,200.00 16,100.00
MOTOROLA INC 276057 5D 8/18/97 279,125.00 279,125.00 IRIDIUM
XXXXXXXX XX 00-XX00-00-0000 4/4/97 273,735.00 0.00 AMRAAM XXX 00
XXXXXXXX XX 00-XX00-00-0000 9/12/97 273,000.00 117,000.00 AMRAAM
U.S. NAVY N00383-97-C-B003 1/3/97 267,456.00 241,984.00 E2C
LOCKHEED XXXXXX AEROSPACE KKM007316 8/25/93 259,000.00 45,313.00 SCAMP
GROUP TECHNOLOGIES 360000268 4/28/97 254,250.00 157,070.00 AMRAAM
SCHEDULE 2.5(a)
SUPPLEMENT TO EXHIBIT A
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
1. HMSC 6-916799-R-A9-K 6/30/95 $55,744,923 $16,062,011 AMRAAM Lots 8,
9,10
(a) 8/25/94 Memorandum of Agreement (MOA) definitizes Lot 8 pricing at $16,193,931 and provides option pricing for
Lots 9 and 10. The MOA also provides discounts (Enterprise Cost Reduction Initiative--ECRI) to HMSC dependent on
the amount of business placed with WJC during 1995 and 1996.
(b) 9/21/94 Letter Subcontract with NTE of $16,193,931 (for Lot 8) with NTE options of $25,737,000--Lot 9 and
$23,912,000--Lot 10.
(c) 3/9/95 MOA amends 8/25/94 MOA, but still provides Lot 8 pricing at $16,193,931 and provides option pricing for
Lots 9 and 10. The MOA also provides discounts (ECRI) to HMSC dependent on amount of business placed with WJC
during 1995 and 1996.
(d) 6/29/95 Letter amendment for Lot 9 option at firm fixed price $14,214,755.
(e) 8/5/95 Letter amendment providing VE incentive payment of $1,053,218 for the DL/RF Processor for AMRAAM Lots 7
and 8.
(f) 9/28/95 Letter amendment for AMRAAM Lot 8 consideration amount of $1,460,118.
(g) Undated original PO #6-916799-R-A9-X (signed by WJC 10/3/95) at firm fixed price of $16,193,931 (for Lot 8).
Includes option pricing provisions for Lots 9 and 10.
(h) 11/2/95 Letter amendment for AMRAAM Lot 9 Value Engineering (VE) incentive payment in the amount of $1,448,951 for
DL/RF Processor.
(i) 12/6/95 Letter amendment for AMRAAM Lot 8 consideration amount of $1,460,118.
(j) 3/14/96 Letter amendment for AMRAAM Lot 8 spares in the amount of $346,416.
(k) 5/23/96 Change Letter OA amends original purchase order (PO) to a revised total of $35,985,723.
(l) 6/14/96 E-mail amendment for AMRAAM Lot 9 spares in the amount of $1,743,058.
(m) 6/28/96 Letter amendment exercising Lot 10 option in the amount $19,513,237.
(n) 8/26/96 Change Letter OB amends the original PO to a revised total of $55,498,960.
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(o) 8/30/96 Letter amendment for AMRAAM Lot 7 and 8 VE incentive payment for RF Processor in the amount of $63,352.
(p) 8/30/96 Letter amendment for AMRAAM Lot 9 VE incentive for RF Processor in the amount of $49,349.
(q) 9/10/96 Change of Letter OC amends the original PO (but not in total dollar amount)-- still $55,498,960.
(r) Undated Preliminary Change Letter OD (stamped as received 9/25/96) amends the original PO to a revised total of
$55,611,661.
(s) Undated Preliminary Change Letter OD (stamped as received 12/11/96) amends the original PO to a revised total of
$53,479,049.
(t) Undated Preliminary Change Letter OD (stamped as received 12/20/96) amends the original PO to a revised total
of $55,744,923.
(u) 9/30/97 Letter Agreement between WJC and HMSC finalizing an ECRI agreement.
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
2. Maryland Procurement MDA904-94-D-1501 3/31/94 $11,925,893.90 $1,403,641 Windjammer
Office (MPO)
(a) 3/31/94 Contract # MDA904-94-D-1501 for a total NTE amount of $29,579,848.02.
(b) 3/31/94 Delivery Order No. 0001 under Contract/Purchase Order No. MDA904-94-D-1501 for a total amount of
$6,824,350.02.
(c) 12/19/94 Amendment/Modification No. P00001 to Delivery Order No. 0001 under Contract No. MDA###-##-####
(no change in total contract amount).
(d) 12/27/94 Delivery Order No. 0002 under Contract/Purchase Order No. MDA904-94-D-1501 for a total amount of
$2,517,675.
(e) 1/13/95 Amendment/Modification No. P00002 to Contract No. MDA###-##-#### (no change in total contract amount).
(f) 2/09/95 Amendment/Modification No. P00001 to Delivery Order No. 0002 under Contract No. MDA###-##-#### (no change
in total contract amount).
(g) 3/29/95 Amendment/Modification No. P00003 to Contract No. MDA###-##-#### (no change in total contract amount).
(h) 5/17/95 Amendment/Modification No. P00004 to Contract No. MDA###-##-#### (no change in total contract amount).
(i) 8/4/95 Amendment/Modification No. P00005 to Contract No. MDA###-##-#### (increases the total NTE amount from
$29,579,848.02 to $30,048,549.02).
2
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(j) 8/04/95 Delivery Order No. 0003 under Contract/Purchase Order No. MDA904-94-D-1501 for a total amount of
$545,700.
(k) 9/29/95 Delivery Order No. 0004 under Contract/Purchase Order No. MDA904-94-D-1501 for a total amount of
$1,260,733.
(l) 11/27/95 Amendment/Modification No. P00001 to Delivery Order No. 0004 under Contract No. MDA###-##-#### (no change
to total contract amount).
(m) 1/4/96 Delivery Order No. 0005 under Contract/Purchase Order No. MDA904-94-D-1501 for a total amount of $682,740.
(n) 3/29/96 Delivery Order No. 0006 under Contract/Purchase Order No. MDA###-##-#### for a total amount of $149,386.
(o) 4/11/96 Amendment/Modification No. P0001 to Delivery Order No. 0005 under Contract No. MDA###-##-#### (no change
to total contract amount).
(p) 4/11/96 Amendment/Modification No. P00001 to Delivery Order No. 0006 under Contract No. MDA###-##-#### (no change
to total contract amount).
(q) 9/10/96 Amendment/Modification No. P00001 to Delivery Order No. 0003 under Contact No. MDA904-94-D-1501
(de-obligates Delivery Order No. 0003 for $545,700).
(r) 9/10/96 Amendment/Modification No. P00002 to Delivery Order No. 0005 under Contract No. MDA###-##-####
(de-obligates Delivery Order No. 0005 for $682,740).
(s) 9/10/96 Amendment/Modification No. P00006 to Contract No. MDA904-94-D-1501 (no change to total contract amount).
(t) 9/10/96 Amendment/Modification No. P00002 to Delivery Order No. 0004 under Contract No. MDA904-94-D-1501 (no
change to total contract amount).
(u) 9/11/96 Delivery Order No. 0007 under Contract No. MDA904-D-1501 for the amount of $1,173,750.
(v) 11/18/96 Amendment/Modification No. P00001 to Delivery Order No. 0007 under Contract No. MDA904-94-D-15010 (total
contract amount is unchanged).
(w) 9/25/97 Amendment/Modification No. P00007 to Contract No. MDA904-94-D-1501 (total contract amount is unchanged).
(x) SUMMARY: (b) + (d) + (j) + (k) + (m) + (n) - (q) - (r) + (u) = $11,925,894.
3. HMSC 6-962271-R-A0-X 4/15/97 $11,510,835 $11,510,835 AMRAAM Lot 11
3
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(a) 4/14/97 Letter Subcontract in the amount $12,077,765 for AMRAAM Lot 11. (Note: booked at $11,510,835 for ECRI
reserve).
(b) 9/30/97 Letter Agreement between WJC and HMSC finalizing an ECRI agreement.
4. Xxxxxx Xxxxxxxx
Millimeter P87042 8/1/97 $8,821,348 $8,821,348 Longbow
Technologies (MMMTI)
(a) 8/1/97 Letter Contract No. P87042 for the firm fixed price of $8,821,348 with option pricing.
(b) 9/16/97 Contract (total dollar amount sums to $8,821,348 with a series of options extending out to the year 2004
and performance incentives of up to $200,000) for the Longbow Hellfire Modular Missile System Program.
5. Xxxxxx Corp 4916142 11/4/94 $5,399,957.31 $180,000 ICS
(a) 10/28/94 Letter Subcontract # 4916142 with a NTE limitation of $2,777,172.
(b) 11/08/94 Change Order No. 1 to Letter Subcontract # 4916142 with a NTE limit of $2,777,172 which includes an
option for $730,288 for additional units.
(c) 1/30/95 Original PO # 4916142 is a definitive cost plus incentive fee subcontract for the total amount of
$2,439,774. There is also incremental funding of an additional $300,000.
(d) 3/22/95 Change Order No. 1 increases the "ceiling price" from $2,439,774 to $3,135,588 (the incremental funding
remains at $300,000).
(e) 4/7/95 Change Order No. 2 increases the ceiling price from $2,439,774 to $3,277,900 and increases the
incremental funding from $300,000 to $1,100,000.
(f) 6/30/95 Change Order No. 3 increases the ceiling price from $3,277,900 to $3,848,104 and increase the incremental
funding from $1,100,000 to $1,500,000.
(g) 8/16/95 Change Order No. 4 increases the ceiling price from $3,848,104 to $3,857,104 and increases the incremental
funding from $1,500,000 to $1,509,000.
(h) 10/19/95 Change Order No. 5 increases the incremental funding from $1,509,000 to $2,309,000 (the ceiling price is
not changed).
(i) 11/30/95 Change Order No. 6 increases the incremental funding from $2,309,000 to $3,109,000 (the ceiling price is
not changed).
(j) 2/7/96 Change Order No. 7 increases the incremental funding from $3,109,000 to $3,609,000 (the ceiling price
is not changed).
4
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(k) 2/19/96 Change Order No. 8 increases the ceiling price from $3,857,104 to $3,909,957 and increases the incremental
funding from $3,609,000 to $3,909,957.
(l) 1/3/97 Change Order No. 9 increases the total funding from $3,909,957 to $4,209,957 and provides for delivery
incentives of $1,500,000.
(m) 2/24/97 Change Order No. 10 does not change any of the totals from Change Order No. 9.
(n) 3/19/97 Change Order No. 11 does not change the total funding, but increases the incremental funding from
$4,209,957 to $4,909,957.
(o) 6/12/97 Change Order No. 12 increases the incremental funding from $4,909,957 to $5,409,957.
(p) The schedule amount should read $5,409,957 and the total open amount should be $240,000. The difference resulted
from a credit memo and a booking adjustment. The Oracle database will be adjusted to reflect the proper amounts.
6. Raytheon TI
Systems (RTIS) 105936762 9/10/97 $3,951,012 $3,951,012 P102
(a) 8/27/97 Memorandum of Agreement in the amount of $3,951,012.
(b) 9/4/97 Original PO # 105936762 for the firm fixed price of $3,951,012.
7. HMSC 8K-906504-7F4 9/28/93 $3,429,487 $49,227 AMRAAM
(a) 4/11/94 Original PO # 8K-906504-7F4 for the firm fixed price $928,654.
(b) 7/25/94 Memorandum of Agreement for the firm fixed price of $805,058 with an option for firm fixed pricing for
Phase III in the amount of $1,695,775.
(c) 9/29/94 Change Letter OA amends the original PO to a revised total of $3,429,487.
8. Texas Instruments (TI) 100759015 6/18/96 $3,183,346 $2,191,812 P102
(a) 6/12/96 Change A (this is the original PO) the total PO amount is listed at $3,183,346.
(b) 8/20/96 Change B to original PO (the total PO amount remains at $3,183,346).
(c) 8/20/96 Change B-C to original PO (the total PO amount remains at $3,183,346).
(d) 9/4/96 Change D-E to original PO (the total PO amount remains at $3,183,346).
5
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(e) 9/27/96 Change F to original PO (the total PO amount remains at $3,183,346).
(f) 3/31/97 Change X-X to original PO (the total PO amount remains at $3,183,346).
(g) 5/01/97 Change K to original PO (the total PO amount remains at $3,183,346).
(h) Undated (TI's approval date is 9/12/97) Change L to original PO (the total PO amount remains at $3,183,346).
9. Xxxxxxxx Xx. 00-XX00-00-0000 4/4/97 $2,798,778 $0 AMRAAM Lot 11
(a) 4/4/97 Fax Turn-On PO # 72-RY00-68-7552 for the firm fixed price of $2,798,778.
(b) 4/15/97 Original PO # 72-RY00-68-7552 at the firm fixed price of $2,798,778.
10. Xxxxxxxx Xx. 00-XX00-00-0000 4/4/97 $2,485,587 $0 AMRAAM Lot 11
(a) 4/4/97 Fax Turn-On PO # 72-RY00-68-7552 for the firm fixed price of $2,485,587.
(b) 4/15/97 Original PO # 72-RY00-68-7552 at the firm fixed price of $2,485,587.
11. EDL Communications LTD 07013 5/30/97 $2,345,000 $2,345,000 Classified
(a) 5/21/97 Original XX # 00000 for a total amount of $2,345,000 (with an option for an additional $33,400).
12. Motorola Inc. Letter Subcontract 12/19/95 $2,245,186 $91,858 P94
Q563
(a) 6/11/96 Letter Subcontract for $2,171,592.
(b) 7/1/96 Supplemental Agreement #1 revises the incremental funding from $2,171,592 to $2,192,497
(c) 8/15/96 Supplemental Agreement #2 revises the incremental funding from $2,192,497 to $2,217,320 fully
funded.
(d) 12/16/96 Supplemental Agreement #3 revises the incremental funding from $2,217,320 to $2,237,831.
(e) The difference between supplemental agreement #3 and the total order amount reflects unavailable documentation.
13. Xxxxxxxx Xx. 00-00X0-00-0000 12/23/96 $2,200,000 $2,200,000 XX XX BLK IVA
6
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(a) 12/05/96 Original PO # 72-11G5-68-0004 with a total NTE amount of $2,376,000 but funded only to $530,000. This PO
was originally booked at $2,200,000 to reflect a possible reserve.
(b) 9/24/97 Change Order 1 to original PO which definitizes the pricing at $2,376,000. Subsequent to definitizing
this PO, the order has been booked at $2,376,000.
14. Raytheon Co. 72-2082-68-0085 5/31/96 $1,980,000 $328,250 XX XX BLK IV
(a) 5/30/96 Original XX # 00-0000-00-0000 xx the amount of $1,980,000.
15. Xxxxxxxx Xx. 00-00X0-00-0000 5/31/96 $1,940,400 $1,605,177 XX XX BLK IV
(a) 5/30/96 Original PO # 72-55F6-68-0195 in the amount of $1,940,400.
(b) 1/23/97 Change Order No. 1 amends the original PO (no change in total dollar amount).
(c) 6/02/97 Change Order No. 2 amends the original PO (no change in total dollar amount).
16. Xxxxxxxx Xx. 00-XX00-00-0000 5/16/97 $1,560,000 $0 AMRAAM
(a) 5/14/97 Original PO # 72-RY01-68-2157 in the amount of $1,552,000.
(b) 5/20/97 Change Order 1 amends the original PO to a revised total amount of $1,560,000.
(c) 9/20/97 Change Order 2 (no change to total PO amount).
17. E-Systems 4061SC09 12/19/95 $1,446,127 $411,711 Rivet Joint
(a) 12/15/95 Subcontract # 4061SC09 for the firm fixed price of $1,446,127.
(b) 2/14/96 Modification S/A No. 1 (does not impact total subcontract amount).
18. Lockheed Xxxxxx Federal 496643 3/18/94 $1,371,168 $229,376 Star
Systems
(a) 3/18/94 MOA for the firm fixed price of $40,000 (which is dependent upon the actual amount of work performed) and
also provides an additional option pricing structure totalling $2,220,322.
7
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(b) 3/30/94 Fax Turn-On exercising option 1 under the 3/18/94 MOA for the amount $40,000.
(c) 4/15/94 Original XX # 000000 for the firm fixed amount of $80,000 (which is dependent upon the actual amount of
work performed) and also provides an additional option pricing structure.
(d) 4/29/94 Alteration No. 1 to original PO # 496643 which exercises option 2 and increases the "commitment" from
$80,000 to $120,000.
(e) 5/27/94 Alteration No. 2 to original PO which exercises option 3 and increases the commitment from 120,000 to
$160,000.
(f) 6/29/94 Alternation No. 3 to original PO which exercises option 4 and increases the commitment amount from
$160,000 to $200,000.
(g) 7/28/94 Alteration No. 4 to original PO which exercises options 5-9 and increases the commitment amount from
$200,000 to $360,000.
(h) 1/20/95 Alteration No. 5 to original PO which exercises option 10 (for January) and increases
the commitment amount from $360,000 to $388,074.
(i) 2/7/95 Alteration No. 6 to original PO which exercises option 10 (for February) and increases the commitment
amount from $388,074 to $424,504.
(j) 3/1/95 Alteration No. 7 to original PO which exercises option 10 (for March) and increases the commitment amount
from $424,054 to $460,934.
(k) 4/3/97 Alteration No. 8 to original PO which exercises option 10 (for April) and increases the commitment amount
from $460,934 to $497,364.
(l) 5/1/95 Alteration No. 9 to original PO which exercises option 10 (for May) and increases the commitment amount
from $497,364 to $533,794.
(m) 5/31/95 Alteration No. 10 to original PO which exercises option 10 (for June and July) and increases the
commitment amount from $533,794 to $606,654.
(n) 7/31/95 Alteration No. 11 to original PO which exercises option 10 (for August and September) and increases the
commitment amount from $606,654 to $679,514.
(o) 10/12/95 Alteration No. 12 to original PO which exercises option 10 (for October, November and December) and
increases the commitment amount from $679,514 to $788,804.
(p) 12/1/95 Alteration No. 13 to original PO which exercises option 11 (for January and February) and increases the
commitment amount from $788,804 to $852,176.
8
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(q) 2/20/96 Alteration No. 14 to original PO which exercises option 11 (for March - September) and increases the
commitment amount from $852,176 to $1,073,978.
(r) 8/19/96 Alteration No. 15 to original PO (with no change in the total amount).
(s) 10/18/96 Alteration No. 16 to original PO which exercises option 11 (for October 1996 - September 1997) and
increases the commitment amount from $1,073,978 to $1,371,168.
19. HMSC 6-936616-R-G2-X 12/21/95 $1,310,026 $297,594 XX XX BLK IV
(a) 12/20/96 MOA for the firm fixed price of $1,460,026 ($150,000 of this MOA amount is assigned to PO #
6-957948-R-G2).
(b) 1/31/97 Original PO # 6-936616-R-G2-X for the firm fixed price of $1,310,026.
(c) 6/24/97 Change Letter OA to original PO (does not change the total PO amount--stays at $1,310,026).
(d) 9/16/97 Change Letter OB to original PO (does not change the total PO amount).
20. Raytheon Co. 92-184H-G-0005 6/30/95 $1,272,000 $14,400 SLQ-32
(a) 6/22/95 Original PO # 92-184H-G-0005 for the total amount of $1,248,000.
(b) 6/30/95 Fax Turn-On (references to PO # 92-184H-G-0005) for the total amount of $1,248,000.
(c) 10/16/95 Change Order No. 2 (total PO amount remains at $1,248,000).
(d) 12/09/95 Change Order No. 3 amends the original PO to a revised total amount of $1,272,000.
(e) 10/16/96 Change Order No. 5 (no change to total PO amount).
(f) 1/27/97 Change Order Xx. 0 (xx xxxxxx xx xxxxx XX xxxxxx).
(x) Change Order No.'s 1, 4 and 6 are not in the folder. These Change Orders were issued internally at Raytheon and
not released to WJC.
21. Nortel Ltd. NB03158 7/25/97 $1,260,000 $163,800
(a) 4/1/97 fax cover sheet cancelling XX # XX00000 and entering XX # XX00000 xx the amount of $1,260,000 (no PO in
file).
22. Xxxxxx Aircraft Co. B8-741647 4/1/97 $1,243,818 1,217,778 ICO
9
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(a) 6/12/97 Letter subcontract for $1,375,358.
(b) 8/28/97 Revision 1 to Letter Subcontract which provides for the firm fixed total contract amount of $1,247,198.
The Schedule amount ($1,243,818) will be adjusted to reflect the firm fixed contract amount ($1,247,198).
23. Seocal Inc. 0013-A-5-02526 1/9/95 1,182,831 $72,468 MELCO
(a) 8/31/95 Original PO # 0013-A-5-02526 for $1,249,997.
(b) 4/16/96 PO Revision #1 which decreases the total PO amount from $1,249,997 to $1,238,053.
(c) 5/28/96 PO Revision #3 which decreases the total PO amount from $1,238,053 to $1,231,411.
(d) Revision #2 not received by WJ. The difference between the Revision #3 total PO amount ($1,231,411) and the
Schedule amount ($1,182,831) reflects commissions which are taken against the total PO amount.
24. HMSC 6-965204-R-G2-X 8/3/97 $1,070,786 $1,070,786 SM2/ESSM
(a) 7/21/97 Original PO # 6-965204-R-G2-X for the total amount of $894,368 (also includes 1998 and 1999 option
pricing).
(b) 8/29/97 Change Letter OA amends the original PO to a revised total of $1,070,786 (includes the 1998 and 1999
options)
(c) 9/16/97 Change of letter OB amends the original PO (total PO amount remains at $1,070,786) (Change Letter OB
also includes the 1998 and 1999 options).
25. Nortel Ltd. NB03104 3/11/97 $1,002,000 $546,925 OC-48
(a) 3/11/97 Original XX # XX00000 for $1,002,000
26. Xxxxxx Aircraft Co. M2-637508-AJ7 6/25/96 $1,000,000 $531,250 F15 RDR SET MSIP
(a) 6/7/96 Original PO # M2-637508-AJ7 for 1,000,000.
27. Xxxxxx Systems, Inc. C5065 3/19/97 $932,120 $682,110 E2C
(a) 3/14/97 Original PO # C00005065 for the total amount of $932,120.
28. Xxxxxx Aircraft Co. B8-741632 6/27/97 $828,235.00 $778,906 ICO
10
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(a) 6/12/97 Letter Subcontract for total proposed price of $909,201.
(b) 8/28/97 Revision 1 to Letter Subcontract which provides for the firm fixed total contract amount of $831,306. The
Schedule amount ($828,235) will be adjusted to reflect the firm fixed contract amount ($831,306).
29. Xxxxxx Xxxxx Xxxxxxx X0XX000000X 12/5/95 $751,107 $48,000 PAC 3
(a) 11/10/95 Original PO # V6CA650200F for a NTE limit of $368,000.
(b) 12/07/95 Change Notice Number 1 to original PO # V6CA650200F (Definitized contract at firm fixed price of
$368,000).
(c) 12/15/95 Change Notice Number 2 (no change to total PO amount).
(d) 4/17/96 Change Notice Number 3 (no change to total PO amount).
(e) 5/30/96 Change Notice Number 4 (no change to total PO amount).
(f) 10/15/96 Change Notice Number 5 (no change to total PO amount).
(g) 2/07/97 Change Notice Number 6 (no change to total PO amount).
(h) 2/14/97 Change Notice Number 7 (no change to total PO amount).
(i) 2/19/97 Change Notice Number 8 (no change to total PO amount).
(j) 3/07/97 Change Notice Number 9 (no change to total PO amount).
(k) 4/22/97 Change Notice Number 10 (no change to total PO amount).
(l) 5/28/97 Change Notice Number 11 (no change to total PO amount).
(m) 7/02/97 Change Notice Number 12 (no change to total PO amount).
(n) 7/10/97 Change Notice Number 13 (no change to total PO amount).
(o) 7/31/97 Change Notice Number 14 increases the total PO amount to $751,107.
(p) 8/19/97 Change Notice Number 15 (no change to total PO amount).
11
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
30. Lockheed Xxxxxx Federal 152902 6/20/96 $749,500 $349,500 AV 1
Systems
(a) 6/10/96 Letter Contract Number PO 686380 with a NTE limit $773,134 and a funding limit of $400,000.
(b) 8/8/96 XX # 000000 for the total firm fixed price of $715,000 (supersedes Letter Contract Number PO 686380).
(c) 10/1/96 authorization increases PO by $34,500 to $749,500.
(d) 12/4/96 XX # 000000 for the total amount of $749,500.
31. HMSC 6-936623-R-A9-X 3/29/96 $737,800 $234,515 XX XX BLK III & IV
(a) 4/18/96 Original PO # 6-936623-R-G2-X for the firm fixed amount of $658,750.
(b) 5/30/96 Change Letter OA to original PO # 6-936623-R-G2-X which increases the total PO amount to $708,815.
(c) 9/05/96 Change Letter OB to original PO # 6-936623-R-G2-X which increases the total PO amount of $737,800.
(d) 6/03/97 Change Letter OC to original PO # 6-936623-R-G2-X (no change to total PO amount).
(e) 7/08/97 Change Letter OD to original PO # 6-936623-R-G2-X (no change to total PO amount).
(f) Note that the PO # was changed from 6-936623-R-A9-X to 6-936623-R-G2-X to reflect a change at HMSC in their own
internal buyer code.
32. Nortel Ltd. NB03943 9/10/97 $729,000 $729,000
(a) 9/5/97 Original XX # XX00000 via fax 9/8/97 in the amount of $729,000.
33. Nortel Ltd. NB03592 8/1/97 $630,000 $630,000
(a) 6/17/97 Original faxed XX # XX00000 xx the amount of $630,000.
34. Xxxxxx Aircraft Co. B8-599658-FLS 11/2/95 $535,359 $699 MDR
(a) 5/17/96 Original PO # N-B8-599658 for $467,233.
(b) 7/31/96 Revision 1 to PO # N-B8-599658 (no change to total PO amount).
12
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(c) 1/6/97 Revision 2 to PO # N-B8-599658 (no change to total PO amount).
(d) 3/4/97 Revision 3 to XX # X-X0-000000 xxxxx decreases the total PO amount from $467,233 to $462,549. The
difference between the Schedule amount ($535,359) and the Revision 3 amount ($462,549) reflects the following two
items: (i) a credit memo for $72,111 which was not reflected in the Schedule amount and (ii) a $699 line item
which was cancelled, but contained in the Schedule and total open amount. The schedule should reflect $462,549 and
the total open amount should be $0.
(e) This PO has subsequently been closed out the Oracle database properly updated.
35. IFR Systems Inc. 202008 3/8/95 $535,009 $14,668
(a) 2/10/95 Requirements Purchase Agreement with Appendix A PO # 202008 for $656,200 (difference is due to incremental
ordering).
36. Texas Instruments Inc. 100759031 5/30/97 $525,000 $525,000 P3 I
(a) 5/29/97 Letter Subcontract (references to PO # 10075931) for the NTE amount of $730,000 ($650,000 of which applies
to PO # 100759031).
(b) 6/18/97 Original PO # 100759031 for the firm fixed amount of $450,000.
(c) 6/26/97 MOA for the amount of $605,000 ($525,000 of which applies to PO # 100759031).
(d) 6/26/97 Revision A to original PO # 100759031 which increases the total PO amount to $525,000.
37. Raytheon Co. 92-227-H-G-2029 9/1/95 $518,202 $22,724 ALQ-184
(a) 9/6/95 Original PO # 92-227H-G-2029 for the total amount of $490,360.
(b) 10/16/95 Change Order No. 1 to the original PO which increases the total PO amount to $518,202.
(c) 11/15/96 Change Order Xx. 0 (xx xxxxxx xx xxxxx XX xxxxxx).
00. Lockheed Xxxxxx
Aerospace KKM007288 12/23/92 $515,000 $181,405 SCAMP
(a) 12/22/92 Letter Subcontract KKM007288 for a NTE limit of $515,000 funded to $150,000.
(b) 12/23/92 Original PO # KKM007288 funded to $150,000.
(c) 4/27/93 Amendment # PO1 to PO # KKM007288 which increases the total PO to a firm fixed price of $515,000.
13
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(d) 3/04/94 Amendment # PO2 to PO # KKM007288 (no change to total PO amount).
(e) 7/27/94 Amendment # PO3 to PO # KKM007288 (no change to total PO amount).
(f) 8/25/94 Amendment # PO4 to PO # KKM007288 (no change to total PO amount).
(g) 9/06/94 Amendment # PO5 to PO # KKM007288 (no change to total PO amount).
(h) 10/18/94 Amendment # PO6 to PO # KKM007288 (no change to total PO amount).
(i) 10/26/94 Amendment # PO7 to PO # KKM007288 (no change to total PO amount).
(j) 10/27/94 Notice of Termination for Convenience of PO # KKM007288.
(k) 10/28/94 Confirms Notice of Termination providing additional instructions.
39. Xxxxxx Corp. 6943858 12/20/96 $510,963 $12,582 HT
(a) 3/7/97 Original PO # 6943858 for $510,963.
40. Raytheon TI Systems Inc. 105936747 9/10/97 $487,000 $487,000 P102
(a) 8/27/97 MOA includes pricing for two PO's ($3,951,012 for PO # 105936762 and $487,000 for PO # 105936747) and
additional option pricing.
(b) 9/3/97 Original PO # 105936747 for the total amount of $487,000.
41. HMSC LSC 8K-858373-7G2 5/30/97 $484,465 $384,715 XX XX
(a) 5/29/97 Original PO # LSC 8K-858373-7G2 for an estimated final commitment NTE limit of $484,465 (includes option
pricing).
(b) 8/27/97 MOA for the firm fixed total of $484,465 (and also provides for option pricing).
(c) 9/26/97 Change Letter OA amends the original PO (lists total PO amount at $484,465) (Change Letter OA also
includes option pricing).
42. Xxxxxxxx Xx. 00-00X0-XX-0000 12/17/96 $466,612 $124,933.31 ESSM
(a) 12/10/96 Original XX # 00-00X0-XX-0000 for the not to exceed amount $495,672.
(b) 4/14/97 Change Order No. 1 amends original PO # 53-54G0-BR-0001 to a revised firm fixed price of $466,612.
14
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(c) 4/29/97 Change Order Xx. 0 (xx xxxxxx xx xxxxx XX xxxxxx).
(x) 6/08/97 Change Order No. 3 (no change to total PO amount).
(e) 9/03/97 Change Order Xx. 0 (xx xxxxxx xx xxxxx XX xxxxxx).
00. HMSC 8K-831170-7F3 3/31/95 $443,361.17 $36,170.59 AMRAAM
(a) 3/31/95 Original PO # 8K-831170-7F3 for the firm fixed total PO amount of $443,361.17.
44. Raytheon Co. 72-RY01-68-0112 5/22/97 $443,300 $393,250 Sparrow
(a) 5/20/97 Original PO # 72-RY01-68-0112 for a total PO amount of $465,500.
(b) 7/11/97 Change Order No. 1 to original PO # 72-RY01-68-0112 increases the total PO amount of $482,150 ($38,850 of
which is subsequently transferred to original PO # 72-5044-68-0565 dated 8/06/97).
45. Alcatel Network Systems 39300004041 5/28/96 $442,210 $158,630 ACES, MTSAT,
Worldstar
(a) 5/7/96 Original PO # 39300004041 for $442,960.
(b) 6/27/97 Amendment 1 which increases the total PO amount from $442,960 to $474,610. The Schedule and total open
amount should be increased by $32,400 to reflect the proper amount.
(c) The Oracle database has subsequently been updated to reflect the proper amount.
46. Maryland Procurement
Office (MPO) MDA904-96-C-1373 9/27/96 $420,549 $53,505 Windjammer
(a) 9/18/96 Contract No. MDA904-96-C-1373 for a total firm fixed price of $420,549.
47. Defense Supply Center SP0970-94-D- 2/12/97 $396,934 $266,867
C006/0004, 0005,
0006
(a) 2/10/97 Original PO # SP0970-94-D-C00610004 for $104,900.
15
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(b) 4/14/97 Original PO # SP0970-94-D-C00610005 for $104,900.
(c) 5/12/97 Original PO # SP0970-94-D-C00610006 for $187,143.
(d) SUMMARY: (a) + (b) + (c) = $396,943 (The Schedule contains a transposition difference of $9 and
should reflect $396,943).
48. U.S. Air Force F09603-95-D-0908 10/28/95 $390,607 $223,530 ALQ-184
DO 0001/0002
(a) 8/31/95 Award Letter for the estimated total amount of $287,671 (estimate is dependent upon amount of returned for
repair units from customer - - this is a repair contract).
(b) 9/21/95 Delivery Order No. 0001 under Contract/Purchase Order No. F09603-95-D-0908 for the total amount of
$314,688.
(c) 11/14/95 Amendment/Modification No. P00001 to Contract Purchase Order No. F09603-95-D-0908 (no change to total
contract amount).
(d) 6/26/96 Delivery Order No. 0002 under Contract/Purchase Order No. F09603-95-D-0908 for the total amount of
$75,919.
49. Xxxxxxxx Xx. 00-XX00-00-0000 8/28/97 $387,777 $387,777 AMRAAM
(a) 9/6/97 Original PO # 72-RY02-68-4287 for a total PO amount of $387,777.
50. IFR System Inc. 202005 2/28/95 $380,794.82 $2,114
(a) 2/10/95 Requirements Purchase Agreement with Appendix A PO # 202005 for $539,070 (difference due to incremental
ordering).
51. Xxxxxxxx Xx. 00-XX00-00-0000 5/22/97 $374,660 $374,660 Sparrow
(a) 5/20/97 Original PO # 72-RY01-68-3188 for a total PO amount of $374,660.
52. AIL Systems 120100-000 12/12/96 $372,552 $169,164 EA6B
(a) 12/3/96 Original PO # 120100-000 for $372,552.
53. HMSC 6-907044-B-L6 5/21/93 $370,820 $47,371 AMRAAM
(a) 5/04/93 Letter Subcontract (for PO # 6-907044-B-L6) for a NTE value of $362,988.
(b) 12/23/94 Original MOA for a total amount of $1,035,520 ($370,820 of which relates to PO # 6-907044-B-L6).
16
DATE TOTAL ORDER TOTAL OPEN
CUSTOMER PURCHASE ORDER ENTERED AMOUNT AMOUNT PROGRAM NAME
(c) 4/24/95 Amendment A to MOA revises the total MOA amount to $1,003,866.25 ($339,166 of which relates to PO #
6-907044-B-L6). Note: the PO amount on the Oracle system properly reflects the $339,166 amount. The manual change
from the Oracle report which is reflected in the final schedule was based on a prior report. The Schedule should
reflect $339,166.
54. Maryland Procurement
Office (MPO) MDA904-96-C-1409 9/27/96 $330,584 $180,512 Z-Group
(a) Undated (Signed by WJC on 9/18/96) Contract No. MDA904-96-C-1409 for a total firm fixed price of $330,584.
55. Saab Ericsson Space 53-6-1059 10/22/96 $326,420 $71,840
(a) 10/16/96 fax from Saab Ericsson letter of intent for PO 53-6-1059 total value $326,420.
17
SCHEDULE 5.03(A)
1. Both before and after giving effect to the consummation of the
Permitted Acquisition, all of the representations and warranties contained in
Section 6.01 of the Credit Agreement and in the other Loan Documents shall be
true in all material respects, except that Schedules 6.01(D) and 6.01(E) may be
modified and amended to give effect to the status of the matters covered by
Sections 6.01(d) and (e) in respect of the Permitted Acquisition, and, as so
modified and amended, shall be reasonably satisfactory to the Requisite Lenders.
SCHEDULE 5.03(B)
1. A Borrower has delivered written notice to the
Administrative Agent and the Lenders of its intention to make a Permitted
Acquisition and a copy of the Information Package no less than Fifteen (15)
Business Days prior to the proposed closing date for such Permitted Acquisition
that sets forth, among other things, information regarding liabilities and
obligations with respect to environmental matters to be incurred by the Borrower
or any other Loan Party (including, without limitation, the acquired Person in
the event of an acquisition of equity interests) as a result of such
acquisition, any indemnities afforded under the terms of such acquisition and
the scope and results of any environmental review undertaken by such Borrower in
connection therewith.
2. The consideration (including, without limitation, the
purchase price, any deferred purchase price and the amount of Indebtedness being
assumed) for such Permitted Acquisition does not exceed the fair market value of
the assets or the equity interests being acquired.
3. The Permitted Acquisition is made at a time when, after
giving effect to such Permitted Acquisition and the related financing thereof,
no Default or Event of Default exists and the acquiring Borrower would remain
Solvent.
4. Substantially all assets and equity interests acquired by
the acquiring Borrower are being pledged to the Collateral Agent, for the
ratable benefit of the Agents and the Lenders, in accordance with Section 9.09.
5. The Pro Forma Interest Coverage Ratio of Stellex and its
Subsidiaries on a consolidated basis calculated in accordance with GAAP after
giving effect to such Permitted Acquisition shall be equal to or greater than
(a) 1.75 to 1.00 in connection with any Permitted Acquisition consummated in
Fiscal Year 1998, (b) 1.90 to 1.00 in connection with any Permitted Acquisition
consummated in Fiscal Year 1999 and (c) 2.25 to 1.00 in connection with any
Permitted Acquisition consummated thereafter.
6. The Pro Forma Leverage Ratio of Stellex and its
Subsidiaries on a consolidated basis calculated in accordance with GAAP after
giving effect to such Permitted Acquisition shall not be greater than (a) 5.75
to 1.00 in connection with any Permitted Acquisition consummated prior to the
Term Loan Termination Date and (b) 4.50 to 1.00 in connection with any Permitted
Acquisition consummated thereafter.
For purposes of the covenants set forth in this Schedule
5.03(B), the following terms shall be defined as set forth below:
"Pro Forma Interest Coverage Ratio" means the ratio of
Pro Forma EBITDA to Pro Forma Cash Interest Expense.
"Pro Forma Leverage Ratio" means the ratio of Pro Forma
Funded Debt to Pro Forma EBITDA.
"Pro Forma EBITDA" means the EBITDA for Stellex and its
Subsidiaries on a consolidated basis for the immediately preceding Financial
Covenant Period, which EBITDA is multiplied by a fraction the numerator of which
is 12 and the denominator of which is the number of months in such Financial
Covenant Period, plus the EBITDA for the acquired Person for the immediately
preceding four fiscal quarters multiplied by the percentage of such Person being
acquired.
"Pro Forma Cash Interest Expense" means the Cash Interest
Expense for Stellex and its Subsidiaries on a consolidated basis for the
immediately preceding Financial Covenant Period, which Cash Interest Expense is
multiplied by a fraction the numerator of which is 12 and the denominator of
which is the number of months in such Financial Covenant Period, plus the
arithmetic product of (a) the Pro Forma Acquisition Debt and (b) the Eurodollar
Rate for an interest period of 3 months plus the then current Applicable Term
Loan Eurodollar Rate Margin.
"Pro Forma Acquisition Debt" means, with respect to any
Permitted Acquisition, the Funded Debt to be incurred in connection with such
Permitted Acquisition as set forth in the Sources and Uses with respect thereto.
"Pro Forma Funded Debt" means the Funded Debt for Stellex and
its Subsidiaries on a consolidated basis for the immediately preceding four
fiscal quarter plus the Pro Forma Acquisition Debt.
SCHEDULE 6.01(C)
OWNERSHIP
Borrowers Ownership
Stellex Industries, Inc. 10.0% of common stock by Askrigg Trust
90.0% of common stock by Xxxxxxxxxx Trust
100% of Series A Preferred Stock by
Sunderland Industrial Holdings Corporation
KII Holding Corp. 80.1% of common stock by Stellex Industries, Inc.
19.9% of common stock by Management Group
100% of Series A Preferred by Stellex Industries,
Inc.
Kll Acquisition Corp. 100% by Kll Holding Corp.
Stellex Aerospace 100% by Kll Acquisition Corp.
Paragon 100% by Stellex Aerospace
SEAL 100% by Stellex Aerospace
Xxxxx Machining International 100% by Stellex Aerospace
General Inspection Laboratories, Inc. 100% by Stellex Aerospace
TSMD Acquisition Corp. 100% by Stellex Industries, Inc.
Stellex Microwave Systems, Inc. 100% by TSMD Acquisition Corp.
SCHEDULE 6.01(D)
VIOLATIONS OF AND CONFLICTS WITH
GOVERNING DOCUMENTS, REQUIREMENTS
OF LAW OR MATERIAL CONTRACTUAL OBLIGATIONS
Reference is made to Schedule 5.01(A) with respect to:
(a) Consents, approvals, contract novations and assignments or new
issuances of various governmental permits that have not been
obtained, as of the date of this Agreement, in each case from
certain governmental authorities specified therein; and
(b) Consents that have not been obtained, as of the date of this
Agreement, under contracts and agreements referred to therein
from the other parties thereto, all in connection with the
consummation of the Xxxxxxx-Xxxxxxx Acquisition.
The operation by Stellex Microwave Systems, Inc. of its portion of the
Business without having obtained such consents, approvals, contract novations,
assignments and/or new issuances, and/or such consents from other parties to
contracts and agreements, may constitute a violation of certain Requirements of
Law and/or of certain material Contractual Obligations to which such matters
pertain.
SCHEDULE 6.01(J)(i)
LITIGATION; ADVERSE EFFECTS
None
SCHEDULE 6.01(J)(ii)
MATERIAL LOSS CONTINGENCIES
NOT REFLECTED IN FINANCIAL STATEMENTS
1. Reference is made to the letter dated September 30, 1997 from Xxxxxx
Missile Systems Company to Xxxxxxx-Xxxxxxx Company, a copy of which is attached
hereto. The $566,000 item referred to in paragraph 1 thereof may constitute a
"material loss contingency," as such term is used in the second sentence of
Section 6.01(j) of the Agreement (an "MLC").
2. Reference is made to Schedule 2.5(m) of the Xxxxxxx-Xxxxxxx
Acquisition Agreement, a copy of which is attached hereto. The items set forth
therein may constitute MLC's.
3. The following projects of Stellex Microwave Systems, Inc. acquired
from Xxxxxxx-Xxxxxxx, may constitute MLC's:
Projected Conservative
Additional Additional Provisional
Project # Project Provisional Loss Loss
--------- ------- ---------------- ----
W06545000 MFE LRIP 3 $ (80,000) $ (200,000)
W06554000 Sparrow (80,000) (115,000)
W06558000 ELF NRE (25,000) (40,000)
[Letterhead of Xxxxxx Aircraft Company]
30 September 1997
In Reply Refer To: WJ-097-DCR-003
Xxxxxxx-Xxxxxxx Company
0000 Xxxxxxxx Xxxxxx
Stanford Research Park
Palo Alto, CA 94304
Attention: Xx. Xxx Xxxxxx
Subject: HMSC/WJ Enterprise Cost Reduction Initiatives (ECRI)
Reference: 1. Telecon between Xxx Xxxxxx, WJ, and Xxxx Xxxxxxx, HMSC,
same subject, dated 29 September 1997.
2. AMRAAM Memorandum of Agreement, Ref. 400-RJT-5020,
dated 9 March 1995.
3. HMSC Letter 097-DCR-001, Same Subject, dated
11 August 1997.
Dear Xxx,
This letter serves to formalize the agreement reached in Reference 1, whereby
Xxxxxx Missile Systems Company (HMSC) and Xxxxxxx-Xxxxxxx (WJ) mutually agree to
the following regarding ECRIs:
o WJ will credit HMSC $1,000,000, as a result of business volume credits
earned in accordance with Reference 2, in accordance with the
following:
1. The AMRAAM Lot 11 purchase order price of $12,077,765
will be reduced by $566,000 to $11,511,765. HMSC will
incorporate this change on a percentage basis over
the four subassemblies in the final purchase order
which is anticipated to be completed on 30 October
1997.
2. WJ will issue a check to HMSC in the amount of
$434,000, not later than 30 October 1997.
o The remaining $1,301,000 ECRI dollars delineated in Reference 3 will be
credited to WJ in support WJ activities relating to FOTT, Special
Access Program, Standard Missile C15, and AMRAAM.
o HMSC will finalize the FOTT purchase order for $250,000 not later than
30 October 1997 and release a second purchase order in the amount of
$90,000 for FOTT phase three not later than 30 October 1997.
The parties agree these actions represent the final completion and closure of
any and all ECRI obligations and commitments between the parties contemplated by
Reference 2. These actions also close out the remaining open items of Reference
2, and therefore the agreement is considered complete.
HMSC request WJ's acknowledgment of this agreement be returned to the
undersigned by 30 September 1997.
XXXXXX MISSILE SYSTEMS COMPANY
/s/ X.X. Xxxx
-----------------
X.X. Xxxx
XXXXXXX-XXXXXXX ACKNOWLEDGMENT
/s/ Xxxxxx X. Xxxxxx
----------------------
Xxxxxx X. Xxxxxx
Director, New Business Development
Tactical Subsystems Sector
SCHEDULE 6.01(L)
PAYMENT OF TAXES
1 . Paragon failed to file either a "top hat" notice or annual Form 5500
report with respect to certain income continuation agreements to which
Paragon is a party. In June, 1997, Paragon filed a Top Hat Plan
Notice, and tendered $2,500 with the required documentation in
satisfaction of any potential civil penalty relating to filing
obligations, pursuant to the U.S. Department of Labor's Delinquent
Filer Voluntary Compliance Program with respect thereto. The receipt
of such payment has been acknowledged.
2. Aerospace failed to file either a "top hat" notice or annual Form 5500
reports with respect to certain deferred compensation agreements to
which Aerospace is a party. In June, 1997, Aerospace filed a Top Hat
Plan Notice, and tendered $2,500 with the required documentation in
satisfaction of any potential civil penalty relating to filing
obligations, pursuant to the U.S. Department of Labor's Delinquent
Filer Voluntary Compliance Program with respect thereto. The receipt of
such payment has been acknowledged.
SCHEDULE 6.01(P)
ENVIRONMENTAL MATTERS
1. All matters, including, but not limited to, compliance issues, orders,
agreements, violations or alleged violations, Remedial Actions,
Liabilities and Costs, Releases or threatened Releases, notices,
underground storage tanks, surface impoundments, asbestos-containing
materials (confirmed or suspected) and polychlorinated biphenyls
("PCBs"), disclosed in the following, all of which have been provided
to the Agent (collectively, the "Environmental Assessments"):
a. Draft Report Phase I Environmental Site Assessment, Seal
Laboratories, 000 Xxxxx Xxxx Xxxxxx, Xx Xxxxxxx, Xxxxxxxxxx,
Dames and Xxxxx, dated October 21, 1996;
b. Draft Report Phase I Environmental Site Assessment and Phase
11 Limited Subsurface Investigation, General Inspection
Laboratories, 0000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx, Dames
and Xxxxx, dated October 21, 1996;
c. Revised Environmental Compliance Assessment Findings, General
Inspection Laboratories, 0000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxx, Dames and Xxxxx, dated December 12, 1996;
d. Draft Report Phase I Environmental Site Assessment, Paragon
Precision Products, Inc., 00000 Xxxx Xxxxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxxx, Dames and Xxxxx, dated October 18, 1996;
e. Draft Report Phase I Environmental Site Assessment and Phase
11 Limited Subsurface Investigation, Xxxxx Machining
International, Inc., 0000 Xxx Xxxxxxxx Xxxxxxxxx and 0000 Xxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxx, Dames and Xxxxx, dated October
22, 1996;
f. Environmental Assessment of Subsidiaries of Stellex Aerospace,
ENSR Consulting and Engineering, dated May, 1997;
g. Memorandum (Additional Investigative Activities and Findings),
ENSR Consulting and Engineering, dated June 3, 1997;
h. Memorandum (Additional Investigative Activities re: Aerospace,
formerly known as Xxxxxxxx Industries, Inc.) ENSR Consulting
and Engineering, dated October 27, 1997;
i. Commercial Sub-Sublease (Buildings 3/4/5) dated October 31,
1997 between X-X TSMD Inc., as Tenant and Xxxxxxx-Xxxxxxx
Company ("WJ"), as Landlord.
j. Commercial Sub-Sublease (Building 6) dated October 31, 1997
between X-X TSMD Inc., as Tenant and WJ, as Landlord.
k. An EPA Notification of Regulated Waste Activity (EPA Form
8700-12) has been filed with the EPA concerning the generation
and disposal of hazardous waste. No waste is to be stored in
excess of 90 days.
l. Information concerning ACMs and other matters as set forth in
Phase I Environmental Site Assessment and Compliance Audit of
WJ, Palo Alto, California dated October 1997 prepared by ENSR
under its Document Number 8713-095.
m. The following information has been obtained concerning the
leased property:
(i) The California EPA issued an order finding that WJ is
a responsible party for groundwater contamination
which flows through WJ's Palo Alto Plant site on the
site itself. A number of other companies in the area
as well as Stanford University, the land owner, have
been included in the order which required the
responsible parties to conduct an investigation into
the cause of the contamination. The order further
required the parties to submit recommendations on the
actions to remediate the contamination. This
regional order applies to what has been designated by
the State as the "Hillview/Xxxxxx site." The primary
sources of contamination were found to have migrated
onto WJ's property from off-site. Subsequent to a
mediation among the responsible parties to the
Hillview/Xxxxxx site, a formula for allocation of
costs for investigation and remediation based on a
determination of liability for such costs was
developed. The parties are in compliance with orders
relating to this cleanup effort.
In 1991 WJ established a reserve for expected costs
associated with this effort, and nothing has occurred
since that time which would cause WJ to change that
reserve.
(ii) The California EPA also ordered responsible or
potentially responsible parties to the
Hillview/Xxxxxx site, in addition to participating in
the total site remediation, to investigate and
remediate contamination that is specific to their
properties ("site specific"). The State has, in that
regard, ordered WJ to take necessary measures to
clean up certain contamination which the State
believes was caused by WJ and not by contaminants
flowing on-site from other sources. WJ has likewise
established a reserve for expected costs associated
with this effort,
and nothing has occurred since that time which would
cause WJ to change that reserve.
n. Preliminary Site Assessment and Limited Site Characterization,
Pure Cote, Inc. and Paragon Precision Products, Pacoima,
California, Xxxxxx Environmental, Inc., June 13, 1989.
o. The documents identified in Paragraph 2 of this Schedule
6.01(P) relating to the Pacoima Site (as defined below),
together with all matters disclosed in the reports, studies,
assessments, findings, filings, records and other data
referenced therein.
2. Prior to the purchase of either Paragon or Paragon's former site at
00000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx (the "Pacoima Site") by
Aerospace, a brick-lined vault (the "Vault") located on the
southwestern side of the Pacoima Site was used for the disposal of
waste oils from the Pacoima Site's operation. During an environmental
audit conducted by Aerospace in 1989, soil impacted by hydrocarbons and
halogenated organic compounds was found at the Vault location.
Groundwater test results also showed that gasoline, aromatic volatile
compounds, and several halogenated organic compounds were present in
the groundwater.
The contamination was reported to the Los Angeles County Department of
Health Services ("DHS"), and, subsequently, to the California Regional
Water Quality Control Board ("RWQCB"), Los Angeles Region, which
assumed jurisdiction over the remediation of the Pacoima Site. A
remediation program consisting of vapor extraction of the volatile
compounds from the soils was proposed, approved by the RWQCB, and
implemented (the "Remediation Program"). The Remediation Program is
described further in the following documents:
a. Project Summary Report prepared by CET Environmental Services,
Inc. dated January, 1993;
b. The Soil Remediation Closure Report submitted to the RWQCB
dated May, 1993 (the "Closure Report"); and
c. A letter from the RWQCB dated August 30, 1993 (the "No Action
Letter").
Several years after Paragon sold the Pacoima Site to D&M Steel
("D&M") (a copy of the purchase agreement with D&M has been
provided to the Agent) and after the RWQCB issued the No
Action Letter, Aerospace learned that the California
Department of Toxic Substances Control ("DTSC"), acting under
the authority of the United States Environmental Protection
Agency ("U.S. EPA") contacted D&M for the purpose of
investigating whether a release of hazardous substances had
occurred at the Site which poses a threat to public health or
the environment (the "DTSC Investigation"). Although neither
Aerospace nor Paragon have been contacted by either
DTSC or U.S. EPA concerning the DTSC Investigation, Aerospace
continues to receive telephone calls from D&M and has been
advised that DTSC recently inspected the Pacoima Site.
In connection with the prior use of the Vault and the
potential presence of discharges and releases caused by the
previous owners of the Pacoima Site, Aerospace and certain
affiliates filed a lawsuit against the prior owners in Los
Angeles County Superior Court (Case No. PCO07199X) (the
"Familian Litigation"). The Familian Litigation and various
claims associated with potential existing and future hazardous
materials claims relating to the Pacoima Site were settled
pursuant to a Settlement and Release Agreement dated on or
about July 5, 1994 by and among Aerospace, Paragon, Paragon
Tool, Die and Engineering, Novo-Paragon, Inc., Novo Leasing,
Ltd., Xxxxxxx Xxxxxxxx, Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxx, Xxxx
Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxx Industries,
Inc., General Accident Insurance Company of America, Utica
Mutual Insurance Co., Allianz Insurance Co., Sentry Insurance
A Mutual Company, Fireman's Fund Insurance Co., Atlantic
Mutual Insurance Co., and The Travelers (a copy of the
Settlement and Release Agreement has been provided to the
Agent).
3. As reflected in the Draft Report Phase I Environmental Site Assessment,
Paragon Precision Products, Inc., 00000 Xxxx Xxxxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxxx, prepared by Dames and Xxxxx and dated October 18,
1996, the activated carbon filters used in the Remediation Program (as
defined above) were transported to Yakima, Washington for regeneration
and reprocessing. The filters allegedly were mishandled in the process
of regeneration and reprocessing by Cameron-Yakima, Inc.
("Cameron-Yakima"), the company responsible for regeneration and
reprocessing of the filters, resulting in a release of hazardous
materials on or near Cameron-Yakima's facility at Yakima. In August
1994, Paragon received a letter from Cameron-Yakima indicating that the
Washington State Department of Ecology had notified some of
Cameron-Yakima's customers that they may be potentially liable for
remediation costs associated with the release.
4. On or about January 27, 1993, SEAL received a letter from the
Sanitation Districts of Los Angeles County ("SDLAC") stating that
SEAL's metal etching and photographic wastestreams were both subject to
pretreatment standards for new sources in the EPA Metal Finishing Point
Source Category and that SEAL was required to apply for and obtain an
Industrial Waste Discharge Permit from SDLAC. SEAL submitted an
application for an Industrial Waste Discharge Permit to SDLAC on or
about July 13, 1993. On May 24, 1993 and again on July 15, 1993, SEAL
received notices of violation from SDLAC alleging that SEAL had failed
to submit self-monitoring reports required by SDLAC in relation to
SEAL's metal etching and photographic wastestreams. Following a
meeting between SEAL and SDLAC personnel in late 1993, SDLAC notified
SEAL in a letter dated February 9, 1994 that SEAL is not required to
obtain an Industrial Waste Discharge Permit.
5. In 1994 or 1995, Aerospace received a letter addressed to X.X. Xxxxx,
Inc. ("X.X. Xxxxx"), the predecessor to Xxxxx Machining International
("Xxxxx"), indicating the existence of legal proceedings arising from
the failure of a hazardous materials transporter formerly used by X.X.
Xxxxx to transport and dispose of machine coolants. Apparently, the
transporter had illegally disposed of the coolants and other materials
handled by it, and had subsequently declared bankruptcy. The
transporter was engaged by X.X. Xxxxx during periods prior to
Aerospace's acquisition of Xxxxx and was not utilized by either
Aerospace or Xxxxx at any time subsequent to Aerospace's acquisition of
Xxxxx in 1990. The letter noticing the legal proceedings was forwarded
by Aerospace to X.X. Xxxxx, as it is Aerospace's view that any
liability arising from the proceedings would be the responsibility of
X.X. Xxxxx, as seller under the purchase agreement pursuant to which
Aerospace acquired Xxxxx (a copy of which has been provided to the
Agent). No copies of the letter noticing the legal proceedings were
retained by Aerospace and Aerospace has not received any subsequent
correspondence or other notices regarding this matter.
6. By copy of a letter dated February 26, 1992 to the Los Angeles County
Department of Public Works ("LADPVV"), the SDLAC notified Paragon that
Paragon was exempt from industrial waste permitting requirements under
SDLAC's then-current policy and, accordingly, Industrial Xxxxxxxxxx
Xxxxxxxxx Xxxxxx Xx. 00000 for Paragon's Valencia, California facility
was "void." Subsequently, sometime during the first-half of 1993, LADPW
conducted a survey of Paragon to determine if Paragon would be required
to obtain an Industrial Wastewater Discharge Permit from LADPW. During
the LADPW survey, LADPW advised Paragon that its non-destructive
penetrant inspection process could be considered a source of industrial
waste and that Paragon would be required to apply for an Industrial
Wastewater Discharge Permit. The process in question involves
application with a brush of a non-toxic penetrant dye on machined parts
and inspection of such parts under blacklight conditions for any
evidence of metal defects. Following the inspection, the dye is rinsed
under tap water in a conventional sink and flushed into the sanitary
sewer. Paragon was advised by the LADPW that as part of Paragon's
application for an Industrial Wastewater Discharge Permit, Paragon
would need to propose installation of a sampling box to test the pH of
the dye discharge on a periodic basis. On March 24, 1993, SDLAC issued
a temporary Industrial Waste Discharge Permit to Paragon.
On June 21, 1993 and again on November 4, 1993, Paragon received from
SDLAC notices of violation dated June 1, 1993 and October 12, 1993,
respectively, stating that Paragon was in violation of SDLAC's
Wastewater Ordinance by failing to submit an application for an
Industrial Wastewater Discharge Permit. Following several months of
discussions between Paragon and SDLAC personnel, on November 29, 1993
Paragon filed an application for an Industrial Wastewater Discharge
Permit with LADPW. By letter dated January 11, 1994 from LADPW,
Paragon's application was disapproved on the grounds that additional
information was required to process the application. Among other
things, the letter indicated that Paragon may be required to install a
gravity separation interceptor. Due to temporary dislocations caused by
the Northridge Earthquake on January 17, 1994, Paragon's revisions to
the application were delayed and a notice of violation was issued by
LADPW on May 2, 1994 stating that Paragon had failed to supply the
additional information required by LADPW in its January 11, 1994
letter.
By letter to SDLAC dated June 30, 1994, Paragon requested an extension
to August 19, 1994 to complete its Industrial Wastewater Discharge
Permit application. In a response, by letter dated July 7, 1994, SDLAC
extended the application deadline to September 1, 1994. On or about
that date, Paragon sent a letter to LADPW requesting that Paragon be
permitted to install a sampling box in lieu of the gravity separation
interceptor requested by LADPW. After an initial request from LADPW for
some additional information, no further correspondence was received
from LADPW during 1994.
On February 10, 1995, Paragon received a letter dated February 8, 1995
from SDLAC notifying Paragon that its temporary Industrial Wastewater
Discharge Permit 12845 issued March 24, 1993 has been "voided" on the
grounds that Paragon's only industrial discharge is from zyglo dye
testing and the daily discharge volumes are less than 200 gallons.
Paragon assumed that this letter concluded the need for further
revisions to its Industrial Wastewater Discharge Permit application;
however, on September 6, 1995, Paragon received a final delinquency
notice from LADPW indicating that it must immediately file a revised
application. This application was filed on October 19, 1995 and was
disapproved with a request for additional information on November 9,
1995. The additional information requested did not include a request
for installation of a gravity separation interceptor. Paragon submitted
the additional information on December 12, 1995 along with a permit
fee. Since that time, Paragon has received no further correspondence
from either SDLAC or LADPW regarding this matter.
7. The respective Borrowers' facilities at El Segundo, Cudahy and Burbank,
California, were all constructed by third parties prior to the time
they were initially occupied by such Borrowers in the mid-1970's.
Although neither Aerospace nor the other Borrowers have any knowledge
of the presence of asbestos in these facilities, it is possible that,
because of their age, some or all of the facilities could have been
constructed using asbestos-based insulation or other materials. Please
refer to the Environmental Assessments for any recognized environmental
conditions associated with the presence of asbestos-containing
materials at these facilities.
8. A power transformer formerly used in connection with X-ray machines
formerly located at the General Inspection Laboratories ("GIL")
facility in Cudahy, California was found to contain PCBs. The
transformer, which is currently not in use, will be transported by a
licensed hazardous waste transporter for proper treatment and/or
disposal.
9. Xxxxx and XXX have each filed a Notification of Hazardous Waste
Activity under Section 3OlO of the federal Resource Conservation and
Recovery Act. GIL has filed an Onsite Hazardous Waste Treatment
Notification Renewal Form, dated April
10, 1997, with the Los Angeles County Fire Department and the
California Department of Toxic Substances Control with respect to its
Xxxxxxxx wastewater treatment equipment and process.
SCHEDULE 6.01(Q)
ERISA
1. The Stellex Aerospace 401 (k) Profit Sharing Plan has not been
determined by the IRS to be qualified. Aerospace has relied upon the
favorable determination letter issued to the prototype plan sponsor,
401 (k) Plans, Inc. On October 16, 1997, the IRS requested additional
information. The IRS has indicated that once such additional
information has been received, a favorable determination letter will be
delivered.
SCHEDULE 6.01(U)
OWNERSHIP OF ALL NECESSARY
GOVERNMENTAL PERMITS
Reference is made to Schedule 5.01(A) with respect to consents,
approvals, contract novations and assignments or new issuances of various
governmental permits that have not been obtained, as of the date of this
Agreement, in each case from certain governmental authorities specified therein.
The failure to have obtained such items, as of the date of this Agreement,
qualifies the first sentence of Section 6.01(u)(i) of this Agreement.
SCHEDULE 6.01(W)
INSURANCE
1. See attached Insurance Summaries.
Stellex Aerospace/Stellex Microwave Systems, Inc.
Schedule of Insurance
INSURER EFFECTIVE
COVERAGE Policy Number DATES
------------------------------------------------------------------------------------------------------------------------------------
Workers' Comp Stellex Aerospace 10/1/97 to 10/1/00
Employers Liability Stellex Microwave Systems, Inc. 10/31/97 to 10/1/00
Travelers-Indemnity Company of Illinois
---------------------------------------
Policy # UJ-UB-161D142-9-97
General Liability - Non Aviation Stellex Aerospace 10/1/97 to 10/1/98
Stellex Microwave Systems, Inc. 10/31/97 to 10/1/98
Travelers - Indemnity Company of Illinois
-----------------------------------------
Policy # UJ-GLSA-161D1466-TIL-97
General Liability - Aviation Products Stellex Aerospace 10/31/97 to 10/01/98
Stellex Microwave Systems, Inc.
USAIG
-----
Policy # TBD
Foreign Liability Package Stellex Microwave Systems, Inc. 10/31/97 to 10/01/98
General Liability CNA
---
Policy # TBD
Automobile Liability
Note: Limit for Owned, Non-Owned
& Hired Liability. Coverage is
DIC/Excess of either $10,000
SIR or local compulsory limits
Foreign Voluntary Workers'
Compensation / EL
INSURER
COVERAGE Policy Number LIMITS
------------------------------------------------------------------------------------------------------------------------------------
Workers' Comp Stellex Aerospace $ 500,000 BI Each Accident
Employers Liability Stellex Microwave Systems, Inc. $ 500,000 BI Disease Policy Limit
Travelers-Indemnity Company of Illinois $ 500,000 BI Disease Each EB
---------------------------------------
Policy # UJ-UB-161D142-9-97 $ 100,000 Repatriation & Eodemic Disease
General Liability - Non Aviation Stellex Aerospace $ 5,000,000 General Aggregate (Non Aviation)
Stellex Microwave Systems, Inc. $ 1,000,000 Each Occurrence
Travelers - Indemnity Company of Illinois $ 1,000,000 Personal/Advertising Injury
-----------------------------------------
Policy # UJ-GLSA-161D1466-TIL-97 $ 1,000,000 Fire Damage/any one fire
$ 5,000 Medical Expense/per person
$ 1,000,000 Employee Benefits (claims made)
General Liability - Aviation Products Stellex Aerospace $ 25,000,000 Products Liability Aggregate
Stellex Microwave Systems, Inc.
USAIG
-----
Policy # TBD
Foreign Liability Package Stellex Microwave Systems, Inc. $ 5,000,000 General Aggregate
General Liability CNA $ 1,000,000 Each Occurrence
---
Policy # TBD $ 1,000,000 Products/Completed Ops. Occ/
Agg
$ 1,000,000 Personal/Advertising Injury
$ 1,000,000 Premises Damage / any one fire/
Agg
$ 10,000 Medical Expense / any one person
$ 20,000 Medical Expense / Aggregate
$ 1,000,000 Employee Benefits Liability
$ 1,000 Deductible
Automobile Liability $ 1,000,000 Combined Single Limit per
Occurrence
Note: Limit for Owned, Non-Owned $ 10,000 Medical Expense / each person
& Hired Liability. Coverage is
DIC/Excess of either $10,000 $ 20,000 Medical Expense / each accident
SIR or local compulsory limits
Hired Car Physical Damage
-------------------------
$ 1,000 Any one Accident
$ 10,000 Any one Policy Period
Foreign Voluntary Workers' $ 1,000,000 BI Each Accident
Compensation / EL $ 1,000,000 BI Disease Policy Limit
$ 1,000,000 BI Disease Each EE
$ 50,000 Repatriation & Eodemic Disease
INSURER EFFECTIVE
COVERAGE Policy Number DATES
------------------------------------------------------------------------------------------------------------------------------------
Automobile Stellex Aerospace 10/1/97 to 10/1/98
Stellex Microwave Systems, Inc. 10/31/97 to 10/1/98
Travelers-Indemnity Company of Illinois
---------------------------------------
Policy # UI-CAP-161D1546-TTL-97
Umbrella/Excess Liability Stellex Aerospace 10/1/97 to 10/1/98
Stellex Microwave Systems, Inc. 10/31/97 to 10/1/98
American Home Assurace Company
------------------------------
Policy #000-00-00
Ocean Cargo/Marine Stellex Microwave Systems, Inc. 10/31/97 to 10/01/98
Fireman's Fund
--------------
Policy # TBD
Property Stellex Aerospace 10/1/97 to 10/1/98
Stellex Microwave Systems, Inc. 10/31/97 to 10/1/98
Xxxxxx -American Protection Insurance Co.
-----------------------------------------
Policy #3ZG 005 484-00
INSURER
COVERAGE Policy Number LIMITS
------------------------------------------------------------------------------------------------------------------------------------
Automobile Stellex Aerospace $ 1,000,000 Symbol 1 Liability Coverage
Stellex Microwave Systems, Inc. $ 1,000,000 Symbol 2 Uninsured/
Travelers-Indemnity Company of Illinois Underinsured Motorist
---------------------------------------
Policy # UI-CAP-161D1546-TTL-97 $ 5,000 Medical Expense Benefit
ACV Physical Damage
$ 50 day/30 days Rental Reimbursement
$ 50 Towing & Labor - e/ occurrence
$ 500 Deductible - Comprehensive/
Collision (each auto)
Umbrella/Excess Liability Stellex Aerospace $ 25,000,000 Each Occurrence
Stellex Microwave Systems, Inc. $ 25,000,000 General Aggregate per location
American Home Assurace Company $ 25,000,00 Completed Operation
------------------------------
Policy #000-00-00 Aggregate Limit
$ 10,000 SIR
Ocean Cargo/Marine Stellex Microwave Systems, Inc. $ 5,000,000 Any one Vessel or Aircraft
Fireman's Fund $ 5,000,000 Any one Truck or Rail Car (Intl.
--------------
Transit)
Policy # TBD $ 2,000,000 Domestic Transit
$ 2,000,000 Exhibition Liability - Strikes,
Riots, Civil Commotions, War
Risk
$ 10,000 Deductible
Property Stellex Aerospace $ 34,127,579 All Risk incl. Earth Movement
& Flood, Real and Personal Property
Stellex Microwave Systems, Inc. $ 71,000,000 All Risk incl. Earth Movement
Xxxxxx-American Protection Insurance Co & Flood, Real and Personal Property
---------------------------------------
Policy #3ZG 005 484-00 $ 100,000,000 Per Occurrence/Aggregate - Flood (1)
$ 100,000,000 Per Occurence/Aggregate - Earth
Movement excl. California
$ 10,000,000 Newly Acquired Locations (180 days)
$ 10,000,000 Unnamed Locations
$ 10,000,000 Unintentional Errors & Ommissions
$ 1,000,000 Pollution - Annual Aggregate
$ 1,000,000 Contingent Business Interruption
$ 5,000,000 Extra Expense, Valuable Papers, A/R
Deductibles
$ 10,000 Property - Per Occurrence except
$ 500 Transit, Valuable Papers, A/R
$ 25,000 EQ - Outside CA
$ 25,000 Flood excl. Zone A
1% of Values Wind - Tier One Counties in the
state of FL subj. to $25,000
min.
Stellex Aerospace / Stellex Microwave Systems, Inc.
Schedule of Insurance
INSURER EFFECTIVE
COVERAGE POLICY NUMBER DATES LIMITS
------------------------------------------------------------------------------------------------------------------------------------
Boiler & Machinery Stellex Aerospace 10/1/97 to 10/1/98 $ 34,127,579 Total Blanket Limit
Stellex Microwave Systems, Inc. 10/31/97 to 10/1/98 $ 71,000,000
Xxxxxx - American Protection Insurance Co. Included Hazardous Substance
Policy #3ZG 005 484-00 Included Water Damage
$ 1,000,000 Ammonia Contamination
$ 1,000,000 Expediting Expense
$ 1,000,000 Consequential Damage
Deductibles
$ 10,000 Property Damage
1 X 100% Daily Value Time Element
Difference in
Conditions (DIC) Stellex Aerospace 8/29/97 to 8/29/98 $ 5,000,000 Per Occurrence
incl. EQ, Incl. Flood
$5MM xs $1MM Stellex Microwave Systems Inc. 10/31/97 to 8/29/98 $ 5,000,000 Annual Aggregate
Primary Pacific Insurance Company, Ltd.
Policy # XX0000000
First Excess Layer Agricultural Insurance Company $ 5,000,000 XS of $5MM - Per
Policy # CPP1803792 Occurrence
$ 5,000,000 XS of $5MM - Annual
Aggregate
Deductibles
$ 50,000 Per Occurrence except
5% of Values at time &
place of loss - EQ
Directors & Officers Stellex Microwave Systems, Inc. 10/31/97 to 10/31/98 $ 10,000,000 Each Loss/Each Policy
Gulf Insurance Company Period
$ 50,000 Deductible
Fidelity/Crime $ 5,000,000 Each Loss/Each Policy
Period
$ 25,000 Deductible
Fiduciary $ 10,000,000 Each Loss/Each Policy
Period
$ 5,000 Deductible
Special Accident Coverage Available upon request
(1) National Flood Insurance Program (NFIP) coverage will be placed at closing
for first $500,000 limit. Excess coverage remains the same.
SCHEDULE 6.01(Z)
BANK ACCOUNTS
ACCOUNT NUMBER BANK SIGNATORIES
Stellex Industries, Inc.
967-335272 Chase X. Xxxxxx, X. Xxxxxx, X. Xxxxx
Manhattan
TSMD Acquisition Corp.
967-248892 Chase X. Xxxxxx, X. Xxxxxx, X. Xxxxx
Manhattan
Stellex Microwave Systems, Inc.
12330-26244 Bank of America X. Xxxxxxx, P. Xxxxx Xxxx, X.
Xxxxxxxxxx
12334-26242 Bank of America
12332-26243 Bank of America
12336-26241 Bank of America
Stellex Aerospace
1465550703 Bank of America* B. Call, X. Xxxxx
0000000000 Bank of America (2 signors if $10,000 or more)
Xxxxx Machining International
1465950706 Bank of America B. Call, X. Xxxxx, E. Marcale, X. Xxxxx
0217304809 Bank of America (2 signors if $1,500 or more)
1465550708 Bank of America
Paragon Precision Products
1465450713 Bank of America X. Xxxxx, X. Xxxx, X. Xxxxxxx,
0092700289 Bank of America X. Xxxxx
--------
* All references to Bank of America are to: Bank of America,
Commercial Banking Office, 0000 Xxxxxx Xxxxxx, Xxxxxxxx
Xxxxx, XX 00000; Phone: 000.000.0000.
ACCOUNT NUMBER BANK SIGNATORIES
-------------- ---- -----------
0000000000 Bank of America (2 signors if $1500 or more)
General Inspection Laboratories, Inc.
1465350709 Bank of America X. Xxxxxxxxx, X. Xxxxx, X. Xxxxx
1465050710 Bank of America X. Xxxxxxx (2 signors)
Scanning Electron Analysis Laboratories, Inc.
0000000000 Bank of America X. Xxxxx, X. Xxxxx, X. Xxx, X. Xxxxx
1465650712 Bank of America (2 signors)
SCHEDULE 8.12
POST-CLOSING MATTERS(1)
1. Reliance Letter* regarding the opinion of O'Melveny & Xxxxx
delivered pursuant to the Xxxxxxx-Xxxxxxx Acquisition Agreement.
2. Stock Certificate, Stock Power, Acknowledgment and Revised Schedule
I to Pledge Agreement of Stellex, all relating to the pledge by Stellex of all
the issued and outstanding capital stock of Paragon Precision Products.
3. Landlord Waivers* executed by the landlord leasing property to the
Borrower(s) at each of the following locations:
a. 0000 Xxxxxxxx Xxx., Xxxx Xxxx XX 00000
b. 3400 and 0000 X. Xxx Xxxxxxxx Xxxx., Xxxxxxx, XX 00000
c. 0000 X. Xxxx Xx. Xxxxxxx, XX 00000
d. 000 X. Xxxx Xx., Xx Xxxxxxx, XX 00000
e. 0000 Xxxxxxxx Xxx., Xxxxxx, XX 00000
4. Consents(2) from the following Persons:
a. U.S. Government, approving the change of ownership
of Stellex Microwave Systems, Inc. for purposes of all
facility security clearances referred to in item 2(a) of
Schedule 5.01(A) of the Agreement.
b. U.S. Government, approving the novation of all
contracts between it and Stellex Microwave Systems, Inc.
referred to in item 2(b) of Schedule 5.01(A) of the
Agreement.
c. U.S. Department of State, Office of Defense Trade Controls,
consenting to the assignment to Stellex Microwave Systems, Inc. of all
export licenses referred to in item 2(c) of Schedule 5.01(A) of the
Agreement.
--------
(1) Unless otherwise indicated, each item on this Schedule 8.12 must be
delivered as soon as possible, and in any case within 60 days after the Closing
Date.
* With respect to each of these items, Stellex is obligated to make its best
efforts to obtain its delivery.
(2) Each of these Consents must be delivered within 180 days after the Closing
Date.
d. Each Customer party to any of the Customer Contracts
referred to in item 3 of Schedule 5.01(A) of the Agreement which
involves remaining payments of $1,000,000 or more.
